Borneo Aqua to acquire firm, diversify into mining

PETALING JAYA: Borneo Aqua Harvest Bhd is buying over a dormant company, Wullersdorf Resources Sdn Bhd for RM131 million, in an all-share deal, to diversify into the mining business.

Last month, Wullersdorf entered into a sub-lease agreement with Southsea Gold Sdn Bhd, to sub-lease 317.7ha of the 1,000ha land for 33 years for RM60,000 in annual rent.

Southsea signed a lease with Sabah Lands and Surveys Department in December last year for a parcel of land in Tawau for mining purpose. The lease for the 1,000ha land is for 35 years, ending on Dec 31, 2048.

Southsea Gold has common shareholders as the selling party of Wullersdorf.

In a filing with Bursa Malaysia last Friday, Borneo Aqua said it has entered into a share sale agreement with Datuk Lo Fui Ming, Mohd Amir Masry and Dr Tan Su Haw (the vendors) to acquire 10,000 ordinary shares of RM1 each in Wullersdorf.

Lo, Mohd Amir and Tan currently hold 70%, 25% and 5% equity interest respectively in Wullersdorf.

The purchase consideration of RM131 million will be satisfied via an issuance of 104.52 million new Borneo Aqua shares at 94 sen per share and an issuance of 34.84 million irredeemable convertible preference shares (ICPS) at 94 sen per ICPS.

Borneo Aqua is currently involved in the aquaculture business.

Southsea also has a prospecting licence dated Jan 17, 2013 from the department, which allows it to prospect and explore minerals namely zinc, lead, copper, gold, silver and other base metals on 20,000ha, also in Tawau, for four years from Jan 1, 2013.

Borneo Aqua said it intends to carry out the mining business through Wullersdorf with an estimated initial capital expenditure (capex) and operating expenses for the first two years at RM30 million.

It may consider outsourcing part of Wullersdorf’s mining operations to external contractors to reduce the initial capital and operational cost outlay.

In conjunction with the acquisition, the company has proposed a diversification of its existing core businesses to include the exploration for minerals, mining and other mining related businesses as well as an increase in authorised share capital from RM50 million comprising 500 million Borneo Aqua shares to RM200 million comprising 1.95 billion Borneo Aqua shares and 50 million ICPS.

The proposals are expected to be completed by the second quarter of 2016.

For the second quarter ended Sept 30, 2015, Borneo Aqua posted a net profit of RM1.80 million against a net loss of RM1.94 million a year ago mainly due to unrealised foreign exchange gain of RM2.33 million and after taking into consideration the non-cash employee benefit cost of RM564,000 for the quarter.

Revenue for the quarter grew 11.53% to RM4.14 million from RM3.71 million a year ago due to strong demand in larger grouper fishes, particularly the cross-breed species.

For the six months ended Sept 30, 2015, it posted a net profit of RM988,000 compared with a net loss of RM3.75 million a year ago while revenue grew 25.72% to RM7.44 million from RM5.91 million a year ago.