CNMC enters into exclusive talks for 51 per cent stake in fellow Kelantan miner

CATALIST-LISTED CNMC Goldmine Holdings, which has been on the search for an acquisition target for some time, on Tuesday revealed plans to acquire a 51 per cent stake in another Malaysian miner for RM13.8 million (S$4.6 million).

The group has signed a non-binding letter of intent to buy the controlling stake in Pulai Mining Sdn Bhd, which has a 3,841.3 ha concession in Kelantan - almost four times the size of CNMC's flagship Sokor gold project which is also in the same state.

Pulai Mining's concession is about 105 km away from CNMC's project site. The firm has 11 licences to explore and mine for gold, iron ore and feldspar, a raw material used in the making of glass and ceramics.

CNMC will pay for the new shares that Pulai Mining will issue through internal resources. CNMC had US$26.2 million in cash as at March 31, 2016.

Its CEO Chris Lim said that Pulai Mining is an attractive asset as it will not only increase CNMC's gold resources, but also expand its portfolio of minerals.

"As the concession is in Kelantan, where we have been operating for years, we are confident of getting the project off the ground within a shorter lead time," he said. "The investment is also financially manageable as we have a strong balance sheet."

The deal is subject to due diligence by CNMC and other conditions being fulfilled. Both parties will enter into exclusive talks for two months to reach a definitive agreement.