Subcontractor to invest RM15mil for prospecting, mining

KUCHING: Borneo Oil & Gas Corporation Sdn Bhd (BOG), which has been appointed as a sub-contractor to carry out prospecting and mining of alluvial and lode gold in Pahang, will make an initial commitment of some RM15mil to put the business on stream.

The capital outlay would be for heavy plant and equipment, vehicles and other facilities required to carry out prospecting, mining and exploration works as well as for start-up working capital.

“The scope of works under the sub-contract involves prospecting and mining of alluvial and lode gold on an exclusive basis over the mining area (in Mukim Batu Yon, Lipis district) as well as exploration works on a jointly basis (with Champmark Sdn Bhd),” BOG’s parent Borneo Oil Bhd said in reply to queries from Bursa Securities.

Borneo Oil is the franchise holder for the local fast food chain SugarBun. BOG was appointed by Champmark as the sub-contractor on March 14. The agreement is for five years and renewable for another five years.

The mining area, which covers 400 acres, was contracted to Champmark by MMC Corporation Bhd, which had leased it from Perbadanan Kemajuan Negeri Pahang on a sole and exclusive right basis to carry out the prospecting and mining of minerals.

Borneo Oil said the value of the sub-contract could not be readily quantified as it would depend on the production quantity and sales price of the minerals as well as rates of tribute payable involved.

“BOG will venture into mining of lode gold only after prospecting and exploration works undertaken have indicated sufficient gold reserve to justify a mining operation that is commercially viable.

“BOG shall pay tributes to Champmark based on the revenue from the sale of gold produced from alluvial. The rate range from 8% to 12% of gross revenue depending on the level of revenue achieved. As for the sale of gold from lode gold mining, the rates range from 14.5% to 16.5%,” it added.

BOG and Champmark will jointly carry out exploration of the mining area. BOG has advanced RM1.3mil to Champmark which would be repaid by way of reduction against future tribute payable.

BOG is currently involved in the quarrying of limestone and manufacturing of related products.

Meanwhile, substantial shareholder Victoria Capital Sdn Bhd acquired more than 4.12 million of Borneo Oil shares, or 9.37%, at 66.5 sen each in the open market on March 4. With the purchase, Victoria’s total shareholding has increased to 20.72 million shares.

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