KUALA LUMPUR (March 25): Property developer Yong Tai Bhd's subsidiary has been appointed the exclusive mining operator to undertake exploration works on a 100ha site in Bukit Kenderak in Pahang's Lipis district.

In a filing with Bursa Malaysia yesterday, Yong Tai said wholly-owned subsidiary YTB Land Sdn Bhd has signed an agreement with the registered holder of the mining lease of the land, Tengku Fahad Mua'adzam Shah ibni Almarhum Sultan Haji Ahmad Shah, and Amazing Logic Sdn Bhd.

Tengku Fahad, who is also Yong Tai's existing joint venture partner for the Impression U-Thant property development project, has appointed Amazing Logic to manage the economic exploitation of the rights under the mining lease.

Tengku Fahad and Tengku Nor Aizah Sultan Abu Bakar are the directors of Amazing Logic. The company is 50% owned by Hawthorne Capital Sdn Bhd, and the balance by Tengku Nor Aizah, Tengku Nong Maharani Sultan Abu Bakar, Tengku Zabedah Sultan Abu Bakar and Tengku Nina Sir Abu Bakar (50%).

Yong Tai chief executive officer Datuk Wira Boo Kuang Loon said in a press statement that the group's appointment is a golden opportunity for it to diversify away from its property development and tourism business, which has been severely affected by the Covid-19 pandemic.

"A brownfield project is also a viable option for us as it offers a faster return at a lower cost by using existing infrastructure," he added.

Yong Tai said the mining area was in operation over the last five years with proven gold mined, giving a better exploration database and detailed geological models, which translated into reduced risks and huge discount on capital costs.

"Given the average gold price of around RM225,000 per kg, Yong Tai is set to record a revenue of RM4.5 million per month if the mining activities run at the estimated average capacity of 20kg," said the group.

"As consideration for the rights granted to the group to carry out mining operation and upon satisfactory completion of the exploration works on the land, the group would pay RM30 million of a base fee to the owner over four years, assuming the monthly gold production is at 20kg of gold per month.

"For all gold extracted in excess of the 20kg monthly production, 7.5% of the gross value extracted during the applicable month would be paid as an excess fee to mining lease owner," it added.

The mining agreement is valid until May 11, 2025 for the initial term and the group could apply for an extension of the mining lease for an additional period of five years if the gold deposits in the land are not exhausted.

The operational costs for the exploitation works are expected to be funded through a combination of sale proceeds from gold production and/or bank borrowings, said Yong Tai.

Yong Tai shares jumped to as high as 45.5 sen on Dec 7 after announcing a Covid-19 vaccine deal. The shares had been trading between 4.5 sen and 20 sen over the past year.

Yesterday, the counter closed one sen or 3.85% higher at 27 sen, valuing the group at RM340 million.  

It was among the most actively traded counters on Bursa Malaysia, with 148.61 million shares changing hands, three times higher than its 200-day average trading volume of 47.63 million shares.

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