DENG Yiming, a former joint-venture (JV) partner with whom Metech International is working to expand its diamond business, has many years of entrepreneurial and management experience in the semiconductor retail industry.

The Catalist-listed company said this in a Monday (Dec 18) bourse filing.

This was in response to queries from the Singapore Exchange (SGX) on its choice to partner Deng despite previous issues over missing diamonds and inflated machine prices. Deng is one of the former directors of Asian Eco Technology (AET), a JV between Metech’s subsidiary Asian Green Tech and Deng’s X Diamond Capital (XDC) to manufacture and distribute lab-grown diamonds.

Through extensive discussions with Deng and his associates, as well as on-site inspections of X Diamond – a wholly-owned subsidiary of XDC – in China, Metech’s board learned that X Diamond’s facilities and expertise, as well as its patents and know-how, “can be complementary to the company’s current diamond business”, it said.

Metech flagged that the group had realised only S$3,000 in revenue in the lab-grown diamond business for the 12 months ended Jun 30, 2023, against S$2.78 million for the financial year ended Jun 30, 2022.

This was due to the company being unable to recruit suitable experienced personnel to operate its machines used for growing diamonds – known as microwave plasma chemical vapour deposition machines – to restore AET’s business and operations, it said.

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Working together with Deng and his associates, Metech will be able to resume and further the business, it added.

XDC Group, of which Deng is the founder, specialises in the research and development (R&D) of microwave plasma application technology, as well as the production, manufacturing and commercialisation of related equipment and products, the company said. It has a strong core technical team and its own core technology advantages, Metech added.

It noted that XDC Group, “one of the leading companies in the microwave plasma application technology industry domestically and internationally”, has been researching lab-grown diamonds since 2017. It has successfully produced, supplied and distributed such products, as well as obtained various industry certifications.

Metech noted that Deng said he and his technical team will cooperate with the company to support its business in the international markets outside of China.

Addressing SGX’s question about improvements and safeguards to protect the company’s interests, Metech said it has reviewed and updated its internal policies and standard operating procedures, including the approval matrix, and a policy for accounting for inventories. It is also seeking to implement and enhance policies which will track key performance indicators and deliverables.

Meanwhile, the company is in talks with “top-tier” experts in China to discuss the possibility of a multi-party partnership to train and boost the capabilities of its own R&D staff. It has also engaged industry experts, primarily from the US, Japan, Korea and Taiwan, to explore potential collaborations. 

Metech had previously filed two lawsuits against Deng, which were subsequently dropped in an out-of-court settlement deal. The first was over missing diamond seeds and loose diamonds which it previously said were last in his possession. The second lawsuit was filed as Metech believed that XDC sold five diamond-growing machines to it at a price higher than their fair-market value.

Deng will be repaying S$483,000 in damages to the company, as ordered by the High Court, in six instalments. He and his associates will also provide expertise and know-how to help the company resume its production.

AET and XDC also plan to jointly appoint an independent valuer to determine the current market value of the five machines to decide on further compensation schemes, if necessary.

Shares of Metech closed at S$0.024 on Monday, down S$0.018 or 42.9 per cent, before the filing.