KUALA LUMPUR: Ace Market-bound Indonesian tin mining operator TMR Ltd is set to be a significant investment to Malaysia Smelting Corp Bhd (MSC) given its offshore mining operations.
MSC is one of the world's largest integrated producers of tin metal and tin-based products with tin mining and smelting assets in Malaysia and Indonesia.
“Even though MSC's existing stake in TMR of 18.5% will be diluted to 15% after the listing exercise, the offshore mining operation will add another feather in MSC's cap which is currently focusing on onshore mining activities,” a source close to TMR told StarBiz yesterday.
MSC stands to benefit from the expected dividend payment from TMR which was slated to be upgraded to the main board, the source added.
TMR posted a net profit of RM2.74mil on the back of RM21.46mil revenue.
It will be issuing 90 million shares to raise about US$18mil. It will have an enlarged and issued paid-up capital of US$77.45mil post-listing.
TMR's business is mainly in offshore exploration and mining as well as support activities for the production of tin in the Bangka Belitung Islands, Indonesia. It also intends to acquire a smelting plant in Bangka.
Meanwhile, MSC would be expanding its existing tin resources via new acquisitions or joint-ventures with interested parties in Malaysia and Indonesia, said group chief executive officer Datuk Seri Dr Mohd Ajib Anuar.
He said the investments would be financed from the proceeds of about RM100mil generated from MSC's dual listing exercise on the Singapore Stock Exchange early this year.
“However, MSC might also consider raising new capital,” Ajib told reporters after the company's AGM yesterday.
On the purchase of “conflict” tin-in-concentrates from Congo, Ajib confirmed that effective from this month, MSC would stop its purchases, which represented 15% of the group's feedstocks should the minerals failed to meet the requirements of the tagging system under the electronics industry citizenship coalition smelter audit programme.
Despite the shortfall in feedstock from Congo, MSC would be sourcing from Australia and other countries. It will also seek new prospecting licences and mining leases in Malaysia and Bangka, Indonesia.
“Our smelting plants will continue to run at full capacity,” he said.
In 2010, the group produced 45,381 tonnes of tin metal, making it the second largest producer of tin metal in the world.
On tin price, Ajib said it was not impossible for tin price to hit US$40,000 tonne in the medium term.
“The commodity is still fundamentally strong even though there is a short-term increase in tin supply from small producers,” he added.
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