OFFER DOCUMENT DATED 18 OCTOBER 2011 (Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST”), acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 18 October 2011) This offer is made in or accompanied by an Offer Document (the “Offer Document”) that has been registered by the SGX-ST, acting as agent on behalf of the Authority on 18 October 2011. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with. This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s). PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”) has made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of CNMC Goldmine Holdings Limited (the “Company”) already issued (including the Vendor Shares (as defined herein), the new Shares which are the subject of this Placement (the New Shares (as defined herein) and together with the Vendor Shares, collectively the “Placement Shares”), the new Shares to be issued to PPCF (the “PPCF Shares”) pursuant to the Management Agreement (as defined herein), the Employee Shares (as defined herein) and the new Shares which may be issued pursuant to the CNMC Performance Share Plan (the “Award Shares”) to be listed for quotation on Catalist. The Sponsor has submitted this Offer Document to the SGX-ST. Acceptance of applications will be conditional upon, inter alia, issue of the New Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the New Shares, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars. Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s). Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares or units of Shares being offered for investment. We have not lodged this Offer Document in any other jurisdiction. INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED “RISK FACTORS” OF THIS OFFER DOCUMENT. IN PARTICULAR, YOU SHOULD NOTE THAT BASED ON THE PLANNED PRODUCTION SCHEDULE FOR OUR MINING OPERATIONS, IT IS EXPECTED THAT THE MINING OF OUR CURRENT GOLD ORE RESERVES (AS DEFINED HEREIN) WILL BE COMPLETED IN 2012. PLEASE REFER TO THE FOLLOWING RISKS FURTHER DESCRIBED IN THIS OFFER DOCUMENT: (1) OUR GROUP (AS DEFINED HEREIN) MAY NOT BE ABLE TO DISCOVER NEW GOLD RESERVES TO MAINTAIN A COMMERCIALLY VIABLE MINING OPERATION; (2) OUR GROUP HAS A LIMITED OPERATING HISTORY; AND (3) OUR GROUP’S BUSINESS, REVENUES AND PROFITS ARE AFFECTED BY THE VOLATILITY OF PRICES FOR GOLD AND THE GLOBAL ECONOMY. After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document. (Company Registration Number: 201119104K) (Incorporated in Singapore on 11 August 2011) Placement of 41,000,000 Placement Shares comprising 23,900,000 New Shares and 17,200,000 Vendor Shares at S$0.40 for each Placement Share, payable in full on application PRIMEPARTNERS CORPORATE FINANCE PTE. LTD. (Company Registration No.: 200207389D) (Incorporated in the Republic of Singapore) Manager and Sponsor and Joint Placement Agent Joint Placement Agent ASIASONS WFG SECURITIES PTE LTD (Company Registration No.: 200300646M) (Incorporated in the Republic of Singapore)
Transcript
OFFER DOCUMENT DATED 18 OCTOBER 2011(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST”), acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 18 October 2011)
This offer is made in or accompanied by an Offer Document (the “Offer Document”) that has been registered by the SGX-ST, acting as agent on behalf of the Authority on 18 October 2011. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”) has made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of CNMC Goldmine Holdings Limited (the “Company”) already issued (including the Vendor Shares (as defined herein), the new Shares which are the subject of this Placement (the New Shares (as defined herein) and together with the Vendor Shares, collectively the “Placement Shares”), the new Shares to be issued to PPCF (the “PPCF Shares”) pursuant to the Management Agreement (as defined herein), the Employee Shares (as defined herein) and the new Shares which may be issued pursuant to the CNMC Performance Share Plan (the “Award Shares”) to be listed for quotation on Catalist. The Sponsor has submitted this Offer Document to the SGX-ST. Acceptance of applications will be conditional upon, inter alia, issue of the New Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the New Shares, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares or units of Shares being offered for investment.
We have not lodged this Offer Document in any other jurisdiction.
INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED “RISK FACTORS” OF THIS OFFER DOCUMENT. IN PARTICULAR, YOU SHOULD NOTE THAT BASED ON THE PLANNED PRODUCTION SCHEDULE FOR OUR MINING OPERATIONS, IT IS EXPECTED THAT THE MINING OF OUR CURRENT GOLD ORE RESERVES (AS DEFINED HEREIN) WILL BE COMPLETED IN 2012. PLEASE REFER TO THE FOLLOWING RISKS FURTHER DESCRIBED IN THIS OFFER DOCUMENT: (1) OUR GROUP (AS DEFINED HEREIN) MAY NOT BE ABLE TO DISCOVER NEW GOLD RESERVES TO MAINTAIN A COMMERCIALLY VIABLE MINING OPERATION; (2) OUR GROUP HAS A LIMITED OPERATING HISTORY; AND (3) OUR GROUP’S BUSINESS, REVENUES AND PROFITS ARE AFFECTED BY THE VOLATILITY OF PRICES FOR GOLD AND THE GLOBAL ECONOMY.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document.
(Company Registration Number: 201119104K)(Incorporated in Singapore on 11 August 2011)
Placement of 41,000,000 Placement Shares comprising 23,900,000 New Shares and 17,200,000 Vendor Sharesat S$0.40 for each Placement Share, payable in full on application
PRIMEPARTNERS CORPORATE FINANCE PTE. LTD.(Company Registration No.: 200207389D)(Incorporated in the Republic of Singapore)
Manager and Sponsor and Joint Placement Agent Joint Placement Agent
ASIASONS WFG SECURITIES PTE LTD(Company Registration No.: 200300646M)(Incorporated in the Republic of Singapore)
* The above newspaper articles have been extracted from Nanyang Business Daily, Sin Chew Daily and China Press. Nanyang Business Daily, Sin Chew Daily and China Press have not consented to the inclusion of the newspaper articles in this Offer Document for the purpose of Section 249 of the Securities and Futures Act (Chapter 289) of Singapore (“SFA”) and are therefore not liable for the relevant information of the newspaper articles under Sections 253 and 254 of the SFA and while the directors of the Company have taken reasonable action to ensure that the information of the newspaper articles is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information in the newspaper articles.
OFFER DOCUMENT DATED 18 OCTOBER 2011(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST”), acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 18 October 2011)
This offer is made in or accompanied by an Offer Document (the “Offer Document”) that has been registered by the SGX-ST, acting as agent on behalf of the Authority on 18 October 2011. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”) has made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of CNMC Goldmine Holdings Limited (the “Company”) already issued (including the Vendor Shares (as defined herein), the new Shares which are the subject of this Placement (the New Shares (as defined herein) and together with the Vendor Shares, collectively the “Placement Shares”), the new Shares to be issued to PPCF (the “PPCF Shares”) pursuant to the Management Agreement (as defined herein), the Employee Shares (as defined herein) and the new Shares which may be issued pursuant to the CNMC Performance Share Plan (the “Award Shares”) to be listed for quotation on Catalist. The Sponsor has submitted this Offer Document to the SGX-ST. Acceptance of applications will be conditional upon, inter alia, issue of the New Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the New Shares, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares or units of Shares being offered for investment.
We have not lodged this Offer Document in any other jurisdiction.
INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED “RISK FACTORS” OF THIS OFFER DOCUMENT. IN PARTICULAR, YOU SHOULD NOTE THAT BASED ON THE PLANNED PRODUCTION SCHEDULE FOR OUR MINING OPERATIONS, IT IS EXPECTED THAT THE MINING OF OUR CURRENT GOLD ORE RESERVES (AS DEFINED HEREIN) WILL BE COMPLETED IN 2012. PLEASE REFER TO THE FOLLOWING RISKS FURTHER DESCRIBED IN THIS OFFER DOCUMENT: (1) OUR GROUP (AS DEFINED HEREIN) MAY NOT BE ABLE TO DISCOVER NEW GOLD RESERVES TO MAINTAIN A COMMERCIALLY VIABLE MINING OPERATION; (2) OUR GROUP HAS A LIMITED OPERATING HISTORY; AND (3) OUR GROUP’S BUSINESS, REVENUES AND PROFITS ARE AFFECTED BY THE VOLATILITY OF PRICES FOR GOLD AND THE GLOBAL ECONOMY.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document.
(Company Registration Number: 201119104K)(Incorporated in Singapore on 11 August 2011)
Placement of 41,000,000 Placement Shares comprising 23,900,000 New Shares and 17,200,000 Vendor Sharesat S$0.40 for each Placement Share, payable in full on application
PRIMEPARTNERS CORPORATE FINANCE PTE. LTD.(Company Registration No.: 200207389D)(Incorporated in the Republic of Singapore)
Manager and Sponsor and Joint Placement Agent Joint Placement Agent
ASIASONS WFG SECURITIES PTE LTD(Company Registration No.: 200300646M)(Incorporated in the Republic of Singapore)
* The above newspaper articles have been extracted from Nanyang Business Daily, Sin Chew Daily and China Press. Nanyang Business Daily, Sin Chew Daily and China Press have not consented to the inclusion of the newspaper articles in this Offer Document for the purpose of Section 249 of the Securities and Futures Act (Chapter 289) of Singapore (“SFA”) and are therefore not liable for the relevant information of the newspaper articles under Sections 253 and 254 of the SFA and while the directors of the Company have taken reasonable action to ensure that the information of the newspaper articles is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information in the newspaper articles.
Competitive StrengthsΟ Availability of high grade gold-bearing ore in
Sokor Block Based on the BDA Technical Report, supergene
enrichment of gold is widespread at Sokor Block Near-surface high grade gold
Ο Exploration upside potential Considerable exploration upside potential within
Sokor Block to locate additional gold resources where to date only limited reconnaissance exploration has taken place
Ο Close proximity to urban facilities Proximity to land and air transport Availability of existing infrastructure and
communication access helps to minimize investment costs
Ο Strong working relationships with Chinese contractors and/or consultants
Consultants such as CSU, Sinomine and CGRI are leading players in the PRC in their respective niche markets, their expertise in mining operations helps to ensure greater cost efficiencies and economic benefits
Services and technical support provided at competitive prices
Ο Strong relationships with stakeholders and local communities
Good working relationship with Kelantan State Government and KSEDC
Professor Lin Xiang Xiong (Executive Chairman) is Kelantan’s Chief Advisor on Kelantan-China International Trade for the Kelantan State Government
Participation in community development projects
Use of ProceedsΟ Further resource definition and continuing
exploration activitiesΟ Construction of a heap leach facilityΟ Working CapitalΟ Expenses incurred in connection with the
Placement
ProspectsΟ World demand for Gold Gold as a hedge against currency risks and
remains a sought-after asset especially in light of sovereign debt crisis in Europe
Gold as an alternative investment and a hedge against inflationary pressures
Ο Price Outlook Analysts at BNP Paribas forecasted the
average price of gold to be US$1,500/oz for 2011 and US$1,600/oz in 2012
Investment product for portfolio diversification and risk management strategies
Supportive environment for gold investment in 2011, revived demand in jewellery and industrial sector provide further scope for growth
Business Strategies and Future PlansΟ Expansion of gold extraction facilitiesΟ Further resource definition and continuing
exploration activitiesΟ Feasibility study to construct a gold
carbon-in-leach plantΟ Exploration and possible mining for other
minerals such as silver, lead and zincΟ Expansion through acquisitions, joint ventures
and strategic alliances
Price of gold
Comp tetititiive StStrengthths Us
TABLE 1 – CNMC MINERAL RESOURCES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Measured 659,000 3.4 71,700
Indicated 803,000 2.0 50,900
Inferred 720,000 2.6 60,900
TOTAL 2,182,000 2.6 183,500
Note: The total gold resources of 2,182,000 tonnes includes gold ore reserves of 989,000 tonnes
TABLE 2 – CNMC ORE RESERVES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Proved 204,000 3.6 23,900
Probable 785,000 1.8 46,400
TOTAL 989,000 2.2 70,300
g
The above chart sets forth monthly average London Fix gold price from January 2008 to August 2011.
Source: World Gold Council
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Janu
ary
2008
Feb
ruar
y 20
08M
arch
200
8A
pril
2008
May
200
8Ju
ne 2
008
July
200
8A
ugus
t 200
8S
epte
mbe
r 20
08O
ctob
er 2
008
Nov
embe
r 20
08D
ecem
ber
2008
Janu
ary
2009
Feb
ruar
y 20
09M
arch
200
9A
pril
2009
May
200
9Ju
ne 2
009
July
200
9A
ugus
t 200
9S
epte
mbe
r 20
09O
ctob
er 2
009
Nov
embe
r 20
09D
ecem
ber
2009
Janu
ary
2010
Feb
ruar
y 20
10M
arch
201
0A
pril
2010
May
201
0Ju
ne 2
010
July
201
0A
ugus
t 201
0S
epte
mbe
r 20
10O
ctob
er 2
010
Nov
embe
r 20
10D
ecem
ber
2010
Janu
ary
2011
Feb
ruar
y 20
11M
arch
201
1A
pril
2011
May
201
1Ju
ne 2
011
July
201
1A
ugus
t 201
1
Pri
ce o
f G
old
US
$ p
er o
z
Competitive StrengthsΟ Availability of high grade gold-bearing ore in
Sokor Block Based on the BDA Technical Report, supergene
enrichment of gold is widespread at Sokor Block Near-surface high grade gold
Ο Exploration upside potential Considerable exploration upside potential within
Sokor Block to locate additional gold resources where to date only limited reconnaissance exploration has taken place
Ο Close proximity to urban facilities Proximity to land and air transport Availability of existing infrastructure and
communication access helps to minimize investment costs
Ο Strong working relationships with Chinese contractors and/or consultants
Consultants such as CSU, Sinomine and CGRI are leading players in the PRC in their respective niche markets, their expertise in mining operations helps to ensure greater cost efficiencies and economic benefits
Services and technical support provided at competitive prices
Ο Strong relationships with stakeholders and local communities
Good working relationship with Kelantan State Government and KSEDC
Professor Lin Xiang Xiong (Executive Chairman) is Kelantan’s Chief Advisor on Kelantan-China International Trade for the Kelantan State Government
Participation in community development projects
Use of ProceedsΟ Further resource definition and continuing
exploration activitiesΟ Construction of a heap leach facilityΟ Working CapitalΟ Expenses incurred in connection with the
Placement
ProspectsΟ World demand for Gold Gold as a hedge against currency risks and
remains a sought-after asset especially in light of sovereign debt crisis in Europe
Gold as an alternative investment and a hedge against inflationary pressures
Ο Price Outlook Analysts at BNP Paribas forecasted the
average price of gold to be US$1,500/oz for 2011 and US$1,600/oz in 2012
Investment product for portfolio diversification and risk management strategies
Supportive environment for gold investment in 2011, revived demand in jewellery and industrial sector provide further scope for growth
Business Strategies and Future PlansΟ Expansion of gold extraction facilitiesΟ Further resource definition and continuing
exploration activitiesΟ Feasibility study to construct a gold
carbon-in-leach plantΟ Exploration and possible mining for other
minerals such as silver, lead and zincΟ Expansion through acquisitions, joint ventures
and strategic alliances
Price of gold
Comp tetititiive StStrengthths Us
TABLE 1 – CNMC MINERAL RESOURCES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Measured 659,000 3.4 71,700
Indicated 803,000 2.0 50,900
Inferred 720,000 2.6 60,900
TOTAL 2,182,000 2.6 183,500
Note: The total gold resources of 2,182,000 tonnes includes gold ore reserves of 989,000 tonnes
TABLE 2 – CNMC ORE RESERVES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Proved 204,000 3.6 23,900
Probable 785,000 1.8 46,400
TOTAL 989,000 2.2 70,300
g
The above chart sets forth monthly average London Fix gold price from January 2008 to August 2011.
Source: World Gold Council
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Janu
ary
2008
Feb
ruar
y 20
08M
arch
200
8A
pril
2008
May
200
8Ju
ne 2
008
July
200
8A
ugus
t 200
8S
epte
mbe
r 20
08O
ctob
er 2
008
Nov
embe
r 20
08D
ecem
ber
2008
Janu
ary
2009
Feb
ruar
y 20
09M
arch
200
9A
pril
2009
May
200
9Ju
ne 2
009
July
200
9A
ugus
t 200
9S
epte
mbe
r 20
09O
ctob
er 2
009
Nov
embe
r 20
09D
ecem
ber
2009
Janu
ary
2010
Feb
ruar
y 20
10M
arch
201
0A
pril
2010
May
201
0Ju
ne 2
010
July
201
0A
ugus
t 201
0S
epte
mbe
r 20
10O
ctob
er 2
010
Nov
embe
r 20
10D
ecem
ber
2010
Janu
ary
2011
Feb
ruar
y 20
11M
arch
201
1A
pril
2011
May
201
1Ju
ne 2
011
July
201
1A
ugus
t 201
1
Pri
ce o
f G
old
US
$ p
er o
z
TABLE OF CONTENTS
1
CORPORATE INFORMATION .......................................................................................................... 4
DETAILS OF THE PLACEMENT ...................................................................................................... 23
LISTING ON CATALIST .......................................................................................................... 23
INDICATIVE TIMETABLE FOR LISTING .......................................................................................... 27
PLAN OF DISTRIBUTION ................................................................................................................ 28
INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT AGENT .................................................................................................................................... 29INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT ................................ 29
OUR COMPANY ...................................................................................................................... 30OUR BUSINESS ...................................................................................................................... 30SUMMARY OF OUR FINANCIAL INFORMATION .................................................................. 30OUR COMPETITIVE STRENGTHS ........................................................................................ 31OUR PROSPECTS .................................................................................................................. 31OUR BUSINESS STRATEGIES AND FUTURE PLANS ........................................................ 32OUR CONTACT DETAILS........................................................................................................ 32
THE PLACEMENT ............................................................................................................................ 33
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY................................................ 35RISKS RELATING TO OUR OPERATIONS IN MALAYSIA .................................................... 44RISKS RELATING TO AN INVESTMENT IN OUR SHARES .................................................. 46
SHAREHOLDING AND OWNERSHIP STRUCTURE.............................................................. 57SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP ............................................ 59VENDORS................................................................................................................................ 60MORATORIUM ........................................................................................................................ 60
CAPITALISATION AND INDEBTEDNESS ........................................................................................ 62
WORKING CAPITAL.......................................................................................................................... 64
GROUP STRUCTURE ...................................................................................................................... 71
SELECTED COMBINED FINANCIAL INFORMATION .................................................................... 72
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL POSITION ...................................................................................................................... 75
OVERVIEW .............................................................................................................................. 75PRINCIPAL COMPONENTS OF OUR INCOME STATEMENT .............................................. 75REVIEW OF RESULTS OF OPERATIONS ............................................................................ 79REVIEW OF PAST OPERATING PERFORMANCE ................................................................ 79REVIEW OF PAST FINANCIAL POSITION OF OUR GROUP .............................................. 82LIQUIDITY AND CAPITAL RESOURCES................................................................................ 85MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS................................................ 86FOREIGN EXCHANGE MANAGEMENT ................................................................................ 87SEASONALITY ........................................................................................................................ 88INFLATION .............................................................................................................................. 88SIGNIFICANT CHANGES IN ACCOUNTING POLICIES ........................................................ 88
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP ............................................ 89
HISTORY.................................................................................................................................. 89OUR SUBSIDIARIES .............................................................................................................. 92INDEPENDENT VALUATION .................................................................................................. 92BUSINESS OVERVIEW .......................................................................................................... 93BUSINESS ACTIVITIES .......................................................................................................... 96QUALITY ASSURANCE .......................................................................................................... 103OUR MAJOR CUSTOMERS.................................................................................................... 103OUR MAJOR SUPPLIERS ...................................................................................................... 104CREDIT POLICY...................................................................................................................... 104INVENTORY MANAGEMENT.................................................................................................. 105SALES AND MARKETING ...................................................................................................... 105INSURANCE ............................................................................................................................ 105INTELLECTUAL PROPERTY .................................................................................................. 105LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS ........................ 106KEY CONTRACTORS AND CONSULTANTS.......................................................................... 109STAFF TRAINING .................................................................................................................... 110ENVIRONMENTAL PROTECTION AND COMMUNITY DEVELOPMENT .............................. 110INFRASTRUCTURE ................................................................................................................ 114SAFETY POLICY .................................................................................................................... 114RESEARCH AND DEVELOPMENT ........................................................................................ 115COMPETITION ........................................................................................................................ 115COMPETITIVE STRENGTHS.................................................................................................. 115PROPERTIES AND FIXED ASSETS ...................................................................................... 117INDUSTRY OVERVIEW .......................................................................................................... 118PROSPECTS .......................................................................................................................... 121BUSINESS STRATEGIES AND FUTURE PLANS .................................................................. 123ORDER BOOK ........................................................................................................................ 124TREND INFORMATION .......................................................................................................... 124
DIRECTORS, MANAGEMENT AND STAFF .................................................................................... 125
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES .......................................................................................................................... 132SERVICE AGREEMENTS........................................................................................................ 132
CNMC PERFORMANCE SHARE PLAN .......................................................................................... 134
INTERESTED PERSON TRANSACTIONS ...................................................................................... 148
PAST INTERESTED PERSON TRANSACTIONS .................................................................. 148PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS .............................. 150GUIDELINES AND REVIEW PROCEDURES FOR ON-GOING AND FUTURE INTERESTED PERSON TRANSACTIONS ............................................................................ 153POTENTIAL CONFLICTS OF INTEREST .............................................................................. 155INTERESTS OF EXPERTS .................................................................................................... 155INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT AGENT .................................................................................................................................... 155INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT ................................ 156
DESCRIPTION OF ORDINARY SHARES ........................................................................................ 157
CLEARANCE AND SETTLEMENT .................................................................................................. 169
GENERAL AND STATUTORY INFORMATION ................................................................................ 170
APPENDIX A – INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIALSTATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2008, 2009 AND 2010 ...................................................................................................................... A-1
– COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED 31 DECEMBER 2008, 2009 AND 2010 ................................................................ A-3
APPENDIX B – REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM COMBINEDFINANCIAL INFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011 .................................................................................................. B-1
– UNAUDITED CONDENSED INTERIM COMBINED FINANCIAL INFORMATIONFOR THE THREE MONTHS ENDED 31 MARCH 2011 ...................................... B-2
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCATION ...................... C-1
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT .............................................................. D-1
APPENDIX E – LEGAL OPINION FROM SKRINE ........................................................................ E-1
APPENDIX F – BDA TECHNICAL REPORT .................................................................................. F-1
APPENDIX G – INDEPENDENT VALUATION REPORT ................................................................ G-1
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN .................................. H-1
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE ...................................................................................................... I-1
TABLE OF CONTENTS
3
BOARD OF DIRECTORS : Professor Lin Xiang Xiong @ Lin Ye (Executive Chairman)Choo Chee Kong (Executive Vice Chairman)Lim Kuoh Yang (Executive Director and Chief Executive Officer)Kuan Cheng Tuck (Independent Director)Tan Poh Chye Allan (Independent Director)Lim Yeok Hua (Independent Director)
COMPANY SECRETARY : Vincent Lim Bock Hui, LLB (Hons)
PRINCIPAL BANKERS : The Bank of East Asia, Limited60 Robinson RoadBank of East Asia BuildingSingapore 068892
CIMB Bank BerhadLot 522, Jalan Dato’ Nik Mustapha17500 Tanah Merah, KelantanMalaysia
Standard Chartered BankMarina Bay Financial Centre (Tower 1)8 Marina Boulevard, Level 24Singapore 018981
RECEIVING BANKER : The Bank of East Asia, Limited60 Robinson RoadBank of East Asia BuildingSingapore 068892
VENDORS : Messiah LimitedP.O. Box 957 Offshore Incorporations CentreRoad Town Tortola British Virgin Islands
EP Capital Inc.P.O. Box 957 Offshore Incorporations CentreRoad Town Tortola British Virgin Islands
Caravel Holdings Group LtdPortcullis TrustNet Chambers P.O. Box 3444 Road Town TortolaBritish Virgin Islands
Ng Eng Tiong 1 Shenton Way#16-11Singapore 068803
CORPORATE INFORMATION
5
In this Offer Document and the accompanying Application Forms, unless the context otherwise requires,the following definitions apply throughout where the context so admits:
Companies within our Group
“Company” : CNMC Goldmine Holdings Limited, a company incorporated inSingapore on 11 August 2011
“CNMC” : CNMC Goldmine Limited, a company incorporated in Hong Kongon 28 October 2006 and a wholly-owned subsidiary of ourCompany
“CMNM” : CMNM Mining Group Sdn. Bhd., a company incorporated inMalaysia on 27 December 2006 and a 81% owned subsidiary ofCNMC
“Group” or “Group Companies” : Our Company and our subsidiaries as at the date of this OfferDocument
“MCS” : MCS Mining Group Sdn. Bhd., a company incorporated inMalaysia on 4 October 2004 and a 80%(1) owned subsidiary ofCNMC
“CNMC-Nalata” : CNMC-Nalata Mining Sdn. Bhd., a company incorporated inMalaysia on 24 January 2008 and a 80% owned subsidiary ofCNMC
Other Companies, Organisations and Agencies
“ACRA” : Accounting and Corporate Regulatory Authority of Singapore
“Asiasons WFG” : Asiasons WFG Securities Pte Ltd
“Authority” : Monetary Authority of Singapore
“BDA” : Behre Dolbear Australia Pty Limited
“CDP” or “Depository” : The Central Depository (Pte) Limited
“CGRI” : Changchun Gold Research Institute
“CMNM-JY” : CMNM-Juyuan Mining Service Sdn. Bhd., a joint venture companyincorporated in Malaysia on 13 March 2011 pursuant to the JointVenture Agreement which is proposed to be 51% owned byCMNM and 49% owned by Xiamen Shenkun
“CPF” : Central Provident Fund
“CSU” : Central South University’s School of Geo-science andEnvironmental Engineering
“DOE” : The Department of Environment of Kelantan
“IRAS” : Inland Revenue Authority of Singapore
“JLLS” : Jones Lang LaSalle Sallmanns Limited
DEFINITIONS
6
(1) CNMC is the registered holder of 87.5% interest in MCS. CNMC has an arrangement with the Kelantan State Government tohold 7.5% interest in MCS for the Kelantan State Government, and such interest will be transferred from CNMC in due course.The effective percentage interest of CNMC in MCS is therefore 80% as at the Latest Practicable Date.
“KSEDC” : Kelantan State Economic Development Corporation
“Manager”, “Sponsor” or “PPCF” : PrimePartners Corporate Finance Pte. Ltd.
“Joint Placement Agent(s)” : PPCF and Asiasons WFG
“MIDA” : Malaysian Industrial Development Authority
“Receiving Banker” : The Bank of East Asia, Limited
“Sinomine Resource (Malaysia)” : Sinomine Resource (Malaysia) Sdn Bhd
“Solicitors to the Placement” : Shook Lin & Bok LLP
“Xiamen Shenkun” : Xiamen Shenkun Group Co., Ltd.
General
“1Q” : The three (3) months financial period ended or ending 31 March,as the case may be
“Application Form” : The printed application form to be used for the purpose of thePlacement and which form part of this Offer Document
“Application List” : The list of applications for the subscription and/or purchase of thePlacement Shares
“Articles” or “Articles of : The articles of association of our Company, as amended,Association” supplemented or modified from time to time
“Associate” : (a) in relation to any director, chief executive officer, substantialshareholder or controlling shareholder (being an individual)means:
(i) his immediate family;
(ii) the trustees, acting in their capacity as such trustees,of any trust of which he or his immediate family is abeneficiary or, in the case of a discretionary trust, is adiscretionary object; or
(iii) any company in which he and his immediate familytogether (directly or indirectly) have an interest of30% or more of the total votes attached to all thevoting shares;
DEFINITIONS
7
(b) in relation to a substantial shareholder or a controllingshareholder (being a company) means any other companywhich is its subsidiary or holding company or is a fellowsubsidiary of any such holding company or one in the equityof which it and/or such other company or companies takentogether (directly or indirectly) have an interest of 30% ormore of the total votes attached to all the voting shares
“Associated Company” : In relation to a corporation, means:
(a) any corporation in which the corporation or its subsidiaryhas, or the corporation and its subsidiary together have, adirect interest of not less than 20% but not more than 50%of the aggregate of the total votes attached to all the votingshares; or
(b) any corporation, other than a subsidiary of the corporationor a corporation which is an associated company by virtueof paragraph (a), the policies of which the corporation or itssubsidiary, or the corporation together with its subsidiary, isable to control or influence materially
“Audit Committee” : The audit committee of our Company as at the date of this OfferDocument, unless otherwise stated
“Awards” : The contingent awards of Shares granted or which may begranted pursuant to the CNMC Performance Share Plan
“Award Shares” : The Shares which are the subject of the Awards under the CNMCPerformance Share Plan
“BDA Technical Report” : The technical report dated 12 August 2011 prepared by BDArelating to the Sokor Gold Project and Sokor Gold Zone set out inAppendix F of this Offer Document
“Board” or “Board of Directors” : The board of Directors of our Company as at the date of this OfferDocument, unless otherwise stated
“Catalist” : The sponsor-supervised listing platform of the SGX-ST
“Catalist Rules” : Any or all of the rules in the SGX-ST Listing Manual Section B:Rules of Catalist, as the case may be
“CNMC Performance Share : The share plan of our Company known as “CNMC PerformancePlan” Share Plan” which was approved on 14 October 2011, particulars
of which are set out in the section entitled “CNMC PerformanceShare Plan” of this Offer Document
“Companies Act” : Companies Act (Chapter 50) of Singapore, as amended,supplemented or modified from time to time
“Controlling Shareholder” : In relation to a corporation, means:
(a) a person who has an interest in the voting shares of acorporation and who exercises control over the corporation;or
DEFINITIONS
8
(b) a person who has an interest of 15% or more of the totalvotes attached to all the voting shares in a corporation,unless he does not exercise control over the corporation
“Convertible Loans” : The convertible loans of an aggregate value of approximatelyUS$3.10 million issued by CNMC to Lim Chee Hoong, Lim PengLiang David Llewellyn and Grande Pacific which were convertedinto shares of CNMC pursuant to the Restructuring Exercise
“Director” : A director of our Company as at the date of this Offer Document
“Employee Shares” The 2,022,000 new Shares to be issued to Chen Yan, the ChiefFinancial Officer of our Company
“Entity at Risk” : (a) The Company; (b) a subsidiary of the Company that is notlisted on the SGX-ST or an approved exchange; or (c) anAssociated Company that is not listed on the SGX-ST or anapproved exchange, provided that our Group or our Group andour Interested Person(s), has control over the AssociatedCompany
“EPS” : Earnings per Share
“Executive Directors” : The executive Directors of our Company as at the date of thisOffer Document, unless otherwise stated
“Executive Officers” : The executive officers of our Company as at the date of this OfferDocument, who are also key executives as defined under theSecurities and Futures (Offers of Investments) (Shares andDebentures) Regulations 2005, unless otherwise stated
“FY” : Financial year ended or, as the case may be, ending 31December
“Hong Kong” : The Hong Kong Special Administrative Region of the PRC
“Independent Directors” : The independent Directors of our Company as at the date of thisOffer Document, unless otherwise stated
“Independent Valuation Report” : The valuation report dated 1 September 2011 prepared by JLLSrelating to the independent valuation of the fair market value of theSokor Gold Project as set out in Appendix G of this OfferDocument
“Interested Person” : (a) a director, chief executive officer or Controlling Shareholderof the Company; or
(b) an Associate of any such director, chief executive officer orControlling Shareholder
“Interested Person Transaction” : Means a transaction between an Entity at Risk and an InterestedPerson
“Joint Venture Agreement” : A joint venture agreement dated 28 January 2011 entered intobetween CMNM and Xiamen Shenkun to incorporate a jointventure company to be 51% owned by CMNM and 49% owned byXiamen Shenkun
DEFINITIONS
9
“JORC Code” : Australasian Code for Reporting of Exploration Results, MineralResources and Ore Reserves promulgated by the Joint OreReserves Committee of the Australasian Institute of Mining andMetallurgy, Australian Institute of Geoscientists and MineralsCouncil of Australia, 2004 Edition
“Kelantan” : A state in the Federation of Malaysia
“Latest Practicable Date” or “LPD” : 16 September 2011, being the latest practicable date before thelodgement of this Offer Document with the SGX-ST
“Listing” : The listing of the Shares on Catalist
“Management Agreement” : The full sponsorship and management agreement entered intobetween our Company, the Vendors and PPCF pursuant to whichPPCF shall sponsor and manage the Listing, details as describedin the sections entitled “Plan of Distribution” and “General andStatutory Information – Management and PlacementArrangements” of this Offer Document
“Market Day” : A day on which the SGX-ST is open for trading in securities
“Memorandum” : The memorandum of association of our Company, as amended,varied or supplemented from time to time
“Mineral Enactment” : Kelantan Mineral Enactment 2001
“NAV” : Net asset value
“New Shares” : The 23,900,000 new Shares for which our Company invitesapplications to subscribe for pursuant to the Placement, subject toand on the terms and conditions set out in this Offer Document
“Nominating Committee” : The nominating committee of our Company as at the date of thisOffer Document, unless otherwise stated
“Non-Executive Directors” : The non-executive Directors of our Company (including theIndependent Directors) as at the date of this Offer Document,unless otherwise stated
“NTA” : Net tangible assets
“Offer Document” : This Offer Document dated 18 October 2011 issued by ourCompany in respect of the Placement
“PER” : Price earnings ratio
“period under review” : The period which comprises FY2008, FY2009, FY2010 and1Q2011
“Placement” : The placement of the Placement Shares by the Joint PlacementAgents on behalf of our Company and the Vendors forsubscription and/or purchase at the Placement Price, subject toand on the terms and conditions as set out in this Offer Document
DEFINITIONS
10
“Placement Agreement” : The placement agreement entered into between our Company, theVendors and the Joint Placement Agents pursuant to which theJoint Placement Agents agreed to procure subscriptions and/orpurchases for the Placement Shares at the Placement Price asdescribed in the sections entitled “Plan of Distribution” and“General and Statutory Information – Management and PlacementArrangements” of this Offer Document
“Placement Price” : S$0.40 for each Placement Share
“Placement Shares” : The 41,100,000 Shares which are the subject of the Placement,comprising 23,900,000 New Shares and 17,200,000 VendorShares
“PPCF Shares” : The 3,771,000 new Shares to be issued and allotted to PPCF byour Company as part of PPCF’s management fee as the Managerand Sponsor
“PRC” : The People’s Republic of China
“Pre-Placement Investors” : Lim Chee Hoong, Lim Peng Liang David Llewellyn, Grande PacificLimited and Yu Long Fei
“Refining Agreement” : Refining agreement dated 7 April 2009 entered into betweenCMNM and AGR Matthey pursuant to which CMNM engages AGRMatthey to refine gold and silver produced by CMNM and asvaried by a novation deed dated 29 March 2010
“Remuneration Committee” : The remuneration committee of our Company as at the date ofthis Offer Document, unless otherwise stated
“Restructuring Exercise” : The corporate restructuring exercise implemented in connectionwith the Placement, more fully described in the section entitled“Restructuring Exercise” of this Offer Document
“Securities Account” : The securities account maintained by a Depositor with CDP butdoes not include a securities sub-account
“Securities and Futures Act” or : The Securities and Futures Act (Chapter 289) of Singapore, as“SFA” amended, supplemented or modified from time to time
“Service Agreements” : The service agreements entered into between our Company andour Executive Directors, as described in the section entitled“Directors, Management and Staff – Service Agreements” of thisOffer Document
“SFR” : The Securities and Futures (Offers of Investments) (Shares andDebentures) Regulations 2005 of Singapore, as amended,supplemented or modified from time to time
“SGXNET” : Singapore Exchange Network, a system network used by listedcompanies in sending information and announcements to theSGX-ST or any other system networks prescribed by the SGX-ST
“Share(s)” : Ordinary share(s) in the capital of our Company
DEFINITIONS
11
“Shareholder(s)” : Registered holders of Shares, except where the registered holderis CDP, the term “Shareholder” shall, in relation to such Sharesmean the Depositors whose Securities Accounts are credited withShares
“Share Swap Agreement” : The share swap agreement dated 9 October 2011 entered intobetween our Company and the shareholders of CNMC to acquirethe entire issued share capital of CNMC pursuant to theRestructuring Exercise
“Singapore” : The Republic of Singapore
“Sokor Block” : Mining area covering approximately 10 sq km within SungaiAmang and Sungai Sejana, Mukim Sokor, Sokor, Tanah Merah,Kelantan, Malaysia
“Sokor Gold Project” : The exploration and mining of gold at the Sokor Block pursuant tothe contractual rights granted to CMNM by KSEDC as the holderof the mining lease for the Sokor Block via an agreement dated 16May 2007 entered into between CNMC and KSEDC andsupplemented by a tripartite agreement dated 21 April 2011entered into between CNMC, CMNM and KSEDC
“Sokor Gold Zone” : An area covering approximately 62.8 sq km within the Districts ofKuala Krai, Jeli and Tanah Merah, Kelantan, Malaysia
“Substantial Shareholder(s)” : Persons who have an interest in one or more voting shares, andthe total votes attaching to that share or those shares, representnot less than 5% of the total votes attaching to all the votingshares in our Company
“USA” : United States of America
“VALMIN Code” : Code for the Technical Assessment and Valuation of Mineral andPetroleum Assets and Securities for Independent Expert Reports2005 Edition, prepared by the VALMIN Committee, a jointcommittee of the Australasian Institute of Mining and Metallurgy,the Australian Institute of Geoscientists and the Mineral IndustryConsultants Association with the participation of the AustralianSecurities and Investment Commission, the Australian StockExchange Limited, the Minerals Council of Australia, thePetroleum Exploration Society of Australia, the SecuritiesAssociation of Australia and representatives from the Australianfinance sector
“Vendors” : Messiah Limited, EP Capital Inc., Caravel Holdings Group Ltd andNg Eng Tiong
“Vendor Shares” : The 17,200,000 issued and fully paid-up Shares for which theVendors invite applications to purchase pursuant to thePlacement, subject to and on the terms and conditions of thisOffer Document
DEFINITIONS
12
Currencies, Units and Others
“HK$” : Hong Kong dollars
“MYR” or “Ringgit” : Malaysian ringgit
“RMB” : PRC Renminbi
“S$” and “cents” : Singapore dollars and cents, respectively
“US$” or “USD” and “US cents” : USA dollars and cents, respectively
“g” : grams
“kg” : Kilograms
“km” : Kilometres
“koz” : Kilo ounces
“kt” : Kilo tonnes
“m” : Metres
“m3” : Cubic metres
“mm” : Millimetres
“oz” : Troy ounces
“sq ft” : Square feet
“sq km” : Square kilometres
“sq m” : Square metres
“t” : tonnes
“%” or “per cent.” : Per centum or percentage
Any capitalised terms relating to the CNMC Performance Share Plan which are not defined in this sectionof this Offer Document shall have the meanings ascribed to them as stated in Appendix H of this OfferDocument.
The expression “subsidiary” shall have the meaning ascribed to it in the SFR and the Companies Act.
The expression “business trust” has the same meaning ascribed to it in Section 2 of the Business TrustsAct (Chapter 31A) of Singapore.
The expression “Entity” includes a corporation, an unincorporated association, a partnership and thegovernment of any state, but does not include a trust.
The expressions “Depositor”, “Depository Agent” and “Depository Register” shall have the meaningsascribed to them respectively in Section 130A of the Companies Act.
DEFINITIONS
13
References in this Offer Document to Appendix or Appendices are references to an appendix orappendices respectively in this Offer Document.
Any discrepancies in tables included herein between the total sum of amounts listed and the totals shownthereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be anarithmetic aggregation of the figures which precede them.
Words importing the singular shall, where applicable, include the plural and vice versa and wordsimporting the masculine gender shall, where applicable, include the feminine and neuter genders andvice versa. References to persons shall include corporations.
Certain names with Chinese characters have been translated into English names for the convenience ofShareholders. Such translations may not be recognised with the relevant PRC authorities and should notbe construed as representing the Chinese characters. In the event of any inconsistency between theofficial Chinese names and the translated English names, the official Chinese names shall prevail.
Any reference in this Offer Document and the Application Forms to any statue or enactment is areference to that statue or enactment as for the time being amended or re-enacted.
Any word defined under the Companies Act, the SFA, SFR or any statutory modification thereof and usedin this Offer Document and the Application Forms shall, where applicable, have the meaning ascribed toit under the Companies Act, the SFA, SFR or any statutory modification thereto, as the case may be.
Any reference in this Offer Document and the Application Forms to Shares being allotted to an applicantincludes allotment to CDP for the account of that applicant.
Any reference to a time of day in this Offer Document and the Application Forms is a reference toSingapore time unless otherwise stated.
Any reference in this Offer Document to the “Group”, “we”, “our”, “us” or their other grammatical variationsis a reference to our Company, or Group, or any member of our Group, as the context requires.
Any reference to “Professor Lin Xiang Xiong” in this Offer Document is a reference to Professor Lin XiangXiong @ Lin Ye.
DEFINITIONS
14
To facilitate a better understanding of the business of our Group, the following glossary provides adescription of some of the technical terms and abbreviations commonly used in our industry. The termsand their assigned meanings may not correspond to standard industry or common meanings or usage ofthese terms:
“Ag” : The chemical symbol for silver
“alluvial gold” : Gold that is found in the soil or sediments deposited by a river,stream, or other running water and usually takes the form of dust,thin flakes or nuggets
“ALS method ME-OG62” : This method of analysis incorporates hydrofluoric acid to provide a‘near total’ digestion of the sample, with the final determinationbeing made by inductively coupled plasma atomic emissionspectrometry or flame atomic absorption mass spectrometry. Thisprocedure may be used for the analysis of sulfide ores and isparticularly suited for the analysis of skarn deposits and orescontaining chrysacolla and willemite. It is also useful whenknowledge of the major gangue elements is required
“assay sample preparation” : Method by which drill core or other soil/rock samples are reduced insize in order to enable a small sample to be tested in a laboratoryto determine the grade of the mineral of interest; preparationmethods ensure that the small sample that is ultimately tested isrepresentative of the original whole sample
“atomic absorption mass : A spectroanalytical technique for the qualitative and quantitativespectrometry” chemical elements analysis of ore material
“Au” : The chemical symbol for gold
“backhoe” : A piece of excavating equipment consisting of a digging bucket onthe end of a two-part articulated arm
“carbon-in-leach” : A method of recovering gold and silver from ore by simultaneousdissolution and absorption of the precious metals onto fine carbonin an agitated tank of ore solids/solution slurry
“carbon re-generation” : Regeneration of spent activated carbon in an enclosed thermaltreatment device
“Central Belt” : The Central Belt of Peninsular Malaysia which extends fromMalaysia’s borders to Thailand to Johore in the south of thepeninsula and contains base metal and gold mineralisation
“channel samples” : A sample composed of pieces of vein or mineral deposit that havebeen cut out of a small trench or channel, usually about 10centimetres wide and 2 centimetres deep
“concentrate” : A powdery product containing an upgraded mineral contentresulting from initial processing of mined ore to remove some wastematerials. A concentrate is an intermediary product, which wouldstill be subject to further processing, such as smelting, to effectrecovery of metal
“core” : The long cylindrical piece of rock, about an inch in diameter,brought to surface by diamond core drilling
GLOSSARY OF TECHNICAL TERMS
15
“cut-off” : The lowest grade or assay value of ore in a deposit that will recovermining costs; the cut-off grade which determines the workabletonnage of an ore
“deposit” or “mineral deposit” : A body of mineralisation containing a sufficient average grade ofmetal or metals to warrant further exploration and/or developmentexpenditure
“diamond core drilling” : A drilling method where the rock is cut with a diamond bit to extracta core of the rock
“drill anomaly targets” : An indication of concentrations of magnetic minerals for furtherexploration drilling
“eluvial gold” : Gold freed up from the gold source by erosion/weathering andmoved by gravity down slope
“enhanced thematic mapper” : An eight-band multispectral scanning radiometer onboard thesatellite that is capable of providing high-resolution imaginginformation of the earth’s surface
“exploration” : An activity to prove the location, volume and quality of an ore body
“fire assay method” : A type of analytical procedure that involves the heat of a furnaceand a fluxing agent to fuse a sample to collect any precious metals(such as gold) in the sample. The collected material is thenanalysed for gold or other precious metals by weight orspectroscopic methods
“geochemical” : Pertaining to the chemical composition of the Earth
“geological” : Pertaining to the materials of the Earth and structure of thosematerials
“geological mapping” : A tool to communicate or decode information relating to the surfaceof the earth. It is mainly used for the interpretation of the structure,mineralogy, stratigraphy, and paleontology of the earth crust. It isalso used in locating energy resources like petroleum, coal, naturalgas, and geothermal resources and is used for the exploration ofmineral deposits like gold, copper, iron, and construction aggregate
“geological surveying” : It is a modern technology that utilizes the technologicaladvancement of several disciplines of engineering. The geologysurvey techniques include geological and topographic mapping withthe employment of robotic lasers, GPS, laser beams, and othermodern systems
“geophysical” : Matters concerning the physics of the earth and its environment,including the physics of fields such as meteorology, oceanography,and seismology
“GPS” : Global Positioning System; a navigational system involving satellitesand computers that can determine the latitude and longitude of areceiver on earth by computing the time difference for signals fromdifferent satellites to reach the receiver
“gold bullion” : Refined gold in the form of bars
GLOSSARY OF TECHNICAL TERMS
16
“gold doré” : A crude gold, silver bullion, usually produced at the mine site andsent to a refiner where the silver and gold are parted and the goldis refined to commercial-grade gold bullion
“gold-bearing ore dressing” : The cleaning of gold-bearing ore by the removal of certainvalueless portions
“heap leaching” : A method of extracting precious metals from ore. The mined ore isusually crushed into small chunks and heaped on an impermeableplastic and/or clay lined leach pad where it can be irrigated with aleach solution to dissolve the valuable metals. The solution thenpercolates through the heap and reaches both the target and otherminerals. The leach solution containing the dissolved minerals isthen collected, treated in a process plant to recover the targetmineral and in some cases precipitate other minerals, and thenrecycled to the heap after reagent levels are adjusted
“indicated resources” : According to the JORC Code, is such part of mineral resource forwhich tonnage, densities, shape, physical characteristics, grade andmineral content can be estimated with a reasonable level ofconfidence. It is based on exploration, sampling and testinginformation gathered through appropriate techniques from locationssuch as outcrops, trenches, pits, workings and drill holes. Thelocations are too widely or inappropriately spaced to confirmgeological and/or grade continuity but are spaced closely enoughfor continuity to be assumed
“induced polarisation” : A method of geophysical prospecting carried out by passing anelectrical current through the ground and measuring the effect ofrocks and minerals in its path
“inductively coupled plasma : An analytical technique that uses the inductively coupled plasma toatomic emission spectrometry” produce excited atoms and ions that emit electromagnetic radiation
at wavelengths characteristic for the detection of trace metals
“inferred resources” : According to the JORC Code, is such part of mineral resource forwhich tonnage, grade and mineral content can be estimated with alow level of confidence. It is inferred from geological evidence andassumed but not verified geological and/or grade continuity. It isbased on information gathered through appropriate techniques fromlocations such as outcrops, trenches, pits, workings and drill holeswhich may be limited or of uncertain quality and reliability
“ISO” : International Organisation for Standardisation, a worldwidefederation of national standard bodies
“ISO 9000” : A series of international standards primarily concerned with qualitymanagement and quality assurance
“ISO 9001” : A constituent part of the ISO 9000 series which specifies therequirements for a quality management system for any organisationthat needs to demonstrate its ability to consistently provideproducts that meet customer and applicable requirements and aimto enhance customer satisfaction
GLOSSARY OF TECHNICAL TERMS
17
“ISO/IEC 17025” : A main standard used by testing and calibration laboratories. Itspecifies the general requirements for the competence to carry outtests and/or calibrations, including sampling and covers testing andcalibration performed using standard methods, non-standardmethods, and laboratory-developed methods. Laboratories useISO/IEC 17025 to implement a quality system aimed at improvingtheir ability to consistently produce valid results. It is also the basisfor accreditation from an accreditation body and is a formalrecognition of a demonstration of competence in accuracy andreliability of the tests and calibrations performed in laboratory
“leaching vat” : A vat containing gold extraction solution used for separating thedesired metals from the ore
“measured resources” : According to the JORC Code, is such part of mineral resource forwhich tonnage, densities, shape, physical characteristics, grade andmineral content can be estimated with a high level of confidence. Itis based on detailed and reliable exploration, sampling and testinginformation gathered through appropriate techniques from locationssuch as outcrops, trenches, pits, workings and drill holes. Thelocations are spaced closely enough to confirm geological andgrade continuity
“metallurgy studies” : The science and technology of metals; usually pertaining to theprocessing and extraction of metals and minerals from ores inmining
“mineral processing” : The treatment of mineral products into concentrate
“mineral resource” : A concentration or occurrence of material of intrinsic economicinterest in and on the earth’s crust in such form, quality andquantity that there are reasonable prospects for economicextraction. The location, quantity, grade, geological characteristicsand continuity of a resource are known, estimated or interpretedfrom specific geological evidence and knowledge.
“mineralisation” : Any single mineral or combination of minerals occurring in a mass,or deposit, of economic interest. It covers all forms in whichmineralisation might occur, whether by class of deposit, mode ofoccurrence, genesis or composition
“mining dilution” : The reduction of grade for mined ore due to the inclusion of wastematerial in the mined ore
“ore” : A type of rock that contains mineral that can be mined for sale
“Pb” : The chemical symbol for lead
“primary gold” : Gold which is extracted from hard rock mining
“pulp” : A mixture of crushed ore and water
“reconnaissance mapping” : A general, exploratory examination or survey of the main featuresof a region, usually preliminary to a more detailed survey
GLOSSARY OF TECHNICAL TERMS
18
“reverse circulation drilling” : A drilling method that produces rock chips instead of core. The rockchips are forced by air to surface through a double-walled drill pipeand are collected for examination
“siltation” : A build-up of silt that is suspended in rivers or other bodies of water
“smelting” : A metallurgical thermal processing operation in which the metal ormatte is separated in fused form from nonmetallic materials or otherundesired metals with which it is associated
“trenches” : A long, narrow excavation dug through overburden, or blasted outof rock, to expose a vein or ore structure
“vat leaching” : A method of extracting precious metals from ore. Vat leachinginvolves contacting ore which has usually undergone size reductionand classification, with leach solution in large tanks or vats
“Zn” : The chemical symbol for zinc
GLOSSARY OF TECHNICAL TERMS
19
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
20
All statements contained in this Offer Document, statements made in press releases and oral statementsthat may be made by the Vendors, us or our Directors, Executive Officers or employees acting on ourbehalf, that are not statements of historical fact, constitute “forward-looking statements”. You can identifysome of these forward-looking statements by terms such as “expects”, “believes”, “plans”, “intends”,“estimates”, “anticipates”, “may”, “will”, “would” and “could” or similar words. However, you should notethat these words are not the exclusive means of identifying forward-looking statements. All statementsregarding our expected financial position, business strategies, plans and prospects are forward-lookingstatements.
These forward-looking statements, including without limitation, include statements as to the following:
(a) our revenue and profitability;
(b) expected growth in demand;
(c) expected industry trends;
(d) anticipated expansion plans; and
(e) other matters discussed in this Offer Document regarding matters that are not historical fact,
are only predictions. These forward-looking statements involve known and unknown risks, uncertaintiesand other factors that may cause our actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expected, expressed or implied by theseforward-looking statements. These risks, uncertainties and other factors include, among others:
(a) changes in political, social and economic conditions and the regulatory environment in which weconduct business;
(b) our anticipated growth strategies and expected internal growth;
(c) changes in the availability and prices of utilities and supplies which we require for the operation ofour business;
(d) changes in competitive conditions and our ability to compete under such conditions;
(e) changes in our future capital needs and the availability of financing and capital to fund such needs;
(f) changes in currency exchange rates; and
(g) other factors beyond our control.
Some of these risk factors are discussed in more detail under the section entitled “Risk Factors” of thisOffer Document. All forward-looking statements by or attributable to us or persons acting on our behalf,contained in this Offer Document are expressly qualified in their entirety by such factors.
Given the risks and uncertainties that may cause our actual future results, performance or achievementsto be materially different from that expected, expressed or implied by the forward-looking statements inthis Offer Document, undue reliance must not be placed on these statements which apply only as at thedate of this Offer Document. Neither our Company, the Vendors, the Manager and Sponsor, the JointPlacement Agents, nor any other person represents or warrants that our Group’s actual future results,performance or achievements will be as discussed in those statements.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
Our actual results may differ materially from those anticipated in these forward-looking statements as aresult of the risks faced by us. We, the Vendors, the Manager and Sponsor and the Joint PlacementAgents, disclaim any responsibility to update any of those forward-looking statements or publiclyannounce any revisions to those forward-looking statements to reflect future developments, events orcircumstances. We are, however, subject to the provisions of the SFA and the Catalist Rules regardingcorporate disclosure. In particular, pursuant to Section 241 of the SFA, if after the registration of the OfferDocument but before the close of the Placement, our Company becomes aware of (a) a false ormisleading statement or matter in the Offer Document; (b) an omission from the Offer Document of anyinformation that should have been included in it under Section 243 of the SFA; or (c) a new circumstancethat has arisen since the Offer Document was lodged with the SGX-ST and would have been required bySection 243 of the SFA to be included in the Offer Document if it had arisen before the Offer Documentwas lodged and that is materially adverse from the point of view of an investor, our Company may lodgea supplementary or replacement offer document with the SGX-ST, acting as agent on behalf of theAuthority.
21
SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/orpurchase our Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawfulor is not authorised or to any person to whom it is unlawful to make such offer, solicitation or invitation.No action has been or will be taken under the requirements of the legislation or regulations of, or of thelegal or regulatory requirements of any jurisdiction, except for the filing and/or registration of this OfferDocument in Singapore in order to permit a public offering of our Placement Shares and the publicdistribution of this Offer Document in Singapore. The distribution of this Offer Document and the offeringof our Placement Shares in certain jurisdictions may be restricted by the relevant laws in suchjurisdictions. Persons who may come into possession of this Offer Document are required by ourCompany, the Vendors, the Manager and Sponsor and the Joint Placement Agents to inform themselvesabout, and to observe and comply with, any such restrictions at their own expense and without liability tous, the Vendors, the Manager and Sponsor as well as the Joint Placement Agents.
22
DETAILS OF THE PLACEMENT
23
LISTING ON CATALIST
A copy of this Offer Document has been lodged with the SGX-ST, acting as agent on behalf of theAuthority. The registration of this Offer Document by the SGX-ST, acting on behalf of the Authority doesnot imply that the SFA, the Catalist Rules or any other legal or regulatory requirements, have beencomplied with. We have not lodged this Offer Document in any other jurisdiction.
We have made an application to the SGX-ST for permission to deal in, and for quotation of, all ourShares already issued (including the Vendor Shares), the New Shares which are the subject of thePlacement, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Such permissionwill be granted when we have been admitted to Catalist. Acceptance of applications will be conditionalupon, inter alia, the issue of the New Shares and permission being granted by the SGX-ST for the listingand quotation of all our existing issued Shares (including the Vendor Shares), the New Shares, the PPCFShares, the Employee Shares and the Award Shares on Catalist. If the admission, listing and trading ofour Shares already issued (including the Vendor Shares) and the New Shares do not proceed or the saidpermission is not granted for any reason, monies paid in respect of any application accepted will bereturned, without interest or any share of revenue or other benefit arising therefrom and at the applicant’sown risk, and the applicant will not have any claim against us, the Vendors, the Manager and Sponsorand the Joint Placement Agents. No Shares will be allotted on the basis of this Offer Document later thansix (6) months after the date of registration of this Offer Document by the SGX-ST, acting as agent onbehalf of the Authority.
Companies listed on Catalist may carry higher investment risk when compared with larger or moreestablished companies listed on the SGX-ST Main Board. In particular, companies may list on Catalistwithout a track record of profitability and there is no assurance that there will be a liquid market in theshares or units of shares traded on Catalist. You should be aware of the risks of investing in suchcompanies and should make the decision to invest only after careful consideration and, if appropriate,consultation with your professional adviser(s).
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document.Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document,including the correctness of any of the statements or opinions made or reports contained in this OfferDocument. The SGX-ST does not normally review the application for admission to Catalist but relies onthe Sponsor confirming that our Company is suitable to be listed and complies with the Catalist Rules.Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares or units ofShares being offered for investment.
Admission to Catalist is not to be taken as an indication of the merits of the Placement, our Company,our subsidiaries, our existing issued Shares (including the Vendor Shares), the New Shares, the PPCFShares, the Employee Shares or the Award Shares.
We are subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure. Inparticular, if after the registration of this Offer Document but before the close of the Placement, webecome aware of:
(a) a false or misleading statement or matter in the Offer Document;
(b) an omission from the Offer Document of any information that should have been included in it underSection 243 of the SFA; or
(c) a new circumstance that has arisen since the Offer Document was lodged with the SGX-ST, actingas agent on behalf of the Authority and would have been required by Section 243 of the SFA to beincluded in the Offer Document if it had arisen before this Offer Document was lodged,
that is materially adverse from the point of view of an investor, we may lodge a supplementary orreplacement offer document with the SGX-ST, acting as agent on behalf of the Authority.
DETAILS OF THE PLACEMENT
In the event that a supplementary or replacement offer document is lodged with the SGX-ST, thePlacement shall be kept open for at least 14 days after the lodgement of such supplementary orreplacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document, applications havebeen made under this Offer Document to subscribe for and/or purchase the Placement Shares and:
(a) where the Placement Shares have not been issued and/or transferred to the applicants, ourCompany and the Vendors shall:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement offer document, give the applicants noticein writing of how to obtain, or arrange to receive, a copy of the supplementary orreplacement offer document, and provide the applicants with an option to withdraw theirapplications and take all reasonable steps to make available within a reasonable period thesupplementary or replacement offer document to the applicants who have indicated that theywish to obtain, or have arranged to receive, a copy of the supplementary or replacementoffer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement offerdocument, give the applicants the supplementary or replacement offer document, as thecase may be, and provide the applicants with an option to withdraw their applications; or
(iii) treat the applications as withdrawn and cancelled, in which case the applications shall bedeemed to have been withdrawn and cancelled, and our Company (and on behalf of theVendors) shall return all monies paid in respect of any application, without interest or anyshare of revenue or other benefit arising therefrom and at the applicants’ own risk; or
(b) where the Placement Shares have been issued and/or transferred to the applicants, our Companyand the Vendors shall:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date oflodgement of the supplementary or replacement offer document, give the applicants noticein writing of how to obtain, or arrange to receive, a copy of the supplementary orreplacement offer document, and provide the applicants with an option to withdraw theirapplications, and take all reasonable steps to make available within a reasonable period thesupplementary or replacement offer document to the applicants who have indicated that theywish to obtain, or have arranged to receive, a copy of the supplementary or replacementoffer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement offerdocument, give the applicants the supplementary or replacement offer document, as thecase may be, and provide the applicants with an option to return to our Company and/or theVendors, the Placement Shares, which they do not wish to retain title in; or
(iii) treat the issue and/or sale of the Placement Shares as void, in which case the issue and/orsale shall be deemed void and our Company (and on behalf of the Vendors) shall return allmonies paid in respect of any application, without interest or any share of revenue or otherbenefit arising therefrom and at the applicants’ own risk.
Any applicant who wishes to exercise his option under paragraph (a)(i) or (a)(ii) to withdraw hisapplication shall, within 14 days from the date of lodgement of the supplementary or replacement offerdocument, notify our Company of this, whereupon our Company (and on behalf of the Vendors) shall,within seven (7) days from the receipt of such notification, return the application monies without interestor any share of revenue or other benefit arising therefrom and at his own risk, and he will not have anyclaim against our Company, the Vendors, the Manager and Sponsor or the Joint Placement Agents.
24
DETAILS OF THE PLACEMENT
25
An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the PlacementShares allocated and/or issued to him shall, within 14 days from the date of lodgement of thesupplementary or replacement offer document, notify our Company of this and return all documents, ifany, purporting to be evidence of title to those Placement Shares to our Company, whereupon ourCompany (and on behalf of the Vendors) shall, within seven (7) days from the receipt of such notificationand documents, if any, pay to him all monies paid by him for those Placement Shares, without interest orany share of revenue or other benefit arising therefrom and at his own risk, and the allocation and/orissue of those Placement Shares shall be deemed to be void, and he will not have any claim against ourCompany, the Vendors, the Manager and Sponsor and the Joint Placement Agents.
Pursuant to Section 242 of the SFA, the Authority may, in certain circumstances issue a stop order (the“Stop Order”) to our Company, directing that no Shares or no further Shares to which this OfferDocument relates, be allotted or issued. Such circumstances will include a situation where this OfferDocument (i) contains any statement or matter which, in the Authority’s opinion, is false or misleading, (ii)omits any information that should have been included in it under the SFA, or (iii) does not, in theAuthority’s opinion, comply with the requirements of the SFA.
In the event that the Authority issues a Stop Order and applications to subscribe for and/or purchase thePlacement Shares have been made prior to the Stop Order, then:
(a) where the Placement Shares have not been issued and/or transferred to the applicants, theapplications for the Placement Shares shall be deemed to have been withdrawn and cancelled andour Company (and on behalf of the Vendors) shall, within 14 days from the date of the Stop Order,pay to the applicants all monies the applicants have paid on account of their applications for thePlacement Shares; or
(b) where the Placement Shares have been issued and/or transferred to the applicants, the issue ofthe Placement Shares shall be deemed to be void and our Company (and on behalf of theVendors) shall, within 14 days from the date of the Stop Order, pay to the applicants all moniespaid by them for the Placement Shares.
Such monies paid in respect of an application will be returned to the applicants at their own risk, withoutinterest or any share of revenue or other benefit arising therefrom, and they will not have any claimsagainst our Company, the Vendors, the Manager and Sponsor and the Joint Placement Agents.
If our Company is required by applicable Singapore laws to cancel issued and/or allocated PlacementShares and repay application monies to applicants (including instances where a stop order under theSFA is issued), subject to compliance with the Companies Act, our Company will purchase thePlacement Shares at the Placement Price.
This Offer Document has been seen and approved by our Directors and the Vendors and they individuallyand collectively accept full responsibility for the accuracy of the information given in this Offer Documentand confirm, after making all reasonable enquiries, that to the best of their knowledge and belief, thisOffer Document constitutes full and true disclosure of all material facts about the Placement, ourCompany and its subsidiaries, and the Directors and the Vendors are not aware of any facts the omissionof which would make any statement in this Offer Document misleading. Where information in this OfferDocument has been extracted from published or otherwise publicly available sources or obtained from anamed source, the sole responsibility of the Directors and the Vendors has been to ensure that suchinformation has been accurately and correctly extracted from those sources and/or reproduced in theOffer Document in its proper form and context.
Neither our Company, the Vendors, the Manager and Sponsor, the Joint Placement Agents nor any otherparties involved in the Placement is making any representation to any person regarding the legality of aninvestment by such person under any investment or other laws or regulations. No information in this OfferDocument should be considered as being business, legal or tax advice regarding an investment in ourShares. Each prospective investor should consult his own professional or other advisers for business,legal or tax advice regarding an investment in our Shares.
DETAILS OF THE PLACEMENT
No person has been or is authorised to give any information or to make any representation not containedin this Offer Document in connection with the Placement and, if given or made, such information orrepresentation must not be relied upon as having been authorised by us, the Vendors, the Manager andSponsor and the Joint Placement Agents. Neither the delivery of this Offer Document and the ApplicationForms nor any documents relating to the Placement, nor the Placement shall, under any circumstances,constitute a continuing representation or create any suggestion or implication that there has been nochange in our affairs or in the statements of fact or information contained in this Offer Document sincethe date of this Offer Document. Where such changes occur and are material or are required to bedisclosed by law, the SGX-ST and/or any other regulatory or supervisory body or agency, we may makean announcement of the same to the SGX-ST and/or the Authority and/or the public and if required, wemay lodge a supplementary or replacement offer document with the SGX-ST and will comply with therequirements of the SFA and/or any other requirements of the SGX-ST and/or Authority. All applicantsshould take note of any such announcements and, upon the release of such an announcement, shall bedeemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promiseor representation as to our future performance or policies. The Placement Shares are offered forsubscription and/or purchase solely on the basis of the information contained and representations madein this Offer Document.
This Offer Document has been prepared solely for the purpose of the Placement and may not be reliedupon by any other persons other than the applicants in connection with their application for thePlacement Shares or for any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation of the PlacementShares in any jurisdiction in which such offer, solicitation or invitation is unlawful or unauthorisednor does it constitute an offer, solicitation or invitation to any person to whom it is unlawful tomake such offer, solicitation or invitation.
Copies of this Offer Document and the Application Forms may be obtained on request, subject toavailability during office hours, from:
PrimePartners Corporate Finance Pte. Ltd. Asiasons WFG Securities Pte Ltd20 Cecil Street 5 Shenton Way
#21-02 Equity Plaza #28-01 UIC BuildingSingapore 049705 Singapore 068808
A copy of this Offer Document is also available on the SGX-ST website http://www.sgx.com.
The Placement will be open from 18 October 2011 (immediately upon the registration of the OfferDocument by the SGX-ST, acting as agent on behalf of the Authority (the “Registration”)) to 25October 2011.
The Application List will open immediately upon the Registration and will remain open until 12.00noon on 25 October 2011 or for such further period or periods as our Directors and the Vendorsmay, in consultation with the Manager and Sponsor and the Joint Placement Agents, in theirabsolute discretion decide, subject to any limitation under all applicable laws and regulations. Inthe event a supplementary offer document or replacement offer document is lodged with theSGX-ST, acting as agent on behalf of the Authority, the Application List will remain open for atleast 14 days after the lodgement of the supplementary or replacement offer document.
Details of the procedures for application of the Placement Shares are set out in Appendix I of thisOffer Document.
26
INDICATIVE TIMETABLE FOR LISTING
An indicative timetable on the trading of our Shares is set out below:
Indicative date/time Event
18 October 2011(immediately upon Registration) Open of Placement
25 October 2011, 12.00 noon Close of Application List
28 October 2011, 9.00 a.m. Commence trading on a “ready” basis
2 November 2011 Settlement date for all trades done on a “ready” basison 28 October 2011
The above timetable is only indicative as it assumes that the date of closing of the Application List will beon 25 October 2011, the date of admission of our Shares to Catalist will be 28 October 2011, theshareholding spread requirement of the SGX-ST will be complied with and the New Shares will be issuedand fully paid-up prior to 28 October 2011.
The above timetable and procedures may be subject to such modification(s) as the SGX-ST may, in itsabsolute discretion, decide, including the commencement of trading on a “ready” basis and thecommencement date of such trading.
In the event of any changes in the closure of the Application List or the time period during which thePlacement is open, we will publicly announce the same:
(i) through a SGXNET announcement to be posted on the Internet at the SGX-ST websitehttp://www.sgx.com; and
(ii) in a local English language newspaper(s).
We will publicly announce the level of subscription and purchase and the results of the distribution of thePlacement Shares pursuant to the Placement, as soon as it is practicable after the close of theApplication List through channels in (i) and (ii) above.
You should consult the SGX-ST’s announcement on the “ready” trading date released on theInternet (at the SGX-ST website http://www.sgx.com) or the newspapers, or check with yourbrokers on the date on which trading on a “ready” basis will commence.
27
PLAN OF DISTRIBUTION
The Placement is for 41,100,000 Placement Shares offered in Singapore and the Listing is managed andsponsored by PPCF.
Prior to the Placement, there has been no public market for our Shares. The Placement Price isdetermined by us and the Vendors in consultation with the Manager and Sponsor and the JointPlacement Agents, taking into account, inter alia, prevailing market conditions and the estimated marketdemand for the Placement Shares, determined through a book-building process. The Placement Price isthe same for all the Placement Shares and is payable in full on application.
Pursuant to the Management Agreement entered into between us, the Vendors and PPCF as set out inthe section entitled “General and Statutory Information – Management and Placement Arrangements” ofthis Offer Document, we and the Vendors have appointed PPCF and PPCF has agreed to manage and toact as the full sponsor for the Listing. PPCF will receive a management fee from our Company for itsservices rendered in connection with the Listing.
The Placement Shares are made available to retail and institutional investors in Singapore who mayapply through their brokers or financial institutions by way of the Application Forms. Application for thePlacement Shares may only be made by way of the Application Forms. The terms, conditions andprocedures for application and acceptance are set out in Appendix I of this Offer Document entitled“Terms, Conditions and Procedures for Application and Acceptance”.
Pursuant to the Placement Agreement entered into between us, the Vendors and the Joint PlacementAgents, we have appointed PPCF and Asiasons WFG as the Joint Placement Agents and PPCF andAsiasons WFG have agreed to procure subscribers and/or purchasers for the Placement Shares for aplacement commission of 3.0% of the aggregate Placement Price for each Placement Share, payable byour Company and the Vendors in the proportion in which the Placement Shares are offered by theVendors and our Company pursuant to the Placement. Subject to any applicable laws and regulations,our Company agrees that PPCF and Asiasons WFG may, at their absolute discretion, appoint one ormore sub-placement agents under the Placement Agreement upon such terms and conditions as PPCFand Asiasons WFG may deem fit.
In the event the Joint Placement Agents receive valid applications and payment for less than 90%of the Placement Shares by 12 noon on 24 October 2011 (or such later date and time as may bedecided by the Joint Placement Agents), each of the Joint Placement Agents shall have the rightto terminate the Placement Agreement (by notice in writing to the Company and the Vendors). Inthat event, our Company reserves the right, in our absolute discretion, to cancel the Placement,upon which all application monies will be returned to subscribers and/or purchasers withoutinterest or any share of revenue or other benefit arising therefrom and at their own risk, andsubscribers and/or purchasers will not have any claim against our Company, the Vendors, theManager and Sponsor and the Joint Placement Agents.
Subscribers and/or purchasers of the Placement Shares may be required to pay brokerage or sellingcommission of 1.0% of the Placement Price (and the prevailing goods and services tax thereon, ifapplicable) to the Joint Placement Agents or any sub-placement agent that may be appointed by theJoint Placement Agents.
None of our Directors or Substantial Shareholders intends to subscribe for and/or purchase thePlacement Shares. As far as we are aware, none of our Independent Directors, the members of ourCompany’s management or employees intends to subscribe for and/or purchase more than 5.0% of thePlacement Shares in the Placement.
To the best of our knowledge and belief, as at the date of this Offer Document, we are not aware of anyperson who intends to subscribe for and/or purchase more than 5.0% of the Placement Shares. However,through a book-building process to assess market demand for our Shares, there may be person(s) whomay indicate an interest to subscribe for and/or purchase Shares amounting to more than 5.0% of thePlacement Shares. If such person(s) were to make an application for more than 5.0% of the Placement
28
PLAN OF DISTRIBUTION
Shares pursuant to the Placement and are subsequently allotted and/or allocated such number ofShares, we will make the necessary announcements at an appropriate time. The final allotment andallocation of Shares will be in accordance with the shareholding spread and distribution guidelines as setout in Rule 406 of the Catalist Rules.
No Shares shall be issued and allotted and/or allocated on the basis of this Offer Document later than six(6) months after the date of registration of this Offer Document.
INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled “Generaland Statutory Information – Management and Placement Arrangements” of this Offer Document, ourCompany does not have any material relationship with the Manager and Sponsor and Joint PlacementAgent, PPCF, in relation to the Placement:
(a) PPCF is the Manager and Sponsor and Joint Placement Agent in relation to the Listing;
(b) PPCF will be the continuing Sponsor of our Company for a period of three (3) years from the dateour Company is admitted and listed on Catalist; and
(c) Pursuant to the Management Agreement and as part of PPCF’s fees as the Manager and Sponsor,our Company issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of theissued and paid-up share capital of our Company prior to the Placement, at the Placement Pricefor each Share. After completion of the relevant moratorium periods as set out in the section“Shareholders – Moratorium” of this Offer Document, PPCF will dispose of its shareholding interestin our Company at its discretion.
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled “Generaland Statutory Information – Management and Placement Arrangements” of this Offer Document, ourCompany does not have any material relationship with the other Joint Placement Agent, Asiasons WFG,in relation to the Placement:
(a) Asiasons WFG is the Joint Placement Agent in relation to the Listing; and
(b) Asiasons WFG’s parent company, Asiasons WFG Financial Ltd, a company listed on the MainBoard of the SGX-ST, is the sole shareholder of Raintree Strategic Consultancy Limited whichholds 6,262,500 Shares representing approximately 1.55% of the post-Placement issued and paid-up share capital of our Company.
29
OFFER DOCUMENT SUMMARY
30
The following summary is qualified in its entirety by, and is subject to, the more detailed information(including the notes thereto) appearing elsewhere in this Offer Document. Terms defined elsewhere inthis Offer Document have the same meaning when used herein. You should carefully consider all theinformation presented in this Offer Document, particularly the matters set out in the section entitled “RiskFactors” of this Offer Document before deciding to invest in our Shares.
OUR COMPANY
On 11 August 2011, our Company was incorporated in Singapore under the Companies Act as a privatecompany limited by shares under the name of CNMC Goldmine Holdings Pte. Ltd.. Our Companyregistration number is 201119104K.
Pursuant to the Restructuring Exercise as described in the section entitled “Restructuring Exercise” in thisOffer Document, our Company became the holding company of our Group on 14 October 2011.
OUR BUSINESS
We are principally engaged in the business of exploration and mining of gold and the processing ofmined ore into gold doré for subsequent sale.
A detailed discussion of our business and the products and services we provide is set out in the sectionentitled “General Information on our Company and our Group - Business Overview” of this OfferDocument.
SUMMARY OF OUR FINANCIAL INFORMATION
The following summary financial data should be read in conjunction with the full text of this OfferDocument, including the section entitled “Management’s Discussion and Analysis of Results ofOperations and Financial Position” of this Offer Document and the “Combined Financial Statements forthe years ended 31 December 2008, 2009 and 2010” as set out in Appendix A of this Offer Documentand the “Unaudited Condensed Interim Combined Financial Information for the three months ended 31March 2011” as set out in Appendix B of this Offer Document.
Audited Unaudited
(US$) FY2008 FY2009 FY2010 1Q2010 1Q2011
Revenue – – 530,169 – 537,320
Loss before income tax (991,053) (1,080,874) (2,289,475) (705,056) (683,189)
Loss for the year/period (991,233) (1,080,880) (1,930,630) (705,056) (668,655)
Loss attributable to:
Owners of the Company (990,166) (1,079,681) (1,737,550) (637,428) (632,835)
(i) For comparative purposes, loss per share for the period under review have been calculated based on loss attributable toowners of the Company and the pre-Placement share capital of 380,793,000 Shares.
(ii) For comparative purposes, loss per share for the period under review have been calculated based on loss attributable toowners of the Company and the post-Placement share capital of 404,693,000 Shares.
OFFER DOCUMENT SUMMARY
31
Audited Unaudited(US$) 31 December 2010 As at 31 March 2011
Non-current assets 6,315,049 7,144,965
Current assets 1,776,582 1,089,492
Total assets 8,091,631 8,234,457
Non-current liabilities 3,163,552 1,213,595
Current liabilities 2,362,815 5,125,724
Total liabilities 5,526,367 6,339,319
Net Assets 2,565,264 1,895,138
Total equity 2,565,264 1,895,138
Total liabilities and equity 8,091,631 8,234,457
NAV per Share (US cents) (1) 0.67 0.50
Notes:
(1) NAV per Share is computed based on the net asset value of our Group and our pre-Placement share capital of 380,793,000Shares.
OUR COMPETITIVE STRENGTHS
Our Directors believe that our competitive strengths are as follows:
� The availability of high grade gold-bearing ore in Sokor Block
� There is considerable exploration upside potential within Sokor Block and Sokor Gold Zone tolocate additional gold resources
� Our Sokor Gold Project and the ore processing facility of our Group are both located close tourban facilities enabling our Group to save in both hiring and transportation costs as well asminimise investment costs in building supporting infrastructure
� We have established strong working relationships with our Chinese contractors and/or consultants
� We have established strong relationships with our stakeholders and local communities
A detailed discussion of our competitive strengths is set out in the section entitled “General Informationon our Company and our Group - Competitive Strengths” of this Offer Document.
OUR PROSPECTS
Our Directors believe that the prospects of our Group are encouraging for the following reasons:
� Continued world demand for gold as it remains a sought-after asset
� Positive price outlook for gold as gold price levels are expected to continue its upward trend
OFFER DOCUMENT SUMMARY
OUR BUSINESS STRATEGIES AND FUTURE PLANS
Our business strategies and future plans for the continued growth of our business are as follows:
� Expansion of our gold extraction facilities by commissioning a heap leach facility
� Focus on further resource definition and continuing exploration activities to identify new goldmineralisation
� Increasing our ore processing capacity by undertaking a feasibility study to construct a goldcarbon-in-leach plant
� Exploration and mining for other minerals such as silver, lead and zinc
� Expansion of our business through acquisitions, joint ventures and strategic alliances
A detailed discussion of our prospects, business strategies and future plans is set out in the sectionentitled “General Information on our Company and our Group – Prospects” and “General Information ofour Company and our Group - Business Strategies and Future Plans” of this Offer Document.
OUR CONTACT DETAILS
Our Company’s registered office is located at 5 Shenton Way, #11-03 UIC Building, Singapore 068808and our principal place of business is located at 5 Shenton Way, #11-03 UIC Building, Singapore 068808.Our Company’s telephone number is +65 6220 4621 and our facsimile number is +65 6220 1270.Information contained in our website does not constitute part of this Offer Document.
32
THE PLACEMENT
Placement Price : S$0.40 for each Placement Share, payable in full on application.
The New Shares, upon issue and allotment, will rank pari passu in allrespects with the existing issued Shares.
The Placement : The Placement comprises a placement of 41,100,000 PlacementShares at the Placement Price, subject to and on the terms andconditions of this Offer Document.
Purpose of the : The purpose of the Placement is to secure the admission of our Placement Company to Catalist. Our Directors consider that the listing and
quotation of our Shares on Catalist will enhance our public image locallyand overseas and enable us to tap the capital markets for the expansionof our business operations.
The Placement will also provide the members of the public, ourmanagement, employees and business associates who havecontributed to our success with an opportunity to participate in theequity of our Company. In addition, the proceeds of the issue of the NewShares will also provide us with, inter alia, additional working capital tofinance our business expansion.
Listing Status : Prior to the Listing, there had been no public market for our Shares. OurShares will be quoted on Catalist, subject to admission of our Companyto Catalist and permission for dealing in, and for quotation of, ourShares being granted by the SGX-ST.
Risk Factors : Investing in our Shares involves risks which are described in the sectionentitled “Risk Factors” of this Offer Document.
Use of Proceeds : Please refer to the section entitled “Use of Proceeds and ListingExpenses” of this Offer Document for more details.
33
EXCHANGE RATES
The following table sets out, for each of the financial years or periods indicated, the average and closingexchange rates for US$/S$. Where applicable, the exchange rates in the below table are used for thetranslation of our Group’s financial statements disclosed elsewhere in this Offer Document.
US$ / S$1
Average Closing
FY2008 0.7073 0.6949
FY2009 0.6881 0.7125
FY2010 0.7340 0.7780
1Q2010 0.7129 0.7150
1Q2011 0.7831 0.7925
The table below sets forth the highest and lowest exchange rates between US$ and S$ for each of thepast six (6) months prior to the Latest Practicable Date and for the period from 1 September 2011 up tothe Latest Practicable Date, and how much US$ can be bought with one S$.
US$ / S$1
Month High Low
March 2011 0.7939 0.7767
April 2011 0.8182 0.7913
May 2011 0.8184 0.7978
June 2011 0.8154 0.8032
July 2011 0.8337 0.8103
August 2011 0.8333 0.8140
1 September 2011 to Latest Practicable Date 0.8317 0.7992
As at the Latest Practicable Date, the exchange rate between US$ and S$ was US$0.8039 to S$1.00.
Notes:
(1) The above exchange rates have been calculated with reference to exchange rates quoted from www.oanda.com and shouldnot be construed as representation that the US$ amounts actually represent such amounts or could be converted into the S$at the rate indicated, or at any other rate, or at all.
(2) Oanda Corporation has not consented to the inclusion of the above information in this Offer Document for the purpose ofSection 249 of the SFA and is therefore not liable for the relevant information under Sections 253 and 254 of the SFA. Whileour Directors have taken reasonable action to ensure that the information is extracted accurately and fairly, and has beenincluded in this Offer Document in its proper form and context, they have not independently verified the accuracy of therelevant information.
34
RISK FACTORS
You should evaluate carefully each of the following risk factors and all of the other information set forth inthis Offer Document before deciding to invest in our Shares. Some of the following considerations relateprincipally to the industry in which we operate and our business in general. Other considerations relateprincipally to general social, economic, political and regulatory conditions, the securities market andownership of our Shares, including possible future dilution in the value of our Shares.
You should also note that certain of the statements set forth below constitute “forward-lookingstatements” that involve risks and uncertainties. If any of the following risk factors and uncertaintiesdevelops into actual events, our business, financial condition or results of operations or cash flows couldbe materially and adversely affected. In such circumstances, the trading price of our Shares could declinedue to any of these risk factors, and you may lose all or part of your investment. To the best of ourDirectors’ belief and knowledge, all the risk factors that are material to investors in making an informedjudgement have been set out below.
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY
We may not be able to discover new gold reserves to maintain a commercially viable miningoperation
As indicated in the BDA Technical Report, our current total gold reserves estimate is 989,000t, of whichproved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900oz and probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au with contained goldof 46,400 oz as at June 2010 (“Current Gold Ore Reserves”). Based on the planned productionschedule for our mining operations, it is expected that the mining of these Current Gold Ore Reserves willbe completed by us in 2012. While we are continuously conducting exploration activities, however there isno assurance that these exploration activities will result in the discovery of new mineable reserves. Inaddition, even if a viable deposit is discovered, it may require substantial capital expenditure and timefrom the initial phases of exploration until production commences during which the capital cost andeconomic feasibility may change. Furthermore, actual results upon production may differ from thoseanticipated at the time of the discovery. In order to maintain gold production beyond the life of our CurrentGold Ore Reserves, other than through acquisitions, additional gold reserves must be identified either toextend the life of the existing mines or justify the development of new projects. In the event that ourexploration programmes do not result in the replacement of such gold reserves or result in newcommercially viable mining operation beyond the Current Gold Ore Reserves identified, this could havean adverse impact on the future operations, results and growth of our Group.
We have a limited operating history
Our Group was only established in 2006 and has a limited history upon which to assess its futureexpected performance. Although our management and technical staff possess the relevant experienceand expertise in gold mining development and production where the Executive Director and ChiefExecutive Officer, Lim Kuoh Yang, has 11 years of experience in the mining industry and the ChiefGeologist, Professor Yang Mu, has a Doctorate Degree in Geosciences and Environment School as wellas a post-doctoral research in Guangzhou Institute of Geochemistry and has been involved in some goldmining projects since 1994, there is no assurance that the growth and future performance of our Groupwill be successful. The failure of our Group to generate revenue and profits from its gold mining activitiescould have an adverse impact on the development of and future production from our Group’s concessionareas, which in turn could have an adverse effect on the financial condition and results of operations ofour Group.
Our business, revenues and profits are affected by the volatility of prices for gold and the globaleconomy
Our results will be highly sensitive to changes in the prices of gold. Gold prices fluctuate and are affectedby numerous factors, including expectations with respect to the rate of inflation, exchange rates, interestrates, global and regional political and economic crises and governmental policies with respect to goldholdings by central banks. The demand for and supply of gold affect gold prices but not necessarily in thesame manner as demand and supply affect the prices of other commodities. The supply of gold consistsof a combination of mine production and existing stocks of bullion and fabricated gold held bygovernments, public and private financial institutions, industrial organisations and private individuals. Thedemand for gold consists primarily of jewellery and investment demand.
35
RISK FACTORS
36
Our business, financial condition and results are dependent upon the prices of, and demand for, gold,and also the global economy. Declines in gold prices and any economic downturn may adversely affectour business, revenues and profits. Our profitability is, and will largely be determined by the differencebetween the prices received for gold that our Group produces and the costs of developing, producing andselling the gold produced. Historically, international prices for gold have fluctuated widely in response tochanges in many factors. Our Group does not and will not have control over the factors affectinginternational prices for gold. These factors include:
(a) global and regional political developments in gold producing regions;
(b) the ability of the gold producing nations to set and maintain gold production levels and prices;
(c) other actions taken by major gold producing or consuming countries;
(d) global and regional supply and demand for gold;
(e) competition from other energy sources;
(f) domestic and foreign government regulations; and
(g) global and regional economic conditions.
We expect that there may be continued volatility and uncertainty in international prices for gold in thefuture, and accordingly, our revenue and profit in any financial reporting period may be subject tosignificant volatility.
Our actual operating costs may differ significantly from estimates
The operating costs of our Group are based on certain estimates and assumptions with respect to themethod and timing of mining activities. By their nature, these estimates and assumptions are subject tosignificant uncertainties and the actual costs may materially differ from these estimates and assumptions.Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will berealised in practice and in the event that our Group has underestimated our operating costs, our financialcondition and results of operations will be adversely affected.
Our actual ore processing capacity may differ significantly from management’s expectations ofthe processing capacity
The ore processing capacity of our Group is based on certain estimates and assumptions, which include,inter alia, the construction of a heap leach facility in the fourth quarter of FY2011, the processingcapacity of each heap leach pad and the time taken for each ore processing cycle. These estimates andassumptions are subject to significant uncertainties and the actual ore processing capacity may differmaterially from management’s expectations and assumptions. Accordingly, no assurance can be giventhat the expected ore processing capacity and the underlying assumptions will be realised in practice andin the event that our Group has overestimated our ore processing capacity, we will not be able to achievethe management’s anticipated level of production and profitability.
We may not be able to obtain or renew governmental permits necessary for exploration, mining orproduction at our gold mines
In the ordinary course of business, mining companies are required to seek governmental permits andapprovals for prospecting, exploration and mining and expansion of existing operations or for thecommencement of new operations. Obtaining or renewing the necessary governmental permits andapprovals can be a complex and time-consuming process involving several layers of approvals fromgovernment and regulatory bodies and often involving costly undertakings on our part. The duration andsuccess of obtaining such approvals are contingent upon many variables and are dependent on thedecisions of the regulatory authorities. Environmental protection and rehabilitation requirements, including
RISK FACTORS
37
the submission of environmental assessment reports, environmental management plans, rehabilitationplans and compliance with the environmental monitoring requirements, which may increase our costs andcause delays depending on the nature of the activity to be permitted and the interpretation of applicablerequirements implemented by the permitting authority. There can be no assurance that all necessarypermits and approvals for our activities will be obtained and, if obtained, that the costs involved will notexceed those estimated by us. It is possible that the costs and delays associated with the compliancewith such standards and regulations could affect our ability to proceed with the development or operationof a mine or mines. Accordingly, our operations, financial condition and future growth will be adverselyaffected.
We will need to obtain further financing for our existing business and future growth
We will have to fund the investment costs for capital expenditure and operating costs required for ourgold mining project. We may also require additional funding for our growth plans. We have estimated ourfunding requirements in order to implement our growth plans as set out in the section entitled “GeneralInformation on our Company and our Group - Business Strategies and Future Plans” of this OfferDocument.
In the event that the costs of implementing our growth plans should exceed our funding estimatessignificantly or that we come across opportunities to grow through expansion plans which cannot bepredicted at this juncture, and our funds generated from our operations prove insufficient for suchpurposes, we may need to raise additional funds to meet these funding requirements. We will considerobtaining such funding from new issuance of equity, debt instruments and/or external bank borrowings,as appropriate. In addition, we may need to obtain additional equity or debt financing for other businessopportunities that our Group deems favourable to our future growth and prospects. Funding through thenew issuance of equity will lead to a dilution in the interests of the Shareholders. An increase in debtfinancing may be accompanied by conditions that restrict our ability to pay dividends or require us toseek lenders’ consent for payment of dividends, or restrict our freedom to operate our business byrequiring lenders’ consent for certain corporate actions. In addition, there is no assurance that we will beable to obtain additional financing on terms that are favourable and acceptable. If we are not able tosecure adequate financing, our business and growth may be negatively affected.
Our resources and reserves estimates are based on assumptions and exposed to technicaluncertainties which may lead to inaccuracy
The gold resources and reserves estimates of our gold mine are based on certain estimationmethodology and procedures, various assumptions and professional engineering judgment. There is noassurance on the accuracy of the resource and reserve estimates. If the data on which the resource andreserve estimates are based on are unreliable, it may affect the accuracy of the information. In addition,the resources and reserves estimates are subject to future revision, either upward or downward, as aresult of the development of future operations, or as additional information becomes available.
Should there be changes to any significant factors, assumptions and professional opinions or anyunreliability of the data or estimation methodology and procedures in respect of which the resources andreserves estimates are calculated, it could have an adverse effect on the valuation, financial conditionsand results of operations of our Group.
Resources for the Sokor Gold Project stated in the BDA Technical Report represents the tonnage of in-situ mineralization delineated within the drilled area and above the defined cut-off of 0.5g/t Au for each ofthe four deposits and do not take into account factors such as the economic viability of the extraction ofsuch resources, the incorporation of mining dilution and allowing for mining losses. In addition, theresources estimates are presented on an unrisked basis and before adjusting for the likelihood ofcommercial production. In the event that resources cannot be converted successfully to reserves or thatthe actual production costs and actual sale prices render a portion or all of our reserves to beuneconomical to recover, the actual resources and reserves estimates may differ significantly.
RISK FACTORS
38
Our future cash flow, results of operations and financial condition will be affected if we fail toachieve our production estimates
Estimates of future production for the mining operations of our Group are subject to change and basedon various assumptions. The production estimates are based on, among other things, reserve estimates,assumptions regarding ground conditions and physical characteristics of ores (such as hardness andpresence or absence of certain metallurgical characteristics) and estimated rates and costs ofproduction. The production schedule for the extended life of the mine is considered preliminary andseveral assumptions are made by our Group including conversion of inferred resources to ore reserves,definition of additional resources at Rixen’s and metallurgical recovery of the primary ore which requirebetter definition. In addition, testwork has yet to be completed on primary ore and there is a possibilitythat the gold recovery rate of up to 80% which the production schedule is based on, will not be achieved.As set out in the BDA Technical Report, maintaining production at the design rate with a high proportionof gold production projected based on a heap leaching operation is likely to be challenging as the need tocontrol the water balance in such a plant in a tropical monsoonal environment that our Group is operatingin may affect the viability of the heap leach operation. In addition, the production schedule is based on amining dilution rate of 5% at zero grade and mining recovery at 100% which BDA considers to besomewhat optimistic. Due to the above reasons, there is no assurance that we will be able to achieve ourproduction estimates and in such event, the future cash flow, results of operations and financial conditionof our Group could be adversely affected. Actual production may also vary from the estimates for avariety of other reasons as set out below:
(a) actual ore mined varying from estimates in grade, tonnage, and metallurgical and othercharacteristics;
(b) lower than estimated recovery rate;
(c) mining dilution;
(d) pit wall failures or cave-ins;
(e) industrial accidents;
(f) equipment failures;
(g) natural phenomena such as inclement weather conditions, floods, blizzards, droughts, rock slidesand earthquakes;
(h) encountering of unusual or unexpected geological conditions;
(i) changes in power costs and potential power shortages;
(j) shortages of principal supplies needed for operation, including fuels, equipment parts andlubricating oil;
(k) litigation; and
(l) restrictions imposed by government authorities.
RISK FACTORS
39
The occurrences of any of the above events could result in damage to mineral properties, interruptions inproduction, injury or death to persons, damage to the properties of our Group or others, monetary lossesand legal liabilities. These factors may cause a mineral deposit that has been mined profitably in the pastto become unprofitable. Mining operations frequently experience unexpected problems during the initialdevelopment phase. Delays or interruptions can often occur in the initial stage of production. As ourGroup is in the preliminary stage of production, it is possible that actual cash operating costs andeconomic returns will differ significantly from those that are estimated. There is no assurance that we willbe able to realise the estimated recovery rate at the Sokor Gold Project or any other mines operated byus in the future and in such event, the future growth prospects and results of operations of our Groupmay be adversely affected.
Our business and results of operations will be affected if we fail to maintain or enhance existingmining operations
Mining exploration is unpredictable in nature. The success of any mining exploration programme dependson various factors including, among other things, (i) whether ore bodies can be located; (ii) whether thelocation of ore bodies are economically viable to mine; (iii) whether appropriate metallurgical processescan be developed and appropriate mining and processing facilities can be economically constructed; and(iv) whether necessary governmental permits, licences and consents can be obtained. In order tomaintain gold production beyond the life of our current proved and probable reserves, we must identifyfurther reserves and resources capable of economical exploitation. However, due to the unpredictableand speculative nature of the mining industry, there is no assurance that any exploration programme willresult in the discovery of valuable resources. There is also no assurance that reported resources can beconverted into reserves. Furthermore, actual results upon production may differ from those anticipated atthe time of discovery.
To access additional reserves and resources, we will need to successfully complete developmentprojects, including extending existing mines and developing new mines. We typically conduct feasibilitystudies to determine whether to undertake significant development projects. Actual results may differsignificantly from those anticipated by the feasibility studies. In addition, there are a number ofuncertainties inherent in the development of any new mine or an extension to an existing mine, including:(i) the availability and timing of necessary governmental approvals; (ii) the timing and cost necessary toconstruct mining and processing facilities, and the availability and cost of smelting and refiningarrangements; (iii) the availability and cost of labour, utilities, auxiliary materials and other supplies andthe accessibility of transportation and other infrastructure; and (iv) the availability of funds to financeconstruction and production activities. Accordingly, there is no assurance that any future explorationactivities or development projects will extend the life of our existing mining operations or result in any neweconomical mining operations.
We rely on our Chinese contractors and/or consultants for certain services
We work closely with our Chinese contractors and/or consultants, in particular, CSU, Sinomine and CGRIto carry out our exploration activities. Such Chinese contractors and/or consultants have offered theirservices and provided their support to our Group at prices which are more favourable than those offeredby other contractors and/or consultants. The mining operations of our Group rely on the services providedby the Chinese contractors and/or consultants and our ability to maintain our relationships with theChinese contractors and/or consultants whom our Group does not enter into any long term contract with.Any failure by our Group to retain the services of the Chinese contractors and/or consultants on thecurrent favourable terms, or obtain replacements on favourable terms or at all may affect our Group’sbusiness and results of operations. Details of the Chinese contractors and/or consultants of our Groupare set out in the section entitled “General Information on Our Company and Our Group - KeyContractors and Consultants” of this Offer Document.
RISK FACTORS
40
We rely on third party contractors to provide exploration and mining services
We may outsource substantially our exploration and mining activities pursuant to service contracts withthird party contractors. As a result, our operations will be affected by the performance of such third partycontractors. Although we monitor the work of such third party contractors to ensure that the work iscarried out on time, on budget and to specification, we may not be able to control the quality, safety andenvironmental standards of the work done by the third party contractors to the same extent as when thework is performed by our own employees. Any failure by the third party contractors to meet our Group’squality, safety and environmental standards could affect our Group’s compliance with government rulesand regulations relating to exploration, mining and workers’ safety and may also result in liabilities to thirdparties, which in turn could have a material adverse effect on our Group’s business, reputation, financialcondition and results of operations. Moreover, since we do not enter into any long term contract with anyof the third party contractors, any failure by us to retain the services of such third party contractors onfavourable terms, or obtain replacements on favourable terms or at all may have a material adverse effecton our Group’s business and results of operations.
Our business is exposed to uncertainties in relation to its expansion plans
As described in the section entitled “General Information on Our Company and Our Group – BusinessStrategies and Future Plans” of this Offer Document, the growth strategies of our Group include (i)expansion of our gold extraction facility by commissioning a heap leach facility; (ii) carrying out furtherresource definition and continuing exploration activities; (iii) undertaking a feasibility study to construct agold carbon-in-leach plant; (iv) exploration and mining for other minerals such as silver, lead and zinc;and (v) expansion through acquisitions, joint ventures and strategic alliance. There is no guarantee thatthe implementation and execution of such business strategies and future plans will be successful as thisinvolves a number of risks and uncertainties and it is dependent on approvals from the governmental andregulatory authorities and requires substantial capital expenditure, financial and management resources.In the event that we are not able to achieve a sufficient level of revenue or manage our costs effectivelyor the commencement of these planned expansions is delayed or aborted, our future financialperformance and position will be adversely affected. In addition, our mining scheme approved by theKelantan State Government is subject to initial mine production not exceeding 300,000t per annum ofmined ore. Failure to obtain the approval of the Kelantan State Government to relax such condition tocater for our Group’s expansion in the future will have a material adverse effect on our Group’s growthpotential.
Our operations are exposed to regulations and risks in relation to production safety and theoccurrence of accidents
As a gold mining company, we are subject to extensive laws, rules and regulations imposed by theMalaysian government regarding occupational safety and health. In particular, our mining operationsinvolve the handling and storage of hazardous chemicals and other dangerous articles and the usage ofvarious heavy machineries. We may experience in the future increased costs of production arising fromcompliance with occupational safety and health laws and regulations. There can be no assurance thatmore stringent laws, regulations or policies regarding occupational safety and health will not beimplemented or that the existing laws, regulations and policies will not be more stringently enforced. Wemay not be able to comply with all existing or future laws, regulations and policies in relation tooccupational safety and health issues economically or at all. Should we fail to comply with anyoccupational safety and health laws or regulations, we would be required to rectify the occupationalsafety and health problems within a period prescribed under the laws and regulations or as prescribed bythe regulatory authorities. Failure to rectify any problem could lead to suspension of our operations andoffences committed against the laws and regulations could lead to penalties involving mandatory finesand/or imprisonment. In addition, there can be no assurance that accidents arising from the mishandlingof dangerous articles will not occur in the future. Should we fail to comply with any relevant laws,regulations or policies or should any accident occur as a result of the mishandling of dangerous articles,our business, reputation, financial condition and results of operations may be adversely affected, and wemay be subject to penalties, civil liabilities or criminal liabilities.
RISK FACTORS
41
We and/or our third party contractors may encounter accidents, technical difficulties, mechanical failure orbreakdown in the exploration, mining and production processes, as well as possible localised mud-slides,instability of the slopes, and subsidence of the working areas due to natural disasters. In July 2010, therewas a fatal industrial accident which occurred in the mining area of our Group. Please refer to the sectionentitled “General Information on Our Company and Our Group - Safety Policy” of this Offer Document forfurther details. The occurrence of accidents may disrupt or result in a suspension of our operations,increase production costs, result in liabilities incurred by our Group and harm our Group’s reputation.Such incidents may also result in a breach of the conditions of our mining rights, or any other consents,approvals or authorisations, which may result in fines and penalties or even possible revocation of ourmining rights. In any of such events, our business and financial performance will be adversely affected. Inthe event of accidents which are not covered by the insurance or workmen’s compensation policies takenby our Group, or if claims arising from such accidents are in excess of our insurance coverage, and/orany of our insurance claims are contested by the insurance companies, we will be required to pay suchcompensation. Under such circumstances, the business and financial performance of our Group will beadversely affected.
Our operations are exposed to risks in relation to environmental protection and rehabilitation
Operations of gold mines are subject to environmental risks and hazards. Our production and operationsare subject to environmental laws, rules and regulations of Malaysia, such as prevention of pollution ofthe air, earth and water, the treatment and discharge of hazardous wastes and materials andenvironmental rehabilitation.
Environmental hazards may occur in connection with our operations as a result of human negligence,force majeure or otherwise. One of the main environmental risks arising from the mining activities of ourGroup relates to the potential for exposure to offsite water contamination via contaminated water run-offfrom the proposed heap leach area, the tailings storage facility, the plant area and mining areas. Theoccurrence of any environmental hazards may delay production, increase production costs, causepersonal injuries or property damage, result in liabilities incurred by our Group and/or damage ourGroup’s reputation. Such incidents may also result in a breach of the conditions of our Group’senvironmental approvals and/or mining rights or other consents, approvals or authorisations, which mayresult in fines, penalties, or even possible revocation of our mining rights. In any of such events, ourbusiness and financial performance will be adversely affected.
In the future, we may experience increased costs of production arising from compliance withenvironmental laws and regulations. In particular, we will incur additional costs for payments to be madeinto the common rehabilitation fund under the Mineral Enactment, which will amount to approximately 1%of the gross sales value of all minerals won during a calendar year from the mining land that is subject tothe mining lease. Moreover, the development of the Malaysian economy and the improvements in theliving standards of the population may lead to a heightened awareness of environmental protection. As aresult, it is possible that more stringent environmental laws, regulations and policies may be implementedin the future, or the existing environmental laws, regulations and policies may be more strictly enforced.We may not always be able to comply with existing or future laws, regulations or policies in relation toenvironmental protection and rehabilitation economically or at all. Should we fail to comply with any suchexisting or future laws, regulations or policies, we may be subject to penalties and liabilities underMalaysian laws and regulations, including but not limited to warnings, fines, prosecution, suspension ofproduction and closure of the facility that fails to comply with the relevant environmental standards. Inaddition, we may also be subject to actions by environment protection groups or other interested personswho object to the actual or perceived environmental impact of our mining operation or other actual orperceived condition at our mine. These actions may delay or halt production or may create negativepublicity related to our mine. Accordingly, our operations and financial condition will be adversely affected.
RISK FACTORS
42
Our operations may have negative impacts on local communities
The impact of the operations of our Group may pollute fishing areas, which may impact on the revenueand livelihoods of the members of the local communities who use the area. Consequently, localdissatisfaction with our Group may arise if access to fish resources is restricted. In addition, the localcommunities may become disenchanted from in-migration and disturbance from traffic from mineoperations as well as loss of jobs which occurs at mine closure. If we are not able to deal with suchsocial issues properly, it will cause damage to our reputation which could adversely affect our businessoperations and in turn, our financial performance.
Our mining operations have a finite life and eventual closure of these operations will entail costsand risks regarding ongoing monitoring, rehabilitation and compliance with environmentalstandards
Our mining operations have a finite life and will eventually be closed. The key costs and risks for mineclosures are as follow:
(a) long-term management of permanent engineered structures and acid rock drainage;
(b) achievement of environmental closure standards;
(c) orderly retrenchment of employees and third party contractors; and
(d) relinquishment of the site with associated permanent structures and community developmentinfrastructure and programmes to new owners.
The successful completion of these tasks is dependent on our ability to successfully implementnegotiated agreements with the relevant government, community, employees and third party contractors.The consequences of a difficult closure range from increased closure costs and handover delays toongoing environmental rehabilitation costs and damage to the reputation of our Group if desiredoutcomes cannot be achieved, which could materially and adversely affect our business and results ofoperations.
We may not be able to maintain the provision of adequate and uninterrupted supplies ofelectricity, water, diesel, auxiliary materials, equipment and spare parts
Electricity and water are the main utilities used in our exploration and mining activities. There can be noassurance that supplies of electricity, water, diesel, auxiliary materials, equipment or spare parts will notbe interrupted or that their prices will not increase in the future. In the event that our existing supplierscease to supply us with electricity generators, water, diesel, auxiliary materials, equipment or spare partsat existing or lower prices or at all, and we are not able to procure alternative sources of such supplies,our financial condition and results of operations will be adversely affected. In addition, although wecurrently generate electricity in-house, an interruption in electricity supply due to a breakdown of ourgenerators or for any other reasons will materially and adversely affect our Group’s production bydisrupting operations such as water pumping.
Severe weather conditions, natural disasters and other events beyond our control could materiallyand adversely affect our business and results of operations
Severe weather conditions such as heavy rainfall and natural disasters such as landslides, earthquakes,fire hazards and floods and other events beyond our control may require us to evacuate personnel orcurtail operations and may result in damage to our mines, equipment or facilities, which could result inthe temporary suspension of operations or a reduction in our productivity. During periods of curtailedactivity due to adverse weather conditions, natural disasters or other events beyond our control, we maycontinue to incur operating expenses while production has slowed down or ceased altogether. Anydamages to our projects or delays in our operations caused by severe weather conditions, naturaldisasters or other events beyond our control could materially and adversely affect our business andresults of operations.
RISK FACTORS
43
We are dependent on certain key personnel for our continued success
Our success to date is attributable to the contributions and expertise of the Executive Directors andExecutive Officers of our Group who have built the business of our Group under the guidance andleadership of the Executive Chairman, Professor Lin Xiang Xiong, and the other Executive Directors,Choo Chee Kong and Lim Kuoh Yang. Our Group’s continued success and growth will depend, to a largeextent, on our ability to retain the services of the Executive Directors and the Executive Officers. The lossof services of the Executive Chairman and or any of the other Executive Directors and the ExecutiveOfficers without suitable and timely replacement, or the inability to attract and retain other qualifiedpersonnel would have an adverse impact on our operations and financial performance.
Some of our Directors may not be able to fully devote their time to perform their respective rolesin the Company in the event that they are required to defend themselves against potential legalactions
The Company understands from our Directors, Choo Chee Kong and Kuan Cheng Tuck, who were thedirectors of Falmac Limited but have both since resigned as the directors of Falmac Limited on 29 August2011, that there is an ongoing law suit initiated by Falmac Limited against certain of its former director(s),for breaches of directors’ fiduciary duties. The Company further understands from Choo Chee Kong andKuan Cheng Tuck that the first hearing was conducted between 14 July 2011 and 16 July 2011, and it isexpected that the second hearing will be conducted between 28 November 2011 and 2 December 2011.Please refer to the previous announcements made by Falmac Limited on the SGXNET for further details.
In view of such ongoing dispute, in the event that any legal action is taken against Falmac Limited and/orits directors and former directors, whether in relation to such dispute or otherwise (“Potential LegalActions”), our Directors, Choo Chee Kong and Kuan Cheng Tuck may have to expend considerable timeand effort to defend themselves against such Potential Legal Actions. In such event, there may beinstances where they may not be able to fully devote their necessary time to perform their respectiveroles in the Company and this may have an adverse impact on our operations and financial performance.
Our operations are dependent on our ability to retain and recruit skilled personnel andprofessional staff
The business of our Group requires skilled personnel and professional staff in the areas of mining andproduction of gold, operations, engineering, finance and accounting. Competition for such skilledpersonnel and professional staff is intense and comes primarily from similar businesses active in theindustry, many of which possess greater resources. Limitations on our ability to hire, train and retain therequired number of skilled personnel and professional staff would reduce our capacity to undertakefurther projects and may have an adverse impact on the operations, results and growth of our Group.
We may be liable for non-compliances with certain conditions and regulations imposed by thegovernment authorities in Malaysia
There are certain past non-compliances with the conditions and regulations imposed on CMNM inrelation to the various governmental approvals, licences and permits relating to our mining operations inMalaysia, which include, inter alia, non-compliance with certain conditions in the approved operationalmining scheme and environment impact assessment relating to effective drainage, control of water qualityand earth works, proper waste handling, emergency and security control, submission of various reportsto DOE and other relevant state and federal regulatory authorities relating to the progress of the SokorGold Project and compliance of the Sokor Gold Project with certain rules and regulations and thepreparation of an environment management plan and a restoration and abandonment plan. In addition,certain licences, permits and approvals required for our mining operations had not been obtained byCMNM in the past. Please refer to the Abridged Due Diligence Report as set out in Appendix D forfurther details of the past breaches. As at the Latest Practicable Date, we have applied for the requisitelicences, permits and approvals and rectified these past non-compliances. These rectification actions donot exonerate us, our employees and/or our Directors from such non-compliances. Consequently, we maystill be liable for statutory penalties and enforcement actions including, inter alia, fines enforced by the
RISK FACTORS
44
relevant authorities for the non-compliances, suspension of the mining operations and revocation orcancellation of any licences or rights previously granted to CMNM. In the event that fines, penalties orenforcement actions are imposed on or taken against us, the results of operations and financialconditions of our Group will be adversely affected. In the future, our Directors will ensure that we will takethe necessary actions and precautions are taken to prevent our Group from contravening any conditionsand regulations imposed by the government authorities.
We may be exposed to risk of loss and potential liabilities that may not be covered or adequatelycovered by insurance
Certain liabilities and risks in respect of the business, operations and assets of our Group may not becovered or adequately covered by insurance for a variety of reasons such as acts of god, theft androbbery. In the event that we are not insured or are inadequately insured against losses, damage orliabilities, the financial performance our Group will be adversely affected. Please refer to the sectionentitled “General Information on Our Company and Our Group - Insurance” of this Offer Document forfurther details on our existing insurance coverage.
Our business is subject to foreign exchange exposure and currency fluctuations
Our revenue is denominated in US$ while our operating costs, exploration and evaluation expenditureand/or purchases are denominated in S$, MYR, RMB and US$.
To the extent that the our revenue and operating costs, exploration and evaluation expenditure and/orpurchases are not entirely matched in the same currency and to the extent that there are timingdifferences between invoicing and collection or payment, as the case may be, we are exposed to anyadverse fluctuations of US$ against S$, MYR and RMB or vice versa. Any significant fluctuations in theexchange rates of US$ against S$, MYR and RMB could adversely affect the financial position andresults of our Group.
We had negative working capital for the period under review
We had negative working capital as at the end of the period under review. Our negative working capitalwas due mainly to the use of short term financing to fund our capital expenditure. As such, we aresubject to the risk that our current assets will be insufficient to meet our obligations under the currentliabilities. In such event, additional capital, debt or other forms of financing may be required for ourworking capital. If any of the aforesaid events occur and we do not have sufficient internal resources andare unable for any reason, to raise additional capital, debt or other financing for our working capitalrequirements, our business, operating results, liquidity and financial position will be adversely affected.Please refer to the sections entitled “Working Capital” and “Management’s Discussion and Analysis ofResults of Operations and Financial Position – Liquidity and Capital Resources” of this Offer Documentfor more information.
RISKS RELATING TO OUR OPERATIONS IN MALAYSIA
We are subject to the Malaysian regulatory regime for the gold mining industry
Our operations are subject to compliance with Malaysian laws, regulations, policies, guidelines, standardsand requirements in relation to, among other things, mine exploration, development, production, taxation,labour standards, occupational health and safety, waste treatment and environmental protection andoperation management. In addition, the existing contractual mining right of CMNM for the mining area atthe Sokor Block is granted by KSEDC pursuant to the mining lease issued by the Kelantan StateAuthority to KSEDC, and such mining right is dependent on the validity and existence of the mining leasegranted to KSEDC as well as the validity of the tripartite agreement between KSEDC, CMNM and CNMC.Any changes to the laws, regulations, policies, standards and requirements concerning any of theaforesaid matters (including any change to the policy regarding the grant of the mining lease or miningrights in Malaysia that is unfavourable to our Group) or to the interpretation or enforcement thereof mayincrease our operating costs and/or may affect our Group adversely. Our right to mine is derived from thecontractual right granted by KSEDC. We do not hold a mining lease issued in our favour. As such, in the
RISK FACTORS
45
event that KSEDC breaches such contract, our mining rights will be affected. There is no assurance thatwe will be able to comply with any new Malaysian laws, regulations, policies, standards and requirementsapplicable to the gold mining industry or any changes in existing laws, regulations, policies, standardsand requirements economically or at all. Further, any such new Malaysian laws, regulations, policies,standards and requirements or any such change in existing laws, regulations, policies, standards andrequirements may also constrain our future expansion plans and adversely affect the profitability of ourGroup.
Our business is subject to political, economic, regulatory and social conditions in Malaysia
We are currently operating our business in Malaysia. Our business operations are therefore dependenton the political, economic, regulatory and social conditions in Malaysia. Any changes in the policiesimplemented by the government of Malaysia which may result in currency and interest rate fluctuations,inflation, capital restrictions, price and wage controls, expropriation and changes in taxes and dutiesdetrimental to our business may materially affect our operations, financial performance and future growth.In particular, in the event of expropriation, we may not be able to continue our business as we would notbe able to enforce any mining or exploration rights we had obtained or receive any compensation for theloss of such mining or exploration rights. Unfavourable changes in the social, economic and politicalconditions of Malaysia or in the Malaysian government policies in the future may have a negative impacton the operations and business in Malaysia, which will in turn adversely affect the overall financialperformance of our Group. In addition, Malaysian foreign exchange control may limit our ability to utiliseour cash effectively and affect our ability to receive dividends and other payments from our Malaysiansubsidiaries.
We are subject to the foreign exchange legislation and regulations in Malaysia
Local and foreign investors are subject to Foreign Exchange Administration Rules in Malaysia. Thelegislation in Malaysia governing exchange control is the Exchange Control Act 1953, pursuant to whichBank Negara Malaysia, which is the central bank of Malaysia (“Bank Negara”) has issued ExchangeControl Notices (“ECM Notices”) which embody its general permissions and directions. The ECM Notices(together with the clarifications) set out the circumstances in which the specific approval of the Controllerof Foreign Exchange within Bank Negara must be obtained by residents and non-residents to remit fundsto and from Malaysia. These ECM Notices are reviewed regularly by Bank Negara in line with thechanging environment. As at the Latest Practicable Date, foreign investors are free to repatriate capital,divestment proceeds, profits, dividends, rental, fees and interests arising from investments in Malaysia.Any future restriction by the ECM Notices on repatriation of funds may limit our ability to distributedividends to the Shareholders from our business operations in Malaysia.
As at the Latest Practicable Date, resident companies are free to borrow any amount in foreign currencyfrom non-resident, non-bank related companies. Related companies, as defined under the ECM Notice10 (Foreign Currency Credit Facilities and Ringgit Credit Facilities from Non-Residents) (“ECM10”) (readtogether with the circular issued by Bank Negara on 18 August 2010) includes the ultimate holding,parent/head office, subsidiary/branch, associate or sister (common shareholder) company.
Resident companies are also free to borrow any amount in Ringgit from its non-resident, non-bank parentcompany to finance activities in the real sector. Real sector is defined under the ECM 10 (read togetherwith the circular issued by Bank Negara on 28 May 2008) as a sector where there is production of goodsand services which include all industries except for financial services. Resident companies may alsoborrow up to MYR1 million in aggregate from other non-resident non-bank companies and individuals foruse in Malaysia. Any amount in excess of this will require the prior approval of Bank Negara under ECM10 (read together with the circular issued by Bank Negara on 28 May 2008).
However, there is no assurance that the relevant rules and regulations on foreign exchange control inMalaysia will not change. In the event that there is any adverse change in the foreign exchange rules andregulations relating to the borrowing or repatriation of foreign currency, our business and results ofoperation may be adversely affected.
RISK FACTORS
46
RISKS RELATING TO INVESTMENT IN OUR SHARES
Investment in shares quoted on Catalist involves a higher degree of risk and can be less liquidthan shares quoted on the Main Board of the SGX-ST
An application has been made for our Shares to be listed for quotation on Catalist, a listing platformdesigned primarily for fast-growing and emerging or smaller companies to which a higher investment risktends to be attached as compared to larger or more established companies listed on the Main Board ofthe SGX-ST. An investment in shares quoted on Catalist may carry a higher risk than an investment inshares quoted on the Main Board of the SGX-ST. Catalist was newly formed in December 2007 and thefuture success and liquidity in the market of our Shares cannot be guaranteed.
There is no prior market for our Shares and the Placement may not result in an active or liquidmarket for our Shares
Prior to this Placement, there has been no public market for our Shares. Although we have made anapplication to the SGX-ST to list our Shares on Catalist, there is no assurance that an active tradingmarket for our Shares will develop or if developed, be sustained after the Placement. There is also noassurance that the market price for our Shares will not decline below the Placement Price. The marketprice of our Shares could be subject to significant fluctuations as investors’ sentiments may be affectedby external factors such as the outbreak of war, escalation of hostilities or outbreak of infectious diseases(whether in Singapore or elsewhere). Other factors including the liquidity of our Shares in the market,differences between our actual financial or operating results and those expected by investors andanalysts, the general market conditions and broad market fluctuations may also result in significantfluctuations in the market price of our Shares.
Our Share price may be volatile in future which could result in substantial losses for investorssubscribing and/or purchasing for Shares pursuant to the Placement
The trading price of our Shares may fluctuate significantly and rapidly after the Placement as a result of,among others, the following factors, some of which are beyond our control:
(i) variations of our operating results;
(ii) changes in securities analysts’ recommendations, perceptions or estimates of our financialperformance;
(iii) announcements made by us of significant acquisitions, strategic alliances or joint ventures;
(iv) additions or departures of key personnel;
(v) fluctuations in stock market prices and volume;
(vi) involvement in litigation; and
(vii) changes in general economic and stock market conditions.
Future sale, availability or issuance of Shares could adversely affect our Share price
Any future sale, availability or issuance of a large number of our Shares can have a downward pressureon our Share price. The sale of a significant amount of Shares in the public market after the Placement,or the perception that such sales may occur, could materially and adversely affect the market price of ourShares. These factors also affect our ability to sell additional equity securities. Except as otherwisedescribed in the section entitled “Shareholders – Moratorium” of this Offer Document, there will be norestriction on the ability of our existing Shareholders to sell their Shares either on Catalist or otherwise.
In addition, our Share price may be under downward pressure if certain Shareholders sell their Sharesupon the expiry of their moratorium periods.
RISK FACTORS
Negative publicity which includes those relating to any of our Directors, Executive Officers orSubstantial Shareholders may adversely affect our Share price
Negative publicity or announcements relating to our Group and any of our Directors, Executive Officers orSubstantial Shareholders may adversely affect the market perception or the Share performance of ourShare, whether or not it is justified. Examples of these include unsuccessful attempts in joint ventures,acquisitions or takeovers, or involvement in insolvency proceedings.
As a significant portion of our operations and assets are located outside Singapore, investorsmay find it difficult to enforce a Singapore judgment against our Group or management
A significant portion of our Group’s operations and assets are located outside Singapore. Accordingly,Shareholders may encounter difficulties in effecting service of process in Singapore if they wish to makea claim against our Group, or the enforcement of a Singapore judgement against the assets of ourGroup.
Investors in our Shares would face immediate and substantial dilution in the NAV per Share andmay experience future dilution
Our Placement Price of S$0.40 is higher than our Group’s NAV per Share of S$0.04 based on the post-Placement issued share capital and after adjusting for the Restructuring Exercise and the estimated netproceeds from the issue of the New Shares. If we were liquidated immediately following this Placement,each investor subscribing to this Placement would receive less than the price they paid for their Shares.Please refer to the section entitled “Dilution” of this Offer Document for details of the immediate dilution ofour Shares incurred by new investors.
In addition, we may issue share awards under the CNMC Performance Share Plan. To the extent thatsuch share awards are ultimately granted and Award Shares are issued pursuant to such grant, theremay be further dilution to investors participating in the Placement. Further details of the CNMCPerformance Share Plan are described in the section entitled “CNMC Performance Share Plan” of thisOffer Document.
Control by our Controlling Shareholders, Innovation (China) Limited and Messiah Limited who willcollectively hold 49.79% of our enlarged share capital after the Placement, may limit your ability toinfluence the outcome of decisions requiring the approval of Shareholders.
After the completion of the Placement, our Controlling Shareholders, Innovation (China) Limited andMessiah Limited will collectively hold approximately 49.79% of our enlarged share capital after thePlacement. As a result, Innovation (China) Limited and Messiah Limited will be able to exercisesignificant influence over all matters requiring Shareholders’ approval (other than the approval oftransactions for which they and their Associates may be prohibited from voting), including the election ofdirectors and the approval of significant corporate transactions. Such concentration of ownership mayalso have the effect of delaying, preventing or deterring a change in control of the Company, which mayotherwise have benefited our Shareholders.
We may not be able to pay dividends in the future
Our ability to declare dividends to our Shareholders will depend on our future financial performance anddistributable reserves of our Company. Our Company’s future financial performance and distributablereserves depend on several factors, such as the successful implementation of our strategies, the generaleconomic conditions, demand for and selling prices of our products and services. Many of these factorsmay be beyond our control. As such, there is no assurance that our Company will be able to paydividends to our Shareholders after the completion of the Placement. In the event that any company inour Group enters into any loan agreements in the future, covenants therein may also limit when and howmuch dividends it can declare and pay.
47
ISSUE STATISTICS
Placement Price
Net Asset Value per Share
Unaudited NAV per Share based on the condensed combined balance sheet of ourGroup as at 31 March 2011 adjusted for the Restructuring Exercise (“NAV”):
(a) before adjusting for the estimated net proceeds from the issue of NewShares and based on the pre-Placement share capital of 380,793,000Shares
(b) after adjusting for the estimated net proceeds from the issue of New Sharesand based on the post-Placement share capital of 404,693,000 Shares
Premium of Placement Price over the NAV per Share as at 31 March 2011 adjustedfor the Restructuring Exercise:
(a) before adjusting for the estimated net proceeds from the issue of NewShares and based on the pre-Placement share capital of 380,793,000Shares
(b) after adjusting for the estimated net proceeds from the issue of New Sharesand based on the post-Placement share capital of 404,693,000 Shares
Loss per Share
Historical net loss per Share of our Group for FY2010 based on our Company’spre-Placement share capital of 380,793,000 Shares
Historical net loss per Share of our Group for FY2010 based on our Company’spre-Placement share capital of 380,793,000 Shares, assuming that the ServiceAgreements had been in place from the beginning of FY2010
Price Earnings Ratio
Audited PER based on the Placement Price and the audited net EPS of our Groupfor FY2010
Audited PER based on the Placement Price and the audited net EPS of our Groupfor FY2010, assuming that the Service Agreements had been in place from thebeginning of FY2010
Net Operating Cash Flow(2)
Historical net operating cash flow per Share of our Group for FY2010 based on thepre-Placement share capital of 380,793,000 Shares
Historical net operating cash flow per Share of our Group for FY2010 based on thepre-Placement share capital of 380,793,000 Shares, assuming that the ServiceAgreements had been in place from the beginning of FY2010
Price to Net Operating Cash Flow Ratio
Ratio of Placement Price to historical net operating cash flow per Share of ourGroup for FY2010 based on the pre-Placement share capital of 380,793,000Shares
Ratio of Placement Price to historical net operating cash flow per Share of ourGroup for FY2010 based on the pre-Placement share capital of 380,793,000Shares, assuming that the Service Agreements had been in place from thebeginning of FY2010
48
S$0.40
1.64 cents
3.61 cents
2,339.02%
1008.03%
(0.62) cents
(0.62) cents(1)
Not applicable
Not applicable
(0.73) cents
(0.73) cents(1)
Not applicable
Not applicable
ISSUE STATISTICS
Market Capitalisation
Market capitalisation based on the Placement Price and post-Placement sharecapital of 404,693,000 Shares
Notes:
(1) Assuming that the Service Agreements have been in place from the beginning of FY2010, thereare no changes to the audited net loss per Share of our Group for FY2010 and audited netoperating cash flow per Share of our Group for FY2010 based on the pre-Placement share capitalof 380,793,000 Shares as the Executive Directors are receiving the same compensation prior toand after the Service Agreements.
(2) Net operating cash flow refers to net cash inflows or net cash outflows from operating activities.
49
S$161.9 million
USE OF PROCEEDS AND LISTING EXPENSES
50
Use of Proceeds
The total net proceeds to be raised by our Company and the Vendors from the Placement (comprisingthe New Shares and the Vendor Shares), after deducting the aggregate estimated cash expenses inrelation to the Placement of approximately S$1.41 million, is estimated to amount to approximatelyS$15.03 million. We will not receive any of the proceeds from the Vendor Shares sold by the Vendors inthe Placement. The net proceeds attributable to the Vendors from the sale of the Vendor Shares, afterdeducting the Vendors’ placement commission of S$0.22 million, will be approximately S$6.66 million.
The net proceeds to be raised by our Company from the issue of the New Shares, after deducting ourshare of the estimated cash expenses to be borne by us of approximately S$1.19 million, will beapproximately S$8.37 million.
The following table sets out the breakdown of the use of proceeds to be raised by our Company:
Estimated amount allocated for each dollar of the gross proceedsto be raised from the
issue of the New Shares(as a percentage of
Amount in Aggregate the gross proceeds)Use of proceeds from the Placement (S$’000) (%)
Further resource definition and continuing exploration activities 2,490 26.0
Construction of a heap leach facility 2,110 22.1
Working capital 3,770 39.4
Expenses incurred in connection with the Placement 1,190 12.5
Total 9,560 100.0
As at the Latest Practicable Date, we have identified four (4) gold mineralisations in the Sokor Block.According to the BDA Technical Report, the gold resources estimate in the Sokor Block based on theJORC Code as at June 2010 amounted to approximately 2,182,000t at a grade of 2.62 g/t Au withcontained gold of 183,500 oz which includes a total gold reserves estimate of 989,000t, of which provedgold reserves are estimated to be 204,000t at a grade of 3.64 g/t Au with contained gold of 23,900 ozand probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au with contained gold of46,400 oz. We intend to utilise approximately S$2.49 million (the approximate equivalent of US$2.00million, based on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) from thenet proceeds raised from the Placement to undertake further resource definition and continuingexploration activities in order to identify new gold mineralisation and to increase the identified goldresources and reserves in the Sokor Block.
In addition, as the mining operations of our Group expand and our mining activities increase, we expectto process more gold-bearing ore with the aim to increase our gold production. Our Group intends toincrease its ore processing capacity from the current processing capacity of 60,000t per annum to730,000t per annum in FY2012 by commissioning a heap leach facility to treat oxide ore from Rixen’sdeposit commencing in the fourth quarter of 2011. We intend to utilise approximately S$2.11 million (theapproximate equivalent of US$1.70 million, based on the exchange rate of S$1.00 to US$0.8039 as atthe Latest Practicable Date) from the net proceeds raised from the Placement to fund the construction ofthe heap leach facility.
Further details of our use of proceeds may be found in the section entitled “General Information on ourCompany and our Group – Business Strategies and Future Plans” of this Offer Document.
USE OF PROCEEDS AND LISTING EXPENSES
51
The foregoing discussion represents our Company’s best estimate of its allocation of the net proceeds ofthe Placement based on our current plans and estimates regarding our anticipated expenditures. Actualexpenditures may vary from these estimates and our Company may find it necessary or advisable toreallocate the net proceeds within the categories described above or to use portions of the net proceedsfor other purposes. In the event that our Company decides to reallocate the net proceeds of thePlacement for other purposes, our Company will publicly announce its intention to do so through aSGXNET announcement on the internet at the SGX-ST website, http://www.sgx.com. In addition, ourCompany will make periodic announcements on the use of the proceeds from the Placement as andwhen the proceeds from the Placement are materially disbursed, and provide a status report on the useof the proceeds from the Placement in our annual reports.
Pending the deployment of the net proceeds from the issue of Placement Shares as aforesaid, the fundsmay be placed as deposits with financial institutions or added to the working capital or used to reducebank borrowings or used for investment in short-term money market instruments as our Directors may, intheir absolute discretion, deem fit.
In the opinion of our Directors, there is no minimum amount which must be raised by the Placement.
None of the proceeds of the Placement will be used to discharge, reduce or retire any indebtedness ofour Group.
Listing Expenses
The aggregate estimated amount of expenses of the Placement and of the application for Listing,including the placement commission, management fees, legal and audit fees, fees payable to the SGX-ST and all other incidental expenses in relation to this Placement is approximately S$2.70 million. Savefor the placement commission, which will be borne by the Vendors and our Company in the proportion inwhich the Placement Shares are offered by the Vendors and our Company, the rest of the listingexpenses will be borne by our Company.
A breakdown of these expenses to be borne by our Company in relation to the Placement is as follows:
Estimated amount allocated for each dollar of the gross proceeds to be raised from the
issue of the New Shares(as a percentage of
Estimated Amount the gross proceeds)Expenses borne by our Company(1) (S$’000) (%)
Listing and application fees 43 0.4
Professional fees(2) 2,107 22.0
Placement commission(3) 307 3.2
Miscellaneous expenses 245 2.6
Total 2,702 28.2
Notes:
(1) Includes goods and services tax of 7.0%.
(2) The professional fees include the management fee of S$1,508,400 payable to the Manager and Sponsor pursuant to theManagement Agreement which has been satisfied in full by the issuance and allotment of 3,771,000 PPCF Shares to PPCFrepresenting approximately 0.99% of the issued share capital of our Company prior to the Placement at the Placement Pricefor each Share. For details, please refer to the section entitled “Shareholders” of this Offer Document.
(3) The amount of placement commission per Placement Share, agreed upon between the Joint Placement Agents and ourCompany is 3.0% of the Placement Price payable for each Placement Share. Please refer to the section entitled “General andStatutory Information – Management and Placement Arrangements” of this Offer Document for more details.
DIVIDEND POLICY
Our Company has not declared or paid any dividends since its incorporation and our subsidiaries havenot declared or paid any dividends in FY2008, FY2009, FY2010 and 1Q2011 respectively.
We currently do not have a fixed dividend policy. The form, frequency and amount of future dividends onour Shares will depend on our earnings, general financial condition, results of operations, capitalrequirements, cash flow, general business condition, our development plans and other factors as ourDirectors may, in their absolute discretion, deem appropriate. Therefore, there can be no assurance thatdividends will be paid in the future or of the amount or timing of any dividends that will be paid in thefuture.
All dividends are paid pro-rata among the Shareholders in proportion to the amount paid up on eachShareholder’s Shares, unless the rights attaching to an issue of any Share provides otherwise.Notwithstanding the foregoing, the payment by our Company to CDP of any dividend payable to aShareholder whose name is entered in the Depository Register shall, to the extent of payment made toCDP, discharge our Company from any liability to that Shareholder in respect of that payment.
We may declare an annual dividend subject to the approval of our Shareholders in a general meeting butthe amount of such dividend shall not exceed the amount recommended by our Directors. Our Directorsmay also declare an interim dividend without the approval of our Shareholders. Our Company may pay alldividends out of our profits.
We expect to declare dividends in US$ and make payment of the dividends in S$. Shareholders shouldnote that there will be exchange rate exposure in respect of dividends declared in US$ and subsequentlypaid to them in S$ equivalent amounts. Shareholders whose Shares are held through CDP will receivetheir dividends in S$. CDP will make the necessary arrangement to convert these dividends receivedfrom our Company in US$ into S$ equivalent amounts at such foreign exchange rate as CDP maydetermine for onward distribution to such Shareholder entitled thereto. Neither our Company nor CDP willbe liable for any loss howsoever arising from the conversion of the dividend entitlement of Shareholdersholding their Shares through CDP from US$ into S$ equivalent amounts.
For information relating to taxes payable on dividends, please refer to the section entitled “Taxation” ofthis Offer Document.
52
SHARE CAPITAL
53
Our Company (registration number 201119104K) was incorporated in Singapore on 11 August 2011under the Companies Act as a private company limited by shares under the name of “CNMC GoldmineHoldings Pte Ltd”. On 17 October 2011, our Company changed its name to “CNMC Goldmine HoldingsLimited” in connection with its conversion into a public company limited by shares.
As at the date of incorporation, our issued and paid-up share capital was S$1.00, comprising one (1)ordinary share. On 14 October 2011, our Company issued an aggregate of 374,999,999 new Shares tothe shareholders of CNMC in consideration for the transfer by the shareholders of CNMC of the entireissued share capital of CNMC, comprising 14,004,524 shares to our Company. Pursuant to thecompletion of the Restructuring Exercise on 14 October 2011, our issued and paid-up share capital isS$5,792,198 comprising 375,000,000 Shares. Please refer to the section entitled “Restructuring Exercise”of this Offer Document for more details.
Pursuant to an extraordinary general meeting held on 14 October 2011, the following was, inter alia,approved:
(a) the conversion of our Company into a public company limited by shares and the consequentialchange of our name to “CNMC Goldmine Holdings Limited”;
(b) our adoption of a new set of Articles of Association;
(c) the allotment and issue of 3,771,000 PPCF Shares to PPCF in part satisfaction of theirmanagement fee as Manager and Sponsor;
(d) the allotment and issue of 2,022,000 Employee Shares to Chen Yan, the Chief Financial Officer ofthe Company (“Issue of New Shares to Employee”);
(e) the allotment and issue of the New Shares which are the subject of the Placement on the basisthat the New Shares, when allotted, issued and fully paid, will rank pari passu in all respects withthe existing issued Shares;
(f) the approval of the listing and quotation of all the issued Shares (including the New Shares to beissued and allotted pursuant to the Placement) and the Award Shares on Catalist;
(g) the adoption of the CNMC Performance Share Plan, and the authorisation of our Directors,pursuant to Section 161 of the Companies Act, to allot and issue Shares upon the release ofAwards granted under the CNMC Performance Share Plan;
(h) that authority be and is hereby given to our Directors, pursuant to Section 161 of the CompaniesAct and by way of ordinary resolution in a general meeting, to:
(a) (i) issue Shares whether by way of rights, bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) that might orwould require Shares to be issued during the continuance of this authority orthereafter, including but not limited to the creation and issue of (as well asadjustments to) warrants, debentures, convertible securities or other instrumentsconvertible into Shares; and/or
(iii) notwithstanding that such authority may have ceased to be in force at the time thatInstruments are to be issued, issue additional Instruments arising from adjustmentsmade to the number of Instruments previously issued in the event of rights, bonus orother capitalisation issues,
at any time and upon such terms and conditions and for such purposes and to such personsas our Directors may in their absolute discretion deem fit; and
SHARE CAPITAL
54
(b) issue Shares in pursuance of any Instrument made or granted by our Directors pursuant to(A)(ii) and/or (A)(iii) above, while such authority was in force (notwithstanding that such issueof Shares pursuant to the Instruments may occur after the expiration of the authoritycontained in this resolution),
provided that:
(1) the aggregate number of Shares to be issued pursuant to such authority (including theShares to be issued in pursuance of Instruments made or granted pursuant to this authoritybut excluding Shares which may be issued pursuant to any adjustments (“Adjustments”)effected under any relevant Instrument, which Adjustments shall be made in compliance withthe provisions of the Catalist Rules for the time being in force (unless such compliance hasbeen waived by the SGX-ST) and the Articles of Association for the time being of ourCompany), does not exceed 100% of the post-Placement issued share capital excludingtreasury shares, and provided further that the aggregate number of Shares to be issuedother than on a pro rata basis to Shareholders (including Shares to be issued in pursuanceof Instruments made or granted pursuant to such authority but excluding Shares which maybe issued pursuant to Adjustments effected under any relevant Instrument) shall not exceed50% of the post-Placement issued share capital excluding treasury shares;
(2) in exercising such authority, our Company shall comply with the provisions of the CatalistRules for the time being in force (unless such compliance has been waived by the SGX-ST)and the Articles of Association for the time being of our Company; and
(3) unless revoked or varied by our Company in general meeting by ordinary resolution, theauthority so conferred shall continue in force until the conclusion of the next annual generalmeeting of our Company or the date by which the next annual general meeting of ourCompany is required by law to be held, whichever is the earlier.
For the purposes of this resolution and pursuant to Rules 806(3) and 806(4) of the Catalist Rules, the“post-Placement issued share capital” shall mean the total number of issued Shares of our Company(excluding treasury shares) immediately after the Placement, after adjusting for: (i) new Shares arisingfrom the conversion or exercise of any convertible securities; (ii) new Shares arising from exercisingshare options or vesting of share awards outstanding or subsisting at the time such authority is given,provided the options or awards were granted in compliance with the Catalist Rules; and (iii) anysubsequent bonus issue, consolidation or sub-division of Shares.
As at the date of this Offer Document, there is only one class of Shares in the capital of our Company,being the Shares. A summary of the Articles of Association of our Company relating to, among others,the voting rights of our Shareholders are set out in Appendix C entitled “Selected Extracts of our Articlesof Association” of this Offer Document.
As at the date of this Offer Document, the issued and paid-up share capital of our Company isS$8,109,398 comprising 380,793,000 Shares. Upon the issue and allotment of the New Shares which arethe subject of the Placement, the resultant issued and paid-up share capital of our Company will beincreased to S$17,669,398 comprising 404,693,000 Shares.
There are no founder, management, deferred or unissued Shares reserved for issuance for any purpose.
No person has, or has the right to be given, an option to subscribe for or purchase any securities of ourCompany or our subsidiaries. As at the Latest Practicable Date, no option to subscribe for Shares in ourCompany has been granted to, or was exercised by, any of our Directors or Executive Officers.
SHARE CAPITAL
55
Details of the changes in the issued and paid-up share capital of our Company since the date ofincorporation and immediately after the Placement are set out below:
Issued and paid-upNumber of Issued share capital
Shares (S$)
Issued and fully paid Shares as at incorporation 1 1
Issue of 374,999,999 Shares pursuant to the Restructuring Exercise 374,999,999 5,792,197
Issued and fully paid Shares immediately after the Restructuring Exercise 375,000,000 5,792,198
Issue of New Shares to Employee 2,022,000 808,800
Issue of 3,771,000 PPCF Shares to PPCF in satisfaction of the management fee payable to PPCF as Manager and Sponsor 3,771,000 1,508,400
Pre-Placement issued and paid-up share capital 380,793,000 8,109,398
New Shares issued pursuant to the Placement 23,900,000 9,560,000
Post-Placement issued and paid-up share capital 404,693,000 17,669,398
The issued share capital and the shareholders’ equity of our Company as at incorporation afteradjustments to reflect the Restructuring Exercise, the Issue of New Shares to Employee, the issue of3,771,000 PPCF Shares to PPCF and the issue and allotment of the Placement Shares pursuant to thePlacement, are set forth below.
After the RestructuringExercise, the Issue of New Shares toEmployee and theissue of 3,771,000
As at PPCF Shares to After the Incorporation PPCF Placement
Issued and fully paid-up shares (number of shares) 1 380,793,000 404,693,000
Issued and fully paid-up share capital (S$) 1.00 8,109,398 17,669,398
Total shareholders’ equity (S$) 1.00 8,109,398 16,475,798
Save as disclosed above, there have been no other changes in the share capital of our Company sincethe date of its incorporation on 11 August 2011.
SHARE CAPITAL
56
Save as set out in this section and in the following table, there were no changes in the issued and paid-up share capital or the number and classes of shares of each of our subsidiaries, within the three (3)years preceding the Latest Practicable Date:
Number of shares issued / Subscription Purpose of ResultantShare Capital Price Per Issue or Paid-Up
Date of Issue Contributed(1) share Investment Share Capital
CNMC
20 June 2009 487,000 / Share S$1.64 Working capital HK$12,187,000capital increased and to fund by HK$487,000 listing expenses
9 July 2010 162,467 / Share S$6.16 Conversion of HK$12,349,467capital increased convertible loans /by HK$162,467 bonds
9 July 2010 567,951 / Share S$2.46 Conversion of HK$12,917,418capital increased convertible loans / by HK$567,951 bonds
9 July 2010 169,204 / Share S$2.96 Conversion of HK$13,086,622capital increased convertible loans / by HK$169,204 bonds
9 July 2010 126,903 / Share S$3.94 Conversion of HK$13,213,525capital increased convertible loans / by HK$126,903 bonds
9 July 2010 60,913 / Share S$4.93 Conversion of HK$13,274,438capital increased convertible loans /by HK$60,913 bonds
14 October 2011 110,619 / Share S$4.52 Conversion of HK$13,385,057capital increased convertible loans / by HK$110,619 bonds
14 October 2011 176,990 / Share S$5.65 Conversion of HK$13,562,047capital increased convertible loans / by HK$176,990 bonds
14 October 2011 442,477 / Share S$6.78 Conversion of HK$14,004,524capital increased convertible loans /by HK$442,477 bonds
Note:
(1) For each equity amount contributed, the par value of HK$1.00 per share will be recorded as issued and paid-up share capitaland the remaining equity contributed will be recorded in the share premium account.
There were no changes in the issued and paid-up share capital or the number and classes of shares ofCMNM, MCS and CNMC-Nalata within the three (3) years preceding the Latest Practicable Date.
Save as disclosed in this section, no share in or debenture of our Company or our subsidiaries has beenissued, or is proposed to be issued, as fully or partly paid-up for cash, or for a consideration other thancash, since the date of incorporation of our Company and subsidiaries up to the date of lodgement of thisOffer Document.
SHAREHOLDERS
SHAREHOLDING AND OWNERSHIP STRUCTURE
Our Directors and Substantial Shareholders and their respective shareholdings immediately before andafter the Placement are summarised below:
Before the Placement After the Placement
Direct Interest Deemed Interest Direct Interest Deemed Interest
Number of Number of Number of Number ofShares % Shares % Shares % Shares %
(1) Innovation (China) Limited is a private investment holding company incorporated in Hong Kong whose shareholders areProfessor Lin Xiang Xiong (65%) and his wife, Tan Swee Ngin (35%). Lim Kuoh Yang is the son of Professor Lin Xiang Xiongand Tan Swee Ngin. As such, Professor Lin Xiang Xiong and Tan Swee Ngin are deemed interested in all the Shares held byInnovation (China) Limited by virtue of their respective interests in Innovation (China) Limited and Lim Kuoh Yang is deemedinterested in all the Shares deemed to be held by Professor Lin Xiang Xiong and Tan Swee Ngin under Section 7 of theCompanies Act.
(2) Pursuant to an agreement, Innovation (China) Limited will transfer 11,250,000 and 5,625,000 Shares to Chua Teo Leng andYeo Hung Hee Benjamin, respectively, as soon as practicable after the expiry of the moratorium period in consideration oftheir past contributions and support towards Innovation (China) Limited.
(3) Messiah Limited is a private investment holding company incorporated in the British Virgin Islands whose shareholders areChoo Chee Kong (51%) and his wife, Lim Sok Cheng Julie (49%). As such, Choo Chee Kong and Lim Sok Cheng Julie aredeemed to be interested in all the Shares held by Messiah Limited under Section 7 of the Companies Act.
(4) Pursuant to a deed of agreement dated 27 December 2007 (as amended by a supplemental agreement dated 22 September2011), Messiah Limited and Ng Eng Tiong nominated Innovation (China) Limited to receive 15,675,000 and 15,637,500Shares, respectively, of such Shares that Messiah Limited and Ng Eng Tiong should be issued pursuant to the Share SwapAgreement in consideration for the efforts of Innovation (China) Limited in achieving a successful Listing (the “Transfers”).The shareholdings of the above-mentioned are assumed to be after the Transfers.
(5) Tertius CNMC Limited is a private investment holding company incorporated in the British Virgin Islands whose shareholdersare Tertius Financial Group Pte. Ltd. (51%) and Lim Chee Hoong (49%). As such, Tertius Financial Group Pte. Ltd. and LimChee Hoong are deemed to be interested in all the Shares held by Tertius CNMC Limited under Section 7 of the CompaniesAct.
(6) Raintree Strategic Consultancy Limited is a private investment holding company incorporated in the British Virgin Islandswhose sole shareholder is Asiasons WFG Financial Ltd, a company listed on the Main Board of the SGX-ST. As such,Asiasons WFG Financial Ltd is deemed to be interested in all the Shares held by Raintree Strategic Consultancy Limitedunder Section 7 of the Companies Act.
(7) Caravel Holdings Group Ltd is a private investment holding company incorporated in the British Virgin Islands whose soleshareholder is Lee Kong Hian. As such, Lee Kong Hian is deemed to be interested in all the Shares held by Caravel HoldingsGroup Ltd under Section 7 of the Companies Act.
(8) Brilliant Elite Holdings Limited is a private investment holding company incorporated in the British Virgin Islands whose soleshareholder is Chen Cheng Zong. As such, Chen Cheng Zong is deemed to be interested in all the Shares held by BrilliantElite Holdings Limited under Section 7 of the Companies Act.
(9) Future Gain Enterprises Limited is a private investment holding company incorporated in the British Virgin Islands whose soleshareholder is Ruan Wenkai. As such, Ruan Wenkai is deemed to be interested in all the Shares held by Future GainEnterprises Limited under Section 7 of the Companies Act.
(10) EP Capital Inc. is a private investment holding company incorporated in the British Virgin Islands whose shareholders areChoo Chee Kong (51%) and high net worth individuals. As such, Choo Chee Kong is deemed to be interested in all theShares held by EP Capital Inc. under Section 7 of the Companies Act.
(11) Grande Pacific Limited is a private investment holding company incorporated in the British Virgin Islands whose soleshareholder is Ting Hong Lean. As such, Ting Hong Lean is deemed to be interested in all the Shares held by Grande PacificLimited under Section 7 of the Companies Act.
(12) China Lawyee Holdings Limited is a private investment holding company incorporated in the Cayman Islands whose soleshareholder is Zheng Shun Yan. As such, Zheng Shun Yan is deemed to be interested in all the Shares held by ChinaLawyee Holdings Limited under Section 7 of the Companies Act.
(13) Bellarine Enterprise Ltd is a private investment holding company incorporated in the British Virgin Islands whose soleshareholder is Lin Pei Li. As such, Lin Pei Li is deemed to be interested in all the Shares held by Bellarine Enterprise Ltdunder Section 7 of the Companies Act.
(14) Chen Yan is the Chief Financial Officer of our Company and is not related to the Directors, Substantial Shareholders,Controlling Shareholders and their Associates and is deemed to be an existing public shareholder. Accordingly, Chen Yan isincluded in the minimum of 15% Shares to be held in public hands in accordance with Rule 406(1) of the Catalist Rules.
(15) Pursuant to the Management Agreement and as part of PPCF’s fees as the Manager and Sponsor, our Company issued andallotted 3,771,000 PPCF Shares to PPCF, representing 0.99% of the issued share capital of our Company prior to thePlacement at the Placement Price for each Share. After the completion of the relevant moratorium periods as set out in thesection entitled “Shareholders – Moratorium” of this Offer Document, PPCF will dispose of its shareholding interests in ourCompany at its discretion.
SHAREHOLDERS
59
Save as disclosed above and in the section entitled “Directors, Management and Staff” of this OfferDocument, there are no other relationships among our Directors, Substantial Shareholders and ExecutiveOfficers.
Save as disclosed in the section entitled “Restructuring Exercise” of this Offer Document, there has beenno change in the percentage ownership of Shares of our Directors and Substantial Shareholders from theincorporation of our Company until the Latest Practicable Date.
The Shares held by our Directors and Substantial Shareholders do not carry voting rights that aredifferent from the New Shares. Our Directors are not aware of any arrangement, the operation of whichmay, at a subsequent date, result in a change in control of our Company.
As at the Latest Practicable Date, our Company has only one class of shares, being our Shares whichare in registered form. There is no restriction on the transfer of fully paid ordinary shares in scripless formexcept where required by law or the Catalist Rules.
There has not been any public take-over offer by a third party in respect of our Shares or by ourCompany in respect of the shares of another corporation or units of business trust which has occurredbetween the date of its incorporation to the Latest Practicable Date.
Save as disclosed above, our Company is not directly or indirectly owned or controlled, whether severallyor jointly by any other corporation, any government or person.
Save as disclosed above and in the sections entitled “Restructuring Exercise” and “Share Capital” of thisOffer Document, no shares or debentures were issued or agreed to be issued by our Company for cashor for a consideration other than cash during the last three (3) years preceding the date of lodgement ofthis Offer Document.
There are no Shares in our Company that are held by or on behalf of our Company or by the subsidiariesof our Company.
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP
Save as disclosed above and in the sections entitled “Share Capital” and “Restructuring Exercise” of thisOffer Document, there were no significant changes in the percentage of ownership of our Directors andSubstantial Shareholders in our Company between the date of incorporation on 11 August 2011 and theLatest Practicable Date.
SHAREHOLDERS
60
VENDORS
The names of the Vendors and the number of Vendor Shares which they will offer pursuant to thePlacement are set out below:
Shares held immediately Vendor Shares offered pursuant Shares held afterbefore the Placement to the Placement the Placement
% of pre- % of pre- % of post- % of post-Placement Placement Placement Placement
Number of share Number of share share Number of share Name Shares capital Shares capital capital Shares capital
Ng Eng Tiong 72,075,000 18.93 11,500,000 3.02 2.84 60,575,000 14.97
MORATORIUM
Substantial Shareholders
To demonstrate their commitment to our Group, Innovation (China) Limited, Messiah Limited and Ng EngTiong, which will collectively hold 262,100,000 Shares representing approximately 64.76% of ourCompany’s issued share capital immediately after the Placement, have each undertaken to the Managerand Sponsor not to, amongst others, sell, transfer, assign, dispose of, realise or enter into any agreementthat will directly or indirectly constitute or will be deemed as a disposal of any part of their respectiveshareholding interests in our Company immediately after the Listing for a period of 12 monthscommencing from our Company’s date of admission to Catalist (“Initial Period”), and for a period of six(6) months thereafter not to sell, transfer, assign, dispose of, realise or enter into any agreement that willdirectly or indirectly constitute or will be deemed as a disposal of any part of its shareholding interests inour Company to below 50.0% of their respective original shareholdings (adjusted for any bonus issue orsubdivision) in our Company. The total number of Shares which will be moratorised are as follows:
Percentage (%) of post-Placement
Shareholder Number of Shares share capital
Innovation (China) Limited 138,862,500 34.31
Messiah Limited 62,662,500 15.48
Ng Eng Tiong 60,575,000 14.97
Each of the shareholders of Innovation (China) Limited, namely Professor Lin Xiang Xiong and Tan SweeNgin, who own 65% and 35% of Innovation (China) Limited respectively, has undertaken to maintain theireffective interests in the issued share capital of Innovation (China) Limited and not to sell, realise, transferor otherwise dispose of or enter into any agreement that will directly or indirectly constitute or will bedeemed as a disposal of any part of his or her respective interests in the issued share capital ofInnovation (China) Limited for a period of 18 months commencing from our Company’s date of admissionto Catalist.
Each of the shareholders of Messiah Limited, namely Choo Chee Kong and Lim Sok Cheng Julie, whoown 51% and 49% of Messiah Limited respectively, has undertaken to maintain their effective interests inthe issued share capital of Messiah Limited and not to sell, realise, transfer or otherwise dispose of orenter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of anypart of his or her respective interests in the issued share capital of Messiah Limited for a period of 18months commencing from our Company’s date of admission to Catalist.
SHAREHOLDERS
Pre-Placement Investors
Each of the following Pre-Placement Investors has undertaken not to sell, transfer, assign, dispose of,realise, or enter into any agreement that will directly or indirectly constitute or will be deemed as adisposal of any portion of their respective shareholding interests in the Company being the profit portionof their investments as at the date of our Company’s admission to Catalist for a period of 12 monthscommencing from the date of our Company’s admission to Catalist. The total number of Shares which willbe moratorised are as follows:
Percentage (%) of post-Placement
Shareholder Number of Shares share capital
Lim Chee Hoong(1) 1,712,500 0.42
Lim Peng Liang David Llewellyn(2) 2,225,000 0.55
Grande Pacific Limited(3) 4,350,000 1.07
Notes:
(1) Lim Chee Hoong is a private individual investor and was introduced to our Company by Lee Kong Hian who has a deemedinterest in the Shares by virtue of his interest in Caravel Holdings Group Ltd and Tertius CNMC Limited.
(2) Lim Peng Liang David Llewellyn is a private individual investor and was introduced to our Company by our Executive Directorand Chief Executive Officer, Lim Kuoh Yang.
(3) Grande Pacific Limited is an investment holding company wholly-owned by Ting Hong Lean, who is the spouse of Lim KengHock, Jonathan. Lim Keng Hock, Jonathan was introduced to our Company by Business Corporate Services Pte Ltd.
Yu Long Fei is an individual investor from the PRC and owns 75% of Xiamen Shenkun. Yu Long Fei whowill hold 17,775,000 Shares representing approximately 4.39% of our Company’s issued share capitalimmediately after the Placement has undertaken not to sell, realise, transfer, or otherwise dispose of orenter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of anypart of his shareholding interests in the issued share capital of the Company for the Initial Period and fora period of six (6) months thereafter, not to sell, realise, transfer or otherwise dispose of or enter into anyagreement that will directly or indirectly constitute or will be deemed as a disposal of any part of itsshareholding interests in the issued share capital of the Company to below 50.0% of his originalshareholdings in (adjusted for any bonus issue or subdivision) our Company.
Others
Pursuant to the Management Agreement and as part of PPCF’s fees as the Manager and Sponsor, ourCompany issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of the issued sharecapital of our Company prior to the Placement, at the Placement Price for each Share.
PPCF has undertaken not to sell, transfer, assign, dispose of, realise or enter into any agreement that willdirectly or indirectly constitute or will be deemed as a disposal of any part of its shareholding interests inour Company for a period of six (6) months commencing from our Company’s date of admission to theCatalist and for a period of six (6) months thereafter not to sell, transfer, assign, dispose of, realise, orenter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of anypart of its shareholding interests in our Company to below 50.0% of its original shareholdings (adjustedfor any bonus issue or subdivision) in our Company. Upon completion of the aforesaid relevantmoratorium periods, PPCF will dispose of its relevant shareholding interests in our Company at itsdiscretion.
61
CAPITALISATION AND INDEBTEDNESS
62
The following table, which should be read in conjunction with the the “Combined Financial Statements forthe years ended 31 December 2008, 2009 and 2010” as set out in Appendix A of this Offer Documentand the “Unaudited Condensed Interim Combined Financial Information for the three months ended 31March 2011” as set out in Appendix B of this Offer Document and the section entitled “Management’sDiscussion and Analysis of Results of Operations and Financial Position” of this Offer Document, showsour cash and cash equivalents, capitalisation and indebtedness:
(i) as at 31 August 2011 based on our unaudited consolidated management accounts as adjusted togive effect to the Restructuring Exercise; and
(ii) as adjusted to give effect to the application of the net proceeds from the Placement, afterdeducting estimated listing expenses related to the Placement.
As adjusted for theAs at 31 net proceeds from
(US$’000) August 2011 the Placement
Cash and bank balancesCash and bank balances 108 6,837
Short term debtBank overdraft, unsecured – –Bank borrowings, secured – –Convertible loan – –Finance lease liabilities 8 8
Long term debtConvertible loan – –Finance lease liabilities 35 35
Total indebtedness 43 43
Total shareholders’ equity 4,769 11,498
Total capitalisation and indebtedness 4,812 11,541
As at the Latest Practicable Date, our Group does not have any banking facilities. The Convertible Loansof approximately US$3.10 million were converted into shares of CNMC pursuant to the RestructuringExercise.
To the best of our Directors’ knowledge, our Group is not in breach of any of the terms and conditions orcovenants associated with any of our financing arrangements which could materially affect our Group’sfinancial position and results or business operations, or the investments of our Shareholders.
Save as disclosed above, as at the Latest Practicable Date, our Group has no other borrowings orindebtedness.
Save as disclosed above and changes in our Group’s retained earnings arising from our day-to-dayoperations in the ordinary course of business, there were no material changes to our total capitalisationand indebtedness since 31 August 2011 to the Latest Practicable Date.
Operating Lease Commitments
Our Group leases its office premises under operating leases. As at 31 December 2010, 31 March 2011and the Latest Practicable Date, the future minimum lease payable under the operating leases contractedfor, are as follows:
As at 31 As at 31 As at the Latest(US$’000) December 2010 March 2011 Practicable Date
Within one (1) year 95 91 156After one (1) year but within five (5) years 94 67 120
Total 189 158 276
Capital Commitments
The capital commitments of our Group are mainly financed by internal cash resources. As at 31December 2010, 31 March 2011 and the Latest Practicable Date, our Group has the following capitalcommitments:
As at 31 As at 31 As at the Latest (US$’000) December 2010 March 2011 Practicable Date
Procurement of plant and equipment 628 – 248Commitments in respect of exploration and evaluation assets 195 2,158 567
Total 823 2,158 815
Contingent Liabilities
As at the Latest Practicable Date, to the best of our knowledge, information and belief, we are not awareof any contingent liabilities which may have a material effect on the financial position and profitability ofour Group.
CAPITALISATION AND INDEBTEDNESS
63
Our Group financed our operations through both internal and external sources of funds. Internal sourcesof funds refer to loans from Shareholders and our Directors. External sources of funds comprise mainlyloans from convertible loan holders and credit granted by suppliers. The principal uses of these funds areto finance capital expenditure and operating expenses such as rental, employees’ compensation andadministrative expenses.
Our Group recognised negative operating cash flows in FY2008, FY2009, FY2010 and 1Q2011 ofUS$0.70 million, US$1.06 million, US$2.04 million and US$0.43 million respectively, as our Group onlycommenced gold production in the second half of FY2010 and no revenue was generated in FY2008 andFY2009 while our Group was actively engaged in exploration and evaluation activities. As at 31December 2010 and 31 March 2011, our Group had cash and cash equivalents of approximatelyUS$1.11 million and US$0.45 million respectively. As at the Latest Practicable Date, our Group has cashand bank balances amounting to US$0.26 million.
Our Group recorded negative working capital of US$0.59 million and US$4.04 million as at 31 December2010 and 31 March 2011 respectively.
As at the Latest Practicable Date, our Group does not have any banking facilities.
Notwithstanding the negative working capital position of our Group as at 31 December 2010 and 31March 2011, our Directors are of the opinion that our Group has sufficient resources to meet our workingcapital needs and service our debt obligations as and when they fall due without foregoing any necessaryfuture capital expenditure, having considered the foregoing and the factors set out below:
(a) Our Group had started production of gold in the second half of FY2010. Going forward, our Groupintends to increase our mining and processing activities in the concession area to increase ourproduction of gold. The current capacity of the ore processing facility of our Group is approximately60,000t per annum, based on the total number of leaching vats available as at the LatestPracticable Date. Our Group intends to increase our ore processing capacity to 730,000t perannum in FY2012 by commissioning a heap leach facility to treat oxide ore from Rixen’s depositcommencing in the fourth quarter of 2011 to expand the existing ore processing facility. It isexpected that with the increase in ore processing capacity, our Group will continue to grow ourrevenue and operating cash flows and improve our working capital position. Average monthly goldproduction has increased significantly from 92.298 oz for the July 2010 to December 2010 periodto 214.274 oz for the January 2011 to August 2011 period;
(b) Despite the negative working capital position, our Group is in a net cash position with no bankborrowings as at the Latest Practicable Date. Our Directors believe that our Group will be able toobtain bank borrowings, if necessary, to fund our operations. As at the Latest Practicable Date,CNMC has cash and bank balances of US$0.26 million which can be utilised to meet any shortterm operational needs;
(c) The increase in negative working capital of our Group from approximately US$0.59 million as at 31December 2010 to approximately US$4.04 million as at 31 March 2011 was mainly due to thereclassification of approximately US$1.98 million of outstanding convertible loans issued by CNMCfrom non-current liabilities to current liabilities. The aggregate amount of outstanding convertibleloans of approximately US$3.10 million will be converted to shares of CNMC prior to theRestructuring Exercise and the Listing which will increase the shareholders’ equity and reduce thecurrent liabilities of our Group accordingly. Without taking into account US$1.98 million of theoutstanding convertible loans issued by CNMC, the negative working capital of our Group as at 31March 2011 is approximately US$2.06 million; and
WORKING CAPITAL
64
(d) Included in the current liabilities as at 31 March 2011 were loans from Directors and/or outstandingDirectors’ fees or salaries of approximately US$0.52 million owed to Professor Lin Xiang Xiong,Choo Chee Kong and Lim Kuoh Yang. These loans have no fixed repayment terms. TheseDirectors agree that they will not demand the repayment of such loans until such a time when suchrepayments would not adversely affect our Group’s working capital. In addition, Professor Lin XiangXiong, Choo Chee Kong and Lim Kuoh Yang have given an irrevocable undertaking dated 18August 2011 to continue to provide or procure financial support where necessary to our Group forthe next three (3) years after the Listing. Any loans advanced by the said Directors personallypursuant to the undertaking would be interest-free and will be due and payable on such date asmay be agreed between the said Directors and the Company, subject to review by the AuditCommittee taking into account the financial position of our Group (including the cash flow positionand balance sheet of our Group) and/or any other factors that may potentially affect the financialposition of our Group and the consent of the continuing sponsor of our Group after the listing ofour Company on Catalist.
The Audit Committee may, with the consent of the continuing sponsor, after a review of on-goingliquidity requirements of our Group, release such Directors from the said undertaking before theexpiry of the three (3) years period.
Our Board is of the reasonable opinion that, after having made due and careful enquiry and after takinginto account the cash flows to be generated from our Group’s operations and the existing cash and cashequivalents, the working capital available to our Group is sufficient for present requirements and for atleast 18 months after the listing of our Company on Catalist.
The Sponsor is of the reasonable opinion that, after having made due and careful enquiry and aftertaking into account the cash flows to be generated from our Group’s operations and the existing cash andcash equivalents, the working capital available to our Group is sufficient for present requirements and forat least 18 months after the listing of our Company on Catalist.
WORKING CAPITAL
65
Dilution is the amount by which the Placement Price paid by the subscribers of our Shares in thisPlacement exceeds our NAV per Share of our Group immediately after the Placement. Our NAV perShare as at 31 March 2011, after adjusting for the Restructuring Exercise but before adjusting for theestimated net proceeds due to our Company from the Placement and based on our Company’s pre-Placement issued and paid-up share capital of 380,793,000 Shares, was approximately 1.64 cents perShare.
Pursuant to the Placement in respect of 23,900,000 New Shares at the Placement Price, our NAV perShare as at 31 March 2011 after adjusting for the Restructuring Exercise and the estimated net proceedsdue to our Company from the Placement and based on our Company’s post-Placement issued and paid-up share capital of 404,693,000 Shares would have been approximately 3.61 cents. This represents animmediate increase in NAV per Share of approximately 1.97 cents to our existing Shareholders and animmediate dilution in NAV per Share of approximately 36.39 cents or approximately 90.98% to our newpublic investors.
The following table illustrates the dilution on a per Share basis as at 31 March 2011:
Cents
Placement Price per Share 40.00
NAV per Share adjusted for the Restructuring Exercise and based 1.64on the pre-Placement share capital of 380,793,000 Shares
Increase in NAV per Share attributable to existing Shareholders 1.97
NAV per Share after the Placement 3.61
Dilution in NAV per Share to new public investors 36.39
Dilution in NAV per Share to new public investors (%) 90.98
Our Directors have not acquired any Shares since incorporation. The following table summarises the totalnumber of Shares (as adjusted for the Restructuring Exercise) acquired by our Substantial Shareholderssince our incorporation, the total consideration paid by them and the effective cash cost per Share to ourSubstantial Shareholders of Shares acquired by them from the date of incorporation, and the publicShareholders who subscribe for and/or purchase the Placement Shares at the Placement Price pursuantto the Placement:
Total Effective cash Number of consideration cost per Share
(1) Innovation (China) Limited is a private investment holding company incorporated in Hong Kong whose shareholders areProfessor Lin Xiang Xiong (65%) and his wife, Tan Swee Ngin (35%). As such, Professor Lin Xiang Xiong and Tan Swee Nginare deemed to be interested in all the Shares held by Innovation (China) Limited under Section 7 of the Companies Act.
(2) Pursuant to an agreement, Innovation (China) Limited will transfer 11,250,000 and 5,625,000 Shares to Chua Teo Leng andYeo Hung Hee Benjamin, respectively, as soon as practicable after the expiry of the moratorium period in consideration oftheir past contributions and support towards Innovation (China) Limited.
DILUTION
66
(3) Messiah Limited is a private investment holding company incorporated in the British Virgin Islands whose shareholders areChoo Chee Kong (51%) and his wife, Lim Sok Cheng Julie (49%). As such, Choo Chee Kong and Lim Sok Cheng Julie aredeemed to be interested in all the Shares held by Messiah Limited under Section 7 of the Companies Act.
(4) Pursuant to a deed of agreement dated 27 December 2007 (as amended by a supplemental agreement dated 22 September2011), Messiah Limited and Ng Eng Tiong nominated Innovation (China) Limited to receive 15,675,000 and 15,637,500Shares, respectively, of such Shares that Messiah Limited and Ng Eng Tiong should be issued pursuant to the Share SwapAgreement in consideration for the efforts of Innovation (China) Limited in achieving a successful Listing (the “Transfers”).The shareholdings of the above-mentioned are assumed to be after the Transfers.
DILUTION
67
Our Group was formed through the Restructuring Exercise which involved an acquisition and therationalisation of our corporate and shareholding structure for the purposes of the Listing. Pursuant to theRestructuring Exercise, our Company became the holding company of our Group.
(a) CNMC
CNMC was incorporated in Hong Kong on 28 October 2006 as a limited company with an initialpaid-up capital of HK$10,000 comprising 10,000 shares held by Innovation (China) Limited.
On 17 December 2006, Innovation (China) Limited increased its shareholding in CNMC to4,680,000 shares at the issue price of HK$1 each and Choo Chee Kong as well as Ng Eng Tiongeach subscribed to 3,510,000 shares in CNMC at the issue price of HK$1 each.
On 21 November 2007, Choo Chee Kong and Ng Eng Tiong transferred their shares to RaintreeStrategic Consultancy Limited, Messiah Limited and Sim Yap Kheng such that the resultantshareholding of CNMC was as follow:
Name of Shareholder No. of shares in CNMC % Shareholding
On 20 June 2009, Tertius CNMC Limited subscribed for 487,000 shares in CNMC at the issueprice of S$1.64 each.
Pursuant to convertible bond/loan agreements entered between CNMC and several investors setout in the section entitled “General and Statutory Information - Material Contracts”, outstandingconvertible loans/bonds were converted into equity in CNMC as follows:
No. of Shares Issue priceDate of allotment Name of Shareholder in CNMC per share
9 July 2010 Caravel Holdings Group Ltd(1) 567,951 S$2.46
9 July 2010 Brilliant Elite Holdings Limited 169,204 S$2.96
9 July 2010 Seow Seng Wei 126,903 S$3.94
9 July 2010 Future Gain Enterprises Limited 60,913 S$4.93
9 July 2010 EP Capital Inc. 32,493 S$6.16
9 July 2010 Ma Kwan Chun 25,995 S$6.16
9 July 2010 Phuah Bee Lee 63,363 S$6.16
9 July 2010 Chan Lie Leng 16,246 S$6.16
9 July 2010 Wong Chock Puan Albert 24,370 S$6.16
14 October 2011 Lim Chee Hoong 110,619 S$4.52
14 October 2011 Grande Pacific Limited 442,477 S$6.78
14 October 2011 Lim Peng Liang David Llewellyn 176,990 S$5.65
Note:
(1) Pursuant to a restructuring agreement dated 27 December 2010 (as supplemented by the letter dated 26 September2011), Caravel Holdings Group Ltd agreed to transfer 121,704 and 324,543 shares in CNMC to Bellarine EnterpriseLtd and Ng Han Meng respectively.
RESTRUCTURING EXERCISE
68
(b) Incorporation of our Company
Our Company was incorporated in Singapore on 11 August 2011 in accordance with theCompanies Act as a private company limited by shares with an initial paid-up capital of S$1.00comprising one (1) Share held by Lim Kuoh Yang.
On 14 October 2011, Innovation (China) Limited acquired one (1) Share from Lim Kuoh Yang.
(c) Restructuring Exercise
Pursuant to the Share Swap Agreement dated 9 October 2011 entered into between our Companyand the shareholders of CNMC, our Company acquired the entire issued share capital of CNMC,comprising 14,004,524 ordinary shares in the capital of CNMC, for an aggregate consideration ofapproximately S$5.8 million (the approximate equivalent of US$4.5 million based on the exchangerate of S$1.00 to US$0.7780 as at 31 December 2010) (“Purchase Consideration”). ThePurchase Consideration was arrived at based on the audited NAV of CNMC as at 31 December2010.
Pursuant to a deed of agreement dated 27 December 2007 (as amended by a supplementalagreement dated 22 September 2011), Messiah Limited and Ng Eng Tiong nominated Innovation(China) Limited to receive 15,675,000 and 15,637,500 Shares respectively, of such Shares thatMessiah Limited and Ng Eng Tiong should be issued pursuant to the Share Swap Agreement, inconsideration for the efforts of Innovation (China) Limited in achieving a successful Listing.
In consideration for services rendered in introducing investors to CNMC, Messiah Limitednominated China Lawyee Holdings Limited to receive 6,525,000 Shares, of such Shares thatMessiah Limited should be issued pursuant to the Share Swap Agreement.
Pursuant to a sale and purchase agreement dated 25 February 2011 (as amended by asupplemental agreement dated 22 September 2011), Innovation (China) Limited nominated YuLong Fei to receive 17,775,000 Shares of such Shares that Innovation (China) Limited should beissued pursuant to the Share Swap Agreement.
RESTRUCTURING EXERCISE
69
The Purchase Consideration was satisfied by the issuance of 374,999,999 Shares, credited as fullypaid, to the following shareholders of CNMC on 14 October 2011:
Percentage of Issued Share Capital after
Name of Shareholder Number of Shares Restructuring Exercise
Our Group structure after the Restructuring Exercise and as at the date of this Offer Document is asfollows:
Notes:
(1) CNMC is the registered holder of 87.5% interest in MCS. CNMC has an arrangement with the Kelantan State Government tohold 7.5% interest in MCS for the Kelantan State Government, and such interest will be transferred from CNMC in duecourse. The effective percentage interest of CNMC in MCS is therefore 80% as at the Latest Practicable Date.
(2) CMNM’s mining rights are granted by KSEDC by way of a contract pursuant to the mining lease granted to it by KelantanState Authority over the relevant mining area.
(3) CNMC entered into an agreement dated 14 November 2007 with Nalata Enterprise Sdn. Bhd, (a shareholder holding 5% ofthe total issued share capital of CNMC-Nalata), for the contractual rights over an expired mining certificate over the relevantmining area (the “Transfer Agreement”). In consideration of Nalata Enterprise Sdn. Bhd. granting CNMC-Nalata the right tomine over the relevant area, CNMC will pay the renewal fees for the mining certificate. The Transfer Agreement shallterminate if the mining certificate is not renewed within six (6) months of the date of the Transfer Agreement. As at the LatestPracticable Date, CNMC has not paid the renewal fees. Notwithstanding this, the Transfer Agreement is still subsisting andremains in effect based on mutual verbal understanding between CNMC and Nalata Enterprise Sdn. Bhd.
100%
80%(1) %08 %18
Mining rights covering an area
of 10 sq km(2)
Exploration licence covering an area of up to 62.8 sq km
which has expired. This licence is in the process of
being renewed.
Mining rights covering an area of 3.5 sq km, which has expired
and our Group is currently assessing the commercial feasibility of renewing such
mining rights.(3)
CMNM MCS CNMC-Nalata
The Company
CNMC
in Ulu Sokor, Kelantan, Malaysia
GROUP STRUCTURE
71
The following summary financial information should be read in conjunction with the full text of this OfferDocument, including the sections entitled “Management’s Discussion and Analysis of Results ofOperations and Financial Position” and the “Combined Financial Statements for the years ended 31December 2008, 2009 and 2010” as set out in Appendix A of this Offer Document and the “UnauditedCondensed Interim Combined Financial Information for the three months ended 31 March 2011” as setout in Appendix B of this Offer Document.
A summary of the financial information of our Group in respect of FY2008, FY2009, FY2010, 1Q2010and 1Q2011 is set out below:
Total comprehensive loss for the year/period (1,018,152) (1,076,613) (1,892,189) (681,508) (670,126)
(Loss) per Share (US cents)(1) (0.26) (0.28) (0.46) (0.17) (0.17)
Adjusted (loss) per Share (cents)(2) (0.24) (0.27) (0.43) (0.16) (0.16)
Notes:
(1) For comparative purposes, loss per Share for the period under review have been calculated based on loss attributable toowners of the Company and the pre-Placement share capital of 380,793,000 Shares.
(2) For comparative purposes, loss per Share for the period under review have been calculated based on loss attributable toowners of the Company and the post-Placement share capital of 404,693,000 Shares.
SELECTED COMBINED FINANCIAL INFORMATION
73
Financial Position of our Group
Audited UnauditedAs at As at
(US$) 31 December 2010 31 March 2011
AssetsExploration and evaluation assets 18,475 203,208Mine properties 4,401,346 4,400,338Property, plant and equipment 1,536,383 2,168,040Deferred tax assets 358,845 373,379
Non-current assets 6,315,049 7,144,965
Inventories 120,714 123,385Other receivables, prepayments and deposits 542,197 517,182Cash and cash equivalents 1,113,671 448,925
Current assets 1,776,582 1,089,492
Total assets 8,091,631 8,234,457
Equity attributable to equity holders of the CompanyShare capital 7,291,308 7,291,308Accumulated losses (4,577,383) (5,210,218)Translation reserves 11,089 10,231
Interest-bearing borrowings 8,046 1,985,921Derivative financial instrument 115,440 109,171Trade and other payables 2,239,215 3,030,523Current tax liabilities 114 109
Current liabilities 2,362,815 5,125,724
Total liabilities 5,526,367 6,339,319
Total equity and liabilities 8,091,631 8,234,457
SELECTED COMBINED FINANCIAL INFORMATION
74
The following discussion of our results of operations and financial position should be read in conjunctionwith the “Combined Financial Statements for the years ended 31 December 2008, 2009 and 2010” as setout in Appendix A of this Offer Document and the “Unaudited Condensed Interim Combined FinancialInformation for the three months ended 31 March 2011” as set out in Appendix B of this Offer Document”.This discussion contains forward-looking statements that involve risks and uncertainties. Our actualresults may differ significantly from those projected in the forward-looking statements. Factors that mightcause future results to differ significantly from those projected in the forward-looking statements include,but are not limited to, those discussed below and elsewhere in this Offer Document, particularly in thesection entitled “Risk Factors” of this Offer Document. Under no circumstances should the inclusion ofsuch forward-looking statements herein be regarded as a representation, warranty or prediction withrespect to the accuracy of the underlying assumptions by our Company, the Vendors, the Manager andSponsor, the Joint Placement Agents or any other person. Investors are cautioned not to place unduereliance on these forward-looking statements that speak only as of the date hereof. Please refer to thesection entitled “Cautionary Note on Forward-Looking Statements” of this Offer Document.
Except as otherwise indicated, the following discussion is based on our audited financial statements,which have been prepared in accordance with the Singapore Financial Reporting Standards.
OVERVIEW
We are principally engaged in the business of exploration and mining of gold and the processing ofmined ore into gold doré for subsequent sale.
Please refer to the section entitled “General Information on our Company and our Group - BusinessOverview” of this Offer Document for further details of our business activities.
PRINCIPAL COMPONENTS OF OUR INCOME STATEMENT
Revenue
Our revenue is derived mainly from sales of gold doré bars produced. Our Group holds the right to mineand produce gold from gold deposits at the Sokor Block. Our Group commenced its first gold pour in July2010 with the subsequent off-take of the refined gold by The Perth Mint. Prior to this, our Group wasmainly engaged in exploration and evaluation activities.
Gold doré bars produced by our Group are transported to The Perth Mint for refining to a minimumstandard of 99.95% purity. According to the Refining Agreement signed with The Perth Mint, CMNM hasthe discretion to sell the refined gold to The Perth Mint or require The Perth Mint to credit the refined goldinto CMNM’s London metal account which CMNM could subsequently sell to third parties in the future.
Revenue from the sale of gold doré bars is recognised when (i) ownership is passed to customers; (ii) nofurther processing is required from our Group; (iii) the quantity of gold is determined; and (iv) selling priceis fixed. Our Group generally recognises revenue from the sales of gold doré bars upon confirmation ofthe sale of the gold doré bars from our Group to The Perth Mint or any customers that our Group maysell the gold doré bars to. In cases of the sale of gold dóre bars to The Perth Mint, the sale price of golddoré bars is quoted by The Perth Mint and agreed by our Group, with reference to the Reuters Inter Bankquoted price. Any sales of the silver by-product are used to offset our operating expenses and do notform our main revenue stream.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
75
Our revenue is mainly dependent on the following factors:
(a) Price of gold
Our principal product is gold doré bar. The sale prices of gold doré bars are mainly determinedbased on the prevailing gold price in the international market. Gold prices have fluctuatedsignificantly during FY2008, FY2009, FY2010 and 1Q2011. The following table sets forth monthlyaverage London Fix gold price for FY2008, FY2009, FY2010 and up to August 2011, the monthpreceding the Latest Practicable Date:
US$ per oz
January 2008 889.6
February 2008 922.3
March 2008 968.4
April 2008 909.7
May 2008 888.7
June 2008 889.5
July 2008 939.8
August 2008 839.0
September 2008 829.9
October 2008 806.6
November 2008 760.9
December 2008 816.1
January 2009 858.7
February 2009 943.2
March 2009 924.3
April 2009 890.2
May 2009 928.6
June 2009 945.7
July 2009 934.2
August 2009 949.4
September 2009 996.6
October 2009 1,043.2
November 2009 1,127.0
December 2009 1,134.7
January 2010 1,118.0
February 2010 1,095.4
March 2010 1,113.3
April 2010 1,148.7
May 2010 1,205.4
June 2010 1,232.9
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
76
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
77
US$ per oz
July 2010 1,193.0
August 2010 1,215.8
September 2010 1,271.0
October 2010 1,342.0
November 2010 1,369.9
December 2010 1,390.6
January 2011 1,356.4
February 2011 1,372.7
March 2011 1,424.0
April 2011 1,473.8
May 2011 1,510.4
June 2011 1,528.7
July 2011 1,572.8
August 2011 1,755.8
Source: World Gold Council
The price of gold is affected by many factors, such as supply and demand in the internationalmarket, selling and purchasing activities by central banks, alternative investment avenues,fluctuations in exchange rates among major currencies, expectation of inflation rates, interest ratesand global economic and political trends.
(b) Production volume
Production volume is determined by the amount of gold resources and reserves at our concessionarea, processing capacity, the efficiency of our gold recovery process which is in turn dependenton the grade of ore placed in the leaching vats and the weather condition. Gold productioncommenced in July 2010. Refined gold output was 553.787 oz in the July 2010 to December 2010period and 239.337 oz in the January 2011 to March 2011 period.
We have three leaching vats in our processing facility which are designed with processing capacityof 60,000t per annum. Approximately 6,000t of ore were leached and processed in the July 2010 toDecember 2010 period and 2,500t in the January 2011 to March 2011 period.
Please refer to the section entitled “Risk Factors” of this Offer Document for other factors which mayaffect our revenue.
Other operating income
Other operating income comprises mainly of foreign exchange gains and unwinding of the discount onthe derivative financial instrument relating to the conversion rights arising from convertible loans issuedby CNMC. Other operating income was approximately US$0.06 million, US$0.03 million, US$0.27 millionand US$0.04 million for FY2008, FY2009, FY2010 and 1Q2011 respectively.
Operating expenses
Our operating expenses comprise mainly costs incurred for site and factory operations, amortisationcosts for mining rights, depreciation expenses for property, plant and equipment, rental expenses onoperating lease, royalty fees paid to the Kelantan State Authority, remuneration for employees anddirectors and costs incurred in relation to services provided by contractors.
Site and factory expenses
Site and factory expenses mainly include cost of consumables and diesels used in the productionprocess, security expenses to safeguard the production and processing facilities, expenses in relation toexploration and production plant and processing facilities, and food and accommodation expenses paidfor the workers at the mining site. Proceeds from the sale of silver as a by-product (if any) are used tooffset the site and factory expenses.
Site and factory expenses accounted for approximately 3.2%, 4.2%, 9.3% and 13.5% of total operatingexpenses in FY2008, FY2009, FY2010 and 1Q2011 respectively.
Amortisation and depreciation expenses
Our mining rights is amortised by straight-line method over a period of ten years, from April 2008 to April2018. Expenditures incurred to conduct drilling, geological and related exploration and evaluation studiesare capitalised subsequent to the establishment of economic recoverability and are transferred to mineproperties. Such capitalised expenditures are amortised using unit-of-production method based on theestimated total ounces of recoverable gold deposits contained in proven and probable reserves. Noamortisation is charged during the exploration and evaluation phase. Other plant and equipment aredepreciated by straight-line method over their respective estimated useful lives.
Amortisation and depreciation expenses accounted for approximately 7.4%, 10.9%, 8.0% and 10.1% oftotal operating expenses in FY2008, FY2009, FY2010 and 1Q2011 respectively.
Rental expenses on operating leases
Rental expenses are mainly incurred for our Group’s leased offices in Singapore and Malaysia, andmachine and equipment used for operating activities.
Rental expenses accounted for 7.2%, 9.2%, 7.0% and 6.1% of total operating expenses in FY2008,FY2009, FY2010 and 1Q2011 respectively.
Royalty fees and tribute
Royalty fees and tribute amounting to 5% and 3% of the value of gold produced are calculated based onMalaysia local market gold prices on the day of gold pour and paid to the Kelantan State Authority andKSEDC respectively after each gold pour.
Royalty fees and tribute accounted for 1.5% and 3.8% of total operating expenses and 8.3% and 8.6% ofrevenue in FY2010 and 1Q2010 respectively.
Remuneration for employees and directors
Remuneration for employees includes monthly salaries and wages and compulsory contributions madefor full-time employees as well as temporary workers.
Remuneration for directors includes directors’ fees, salaries and relevant CPF contributions made for thedirectors.
Remuneration for employees and directors accounted for 18.1%, 24.6%, 42.1% and 31.1% of totaloperating expenses in FY2008, FY2009, FY2010 and 1Q2011 respectively.
Others
Other expenses include, inter alia, marketing and publicity expenses, utilities expenses, office andadministrative expenses, travelling and transportation expenses and professional fees for accounting,legal and compliance work performed by relevant professional parties and changes in inventories offinished goods.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
78
Other operating expenses
Other operating expense is mainly due to foreign exchange losses. We incurred expenses denominatedin MYR, S$ and RMB. Therefore any depreciation of our reporting currency, US$ against MYR, S$, andRMB will result in foreign exchange losses.
Finance income and expenses
Finance income mainly includes interest income on cash and cash equivalents.
Finance expenses mainly comprise interest expense on finance lease liabilities, interest and other relatedborrowings costs incurred mainly in relation to loans from non-bank lenders.
Taxation
Income tax expense comprises current tax expense and deferred tax. Current tax is expected tax payableon the taxable income. Deferred tax is a result of temporary differences between carrying amounts ofassets and liabilities for financial reporting purpose and tax purpose.
Deferred tax asset were recognised in FY2010 and 1Q2011, as we expect to have future taxable profitsto utilise our unutilised tax losses and capital allowances. Going forward, before we obtain the pioneer taxcertificate which entitles us to tax exemption, our Group may be subject to the Malaysian corporate taxrate of 25% if our unutilised tax losses and capital allowances are not sufficient to offset our taxableprofits.
Please refer to the section entitled “Taxation” of this Offer Document for further details.
REVIEW OF RESULTS OF OPERATIONS
Breakdown of past performance by business division and geographical markets
We have only one business division for FY2008, FY2009, FY2010 and 1Q2011 and one customer inAustralia for FY2010 and 1Q2011. All of our operations are based in Malaysia. Therefore, a segmentationof our financial performance by business division and geographical regions will not be meaningful.
REVIEW OF PAST OPERATING PERFORMANCE
FY2009 vs FY2008
Revenue
No revenue was generated by our Group in FY2008 and FY2009.
Our Group was mainly engaged in exploration and evaluation activities in FY2008 and FY2009.Construction of production and processing facilities only commenced in the third quarter of FY2009.
Other operating income
In FY2008, other operating income of US$0.06 million was mainly a result of foreign exchange gain dueto appreciation of US$ against S$ and MYR as most of our payments for operating expenses weredenominated in S$ and MYR.
In FY2009, other operating income of US$0.03 million was a result of unwinding of the discount on thederivative financial instrument relating to the conversion rights arising from convertible loans issued byCNMC.
Operating expenses
Total operating expenses decreased by US$0.06 million or 6.0% from US$1.00 million in FY2008 toUS$0.94 million in FY2009.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
79
The decrease was mainly due to a decrease in office and administrative expenses and marketing andpublicity expenses of approximately US$0.02 million and US$0.01 million respectively. In addition, therewas a one-time write-off of pre-feasibility cost and bad debts written off of approximately US$0.27 millionrecorded in FY2008 before the mining rights was obtained which was not recorded in FY2009.
The decrease in operating expenses was offset by an increase in amortisation and depreciationexpenses of approximately US$0.03 million, an increase in rental of operating lease of approximatelyUS$0.01 million, an increase in employees’ compensation of approximately US$0.02 million, an increasein key management’s remuneration of approximately US$0.04 million, an increase in sub-contractorexpenses of approximately US$0.02 million, an increase in professional fees of approximately US$0.11million and foreign exchange loss of approximately US$0.03 million in FY2009.
The increase in amortisation expense of mining rights in FY2009 was due to full-year amortisation inFY2009 as compared to eight-month amortisation in FY2008 as the mining rights was acquired in April2008. The increase in depreciation expenses, rental of operating leases and employees’ compensationwere a result of an increase in operating activities. In FY2009, we increased our exploration andevaluation activities and commenced constructing our production and processing facilities in ourconcession area, resulting in more equipment being purchased or leased and more labour being hired.Higher professional expenses such as accounting and legal fees were incurred in FY2009 in preparationfor the listing exercise of our Group. In FY2009, US$ weakened against other currencies due to the globaleconomic crisis which resulted in a net foreign exchange loss recognised by our Group as compared to aforeign exchange gain recognised by our Group in FY2008.
However, increase in our operating expenses was mainly offset by a one-time write-off of pre-feasibilityand bad debts written off recorded in FY2008 before the mining rights was obtained.
Finance costs
Finance costs increased by approximately US$0.11 million or 183.3% from US$0.06 million in FY2008 toUS$0.17 million in FY2009 mainly due to higher borrowing costs incurred for raising more funds to meetour operational funding requirements in FY2009, increase in interest expenses for new convertible loansissued in FY2009 as well as existing convertible loans which incurred interest expenses for the full year inFY2009 as compared to a partial year in FY2008 as the convertible loans were issued between June toOctober 2008.
Loss before income tax
Loss before income tax increased by approximately US$0.09 million or 9.1% from US$0.99 million inFY2008 to US$1.08 million in FY2009 which was mainly as a result of an increase in operatingexpenses, increase in foreign exchange loss, and increase in finance costs.
FY2010 vs FY2009
Revenue
We commenced gold production in the second half of FY2010 and revenue amounted to approximatelyUS$0.53 million for FY2010. No revenue was recorded in FY2009 as we had not yet commencedproduction of gold.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
80
Operating expenses
Total operating expenses increased by approximately US$1.93 million or 204.3% from US$0.94 million inFY2009 to US$2.87 million in FY2010. The increase was mainly due to royalty fees and tribute paid tothe Kelantan State Authority and KSEDC of approximately US$0.04 million, an increase in site andfactory expenses of approximately US$0.23 million, increase in amortisation and depreciation expensesof approximately US$0.13 million, increase in rental of operating leases of approximately US$0.11million, increase in employees’ and directors’ compensation of approximately US$0.97 million, increase incontractor expenses of approximately US$0.02 million, increase of net foreign exchange loss ofapproximately US$0.28 million and increase in expenses including marketing and publicity expenses,office and administration expenses, travelling and transportation expenses and professional fees ofapproximately US$0.21 million. This is offset by changes in inventories of finished goods of approximatelyUS$0.08 million.
Royalty fees and tribute which are attributable to the production of gold were only incurred with thecommencement of gold production in FY2010. Increase in depreciation expenses was a result of thecommencement of depreciation of our property, plant and equipment which were acquired or constructedin conjunction with the commencement of gold production in FY2010. Increases in site and factoryexpenses, rental of operating leases, employee compensation, marketing and publicity expenses, officeand administrative expenses and travelling and transportation expenses were a result of an increase inour operating activities. In particular, the commencement of production resulted in more equipment beingpurchased or leased and more labour being hired. Remuneration to the directors of CNMC was first paidout in FY2010. Increase in contractor expenses was a result of more contractors and consultants ourGroup engaged to provide advisory services in relation to construction of production and processingfacilities and in preparation of the commencement of gold production. In addition, higher professionalexpenses were incurred for the preparation of our Group’s listing exercise. In FY2010, we incurred higherexpenses denominated in S$, MYR and RMB, all of which appreciated against US$ at a faster pace thanin FY2009, resulting in higher foreign exchange loss in FY2010.
Finance costs
Increase in finance costs of approximately US$0.05 million or 29.4% from US$0.17 million in FY2009 toUS$0.22 million in FY2010 was mainly due to the increase in interest payments as CNMC raisedadditional funds by issuing more convertible loans in FY2010.
Loss before income tax
Loss before income tax increased by approximately US$1.21 million or 112.0% from US$1.08 million inFY2009 to US$2.29 million in FY2010 as a result of increases in operating expenses and in financecosts, which were offset by revenue being first recorded in FY2010.
1Q2011 vs 1Q2010
Revenue
No revenue was generated by us in 1Q2010 as we did not produce any gold during this period.
We were mainly engaged in exploration and evaluation activities and construction of production andprocessing facilities in 1Q2010.
Revenue amounted to US$0.54 million in 1Q2011 arising from production of gold of 239.337oz.
Other operating income
In 1Q2010 and 1Q2011, other operating income of US$0.02 million and US$0.04 million was both aresult of unwinding of the discount on the derivative financial instrument relating to the conversion rightsarising from convertible loans issued by CNMC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
81
Operating expenses
Total operating expenses increased by approximately US$0.57 million or 87.7% from US$0.65 million in1Q2010 to US$1.22 million in 1Q2011.
The increase was in line with our increased business activities, especially the production of gold dorébars which commenced in July 2010. This resulted in increases in most of our operating expensesincluding site and factory expenses, amortization and depreciation expenses and rental expense onoperating lease of approximately US$0.29 million. Royalty fees increased by US$0.05 million, as therewas no royalty fees paid in 1Q2010 which was before the commencement of our gold production. Moreemployees were hired to support the production, resulting in increases in employees’ compensation ofUS$0.16 million, office and administration expenses of US$0.02 million, and travelling and transportationexpenses of US$0.03 million. Marketing and publicity expenses increased by US$0.03 million as weengaged in more charitable and community activities to benefit residents of the villages near ourproduction site. In addition, higher professional expenses of approximately US$0.06 million were incurredfor the preparation of our Group’s listing exercise.
Increases in our operating expenses was mainly offset by decrease in contractor expenses of US$0.03million, which was incurred and paid to consultants in relation to the design and construction of ourproduction facilities. There were no contractor expenses in 1Q2011 as construction of our productionfacilities was completed in FY2010. There were also decreases in foreign exchange loss and keymanagement’s remuneration of approximately US$0.07 million and US$0.03 million respectively.
Finance costs
Finance costs increased by approximately US$0.03 million or 42.9% from US$0.07 million in 1Q2010 toUS$0.10 million in 1Q2011, mainly as a result of interests paid on additional convertible loans issuedafter 1Q2010.
Loss before income tax
Loss before income tax decreased by approximately US$0.03 million or 4.2% from US$0.71 million in1Q2010 to US$0.68 million in 1Q2011, mainly as a result of revenue generated in 1Q2011.
REVIEW OF PAST FINANCIAL POSITION OF OUR GROUP
As at 31 December 2010
Non-current assets
As at 31 December 2010, non-current assets of approximately US$6.32 million accounted forapproximately 78.0% of total assets. Non-current assets comprise exploration and evaluation assets,mine properties and deferred tax assets as well as property, plant and equipment.
Exploration and evaluation assets amounted to approximately US$0.02 million or 0.3% of total non-current assets. Mine properties, which included the carrying value of mining rights, mine design inprogress and the value of producing mines transferred from exploration and evaluation assets(1) amountedto approximately US$4.40 million or 69.6% of total non-current assets.
Property, plant and equipment as at 31 December 2010 amounted to approximately US$1.54 million or24.4% of total non-current assets.
As at 31 December 2010, deferred income tax assets of approximately US$0.36 million accounted forapproximately 5.68% of total non-current assets.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
82
Current assets
As at 31 December 2010, total current assets of approximately US$1.78 million accounted forapproximately 22.0% of total assets. Current assets consist of inventories, other receivables,prepayments and deposits and cash and cash equivalents.
As at 31 December 2010, inventories of approximately US$0.12 million comprise of gold doré bars andconsumables used in our Group’s production and accounted for approximately 6.7% of total currentassets. Other receivables, prepayments and deposits of US$0.54 million accounted for approximately30.3% of total current assets.
Cash and cash equivalents of US$1.11 million accounted for 62.4% of total current assets.
Non-current liabilities
As at 31 December 2010, total non-current liabilities of approximately US$3.16 million accounted forapproximately 57.2% of total liabilities and comprised the non-current portion of convertible loans ofapproximately US$3.04 million, finance lease liabilities of US$0.04 million, rehabilitation provision ofapproximately US$0.04 million and non-current portion of conversion rights of approximately US$0.04million. Provision for the future cost of rehabilitating mine sites and related production facilities are madeon a discounted basis at the time of developing the mines and installing and using those facilities.
Current liabilities
As at 31 December 2010, current liabilities of approximately US$2.36 million accounted for 42.8% of totalliabilities. Current liabilities mainly consisted of current portion of conversion rights of US$0.12 milion andtrade and other payables of approximately US$2.24 million which included trade payables of US$0.10million, accrued operating expenses of US$1.48 million, remuneration and fees due to key managementof US$0.40 million and loans from directors of US$0.23 million.
Shareholders’ equity
As at 31 December 2010, shareholders’ equity amounted to approximately US$2.57 million comprisingmainly US$7.29 million of share capital which was offset by a total of US$4.57 million of accumulatedloss and translation reserves and non-controlling interest of US$0.16 million. Accumulated loss wasmainly operating expenses incurred by our Group to reach to the current stage of mining operations.
As at 31 March 2011
Non-current assets
As at 31 March 2011, non-current assets of approximately US$7.14 million accounted for approximately86.8% of total assets. Non-current assets comprise exploration and evaluation assets, mine properties,property, plant and equipment and deferred tax assets.
Exploration and evaluation assets amounted to approximately US$0.20 million or 2.8% of total non-current assets. Mine properties, which included the carrying value of mining rights, mine design inprogress and the value of producing mines transferred from exploration and evaluation assets(1) amountedto approximately US$4.40 million or 61.6% of total non-current assets.
Property, plant and equipment as at 31 March 2011 amounted to approximately US$2.17 million or30.3% of total non-current assets.
As at 31 March 2011, deferred income tax assets of approximately US$0.37 million accounted forapproximately 5.2% of total non-current assets.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
83
Current assets
As at 31 March 2011, total current assets of approximately US$1.09 million accounted for approximately13.2% of total assets. Current assets consist of inventories, other receivables, prepayments and depositsand cash and cash equivalents.
As at 31 March 2011, inventories of approximately US$0.12 million comprise of gold doré bars andconsumables used in our Group’s production and accounted for approximately 11.3% of total currentassets. Other receivables, prepayments and deposits of US$0.52 million accounted for approximately47.5% of total current assets.
Cash and cash equivalents of US$0.45 million accounted for 41.2% of total current assets.
Non-current liabilities
As at 31 March 2011, total non-current liabilities of approximately US$1.21 million accounted forapproximately 19.1% of total liabilities and comprised the non-current portion of convertible loans ofUS$1.12 million, finance lease liabilities of approximately US$0.04 million, rehabilitation provision ofapproximately US$0.04 million and non-current portion of conversion rights of approximately US$0.01million. Provision for the future cost of rehabilitating mine sites and related production facilities are madeon a discounted to a present value and accounted for at the time of developing the mines and installingand using those facilities.
Current liabilities
As at 31 March 2011, current liabilities of approximately US$5.13 million accounted for 80.9% of totalliabilities. Current liabilities mainly consisted of current portion of convertible loans of US$1.98 million,current portion of conversion rights of US$0.11 million, finance lease liabilities of US$0.01 million, andtrade and other payables of approximately US$3.03 million. Trade and other payables included tradepayables of US$0.23 million, accrued operating expenses of US$1.78 million, amount due to contractorsof US$0.51 million, remuneration and fees due to key management of US$0.31 million and loans fromdirectors of US$0.20 million.
Shareholders’ equity
As at 31 March 2011, shareholders’ equity amounted to approximately US$1.90 million comprising mainlyUS$7.29 million of share capital, and reduced by accumulated losses of US$5.21 million and US$0.20million of non-controlling interest.
Note:
(1) Expenditures incurred to conduct drilling, geological and related exploration and evaluation studies are capitalisedsubsequent to the establishment of economic recoverability and are transferred to mine properties.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
84
LIQUIDITY AND CAPITAL RESOURCES
The following table sets out a summary of our Group’s cash flow for FY2008, FY2009, FY2010 and1Q2011.
(US$’000) FY2008 FY2009 FY2010 1Q2011
Net cash (used in) / provided by operating activities (700) (1,065) (2,039) (427)
Net cash (used in) / provided by investing activities (360) (883) (841) (258)
Net cash (used in) / provided by financing activities 1,068 1,906 3,941 (2)
Net increase (decrease) in cash and cash equivalents 8 (42) 1,061 (687) at the end of the year/period
Cash and cash equivalents at the beginning of the 80 88 48 1,112 year/period
Effect of exchange rate fluctuations on cash held – 2 3 22
Cash and cash equivalents at the end of the year/period 88 48 1,112(1) 447(1)
Note:
(1) The cash and cash equivalents as at the end of FY2010 and 1Q2011 do not include the deposits pledged with financialinstitutions of approximately US$1,000.
FY2008
In FY2008, our Group recorded a net cash outflow from operating activities of approximately US$0.70million, which was mainly a result of operating loss before changes in working capital of US$ 0.81 million,adjusted for working capital inflows of US$0.17 million. The working capital inflows was mainly due to anincrease in trades and other payables of US$0.22 million, offset by an increase in other receivables,prepayments and deposits of approximately US$0.05 million. Cash flow from operating activities wasfurther reduced by interest payments of approximately US$0.06 million
Net cash outflow from investing activities amounted to approximately US$0.36 million, which was mainlyattributable to payments made for exploration and evaluation expenditures.
Net cash inflow from financing activities amounted to approximately US$1.07 million, which were mainlyfrom proceeds from issuance of convertible loans and loans from directors.
As at 31 December 2008, cash and cash equivalents were approximately US$0.09 million.
FY2009
In FY2009, our Group recorded a net cash outflow from operating activities of approximately US$1.06million, which was mainly a result of operating loss before changes in working capital of US$0.86 million,adjusted for working capital outflows of US$0.05 million, which was mainly due to decrease in trade andother payables. Cash flow from operating activities was further reduced by interest payments of US$0.15million.
Net cash outflow from investing activities amounted to approximately US$0.89 million, comprisingUS$0.08 million for payments for exploration and evaluation expenditures and US$0.81 million foracquisition of property, plant and equipment.
Net cash inflow from financing activities amounted to approximately US$1.91 million, which were mainlyfrom proceeds from issuance of convertible loans.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
85
As at 31 December 2009, cash and cash equivalents were approximately US$0.05 million.
FY2010
In FY2010, our Group recorded a net cash outflow from operating activities of approximately US$2.04million, which was mainly a result of operating loss before changes in working capital of US$2.14 million,adjusted for working capital inflows of US$0.28 million. The net working capital inflows were due to anincrease in trade and other payables of US$0.84 million which were offset by an increase in inventories ofUS$0.12 million and an increase in other receivables, prepayments and deposits of US$0.44 million.Cash flow from operating activities was further reduced by interest payments made of approximatelyUS$0.18 million.
Net cash outflow from investing activities amounted to approximately US$0.84 million, which wereattributable to US$0.08 million of payments made for exploration and evaluation expenditures andUS$0.76 million for property, plant and equipment.
Net cash inflow from financing activities amounted to approximately US$3.94 million, which were mainlyfrom proceeds from issuance of convertible loans.
As at 31 December 2010, cash and cash equivalents were approximately US$1.11 million.
1Q2011
In 1Q2011, we recorded a net cash outflow from operating activities of approximately US$0.43 million,which was a result of operating loss before changes in working capital of US$0.52 million, adjusted forworking capital inflows of US$0.17 million. The net working capital inflows were due to a decrease inother receivables, prepayments and deposits of US$0.02 million and an increase in trade and otherpayables of US$0.15 million. Cash flow from operating activities was further reduced by interestpayments made of approximately US$0.08 million.
Net cash outflow from investing activities amounted to approximately US$0.26 million for payments madefor property, plant and equipment.
Net cash outflow for financing activities were related to payments made for finance lease.
As at 31 March 2011, cash and cash equivalents were approximately US$0.45 million.
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS
Capital Expenditure
The capital expenditures made by our Group in FY2008, FY2009, FY2010 and 1Q2011 and for theperiod from 1 April 2011 up to the Latest Practicable Date were as follows:
From 1 April 2011to the Latest
(US$’000) FY2008 FY2009 FY2010 1Q2011 Practicable Date
Buildings – 297 490 – 0Plant and equipment 12 498 246 590 212Fixture and Fittings 2 – 13 – 52Motor Vehicle 21 10 68 25 18Construction Work in Progress – – 33 114 102
Total 35 805 850 729 384
The above capital expenditures were incurred in Malaysia and primarily financed by external sources offunds mainly from convertible bonds issued by CNMC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
86
Capital Divestments
The capital divestments made by our Group in FY2008, FY2009, FY2010 and 1Q2011 and for the periodfrom 1 April 2011 up to the Latest Practicable Date were as follows:
From 1 April 2011 to the Latest
(US$’000) FY2008 FY2009 FY2010 1Q2011 Practicable Date
Motor Vehicle – – 4 – –
Total – – 4 – –
FOREIGN EXCHANGE MANAGEMENT
Accounting Treatment of Foreign Currencies
The consolidated financial statements are presented in US$, which is CNMC’s presentation andfunctional currency. Foreign currency transactions are translated into US$ at rates of exchangeapproximating those prevailing at transaction dates. Foreign currency monetary assets and liabilities aretranslated at rates as at the balance sheet date. Non-monetary items in a foreign currency that aremeasured based on historical cost are translated using the exchange rate at the date of the transaction.
All profits and losses on exchange are recognised in profit or loss.
Foreign Exchange Exposure
The proportions of our Group’s revenue and expenses denominated in US$ and foreign currencies are asfollows:
Percentage of revenue denominated in (%) FY2008 FY2009 FY2010 1Q2011
US$ N.A.(1)(2) N.A.(1)(2) 100.0 100.0
Notes:
(1) Not applicable as no revenue was generated by our Group in FY2008 and FY2009.
(2) Our Group first recognised revenue in FY2010.
Percentage of operating costs and purchases(1) denominated in (%) FY2008 FY2009 FY2010 1Q2011
(1) Purchases include capital expenditures and capitalised exploration and evaluation assets.
To the extent that our Group’s revenue, purchases and expenses are not naturally matched in the samecurrency and to the extent that there are timing differences between invoicing and collection or payment,our Group will be exposed to adverse fluctuations of the various currencies against the US$, which willadversely affect our Group’s earnings.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
87
Our Group’s net foreign exchange exposure for FY2008, FY2009, FY2010 and 1Q2011 were as follows:
FY2008 FY2009 FY2010 1Q2011
Net foreign exchange gain / (loss) (US$’000) 55 (28) (305) (122)As a percentage of revenue (%) N.A.(1) N.A.(1) 57.6 22.8As a percentage of loss before tax (%) 5.5 2.6 13.3 17.9
Note:
(1) Not applicable as no revenue was generated by our Group in FY2008 and FY2009.
Currently, our Group does not have a formal hedging policy. Our Group will continue to monitor its foreignexchange exposure in the future and will consider hedging any material foreign exchange exposureshould the need arise. Prior to entering into any such hedging transactions, our Group will (i) seek theBoard’s approval on the policy for entering into any such hedging transactions; (ii) put in place adequateprocedures which must be reviewed and approved by its Audit Committee; and (iii) the Audit Committeewill monitor the implementation of the policy, including reviewing the instruments for hedging, processesand practices in accordance with the policy approved by the Board.
SEASONALITY
We do not generally experience seasonality in our business. However, adverse weather during north-eastmonsoon season in Peninsular Malaysia which starts around November and continues until end January,may affect our mining activities. Measures will be taken by our Group to shelter our key production areasto mitigate such risk.
INFLATION
Our financial performance for the period under review was not materially affected by inflation.
SIGNIFICANT CHANGES IN ACCOUNTING POLICIES
The accounting policies have been consistently applied by our Group during the period under review,except for the certain changes in accounting policies and related notes which are not material.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONSAND FINANCIAL POSITION
88
The following discussion on our Group’s gold exploration and mining activities should be read inconjunction with the BDA Technical Report as set out in Appendix F of this Offer Document.
HISTORY
Our Company is a private limited company incorporated in Singapore on 11 August 2011. In preparationfor our listing, we undertook the Restructuring Exercise whereby our Company acquired 100%shareholding interest in CNMC and became the holding company of our Group. Please refer to thesection entitled “Restructuring Exercise” of this Offer Document for further details.
Our business originated with the incorporation and establishment of CNMC in Hong Kong in October2006. CNMC has shareholding interests of 81%, 80% and 80%(1) in three Malaysian subsidiaries, namelyCMNM (being its principal operating subsidiary), CNMC-Nalata and MCS respectively. The remainingissued share capital is owned by local Malaysian partners which include KSEDC.
The Executive Chairman and founder of our Group, Professor Lin Xiang Xiong, who has been appointedthe Kelantan’s Chief Advisor on Kelantan-China International Trade for the Kelantan State Government,worked with the Kelantan State Government to secure the Sokor Gold Project in mid-2006. Heincorporated CNMC in Hong Kong in October 2006 as an investment holding company of the Sokor GoldProject and invited Choo Chee Kong and Ng Eng Tiong to participate in the initial equity of CNMC asangel investors.
Pursuant to an agreement dated 16 May 2007 entered into between CNMC and KSEDC andsupplemented by a tripartite agreement dated 21 April 2011 entered into between CNMC, CMNM andKSEDC, CNMC’s main operating subsidiary, CMNM which was set up in December 2006, was grantedthe rights by KSEDC as holder of the mining lease to carry out all exploration works and miningoperations in such mining area as contractually granted by KSEDC in the Sokor Gold Project.
In July 2007, CMNM embarked on the phase 1 exploration programme in a 3 sq km section of the SokorBlock to gather relevant geological data and mineral geology data, through interpreting enhancedthematic mapper remote sensing images on surveyed area, as well as geological field work which includegeological, geophysical and geochemical work, trenching, and drilling. The phase 1 explorationprogramme was managed by Sino Metal Resource Limited which sub-contracted the works to CSU. CSUwas subsequently appointed directly by CNMC in 2008 to provide technical support to our Group inevaluating the potentiality of gold resources in the Sokor Block.
In August 2007, CNMC acquired 375,000 ordinary shares representing 75% of the issued share capitalof MCS which previously held an exploration licence to explore mineral resources found within the SokorGold Zone. CNMC increased its shareholding in MCS to 80%(1) in March 2008.
In October 2007, CMNM commissioned Sinomine Resources Exploration to commence a core drillingprogramme to test drill anomaly targets. At the same time, CMNM engaged an independent consultant,BDA, a leading international mining consulting firm to undertake a review of its exploration programme,and make recommendations on drilling, geophysical work, as well as sample processing, testing andanalysis to ensure that future mineral resource estimates will be acceptable under the JORC Code.
In November 2007, CMNM commissioned geophysical survey work using induced polarisation surveymethod. Based on the recommendation of BDA, CMNM also appointed ALS Group as its primarylaboratory to provide assay sample preparation and analytical services.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
89
Note:
(1) CNMC is the registered holder of 87.5% interest in MCS. CNMC has an arrangement with the Kelantan State Government tohold 7.5% interest in MCS for the Kelantan State Government, and such interest will be transferred from CNMC in due course.The effective percentage interest of CNMC in MCS is therefore 80% as at the Latest Practicable Date.
In January 2008, CNMC-Nalata was incorporated in Malaysia to expand our Group’s mining concessionto include an additional area of approximately 3.5 sq km in the District of Kuala Krai, Daerah Dabong,Mukim Kandek, Kelantan, Malaysia. However, at that point the mining certificate had expired. CNMCentered into the Transfer Agreement dated 14 November 2007 with Nalata Enterprise Sdn. Bhd. grantingCNMC-Nalata the right to mine over the relevant area when the mining certificate is renewed and CNMCwill pay the renewal fees for the mining certificate. The Transfer Agreement shall terminate if the miningcertificate is not renewed within six (6) months from the date of the Transfer Agreement. As at the LatestPracticable Date, CNMC has not paid the renewal fees. Notwithstanding this, the Transfer Agreement isstill subsisting and remains in effect based on mutual verbal understanding between CNMC and NalataEnterprise Sdn. Bhd.
In March 2008, CMNM completed and received the report on the phase 1 exploration programme issuedby CSU with positive results for the Sokor Block. Through field work and integrated studies, four goldmineralisation occurrences in the surveyed area were identified. There was also a preliminary analysis onhow the ore or deposit was formed and a summary of the gold mineralisation distribution regularity andexploration direction in the area.
In May 2008, CMNM commissioned CGRI (a subsidiary of China National Gold Corporation) to conductgold-bearing ore dressing and metallurgy studies.
In October 2008, CMNM commenced the phase II exploration programme and commissioned SinomineResource Exploration to conduct a further 10,000m drilling programme.
In March 2009, CMNM finalised the mining scheme for assessing the technical feasibility of conductingmining operations for primary gold in the Sokor Block.
In April 2009, CMNM entered into the Refining Agreement with AGR Matthey, an Australian-basedpartnership and a leading international gold refiner accredited by the London Bullion Market Association,the New York Commodity Exchange, the Tokyo Commodity Exchange, and the Dubai Multi CommoditiesCentre. Pursuant to the terms of the Refining Agreement, CMNM has the option to sell the refined gold toAGR Matthey or request AGR Matthey to credit the refined gold to CMNM’s London metal account. Inaddition, AGR Matthey must purchase the refined silver from CMNM. Since March 2010, The Perth Minthas taken over the role from AGR Matthey as the service provider under the Refining Agreement due toa corporate reorganisation exercise.
In June 2009, the DOE approved the environmental impact assessment (“EIA”) report which wassubmitted by an independent EIA study consultant on behalf of CMNM, who provided an independentassessment of the conditions of the environmental features and their consequent impacts in connectionwith the development and operation of CMNM.
In September 2009, CMNM commissioned the phase I mine design and construction programme toconstruct a gold-bearing ore crushing and conveying system, a vat leaching facility and a gold extractionand carbon re-generation system at the Sokor Block.
In April 2010, CMNM’s environmental management plan, which described the processes and policies thatCMNM will follow in order to comply with environmental regulations, maximise its compliance andminimise any harm to the environment, was approved by the DOE.
In June 2010, MIDA approved CMNM’s application for the pioneer tax status which would entitle theSokor Gold Project to 100% income tax exemption on statutory income for a period of five (5) years,subject to certain conditions, including the application for a pioneer certificate within a period of 24months from the date of such approval. Our Group has not yet applied for the pioneer certificate and hasnot fulfilled the relevant conditions and tax exemption under the pioneer tax status is therefore notapplicable to our Group as at the Latest Practicable Date.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
90
In July 2010, CMNM obtained the approval for its operational mining scheme from the Department ofMinerals and Geosciences, Kelantan. The approved operational mining scheme was subsequentlyrenewed until 29 June 2012. CMNM achieved its maiden gold pour from the Sokor Gold Project on 21July 2010, producing approximately 93.018oz of gold doré, which contained approximately 76.252oz ofrefined gold. As at the Latest Practicable Date, the quantity of refined gold and silver produced from theSokor Gold Project is set out below:
Quantity of Refined Product (Oz)
Date of Gold Pour Gold Silver
July 2010 76.252 16.766
August 2010 105.897 116.049
September 2010 58.142 81.995
October 2010 –(1) –(1)
November 2010 164.887 175.076
December 2010 148.609 222.754
January 2011 156.814 161.402
February 2011 –(1) –(1)
March 2011 82.523 46.643
April 2011 73.387 –(2)
May 2011 310.989 –(2)
June 2011 410.635 –(2)
July 2011 352.561 –(2)
August 2011 327.285 –(2)
1 September 2011 to Latest Practicable Date 166.024 –(2)
Total 2,434.005 820.685
Notes:
(1) CMNM did not conduct gold pour in October 2010 and February 2011 due to the closure of production facilities for technicaladjustments and for the Chinese New Year period respectively.
(2) Since April 2011 up to the Latest Practicable Date, CMNM did not refine any silver in its production process.
On 28 January 2011, CMNM entered into the Joint Venture Agreement with Xiamen Shenkun for aproposed joint venture company, CMNM-JY to jointly manage the mining and production of silver, leadand zinc at the Sokor Block. On completion of the Joint Venture Agreement, CMNM-JY is proposed to be51% owned by CMNM and 49% owned by Xiamen Shenkun. As at the Latest Practicable Date, CMNMand Xiamen Shenkun do not hold shares in CMNM-JY.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
91
OUR SUBSIDIARIES
The details of our subsidiaries are as follow:
% OwnershipDate and Place Principal Business Activities / Interest held by our
Company of Incorporation Principal Place of Business Company / Group
CNMC 28 October 2006/ Investment holding / Singapore(1) 100Hong Kong
CMNM 27 December 2006 / Exploration, development and 81(2)
Malaysia production of gold / Malaysia
MCS(6) 4 October 2004 / Gold exploration / Malaysia 80(3)(4)
Malaysia
CNMC-Nalata(6) 24 January 2008 / Gold exploration / Malaysia 80(5)
Malaysia
Notes:
(1) CNMC operates in Singapore by registering a branch office with ACRA.
(2) The shareholders of CMNM comprise CNMC (81%), KSEDC (10%) and other investors in Kelantan (9%).
(3) The shareholders of MCS comprise CNMC (80%) and other investors in Kelantan (20%).
(4) CNMC is the registered holder of 87.5% interest in MCS. CNMC has an arrangement with the Kelantan State Government tohold 7.5% interest in MCS for the Kelantan State Government, and such interest will be transferred from CNMC in duecourse. The effective percentage interest of CNMC in MCS is therefore 80% as at the Latest Practicable Date.
(5) The shareholders of CNMC-Nalata comprise CNMC (80%), Nalata Enterprise Sdn. Bhd. (5%) and other investors in Kelantan(15%).
(6) MCS and CNMC-Nalata are dormant as at the Latest Practicable Date.
Save as disclosed above, our Group does not have any subsidiaries or associated companies.
Save as disclosed in this Offer Document, none of our Directors, Substantial Shareholders or theirrespective Associates has any interest, whether direct or indirect, in our Group or any of our subsidiariesand associated companies of our Group.
Our subsidiaries are not listed on any stock exchange.
INDEPENDENT VALUATION
As part of the Listing, the Directors have appointed JLLS to conduct an independent valuation of theSokor Gold Project. The Independent Valuation Report has been prepared in accordance with theVALMIN Code. The valuation was carried out on a Fair Market Value basis. Fair Market Value is definedas “the amount of money (or the cash equivalent of some other consideration) determined by the expertin accordance with the provisions of the VALMIN Code.”
Based on the results of JLLS’s investigations and analysis outlined in the Independent Valuation Report,JLLS is of the opinion that the Fair Market Value of the Sokor Gold Project as at 31 August 2011 isreasonably stated as being in the range of US$70 million to US$95 million (the approximate equivalent ofS$87.1 million to S$118.2 million based on the exchange rate of S$1.00 to US$0.8039 as at the LatestPracticable Date) with a preferred value of US$83 million (the approximate equivalent of S$103.2 millionbased on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date), not taking intoaccount the value of the other measured and inferred resources such as silver, lead and zinc as indicatedin the BDA Technical Report, which is expected to contribute positively to the future earnings of ourGroup on top of the current gold mining operations.
Please refer to the Independent Valuation Report in Appendix G of this Offer Document for further details.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
92
BUSINESS OVERVIEW
Our Group is principally engaged in the business of exploration and mining of gold and the processing ofmined ore into gold doré for subsequent sale. Currently, we are focusing on the mining and production ofgold at the Sokor Block that is undertaken by our subsidiary, CMNM. CMNM has completed theconstruction of its ore processing facility with a processing capacity of up to 60,000t per annum andcommenced its first gold pour in July 2010 with the subsequent off-take of the refined gold by The PerthMint. In the future, our Group also intends to carry out exploration and mining activities for other mineralssuch as silver, lead and zinc at the Sokor Block. On 28 January 2011, CMNM had entered into the JointVenture Agreement with Xiamen Shenkun for a proposed joint venture company, CMNM-JY, to jointlymanage the mining and production of silver, lead and zinc at the Sokor Block. On completion of the JointVenture Agreement, CMNM-JY is proposed to be 51% owned by CMNM and 49% owned by XiamenShenkun.
Our Group works with various third party contractors to carry out its mining operations. Currently, ourGroup subcontracts the geology and metallurgical studies, exploration programme, drilling work, samplingand assaying and environmental monitoring work to third party contractors while our Group carries out itsown mining and extraction of gold. Going forward, our Group intends to sub-contract substantially itsmining and extraction of gold to CMNM-JY as Xiamen Shenkun possesses the requisite qualificationsand experience to undertake exploration, mining, extraction works and other related work. XiamenShenkun is 75% owned by Yu Long Fei, an existing Shareholder. The mining and extraction of goldundertaken by CMNM-JY will be managed and supervised by our Group.
Our Group previously held an exploration licence (through our subsidiary, MCS) to carry out explorationactivities at Sokor Gold Zone, covering a separate area of up to 62.8 sq km in the Ulu Sokor region ofKelantan and a prospecting licence to carry out prospect on a land area of 3.75 sq km in Mukim Kerilla,Daerah Temangan, Machang, Kelantan, Malaysia. The said licences have since expired. MCS is presentlyin the process of renewing the exploration licence for the Sokor Gold Zone and applying for prospectinglicences for 16.1 sq km of land in the areas of Jajahan Jeli and Jajahan Tanah Merah, Kelantan,Malaysia. CNMC-Nalata, the other subsidiary of CNMC, had entered into the Transfer Agreement dated14 November 2007 with Nalata Enterprise Sdn. Bhd. for the transfer of the mining rights granted toNalata Enterprise Sdn. Bhd. (a shareholder of 5% of the issued share capital in CNMC-Nalata) pursuantto a mining certificate issued for approximately 3.5 sq km mining concession in a single mining tenementlocated in the District of Kuala Krai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia, from NalataEnterprise Sdn. Bhd. to CNMC-Nalata. The mining certificate had expired at the time the TransferAgreement was entered into. CNMC-Nalata is currently assessing the commercial feasibility of renewingthe mining certificate issued to Nalata Enterprise Sdn. Bhd. and currently does not hold any mining rightsover the area stated in the mining certificate.
Note:
(1) CNMC is the registered holder of 87.5% interest in MCS. CNMC has an arrangement with the Kelantan State Government tohold 7.5% interest in MCS for the Kelantan State Government, and such interest will be transferred from CNMC in duecourse. The effective percentage interest of CNMC in MCS is therefore 80% as at the Latest Practicable Date.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
93
The map below illustrates the location of our Group’s exploration and mining areas:
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
94
Sokor Gold Project
The Sokor Gold Project is located at the Sokor Block. The project is approximately 80km southwest ofKota Bharu, the state capital of Kelantan. Access is by sealed road to Kampong Bukit Pauh and thenceby an all-weather gravel logging track, with the closest village 18km from site. The nearest town is thedistrict centre of Tanah Merah which is approximately 40km from site. Tanah Merah is approximately40km from the state capital, Kota Bharu, which is serviced daily by jet aircraft from Kuala Lumpurentailing a 55 minute flight.
Pursuant to an agreement dated 16 May 2007 entered into between CNMC and KSEDC andsupplemented by a tripartite agreement dated 21 April 2011 entered into between CNMC, CMNM andKSEDC, KSEDC (holder of the mining lease) has in turn granted to CMNM the contractual rights to mineand produce gold and other minerals found within Sokor Block for a period of ten (10) years expiring on 7April 2018. The mining area covers the upper catchments of the Sungai Sokor River. The topographyconsists of moderately steep hill ridges and narrow valleys. Elevation ranges from 200m to 900m abovesea level. The area has a hot, tropical monsoonal climate with rain falling mainly in the November toJanuary period.
Under the agreements, CMNM is required to pay:
(a) to Kelantan State Authority 5% royalty on the gross proceeds of the sales value of gold based onthe spot price of gold in MYR on the day of gold pour and the payment of royalty is to be effectedas prescribed in the Kelantan Mineral Regulations 2002;
(b) to KSEDC 3% tribute on the gross proceeds of the sales value of primary gold based on the spotprice of gold in MYR on the day of gold pour; and a 10% tribute on the gross proceeds of the salesvalue of alluvial and eluvial gold based on the spot price of gold in MYR on the day of gold pour;and
(c) to KSEDC 5% tribute on the gross proceeds of the sales value of other minerals when executedfrom Sokor Block.
In July 2010, CMNM achieved its maiden gold pour from the Sokor Gold Project, producingapproximately 93.018oz of gold doré, which contained approximately 76.252oz of refined gold. As at theLatest Practicable Date, CMNM has completed 37 gold pours and produced 2,434.005 oz of refined goldand 820.685oz of refined silver. Please refer to the section entitled “General Information on Our Companyand Our Group – History” of this Offer Document for more information on the amount of refined gold andsilver produced from the Sokor Gold Project.
Sokor Gold Zone
MCS held an exploration licence to explore mineral resources found within Sokor Gold Zone, covering anarea of up to 62.8 sq km, which surrounds the Sokor Block. As at the Latest Practicable Date, MCS is inthe process of renewing the exploration licence.
Sokor Gold Zone covers a prospective section of the Central Belt. Structural interpretation of satelliteimagery indicates a number of major north-south and northeast-southwest trending structures which areassociated with gold mineralisation elsewhere in the Central Belt. The area surrounding a majorintersection of these two sets of structures located to the southeast of the mining licence containsevidence from satellite imagery of three circular structures that could indicate buried intrusive bodies andalso one exposed intrusion. This geological setting is regarded as prospective for gold and base metalmineralisation.
Known gold occurrences in the area include the presence of alluvial gold in a number of the rivers andhard rock gold mineralisation in the Sungai Tapis area to the northwest of the mining licence.
As at the Latest Practicable Date, this project is still in the pre-exploration phase, and as such our Groupis unable to provide any reserve or resource estimate.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
95
Nalata Project
In the last quarter of 2007, CNMC had entered into the Transfer Agreement dated 14 November 2007with Nalata Enterprise Sdn. Bhd. for the contractual rights over an expired mining certificate held byNalata Enterprise Sdn. Bhd. for approximately 3.5 sq km mining concession in a single mining tenementlocated in the District of Kuala Krai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia (the “NalataProject”). In consideration of Nalata Enterprise Sdn. Bhd. granting CNMC-Nalata the right to mine overthe relevant area when the mining certificate is renewed, CNMC will pay the renewal fees for the miningcertificate. The Transfer Agreement shall terminate if the mining certificate is not renewed within six (6)months of the date of the Transfer Agreement. As at the Latest Practicable Date, CNMC has not paid therenewal fees. Notwithstanding this, the agreement is still subsisting and remains in effect based onmutual verbal understanding between CNMC and Nalata Enterprise Sdn. Bhd.
As at the Latest Practicable Date, CNMC-Nalata is currently assessing the commercial feasibility ofrenewing the mining rights and does not have any mining rights over the Nalata Project.
BUSINESS ACTIVITIES
Exploration Activities
Our Group’s first phase exploration programme for the Sokor Gold Project includes geological mapping,soil sampling, induced polarisation, geophysical surveying, surface trenching and diamond core drilling.Our Group carried out surface geological mapping in the southern section of the Sokor Block, extendinga further 4km to the Sungai Liang region, subject to reconnaissance mapping. The exploration hasdefined sufficient resources and mineable reserves contained in four (4) separate deposits, namely,Manson’s Lode, New Discovery, Ketubong and Rixen’s. The resources consist of shallow oxide goldmineralisation and deeper primary gold mineralisation associated with sulphide mineralisation, includingpyrite and chalcopyrite. The presence of copper will change the concentration of the leaching solutionused for the Group’s mining process. In addition, currently for the production of gold dorés by our Group,the gold dorés will contain small quantities of base metals as by-products.
Manson’s Lode deposit extends over a strike length of 450m and has been defined by 120 drill holestotalling 4,904m. The deposit has been closely drilled on a 20m x 20m grid. Drill hole gold grades inmineralisation range from 1-8g/t Au averaging 3.5g/t Au; the silver grade averages around 92g/t Ag. Basemetal grades average 2.2% Pb and 2.1% Zn; minor copper is also present.
The New Discovery deposit is located approximately 500m west-northwest of Manson’s Lode. Gold isassociated with the Ketubong-Rixen fault zone and has been defined over a strike length of 200m by 51drill holes totalling 3,238m. The deposit has been drilled on a 20m x 20m grid in the oxide zone and on a20m x 40m grid in the primary zone to a depth of 200m and remains open at depth. Drill hole gold gradesrange from 1-9g/t Au, averaging 3.6g/t Au; silver and base metal grades are typically low.
The Ketubong deposit is located approximately 600m to the northwest of Manson’s Lode and is acontinuation northwards of the New Discovery deposit along the Ketubong-Rixen fault. The deposit hasbeen defined by trenching and ten (10) drill holes totalling 1,743m over a strike length of 680m andremains open to the north. The deposit has limited potential for oxide resources due to the shallow depthof oxidation. The deposit requires additional drilling to adequately test the primary resource. Drill holegold grades typically range from 1-10g/t Au in the primary zone, averaging 2.6g/t Au; silver and basemetal grades are low.
Rixen’s deposit is located 3km north of Ketubong and 5km from the process plant. Gold mineralisation iscontained in silicified volcanic rocks to the west of the Ketubong-Rixen fault. The deposit has beendelineated by soil sampling over a strike length of 800m and defined by drilling on a 100m x 100m gridover a strike length of 300m with nine (9) drill holes totalling 904m. The deposit requires additional drillingto confirm continuity of grade and thickness in the area already drilled and step-out drilling along strikeand down dip to test for extensions to the mineralisation. Drill hole gold grades average around 1.9g/t Au.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
96
Gold, silver and base metal grades were determined by ALS Group by analysing the trench and diamondcore samples from the trenching and drilling carried out by our Group during the period 2007 to 2010.
Based on mapping, soil sampling and induced polarisation results, the total prospective zone withpotential for gold mineralisation within acid volcanic tuff extends over a strike length of around 2,000mwhich includes an extension north of the current drilled area of around 800m and an extension south of700m.
Our Group’s second phase exploration programme consists of additional exploration of the discoveredprospects and expansion of exploration over the remaining area of the Sokor Block.
Gold assay
Trenches are sampled by continuous channel samples over lengths varying from 1m to 1.5m. Allpotentially mineralised core is diamond sawn, with half core despatched for analysis and half retained inthe core box as a permanent record. Core is stored on the mining site close to the processing plant andadministrative office. Sample lengths of drill core take into account geological boundaries but are aminimum length of 0.5m and a maximum length of 1.5m.
Sample preparation is undertaken at ALS Group’s laboratory in Perth, Australia. Samples are placed incalico bags, labelled and air-freighted from Kota Bharu to Perth. Sample weights range from 1kg to 3kg.Samples are dried, crushed to 6mm and the whole sample pulverised to 85% passing 75 microns. A pulpsample of 200g is split for assay and the pulp reject bagged and retained.
The standard suite of analyses includes gold, silver, copper, lead and zinc. Gold analyses are by 30g fireassay with atomic absorption mass spectrometry finish, with a detection limit of 0.01g/t Au. Silver, copper,lead and zinc are analysed by four acid digest and inductively coupled plasma atomic emissionspectrometry using the ALS method ME-OG62.
Pulp samples prepared by ALS Group will be sent to Standard and Reference Laboratories in Perth foranalyses using the same fire assay method as ALS Group to confirm the general reliability of the dataproduced by ALS Group and to provide an appropriate base for resource and reserve estimation.
ALS Group’s laboratories operate quality systems based on the international standards ISO/IEC 17025,ISO 9001 and the National Association of Testing Authorities, Australia (“NATA”) accreditation.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
97
Gold Mining and Extraction Process
The following is a diagrammatic illustration of the gold mining and extraction process of our Group:
Jaw crusher
>10mm
Vibration screen
<10mm
Dumptruck
Leaching vat
Leaching
Pregnant solution
Absorption columns
Gold extracting
Smelting
Transportation of gold doré
Smelting
Gold extraction solution (PH=11.5)
Gold-bearing activatedcarbon
Gold slurry
Carbon regenerated
Tailing area
To decompose gold extraction solution
Pregnant solution
Barrensolution pond
Crushing
Dumptruck
Shovel/excavator
Mining of pit rocks
Sale of gold doré
Refining
Mining Leaching
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
98
The gold mining and extraction process of our Group are briefly described as follows:-
Mining
The mining operations of the Sokor Gold Project are currently carried out by open-pit mining methods.The first mining section is located at the New Discovery. Rocks with gold deposits or the gold-bearingores are excavated from the earth using excavator and transported by dump trucks to the ore processingfacility.
Crushing
The gold-bearing ore is first sent to the ore crushing system, which comprises primary vibrating feeder,jaw crusher, impact crusher, and secondary vibrating screen, to reduce the size of the ore, so that theore is partially or fully exposed. The ore will be crushed to less than 10mm in size before sending to theleaching vat to effect the leaching process.
Leaching
Gold-bearing ore is immersed in a leaching vat of gold extraction solution (comprising a mixture ofchemicals), which will dissolve and leach the gold from the ore, to form a “pregnant solution”. The“pregnant solution” will then be pumped into a series of absorption columns, loaded with activatedcarbon, which will strip the gold out from the “pregnant solution”. The duration of the leaching process(including the treatment time required in the leaching vat) is about five (5) to six (6) days. The endproduct from the ore processing process will be gold slurry.
Smelting
The gold slurry is then sent for smelting in an induction furnace to cast into gold doré (which is a bar thatcontains 40% to 90% of pure gold). The gold doré will be delivered to The Perth Mint (the third partyrefiner in Australia) to carry out the refining process in order to attain a gold purity of at least 99.95%.
Ore Processing Facility and Capacity
The ore processing facility of our Group is located at Sokor Block near the mining area. The facility is alsoadjacent to the service buildings, including an office, plant workshop, laboratory and living quarters forthe employees of our Group. The mining area is approximately 2.5 hours driving distance from the SultanIsmail Petra Airport of Kelantan or 1.5 hours drive from Tanah Merah railway station. It has access totelecommunication, water, roads and is equipped with its own power generator.
The following table shows our Group’s processing capacity and the ore processed for FY2008, FY2009,FY2010 and 1Q2011:
FY2008 FY2009 FY2010 1Q2011
Processing Capacity (t) – – 60,000(1) 15,000
Ore Processed (t) – – 6,000(2) 2,500
Utilisation Rate (%) – – 10.0 16.7
Notes:
(1) Our Group has three (3) leaching vats in our processing facility as at the Latest Practicable Date. One (1) leaching vat cancontain up to 1,500t of gold-bearing ore, while the other two (2) can contain up to 1,000t of gold-bearing ore each. Thethroughput capacity of the vat leaching system is approximately 3,500t of ore per cycle with each cycle taking approximately21 days to complete and this is equivalent to a processing capacity of gold-bearing ore for gold of approximately 60,000t perannum.
(2) Our Group commenced ore processing in July 2010 and the ore processed of 6,000t in FY2010 was for the period from July2010 to December 2010 only.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
99
On an annualised basis, the utilisation rate would have been 20% for FY2010. The low utilisation rate inFY2010 was mainly due to the following factors:
(a) Our Group is still in the initial stage of production;
(b) In FY2010, our Group had only commissioned two (2) leaching vats with an annual processingcapacity of approximately 34,000t;
(c) Our Group is still in the midst of training our mining workers in preparation for future increases inprocessing capacity; and
(d) Our Group intends to sub-contract substantially the mining and extraction of gold to a third partycontractor in the future. Hence, we have been focusing on sourcing, negotiating and selecting thesuitable contractors during this period.
The utilisation rate for 1Q2011 was low as there was no gold pour in February 2011 due to the closure ofproduction facilities during the Chinese New Year period.
As at the Latest Practicable Date, our Group is conducting pilot test run for an alluvial gold productionfacility which can process 1,500t of ore per day.
Production of Gold
CMNM has commenced gold production based on mining and treating near surface oxide ore from two(2) of the deposits, New Discovery and Manson’s Lode. As at the Latest Practicable Date, CMNM hascompleted 37 gold pours and produced 2,434.005oz of refined gold and 820.685oz of refined silver.Please refer to the section entitled “General Information on Our Company and Our Group – History” ofthis Offer Document for more information on the amount of refined gold and silver produced from theSokor Gold Project.
The table below is a summary and extract of the forecasted mined ore and the gold production for theSokor Gold Project for FY2011 to FY2014 which has been reviewed by BDA. A detailed productionschedule is set out in the BDA Technical Report set out in Appendix F of this Offer Document:
The above production schedule is based on various assumptions made by our Group and there isno assurance that our Group will be able to achieve the above production estimates due to avariety of reasons including but not limited to, delays in the implementation of certain operationalprocesses, lower than estimated recovery rate and higher than estimated mining dilution. Pleaserefer to the section entitled “Risk Factors – Our future cash flow, results of operations andfinancial condition will be affected if we fail to achieve our production estimates” of this OfferDocument for details.
The initial production for the period from FY2010 to FY2012 is based on ore reserves at a cut off gradeof 0.5g/t Au while a further two (2) years production is based on primary ore, inferred resources andpossible extensions at Rixen’s pit.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
100
As indicated in the BDA Technical Report, our Group’s current total gold reserves estimate is 989,000t, ofwhich proved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of23,900 oz and probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au withcontained gold of 46,400 oz as at June 2010. Based on the planned production schedule for our Group’smining operations, it is expected that the mining of these Current Gold Ore Reserves will be completedby our Group in 2012. While our Group is continuously conducting exploration activities, however there isno assurance that these exploration activities will result in the discovery of new mineable reserves. Inaddition, even if a viable deposit is discovered, it may require substantial capital expenditure and timefrom the initial phases of exploration until production commences during which the capital cost andeconomic feasibility may change. Furthermore, actual results upon production may differ from thoseanticipated at the time of the discovery. In order to maintain gold production beyond the life of our Group’sCurrent Gold Ore Reserves, other than through acquisitions, additional gold reserves must be identifiedeither to extend the life of our existing mine or justify the development of new projects. In the event thatour Group’s exploration programmes do not result in the replacement of such gold reserves or result innew commercially viable mining operation beyond the Current Gold Ore Reserves identified, this couldhave an adverse impact on the future operations, results and growth of our Group.
Resource Definition and Continuing Exploration Activities
The four (4) deposits, Manson’s Lode, New Discovery, Ketubong and Rixen’s have been evaluated by atotal of 27 surface trenches and a total of 10,791m of diamond core drilling. Trenches were excavated bya backhoe to a depth of 3m to 4m at spacing varying from 50m to 100m. Diamond core drilling wascompleted on all four (4) deposits with a mix of inclined and vertical drill holes with drill sectionsorientated normal to the strike of the mineralisation. The initial drilling programme in 2007 experiencedlow core recovery and consequently the first six (6) holes drilled by CNMC were excluded from theresource estimation. Core recovery in subsequent programmes was satisfactory with most holes inexcess of 90% core recovery.
In 2011, our Group undertook the phase III exploration programme which is expected to be a whole yearprogramme commencing in the first quarter of 2011. It has commissioned Sinomine Resource (Malaysia)to conduct a 10,000m diamond core drilling programme in the first quarter of 2011. This drillingprogramme is still on-going and currently there are four (4) diamond drill rigs operating at the mining siteof our Group. As at the Latest Practicable Date, our Group has completed drilling of a total of 86 drillholes for an aggregate of approximately 9,000m under the phase III exploration programme. Followingthe drilling, 2,666 samples have been despatched to ALS Group in Perth for assay and our Group hasreceived assay results for 2,495 samples. Our Group’s geologist is currently conducting a core loggingprogramme on the rest of the drill holes and organising new samples to be sent to ALS Group for assay.In addition, our Group intends to undertake a 2,500m reverse circulation drilling programme in the laterpart of 2011, barring unforeseen circumstances. These programmes are designed to infill and extendresource drilling on New Discovery, Ketubong and Rixen’s together with drill testing of other targets withinthe mining concession area.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
101
According to the BDA Technical Report, the resource and reserve estimates in Sokor Block based on theJORC Code as at June 2010 at a 0.5g/t Au cut-off are set out below:
Category Gross Attributable Gross Attributable JORC Code Mineral Type to mining lease to CNMC
Tonnes Grade Tonnes Grade
(kt) (Au g/t) (kt) (Au g/t)
Reserves(1)(2)
Proved Alluvial 39 8.32 31 8.32
Proved Oxide 60 4.09 48 4.09
Proved Backfill 106 1.65 85 1.65
Probable Oxide 785 1.84 628 1.84
Total All 989 2.21 792 2.21
Resources(3)(4)
Measured Alluvial 22 1.10 18 1.10
Measured Oxide 71 7.62 57 7.62
Measured Backfill 101 1.73 81 1.73
Measured Primary 433 3.39 346 3.39
Measured All 627 3.52 502 3.52
Indicated Oxide 747 1.93 598 1.93
Indicated Primary 88 1.79 70 1.79
Indicated All 835 1.92 668 1.92
Inferred Alluvial 13 0.82 10 0.82
Inferred Oxide 338 2.26 270 2.26
Inferred Backfill 29 1.86 23 1.86
Inferred Primary 340 3.14 272 3.14
Inferred All 720 2.63 576 2.63
Total All 2,182 2.62 1,746 2.62
Notes:
(1) The procedures and parameters used for reserve estimation are set out in section 8.3 of the BDA Technical Report.
(2) As at the Latest Practicable Date, reserves have been estimated only for backfill, alluvial and oxide ore in Manson’s Lode,New Discovery and Rixen’s deposits.
(3) The procedures and parameters used for resource estimation are set out in section 8.2 of the BDA Technical Report.
(4) The gold resources figures presented are inclusive of a total gold reserves estimate of 989,000t, of which proved goldreserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900 oz and probable gold reservesare estimated to be 785,000t at a grade of 1.84 g/t Au with contained gold of 46,400 oz.
As at June 2010, our Group’s gold resources amounted to approximately 2,182,000t at a grade of 2.62g/tAu with contained gold of 183,500 oz which includes a total gold reserves estimate of 989,000t, of whichproved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900oz and probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au with contained goldof 46,400 oz.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
102
According to the BDA Technical Report, based on the projected mining rate, the defined ore reserve willsupport a two (2) year mine life from FY2011 to FY2012, with a waste to ore stripping ratio ofapproximately 1.6. Our Group has assumed oxide ore reserves from 2013 will be generated byconversion of inferred resources to ore reserves and by an increase in the current resource base throughadditional drilling, mainly in the Rixen’s deposit. Our Group also plans to treat primary resources which isplanned to be converted to ore reserves on successful completion of metallurgical test workdemonstrating that the primary material is suitable for processing though a carbon-in-leach plant.
BDA considers that there is considerable exploration potential within CMNM’s concession area and in thesurrounding exploration licence to locate additional gold resources. Potential exists for extensions to theknown deposits and in areas within the Sokor Block where to date only limited reconnaissanceexploration has taken place.
Please refer to the BDA Technical Report set out in Appendix F of this Offer Document for further detailsof resource and reserve estimation in the Sokor Block.
QUALITY ASSURANCE
Sampling and sample preparation
Trenches are sampled by continuous channel samples over lengths varying from 1m to 1.5m. Allpotentially mineralised core is diamond sawn, with half core despatched for analysis and half retained inthe core box as a permanent record. Core is stored on site close to the plant and administrative office.Sample preparation is undertaken at the laboratory of ALS Group in Perth, Australia. Samples are placedin calico bags, labelled and air-freighted from Kota Bharu to Perth.
To monitor the accuracy and precision of the assays, duplicate and blanks samples are inserted at a rateof approximately one (1) duplicate per batch of 20 samples and one (1) blank sample in every 40samples before they are despatched to ALS Group. Our Group will monitor the results of the duplicateand blanks samples to ensure that they return acceptable results. If there is any significant bias or longterm drift from the standard or expected results, our Group will investigate and carry out additional assaychecks.
ALS Group’s laboratories operate quality systems based on the international standards ISO/IEC 17025,ISO 9001 and NATA accreditation.
Refining
Pursuant to the Refining Agreement, gold doré produced by CMNM will be sent to The Perth Mint for thepurpose of carrying out the refining process in order to attain a gold purity of at least 99.95%. The qualitycontrol of such process is handled by The Perth Mint according to its standards and guidelines.
OUR MAJOR CUSTOMERS
As at the Latest Practicable Date, The Perth Mint and T.C.S. Trading are the only customers of our Groupas it is more effective for us to work with selected customers in light that we are at the initial stage ofproduction.
T.C.S. Trading is a licenced purchaser of gold in Kelantan.
The Perth Mint is an international gold refiner which enjoys accreditation as a refiner, weight master andassayer with the London Bullion Market Association, the New York Commodity Exchange, the TokyoCommodity Exchange and Dubai Multi Commodities Centre. The Perth Mint refines the gold doré barsprovided by our Group to a minimum standard of 99.95% purity and disposes of the non-precious metalextracted from the gold doré. For the period under review, The Perth Mint was our sole customer.
Under the terms of the Refining Agreement, The Perth Mint will purchase all the refined silver and CMNMhas the discretion to sell the refined gold to The Perth Mint or require The Perth Mint to credit the refinedgold into CMNM’s London metal account which CMNM could subsequently sell to third parties in thefuture.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
103
As gold is a recognisable commodity and is easily traded, our Directors believe that they will be able toreadily dispose of the refined gold credited into CMNM’s London metal account to third parties. Inaddition to The Perth Mint and T.C.S. Trading, our Group may source for other viable alternativecustomers to sell our gold doré to in the future.
Our Group is not materially dependent on any contract with any customer and none of our Directors,Substantial Shareholders or their respective Associates has any interest, direct or indirect, in The PerthMint and T.C.S. Trading.
OUR MAJOR SUPPLIERS
The major suppliers accounting for 5.0% or more of our Group’s total operating costs and exploration andevaluation expenditure incurred for FY2008, FY2009, FY2010 and 1Q2011 are set out below:
Percentage of operating costs and exploration and evaluation expenditure (%)
Major Suppliers FY2008 FY2009 FY2010 1Q2011
CGRI 2 9 5 –
CSU 5 9 12 1
Sinomine 20 65 13 7
Sino Metal Resource Limited 46 – – –
Our Group carefully evaluates and chooses experienced suppliers and will only work with those who areable to provide good and timely services at competitive prices.
The percentage increase in the operating costs or expenditures for CGRI, CSU and Sinomine in FY2009was mainly due to the increase in exploratory and evaluation works that were undertaken by CMNM inFY2009 in preparation for gold production in FY2010.
As CMNM focused on gold production in FY2010, less drilling works and technical support wereconducted by Sinomine and CGRI respectively leading to a decrease in exploration and evaluationexpenditure and consequently, the percentage decrease in the operating costs or expenditures for CGRIand Sinomine in FY2010. In FY2010, CGRI completed the technical support required by our Group.There was a decrease in the operating costs or expenditures for CSU and Sinomine for 1Q2011 due tobreaks in exploration activities during the Chinese New Year period.
Following the completion of Sino Metal Resource Limited’s contract work in FY2008, CNMC did notrenew the services of Sino Metal Resource Limited. Sinomine replaced Sino Metal Resource Limited forthe drilling works in respect of the Sokor Gold Project.
Our Group is not materially dependent on any contract with any supplier and none of our Directors,Substantial Shareholders or their respective Associates has any interest, direct or indirect, in any of theabove suppliers.
CREDIT POLICY
Credit Terms Offered to Our Customers
As at the Latest Practicable Date, our customers are The Perth Mint and T.C.S. Trading.
The Perth Mint is required to make payment to our Group by telegraphic transfer within three (3) to five(5) business days upon confirmation of the sale by our Group to The Perth Mint.
T.C.S. Trading is required to make 90% payment on the purchase price of the gold doré on the dayfollowing delivery or collection, whichever is applicable, and the balance payment of 10% uponconfirmation of the gold purity which is usually within five (5) business days from the date of delivery, orcollection, whichever is applicable.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
104
We will review the credit terms offered to our customers on a periodic basis and such credit terms offeredwill take into account, amongst others, the creditworthiness of the customer as well as the size of thecustomer’s purchase.
Credit Terms Granted by Our Suppliers
There are no formal credit terms stipulated in the contracts signed between our Group and our suppliers.Payments to our suppliers are typically made based on certain milestones achieved or our agreementwith the suppliers. Due to the nature of our Group’s business, it is not meaningful to calculate the tradepayables turnover days as the exploration expenditure of our Group is not of a trading nature and iscapitalised by our Group.
INVENTORY MANAGEMENT
Due to the nature of our business, our Group holds a minimum level of inventories as the gold doré areusually shipped out shortly after production. Any gold doré which is awaiting shipment are kept understringent security measures on site. Gold doré produced by CMNM will be shipped to Australia forrefining after production and G4S International, the security firm appointed by our Group, is fullyresponsible for the shipment to Australia. Please refer to the section entitled “General Information on OurCompany and Our Group - Key Contractors and Consultants” of this Offer Document for further details ofG4S International.
SALES AND MARKETING
As gold is a commodity which has a ready market and can be traded through the gold bullion market inLondon, our Group does not undertake any significant sales and marketing activities. As at the LatestPracticable Date, under the terms of the Refining Agreement, The Perth Mint must purchase all therefined silver and CMNM has the discretion to sell the refined gold or require The Perth Mint to credit therefined gold into CMNM’s London metal account. CMNM may then sell the refined gold at the prevailingspot market price.
INSURANCE
We insure our business for, inter alia, the following:
(a) workmen’s compensation for our employees, where applicable;
(b) personal accident for key personnel;
(c) medical coverage for certain personnel;
(d) public liability; and
(e) fire for our production facilities and certain of our production machinery.
As at the Latest Practicable Date, our Directors are of the view that the above insurance policies areadequate for our Group’s current operations. Our Directors will review the insurance coverage of ourGroup from time to time to consider the sufficiency of its coverage.
INTELLECTUAL PROPERTY
As at the Latest Practicable Date, our Group does not own any trademark, patent, or licence or has anyapplication relating thereto or any other intellectual property rights.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
105
LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS
Licences, Permits and Approvals
Our Group is required to comply with local regulatory and governmental licensing requirements duringthe course of its operations. As at the Latest Practicable Date, our Group holds the following licences,permits and approvals which are material to its operations:
CNMC’s Asset name / interest Development Type ofCountry (%) status Expiry date Licence area mineral
Mining rights for gold 81% Mining and 7 April 2018 Sokor Block Goldmining at Sokor production covering an area of Block, Malaysia approximately 10 sq km
Manufacturing licence – – – Lot 2014, Mukim Sokor, Goldto manufacture gold Kelantan Darul Naim doré bars
Operational Mining – – 29 June 2012 – –Scheme as operator
In addition to the contractual mining rights and manufacturing licence, CMNM has also obtained approvalfor its environmental impact assessment and environmental management plan for its mining operations inJune 2009 and April 2010 respectively.
To the best of our Directors’ knowledge, our Group has obtained all necessary licences, permits andapprovals for our business operations. As at the Latest Practicable Date, none of the aforesaid licences,permits and approvals have been suspended, revoked or cancelled and, save as disclosed in the sectionentitled “Risk Factors” of this Offer Document, to the best of our Directors’ knowledge and belief, we arenot aware of any facts or circumstances which would cause such licences, permits and approvals to besuspended, revoked or cancelled as the case may be, or for any applications for, or renewal of, any ofthese licences, permits, approvals and certificates to be rejected by the relevant authorities.
Please refer to Appendix E for the legal opinion from the legal adviser to the Company on Malaysia law,Skrine, on the compliance by our Group with all the relevant laws, rules and regulations and title to orvalidity and enforceability of rights to our Group’s assets.
Government Regulations
Singapore and Hong Kong
As at the Latest Practicable Date, our Group’s business operations in Singapore and Hong Kong are notsubject to any special legislation, regulatory controls or environmental issues other than those generallyapplicable to companies (including foreign investment companies) and business operating in Singaporeand Hong Kong. Our Group has not experienced any adverse effect on its business in complying withthese regulations. Our Directors believe that our Group has complied with all relevant laws andregulations.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
106
Malaysia
Our Group’s mining operations in Malaysia are governed by various laws and regulations and subject tovarious licenses, permits and governmental approvals. Below is a summary of laws and regulationswhich have a material effect on our Group’s mining operations:
Requirements under the Mineral Enactment and the Mineral Development Act 1994 (“MDA”)
Mining Lease
It is an offence to conduct any mining activities without a mining lease under the Mineral Enactment. Themining lease is issued subject to conditions as well as statutory conditions under the Mineral Enactmentto be complied with. A breach of any of the terms and conditions of the mining lease may result inforfeiture of the mining lease or a fine or imprisonment or both. The Mineral Enactment also provides forcompounding of offences for compoundable offences of such amount not exceeding 50% of themaximum amount of fine for that offence. CMNM has a contractual right to mine granted by the mininglease holder, KSEDC.
Where the offence is committed by a body corporate, the Mineral Enactment provides that its managingdirector, manager or officer shall be deemed guilty of the offence unless he proves that the offence wasdone without his knowledge or that he took reasonable precautions to prevent it.
Approved Operational Mining Scheme
The MDA requires a holder of a mining lease to submit for approval by the Director of Mines anoperational mining scheme before the commencement of any development work or mining. Theoperational mining scheme may be approved subject to certain terms and conditions. Failure to submit anoperational mining scheme is an offence under the MDA and the holder of the mining lease shall beliable to a fine or to imprisonment or both.
Requirement to Possess a Manufacturing Licence
It is an offence under the Industrial Co-ordination Act 1975 of Malaysia for companies havingshareholders’ funds of MYR2.5 million or more or having 75 full time employees or more to carry onmanufacturing activities without a manufacturing licence issued by the Ministry of International Trade andIndustry. Such manufacturing licences may be subject to conditions to be complied with. Failure to hold avalid manufacturing licence would subject such manufacturing companies to a fine or to imprisonment orboth and failure to comply with the conditions may result in the revocation of the manufacturing licence.
Environmental Laws and Regulations
Our Group’s mining activities are subject to the Environmental Quality Act 1974 (“EQA”) of Malaysia andits regulations and guidelines and directives issued by the Director General of Environment from theDOE.
An EIA report is required under the EQA to be submitted to the Director General of Environment beforecarrying out the mining activities. The EIA report may be approved subject to terms and conditionsdeemed suitable by the Director General of Environment. These terms and conditions relate to theoperations of the mining site in accordance with the EQA.
Failure to comply with the EQA or breach of the terms and conditions of the EIA report is an offence andwill result in a fine or a term of imprisonment or both.
If the offence is committed by a body corporate, any person who at the time of commission of the offencewas a director, chief executive officer, manager or any other similar officer or a partner of the company orwas purporting to act in such capacity shall be deemed to be guilty of the offence unless he may provethat the offence was done without his knowledge or that he took reasonable precautions to prevent it.Further, the EQA states that if the offence has been committed by any clerk, servant or agent whenacting in the course of employment, the principal shall also be held liable unless he proves to thesatisfaction of the court that the offence was done without his knowledge or that he took reasonableprecautions to prevent it.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
107
Workplace Safety and Health Measures
Under the Occupational Safety and Health Act 1994 (“OSHA”) of Malaysia, all employers with 40 or moreemployees at the place of work (or as the Director General of Occupational Safety and Health directs)must establish a safety and health committee; consult the committee regarding arrangements to enablehim and his employees to cooperate effectively to promote and develop safety and health measures foremployees at the place of work; and check the effectiveness of such measures. More specific duties ofthe employers are laid out in the Occupational Safety and Health (Safety and Health Officer) Regulation1997. For example, the employer must invite persons at the place of work to nominate theirrepresentatives to the safety and health committee and the employee representatives in the committeemust represent the various sections at the place of work.
A company is also required under the OSHA to appoint a safety and health officer who is required topossess such qualifications or have received such training as prescribed under the Occupational Safetyand Health (Safety and Health Officer) Regulations 1997. The safety and health officer is required tosubmit a monthly report pertaining to the safety and health activities carried out by the company to theDepartment of Occupational Safety and Health.
The OSHA also requires a company to notify the nearest Occupational Safety and Health office of anyaccident, dangerous occurrence, occupational poisoning or occupational disease which has occurred oris likely to occur at the place of work.
A company is also required to prepare a chemical health risk assessment report and keep a register ofchemicals hazardous to health in accordance to the Occupational Safety and Health (Use and Standardsof Exposure of Chemicals Hazardous to Health) Regulations 2000.
Failure to comply with the requirements of OSHA and its regulations is an offence which may result inliability in fines, terms of imprisonment or both.
Requirements under the Factories and Machinery Act 1967 (“FMA”) and its regulations of Malaysia
Pursuant to the FMA, no person shall operate any machinery in which a certificate of fitness is requiredunless a valid certificate of fitness is in force or install any machinery or machinery in which a certificateof fitness is prescribed without the written approval of the Chief Inspector of Factories and Machineries.
The FMA also requires the any person who intends to use a premise as a factory to submit a prescribedform to the Chief Inspector of Factories and Machineries one (1) month before commencing use of thepremises as a factory. Every factory is also required to keep a factory general register in accordance toSection 38 of the FMA.
Failure to comply with the requirements under the FMA and its regulations is an offence which may resultin liability in fines, terms of imprisonment or both.
Purchase and Storing of Diesel Fuel
It is an offence under the Control of Supplies Act 1961 of Malaysia and its regulations to purchase or tostore diesel fuel at its premises without approval. Failure to comply with such requirement would result ina fine. Where a person charged with an offence is a body corporate every person who, at the time of thecommission of such offence is a director or officer of that body corporate may be charged jointly in thesame proceedings with the body corporate, and where the body corporate is convicted of the offencecharged, every such director or officer shall be deemed to be guilty of the offence unless he proves thatthe offence was committed without his knowledge or that he took reasonable precautions to prevent itscommission.
Registration Certificate for Diesel Generators
It is an offence under the Electricity Supply Act 1990 of Malaysia for a person to possess or operate aninstallation of diesel generators unless the installation is registered on a valid Certificate of Registrationissued by the Energy Commission of Malaysia. Failure to comply with the said provision would result in afine.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
108
KEY CONTRACTORS AND CONSULTANTS
Our Group selects third party contractors based on our internal selection procedures which includeassessing the skills, experience and track record of the contractors. Agreements with the third partycontractors are based on a fixed tenure of a specified term, or on a per assignment basis, which arerenewable subsequently if the quality of the works carried out by them is satisfactory. Our Group enjoys astable relationship with our contractors as we have been working with the same contractors since thecommencement of the Sokor Gold Project and will continue to work with them.
PRC is now the largest gold producer in the world. Many of the PRC’s gold mines have raised largeamounts of funding to finance their production and gold mining companies in PRC have accumulatedsignificant levels of experience and expertise in mineral extraction. They have designed and developedtheir own extraction technologies and equipment. Given their proven techniques and cheaper and moreefficient manpower, our Group expects to increasingly outsource its future exploration and extraction workto mining experts and companies from the PRC.
Some of our key contractors and consultants are as follows:
CGRI
CGRI, a subsidiary of China National Gold Corporation, is a Chinese research organisation whichengages in scientific research specialising in the research and development of gold engineeringtechnology at a national level and provides various technical support in the areas of mining, mineralprocessing, metallurgy and environment protection.
CGRI has provided our Group with technical support such as on-site administration, samplingsupervision, ore studies, heap leaching studies, product evaluation and setting up processing facility forthe Sokor Gold Project. CGRI has carried out its work for the Sokor Gold Project with the support from itsresearch technical facilities in the PRC.
CSU
CSU is a national university established in the PRC through the amalgamation of three (3) formerindividual universities, namely Central South University of Technology, Hunan Medical University andChangsha Railway University.
CSU has provided technical support to our Group to evaluate the potential of the gold resources in SokorBlock and such services include:
(a) Conduct topographic survey and submit topographic data and relevant maps of Sokor Block; and
(b) Conduct geological prospecting of gold, evaluate the potential of the gold resource in Sokor Block,submit relevant geologic data which can be used to evaluate the potential of gold mineralisation inthe concession and surrounding area, lay out exploration and exploitation work, and design, planand conduct feasibility studies for the mining operation.
Sinomine
Sinomine specialises in the business of mineral exploration and exploration drilling programmes, whichincludes the prospecting and exploiting of non-ferrous mineral resource.
Sinomine has provided our Group with technical service relating to our exploration drilling programme,which includes preparation of the relevant exploration equipments, accessories, auxiliary materials andrelated facilities to carry out engineering and exploration work in the Sokor Block.
ALS Group
ALS Group is a provider of assaying and analytical testing services for mining and mineral explorationcompanies. It specialises in the analysis of a variety of sample types, such as soil, sediment, rockcuttings and core.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
109
G4S plc
G4S plc is an international security solutions group with its head office based in United Kingdom. G4S plcsecures all aspects of the supply chain to protect and account for the assets of clients operating indifferent industries.
Safeguards Securicor Sdn Bhd, one of the subsidiaries of G4S plc, provides 24 hours on site securityservices to the mining site of our Group.
G4S International, another subsidiary of G4S plc, provides security services for the transport of gold doréonsite to The Perth Mint.
The Perth Mint
The Perth Mint is an international gold refiner, which enjoys accreditation as a refiner, weight master andassayer with the London Bullion Market Association, the New York Commodity Exchange, the TokyoCommodity Exchange and Dubai Multi Commodities Centre.
The Perth Mint refines the gold doré bars provided by our Group to a minimum standard of 99.95% purityand disposes the non-precious metal extracted from the gold doré.
Subject to the discretion of CMNM, the refined gold may be sold to The Perth Mint or credited to CMNM’sLondon metal account which can be sold to third parties in the future. However, The Perth Mint mustpurchase all the refined silver pursuant to the terms of the Refining Agreement.
I.Z. Environmind Sdn. Bhd.
I.Z. Environmind Sdn. Bhd. specialises in environmental consultation and site environmental monitoringwork in Malaysia.
I.Z. Environmind Sdn. Bhd. has been engaged by CMNM to conduct monthly environmental monitoringexercise at the Sokor Block to ensure CMNM complies with the relevant environmental laws andregulations of Malaysia.
Our Directors are of the opinion that our Group is not materially dependent on the above third partycontractors and consultants and the risk associated with these third party contractors and consultants islow as there are many other alternative third party contractors and consultants whom our Group cansource for that can provide similar services at equivalent quality standards.
STAFF TRAINING
As at the Latest Practicable Date, we send our employees for training on a need-to basis. Our employeeswere trained in safety measures by our Safety and Health Officer as well as the mining specialists fromthe PRC. However, moving forward, we will put in place a training framework when our Group increasesits local employee head count to support its growth.
Our Group did not incur significant staff training expenses for FY2008, FY2009, FY2010 and 1Q2011.
ENVIRONMENTAL PROTECTION AND COMMUNITY DEVELOPMENT
CMNM’s policy in respect of environmental protection and community development is to develop andmanage its mining operations with an aim to maximise its compliance with the environmental regulationsand minimise any harm to the environment while maintaining sensitivity to local cultural and communityexpectations.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
110
Environmental Protection
In compliance with the environmental regulations, an EIA report was prepared by CMNM and approvedby the DOE in June 2009. An environmental management plan, which sets out the processes that CMNMwill follow to maximise its compliance with the environmental regulations and minimise any harm to theenvironment, was subsequently approved by the DOE in April 2010.
CMNM recognises that environmental monitoring is an on-going obligation. To demonstrate itscommitment to undertake regular environmental monitoring and audit, CMNM has appointed I.Z.Environmind Sdn. Bhd., a licensed third party environmental consultant approved by the DOE, inDecember 2010 to conduct regular environmental monitoring exercise to ensure that CMNM complieswith the environmental regulations in relation to its operations and to constantly provide feedback toCMNM with regard to its environmental practices. Such engagement will continue on an on-going basis.Please refer to the section entitled “General Information on Our Company and Our Group - KeyContractors and Consultants” of this Offer Document for more information on I.Z. Environmind Sdn. Bhd.
A summary of the key anticipated potential environmental impacts arising from CMNM’s miningoperations and their associated mitigation measures are set out below:
Nature of Source of Impact Adverse Impact Mitigating Measures Residual Impact
Site clearance resulting in Siltation of watercourse Development in parcels None bare land exposed to and soil erosion agents of erosion due to Carried out from high to removal of trees and low ground so that the shrubs remaining growth covers
act as silt and runoff barriers
Vegetation stripping follows the prevailing contours so as to maximise effects of silt traps
Use of earth-moving Soil erosion, dust Exposed ground will be Air pollution level heavy machinery to carry generation from vehicle planted with cover crops to increases due toout earthworks such as movement, noise control runoff and soil loss loss of vegetation site preparation, tailings generation, workers covers andvat, drainage works, road safety implication Spraying water on earth earthworks activitiesconstruction and base during works and roads and tracks to suppress camp siltation of watercourse dust generation Local temperature
increases due to lossPersonal protection devices of vegetation covers are issued to workers to which have cooling provide protection from effects dust and noise
Biomass waste disposal Generate air pollution No burning of biomass None in the downwind area waste is allowed
Result in unpleasant Spoils and waste and unhealthy materials will be buriedenvironment on-site in the designated
“fill” areaFire hazard during dry season, cause Properly designed spoillocalised floods and piles surrounded by soilbreeding grounds for containment berm disease vectors
Unusable waste materials will be left in-situ to decompose naturally
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
111
Nature of Source of Impact Adverse Impact Mitigating Measures Residual Impact
Wastewater generation Potential to contaminate Provide adequate sanitation Noneand disposals from base the water course through facilities and potable water camps surface runoff and supply
leachate
Solid waste generation Provide ideal habitat for Solid waste to be recycled,vector-borne disease composted or disposed of
Improper utility facilities in secure areas designedCreate localised fire in accordance with the hazard guidelines of Department of
Environment of Kelantan
Regular collection of solid waste from the site
Chemical substances Generate water Prevent leakage from tailings Can be controlledused in froth flotation or pollution vat by installing water proofing to tolerable levels cyanide leaching materials on the walls of the
vat to inhibit seepage of tailings water and by conducting regular maintenance on the vats
Engage Kualiti Alam, a FederalGovernment licenced toxic waste collector, to handle all acids produced during the mining operations
Tailings will be treated toneutralise any contaminating chemicals before shifting to the tailings area for storage
Movement of Generate air and Provide sufficient width to Can be controlledland-based traffic noise pollution access roads to ease traffic to tolerable levels within, to and from movement the project site
Limit speed of vehicles
Restrict entry into active mining areas to project vehicles only
Hazardous materials Generate water Provide proper storage area Can be controlled such as lubricant oil pollution and potential on-site which will be to tolerable levels
fire hazards concreted to provide animpervious surface and to locate such storage areaaway from incompatible substances that will generate heat, fire, gas or explosion
Provide proper skid tank
Schedule regular collection of hazardous waste for disposal by licenced operators
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
112
Nature of Source of Impact Adverse Impact Mitigating Measures Residual Impact
Closure of the mine Generate disequilibrium Provide rehabilitation plan Noneof watercourse flow which includes, inter alia,regime activities such as handling
site storm water, compactingGenerate water borne and sealing potentiallydisease acid-generating waste rock,
covering tailing dams withProvide ideal habitat for clay and rock after allowingvector-borne disease them to evaporate and
re-vegetationCreate localised firedhazard
Soil erosion
Fauna affected
Result in unpleasant andunhealthy environment
Community Development
Our Group has made substantial efforts to integrate with the local population in the vicinity where ourmine is located and assisted them in social and economic development. We have provided the localcommunity with new employment opportunities, training and skills development for our staff of the miningoperations and broadened economic and commercial base for local businesses, contributing to theeconomic growth of the region. We are also developing a corporate social responsibility policy which willaddress our Group’s impact on the local community. In addition, our Group provides opportunities forbusiness investors to invest in Kelantan and encourages foreign direct investment.
The main negative social impact will occur at mine closure with the loss of jobs as a result of the closureof the mining operations. A mitigation measure is that the workforce that has been employed will havebeen fully trained with multi-skilled experience that will be transferrable to other mining operations.
Our Group also values social responsibility and has been participating in community developmentprojects that align with the needs and objectives of the local communities identified through engagementand consultation. In December 2007, our Group provided and distributed basic food necessities andbasic school supplies to the affected families and their children during the flood in Kelantan. During theHari Raya Aidilfitri festive season in September 2009, gift packs comprising rice, sugar and other basicnecessities were distributed by our Group to the less fortunate individuals and families. In 2010, ourGroup supported Cheng Ho Expo (international trade exhibition organised by Kelantan State Governmentin Kota Bharu) by engaging and sponsoring a team of Shaolin Kung Fu performers to perform during thetrade exhibition period. Our Group had also in 2010, handed out 120 bursaries to school children withoutstanding academic performance residing in or near Sokor area and sponsored 1,000 stationary setsto school children residing in Sokor and Tanah Merah areas. In August 2011, 999 gift packs comprisingrice, sugar and other basic necessities were distributed by our Group to the less fortunate individuals andfamilies residing in Sokor and Tanah Merah areas.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
113
INFRASTRUCTURE
Power to the plant is provided by diesel generators with a total capacity of 950 kilowatts. Smaller unitssupply power to offices and the accommodation camp. Process water is sourced from local streams, withpotable water being trucked to the site. Offices, camp, assay laboratory and maintenance facilities havebeen constructed on site. Communications are based on a satellite telephone system.
The Sokor Gold Project and the ore processing facility of our Group are both located at Sokor Block,which is approximately a 2.5-hour drive from the Sultan Ismail Petra Airport of Kelantan or a 1.5-hourdrive from the Tanah Merah railway station. The mining area has access to telecommunications, water,roads and is equipped with its own power generator. The proximity to land and air transport and theavailability of existing infrastructure and communication access enable our Group to receive supplies ofdiesel, potable water and other equipment or materials required in our mining operations from oursuppliers readily.
SAFETY POLICY
Due to the nature of our business, incidents that may have detrimental effects on the health and safety ofits workers and the environment may occur from time to time. Our Group aims to conduct its business insuch a manner that all reasonable and practicable measures have been taken to protect its workers andthe environment from the detrimental effects. In order for our Group to achieve its aim, our Group hasestablished a set of environment, health and safety policies as follows:
(a) Risk assessment shall be conducted before works are allowed to commence so that anyforeseeable risks arising from such works can be identified and eliminated accordingly. Where it isnot reasonably practicable to eliminate the risks, measures and safe work procedures shall bedeveloped to minimise and control the risks;
(b) All staff and workers shall be briefed on the hazards and risks associated with the works andtrained to carry out works in accordance with the established safe work procedures before theycommence the works;
(c) Regular inspections and checks shall be conducted to ensure that the established safe workprocedures are adhered with;
(d) All staff and workers shall be provided with the necessary safety and health training so as toenable them to carry out their work safely;
(e) All machineries and equipment deployed to the worksite shall be in good working condition. Onlyworkers who have been trained are allowed to operate the machineries and equipment. In addition,all machineries and equipment shall be regularly serviced and maintained;
(f) Regular promotion of safety through talks, demonstrations, seminars and courses shall be carriedout to maintain and raise awareness of safety; and
(g) Only sub-contractors and suppliers who are able to meet the environment, health and safetyrequirements of our Group shall be selected as our business partners. Our Group shall monitortheir performance on a continuous basis to ensure that they maintain their standards.
Since the commencement of our operations till the Latest Practicable Date, an accident has occurred atthe mining site operated by our Group due to the failure to follow safety measures by a worker. In July2010, a mechanic employed by CMNM was repairing a machine which was still running when he suffereda fatal accident. CMNM has since, through its insurer paid the compensation amount of MYR18,000 tothe family of the deceased as full, final and complete settlement of all claims relating to this mishap.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
114
After the occurrence of the abovementioned fatal accident, our Group has implemented the followingadditional preventive measures and safe work procedures for our operations:
(a) A safety and health committee was formed to set the direction with regard to the promotion anddevelopment of safety and health measures for employees at the mining sites and to review theeffectiveness of such measures. This committee comprises representatives from both themanagement and the employees as well as the Safety and Health Officer of CMNM.
(b) A safety and health department was formed to (i) conduct safety audit and attend project safetymeeting; (ii) conduct in-house safety training for staff; (iii) conduct investigation and handle allincident reports; (iv) liaise with all external safety authorities; and (v) review and improve the safetymanagement system.
(c) Implementation of preventive measures that include (i) daily site checking by the project teammember to ensure safety measures are in place; (ii) monitoring the safety performance ofcontractors; (iii) enforcing every employee to wear safety gear while they are at mine site; and (iv)cultivating a ‘safety is everybody’s responsibility’ culture.
RESEARCH AND DEVELOPMENT
Due to the nature of our business, our Group does not carry out any research and development activities.We do, however, carry out exploration as well as resource and reserve definition of Sokor Block with theobjective of identifying gold mineralisation in Sokor Block and such resource definitions are essential forthe continued growth of a mining company. Please refer to the section entitled “General Information onOur Company and Our Group – Business Activities” of this Offer Document for more information on ourexploration as well as resource and reserve definition activities.
COMPETITION
Given the clear geographical demarcation of gold, exploration and mining rights and licences, miningcompanies in general do not compete directly with one another in terms of mining operations. However,our Group competes with other mining companies for new exploration and mining rights and licencesoutside of our current mining rights and licences.
For a discussion of the competitive risks that are faced by our Group in our gold mining operations,please refer to the section entitled “Risk Factors – Risks Relating to our Business or the Industry” of thisOffer Document.
To the best of our Directors’ knowledge, there are no published statistics that can be used to accuratelymeasure the market share of our business in Malaysia.
COMPETITIVE STRENGTHS
Our Directors consider the following to be our core competitive strengths:
Availability of high grade gold-bearing ore in Sokor Block
Based on the BDA Technical Report, supergene enrichment of gold is widespread at the Sokor Block withdevelopment of a typical surface mushroom-shaped dispersion pattern for the near-surface high gradegold values. Typically the near-surface gold grade can be between two (2) and five (5) times higher thanthe grade at depth, with enrichment normally restricted to the top 2m to 10m.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
115
Exploration upside potential within Sokor Block and Sokor Gold Zone
There is considerable exploration upside potential within Sokor Block and Sokor Gold Zone to locateadditional gold resources. Potential exists for extensions to the known deposits and in areas within theSokor Block where to date only limited reconnaissance exploration has taken place. The area south ofManson’s Lode is considered to have potential for replacement style base metal-gold mineralisationsimilar to Manson’s Lode deposit. The northern area east of the Ketubong-Rixen fault is considered tohave potential for structurally controlled gold mineralisation.
Close proximity of our Sokor Gold Project to urban facilities
The Sokor Gold Project and the ore processing facility of our Group are both located at Sokor Block,which is approximately a 2.5-hour drive from the Sultan Ismail Petra Airport of Kelantan or a 1.5-hourdrive from the Tanah Merah railway station. The mining area has access to telecommunications, water,roads and is equipped with its own power generator. The proximity to land and air transport and theavailability of existing infrastructure and communication access enable our Group to save in both hiringand transportation costs as well as minimise investment costs in building supporting infrastructure (suchas roads or railway) which are often very capital intensive.
Strong working relationships with Chinese contractors and/or consultants
We believe that we have been able to achieve cost efficiencies which are lower than the industry costaverage in the production of the gold doré for sale due largely from our strong working relationships withour Chinese contractors and/or consultants such as CSU, Sinomine and CGRI, which are some of theleading players in the PRC in their respective niche markets. Such Chinese contractors and/orconsultants have offered their services and provided technical support to our Group at competitive prices.Their expertise in mining operations has also enabled our Group to ensure greater cost efficiencies andeconomic benefits for our operations.
Strong relationships with stakeholders and local communities
We have considerable experience in dealing with, and have developed good working relationships withour stakeholders, being Kelantan State Government and KSEDC over the years. The Executive Chairmanof our Group, Professor Lin Xiang Xiong is Kelantan’s Chief Advisor on Kelantan-China InternationalTrade for the Kelantan State Government. We believe that we are an integral part of the communities inwhich we operate and believe that support from these communities will help in our success. We alsovalue social responsibility and has been participating in community development projects that align withthe needs and objectives of the local communities identified through engagement and consultation. Someof such projects include the provision and distribution of basic food necessities and basic school suppliesto the affected families and their children during the flood in Kelantan in December 2007. During the HariRaya Aidilfitri festive season in September 2009, gift packs comprising rice, sugar and other basicnecessities were distributed by our Group to the less fortunate individuals and families. We had also in2010, handed out 120 bursaries to school children with outstanding academic performance residing in ornear Sokor area and sponsored 1,000 stationary sets to school children residing in Sokor and TanahMerah areas. In August 2011, 999 gift packs comprising rice, sugar and other basic necessities weredistributed by our Group to the less fortunate individuals and families residing in Sokor and Tanah Merahareas. Please refer to the section entitled “General Information on Our Company and Our Group -Environmental Protection and Community Development” of this Offer Document for more information ofthe community works undertaken by our Group.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
116
PROPERTIES AND FIXED ASSETS
As at the Latest Practicable Date, our Group does not own any real property.
The following table sets out all the properties leased by our Group as at the date of this Offer Document:
ApproximateTenant/ Land Area Annual DescriptionLessee Location (sq ft) Tenure Rental of Use Lessor
CNMC 5 Shenton Way, 2,056 One (1) year S$118,796 Office UIC #11-03/04 106 and ten (10) Investments UIC Building, months (Properties) Singapore 068808 commencing Pte Ltd
1 January 2010to 31 October 2011
CMNM B-878, 3,000 Two (2) years MYR9,600 Workers’ Yeap BoonTaman Tanah Merah, commencing dormitory Yang17500 Tanah Merah, 1 July 2010 to ConstructionKelantan 30 June 2012 Sdn. Bhd.
CMNM Lot PT 6724, 3,200 First three (3) MYR19,200 Office Fatimah Jalan Jedok, years Binti Hamzah 17500 Tanah Merah commencingKelantan 1 April 2011
to 1 April 2014
Next two (2) MYR20,400years commencing1 April 2014 to 1 April 2016(By way of optionto renew)
CMNM B-881, 3,000 Two (2) years MYR9,600 Workers’ Yeap BoonTaman Tanah Merah, commencing dormitory Yang17500 Tanah Merah, 1 July 2011Kelantan to 30 June 2013
Company 745 Toa Payoh, 4,392 Two (2) years S$120,000 Office See Hoy ChanLorong 5 commencing Industrial #04-01 15 October 2011 Pte LtdSingapore 319455 to 14 October 2013
Our fixed assets consisting of property, plant and equipment had a net book value of approximatelyUS$2.17 million as at 31 March 2011.
To the best of our Directors’ knowledge and belief, there are no regulatory requirements that maymaterially affect our Group’s utilisation of tangible fixed assets.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
117
INDUSTRY OVERVIEW
Supply of Gold
The principal sources of gold supply include production of gold from mining activities, recycling of goldand official sector sales.
Total world gold supply in 2010 was 4,108.2t, an increase of 1.8% from 2009, which saw a total worldgold supply of 4,034t. This rise was attributed to an increase in mine production, largely due to productiongrowth in Australia, PRC and USA.
Mine production was the largest source of gold, accounting for 57.8% and 60.6% of the total world supplyin 2009 and 2010 respectively. On the whole, total mine supply (i.e. aggregate of mine production and netproducer hedging) has seen growth over the last few years.
The second major source of gold came from recycled gold, which accounted for 41.5% and 39.4% of thetotal world gold supply in 2009 and 2010 respectively. Generally, recycled gold supply has beenincreasing over the last few years, except for a slight drop of approximately 1% from 2009 to 2010.
Official sector sales on the other hand, turned negative in 2010 as central banks became net purchasersof gold for the first time in 21 years due to the recent sluggish global economic recovery and uncertainfinancial markets.
Please see table below for world gold supply and demand statistics.
Sources: GFMS Limited, The London Bullion Market Association, World Gold Council
Notes:
(1) Provisional.
(2) Excluding any delta hedging of central bank options.
(3) Gold demand excluding central banks.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
118
Demand for Gold
World gold demand stems mainly from jewellery, technology and investment demands. Total world golddemand reached a 10-year high of 3,812.2t in 2010, representing a 9.1% increase from 2009 which sawa total world gold demand of 3,493,4t. The demand in 2010 was worth approximately US$150 billion. Thisnotable performance was mainly due to strong growth in jewellery demand, robust growth in emergingmarkets especially PRC and India which contributed to increased consumer demand for gold and thestrategic shifts made by central banks around the world to diversify their foreign exchange reserves byincreasing their gold reserves, which has resulted in them becoming net purchasers of gold after 21years of net sales.
The jewellery sector was the largest consumer of gold, taking up 50.4% and 54% of total world golddemand in 2009 and 2010 respectively. Overall, jewellery consumption had been declining over the lastfew years, except in 2010 where it experienced a 17% increase from 2009. Indian jewellery demand rose69% during 2010 to 746t, while the PRC’s jewellery demand reached a new annual record of 400t.
The second largest consumer of gold was the investment sector, which consists of bar and coin demandand demand for exchange-traded funds and similar products. Investment demand remained fairly stable,with only a slight decrease of 2% from 2009 to 2010. An interesting observation was that physical barinvestment improved quite significantly with an annual gain of 56%, whereas demand for exchange-traded funds and similar products went down by 45% on an annual comparison.
The third main consumer of gold is the technology sector, which comprises of electronics, dentistry andother industrial demand. Technology demand has been declining over the last few years, except in 2010where it experienced a recovery of 12% from 2009. This increase was spurred by a recovery in theelectronics segment, which was driven by enhanced demand in consumer electronics with goldcomponents, particularly in key emerging markets like India and PRC.
Please refer to the chart below for a breakdown of world gold demand and gold price.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
119
Gold Price
Gold prices have been on a steady ascent for the last ten (10) years and it hit as high as US$1,420/oz in2010 on 7 December 2010 on the London PM fix. The average gold prices were US$1,224.52/oz andUS$972.32/oz in 2010 and 2009 respectively, representing an increase of 25.9% year-on-year. Since thestart of 2011 up to the Latest Practicable Date, the price of gold has remained strong and reached a highof US$1,895/oz on 6 September 2011(1).
The recent strong performance of gold prices can be attributed to recovery in the jewellery andtechnology sectors and increased investment demand. Apart from gold’s long-term supply and demanddynamics, macro-economic factors in recent years have also contributed to the growth in demand of gold.The sovereign debt crisis in Europe, overall economic uncertainty, devaluation of the USD andinflationary pressures in many countries, including India and PRC, have driven up demand for gold due toits relatively low volatility and appeal as a safe haven investment, which in turn, boosted gold prices.
Malaysian Gold Industry
To spearhead the country’s mineral resource industry, the Malaysian Government has launched a revisedNational Mineral Policy in January 2009, which aims to provide the foundation for the development of aneffective, efficient and competitive regulatory environment for the mineral sector(2). Such conduciveregulatory and business climate has attracted many foreign players to carry out exploration and mining ofvarious mineral resources in Malaysia.
For gold, the country has attracted the likes of foreign companies such as Avocet Mining PLC, MonumentMining Limited and Olympus Pacific Minerals Inc. Gold mining in Malaysia occurs mainly in the CentralBelt of the Malaysian Peninsular, which includes the states of Pahang, Kelantan and Terengganu. Today,the largest gold mine in Malaysia is the Penjom Mine in Pahang, operated by Avocet Mining PLC. It islisted on the AIM market of the London Stock Exchange. According to the latest annual report of AvocetMining PLC, gold output from the Penjom Mine was recorded at 51,084oz in 2010, and it held 397,600ozof contained gold reserves(3).
Notes:
(1) Information was extracted from Bloomberg L.P.
(2) Information was extracted from the internet website of MalaysianMinerals.com (http://malaysianminerals.com/).
(3) Information was extracted from the internet website of Avocet Mining PLC (http://www.avocet.co.uk/pdf_resources/Avocet_AR_31_12_2010_low%20res%20for%20website.pdf).
Sources:
Unless expressly stated above, the information set out in this section entitled “Industry Overview” are extracted from the websites ofthe World Gold Council (http://www.gold.org/investment/research/).
Each of the above organisations or corporations (as the case may be) whose websites or publications containing information uponwhich certain statement(s) in this section entitled “Industry Overview” of this Offer Document are based has not consented to theinclusion of the relevant information in this Offer Document for the purpose of Section 249 of the SFA and is therefore not liable forthe relevant information under Sections 253 and 254 of the SFA. While the Directors have taken reasonable action to ensure thatthe information is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context, theyhave not independently verified the accuracy of the relevant information.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
120
PROSPECTS
The following discussion about gold mining industry’s prospects includes forward-looking statements thatinvolve risks and uncertainties. Actual results could differ from those that may be projected or implied inthese forward-looking statements. Please refer to the section entitled “Cautionary Note on Forward-Looking Statements” of this Offer Document.
Our Directors believe that the prospects for the gold mining industry are good due to the following factors:
World Demand for Gold(1)
Against the backdrop of sluggish global economic recovery and uncertain financial markets, investmentdemand for gold continues to be sustained as it remains a sought-after asset. Firstly, there is continuedinvestor concern over the health of economic growth in the developed nations, especially in light of thesovereign debt crisis in Europe along with the prospect of contagions to other regions. This has promptedinvestors to turn to gold as a hedge against currency risks. Secondly, quantitative easing measuresundertaken by central banks in the USA, United Kingdom and Japan and the consequent weakening ofthe USD and associated global currency tensions as countries compete to maintain their competitivenessby suppressing the value of their currencies also contributed to the attractiveness of gold as analternative investment. With the world’s economic outlook looking fragile, interest rates are unlikely to rise,further quantitative easing measures may be used and global fiscal deficits reduction may faceresistance, investors will continue to regard gold as a hedge against inflationary pressures and as a safehaven asset in the face of volatile currency markets.
In order to diversify their foreign exchange reserves, central banks around the world has made strategicshifts towards increasing their gold reserves. On 21 December 2010, the International Monetary Fundannounced the conclusion of its limited gold sales programme of 403.3t of gold. The majority of its salesin off-market transactions are conducted with other central banks, with sales of 200t to the Reserve Bankof India, 10t to Central Bank of Sri Lanka, 10t to Central Bank of Bangladesh and 2t to Central Bank ofMauritius. The Central Bank of the Russian Federation bought 135.3t of gold during 2010 whileVenezuela reported an increase of 5t to its gold reserves in 2010(2).
The above-mentioned macro-economic factors, together with increasing awareness of gold’s investmentqualities among retail investors and enhanced access to gold investment products will continue tosupport the investment demand for gold. Economic factors aside, recent political and military tensions inthe Korean Peninsular and Egypt have also driven investors to turn to gold as a safe haven investment.
On the other hand, many developing nations, such as PRC and India, continue to grow, which has led torobust demand for many commodities. Rising income levels, high savings rates and strong economicgrowth in these emerging markets have pushed up consumption of gold. Gold jewellery demandamounted to US$55.5 billion during the first three (3) quarters of 2010, equal to the US$55.5 billion spentglobally on gold jewellery during the whole of 2009. This shows that despite the escalation in gold pricesin many currencies, consumers have increased their gold jewellery expenditure during 2010.
Apart from gold jewellery demand, the economic growth in key emerging markets such as India and PRChas also driven up demand for consumer electronics. The metal’s unique properties of high reliability,conductivity, malleability and resistance to corrosion make it an ideal material for many industrial uses. Aselectronics manufacturing industries in Asia continue to grow, coupled with increasing demand for newconsumer electronic products in these regions, industrial demand for gold looks set to benefit from thistrend. The World Gold Council also believes that given gold’s distinctive chemical and physical properties,it will be the focus of many research and development activities to discover new industrial applications inthe coming years. These new breakthroughs also represent potential new industrial markets for gold.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
121
Price Outlook
According to the World Gold Council, the price of gold rose for the tenth consecutive year in 2010, tradingas high as US$1420/oz on 7 December 2010 on the London PM fix. Average prices during the year roseto US$1,224/oz from US$972/oz in 2009 (see Chart 1 below). Since the start of 2011 up to the LatestPracticable Date, the price of gold has remained strong and reached a high of US$1,895/oz on 6September 2011(3).
In times of economic uncertainty, gold’s relatively low volatility and independence of many assets boostits appeal as an investment product for portfolio diversification and risk management strategies. Analystsbelieve that prospects for gold will remain good in 2011 as prices are expected to reach aboutS$2,049/oz by the end of 2011(2). Analysts at BNP Paribas forecasted the average price of gold to beUS$1,500/oz for 2011 and US$1,600/oz in 2012(4). As the environment for gold investment remain to looksupportive in 2011 and revived demand in the jewellery and industrial sector will provide further scope forgrowth, gold’s appeal will continue to drive demand. Consequently, gold price levels are expected tocontinue its upward trend.
Notes:
(1) Information was extracted from the internet website of Gold Survey 2010 Update 2, GFMS Limited(http://www.gfms.co.uk/Presentations/GFMS-Gold-Survey-Update-2-presentation.pdf), and the internet website of World GoldCouncil (http://www.gold.org/investment/research/).
(2) Information was extracted from the article dated 31 January 2011, “Gold has good prospects this year:analysts” from the internet website of Channel NewsAsia (http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1108070/1/.html).
(3) Information was extracted from Bloomberg L.P.
(4) Information was extracted from the report from BNP Paribas, “Gold Report” dated 29 March 2011.
Save for BNP Paribas, each of the above organisations or corporations (as the case may be) whose websites or publicationscontaining information upon which certain statement(s) in this section entitled “Prospects” of this Offer Document are based has notconsented to the inclusion of the relevant information in this Offer Document for the purpose of Section 249 of the SFA and istherefore not liable for the relevant information under Sections 253 and 254 of the SFA. While the Directors have taken reasonableaction to ensure that the information is extracted accurately and fairly, and has been included in this Offer Document in its properform and context, they have not independently verified the accuracy of the relevant information.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
122
BUSINESS STRATEGIES AND FUTURE PLANS
Our Group intends to implement the following growth strategies and future plans in the next 24 months todrive our future growth and increase shareholder value:
Expansion of gold extraction facilities
The current processing capacity of the ore processing facility of our Group is approximately 60,000t perannum, based on the total number of leaching vats available as at the Latest Practicable Date. Our Groupintends to increase its ore processing capacity to 730,000t per annum in FY2012 by commissioning aheap leach facility to treat oxide ore from Rixen’s deposit commencing in the fourth quarter of 2011. Thisis in anticipation of the need to process more gold-bearing ore as our Group increases its miningactivities in the concession area.
We have earmarked approximately S$2.11 million (the approximate equivalent of US$1.70 million, basedon the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) of the proceeds of thePlacement to be used for the capital expenditure for constructing a heap leach facility.
Further resource definition and continuing exploration activities
As at the Latest Practicable Date, there are extensive areas at the Sokor Block that have only beensubjected to reconnaissance mapping and rock chip sampling. Our Group intends to carry out moreexploration work, such as geological mapping, soil sampling, drilling activities, collection and analysis ofexploration data to identify new gold mineralisation in the concession area. This will help to add moregold resources into the proven reserve status and enable our Group to plan our mining operationsefficiently. Our Group has since commenced such exploration work in March 2011.
We have earmarked approximately S$2.49 million (the approximate equivalent of US$2.00 million, basedon the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) of the proceeds of thePlacement to be used for the capital expenditure for such exploration work.
Feasibility study to construct a gold carbon-in-leach plant
Our Group intends to carry out a feasibility study to construct a gold carbon-in-leach plant. Subject tofavourable results of the feasibility study, we intend in the longer term within 24 months to construct thegold carbon-in-leach plant with a starting capacity that can process about 500t of gold-bearing ore perday and increasing to about 2,000t to 3,000t of gold-bearing ore per day on a continuous basis. Upon theconstruction of the gold carbon-in-leach plant, our Group will increase its ore processing capacity.
The capital expenditure for the construction of a basic gold carbon-in-leach plant with a starting capacityto process about 500t of gold-bearing ore per day is estimated to be approximately S$4.35 million (theapproximate equivalent of US$3.50 million, based on the exchange rate of S$1.00 to US$0.8039 as atthe Latest Practicable Date).
Exploration and mining for other minerals such as silver, lead and zinc
Our Group intends to carry out exploration and mining activities for other minerals such as silver, leadand zinc found in Sokor Block. Our Group has since commenced a feasibility study to conduct miningoperations for silver, lead and zinc and to consider the best approach to extract and produce suchminerals in the fourth quarter of 2011.
Expansion through acquisitions, joint ventures and strategic alliances
On 28 January 2011, CMNM entered into the Joint Venture Agreement with Xiamen Shenkun for aproposed joint venture company, CMNM-JY, to jointly manage the mining and production of silver, leadand zinc at the Sokor Block. On completion of the Joint Venture Agreement, CMNM-JY is proposed to be51% owned by CMNM and 49% owned by Xiamen Shenkun. The completion of the Joint VentureAgreement is subject to approval of the board of directors of CNMC.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
123
Our Group may also expand through acquisitions, joint ventures and strategic alliance as part of its longterm growth strategy. It may also enter into acquisitions, other joint ventures or strategic alliances withparties who create synergistic values with its existing business. Currently, save for the Joint VentureAgreement, it is not engaged in discussion with any party for acquisitions, joint ventures or strategicalliances. Should such opportunity arise, it will seek approval, where necessary, from Shareholders andthe relevant authorities as required by the relevant laws and regulations.
ORDER BOOK
Due to the nature of our business, the concept of an order book is not meaningful to us and our Groupdoes not maintain an order book.
TREND INFORMATION
Our Directors have observed the following trends based on the revenue and operations of our Group asat the Latest Practicable Date:
Strong gold price
Our Group expects gold price to remain strong in the remaining part of FY2011. Analysts believe thatprospects for gold will remain good in 2011 as prices are expected to reach about S$2,049/oz by the endof 2011(1). Various factors support high gold prices including new financial investment products such asexchange traded gold funds, currency volatilities, financial markets instability, a hedge against rising oilprice and inflation, resilient demand for gold from the PRC and India’s increasingly wealthy consumers,and a structural shift in central banks policy towards holding gold with the result that in 2010, centralbanks became net buyers of gold for the first time in 21 years.
Strong base metal prices to prevail
Our Group expects resilient commodity prices for the base industrial metals such as silver, zinc and leaddue to economic growth in the PRC and India. Our Group believes that it may potentially have significantamounts of zinc, lead and silver in its concessions which may be developed in the future.
Rising energy prices
Our Group requires large amounts of diesel to operate its machineries and a material portion of itsmining expenses is made up of diesel costs. As disclosed in the section entitled “Risk Factors” of thisOffer Document, rising energy costs will affect its cost of production.
Save as discussed above and in the sections entitled “Risk Factors”, “Management’s Discussion andAnalysis of Results of Operations and Financial Position”, “Prospects” and “Business Strategies andFuture Plans” of this Offer Document and barring any unforeseen circumstances, our Directors are notaware of any significant recent trends or any other known trends, uncertainties, demands, commitmentsor events that are reasonably likely to have a material effect on our Group’s revenue, profitability, liquidityor capital resources, or that would cause the financial information disclosed in this Offer Document to benot necessarily indicative of the future operating results or financial condition of our Group. Please alsorefer to the section entitled “Cautionary Note on Forward-Looking Statements” of this Offer Document.
Note:
(1) Information was extracted from the article dated 31 January 2011, “Gold has good prospects this year:analysts” from the internet website of Channel NewsAsia (http://www.channelnewsasia.com/stories/singaporebusinessnews/view/1108070/1/.html).
Channel NewsAsia whose website or publication containing information upon which certain statement(s) in this sectionentitled “Trend Information” of this Offer Document are based has not consented to the inclusion of the above information inthis Offer Document for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information underSections 253 and 254 of the SFA. While the Directors have taken reasonable action to ensure that the information isextracted accurately and fairly, and has been included in this Offer Document in its proper form and context, they have notindependently verified the accuracy of the relevant information.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
124
DIRECTORS, MANAGEMENT AND STAFF
125
DIRECTORS
Our Board of Directors is entrusted with the responsibility for the overall management of our Group. Theparticulars of each of our Directors are set out below:
Country of Designation / Principal Principal
Name Age Residential Address Residence Occupation
Professor Lin Xiang 65 7R Jalan Haji Salam Singapore Executive ChairmanXiong(1) Singapore 468848
Choo Chee Kong 52 18 Namly Grove Singapore Executive Vice Chairman Singapore 267310
Lim Kuoh Yang(1) 37 7R Jalan Haji Salam Singapore Executive Director andSingapore 468848 Chief Executive Officer
(1) Professor Lin Xiang Xiong is the father of Lim Kuoh Yang.
The business and working experience, education and professional qualifications, if any, and areas ofresponsibility of our Directors are set out below:
Professor Lin Xiang Xiong was appointed as the Executive Chairman of our Company on 20September 2011. He was seconded to our Group from Innovation Worldwide Group Pte Ltd sinceDecember 2006 and joined our Group since January 2010. He is responsible for formulating our Group’sstrategic plans and policies. From 1980 and 2004, he was the managing director of Innovation World-Wide Trader Pte Ltd and its group of companies, which are principally engaged in the business of tradingof building materials and mining, processing, marketing, distribution and sale of dimension stone. From2004 to 2009, he was the chief consultant of Innovation Worldwide Group Pte Ltd where he providedconsulting and project management services in association with sub-contracted mining projects.Professor Lin Xiang Xiong was appointed as an advisory professor of East China Normal University in1995 and a visiting professor of Beijing Language and Culture University in 2011. He is currently thepresident of the Global Chinese Arts & Culture Society and a research fellow of the Chinese NationalAcademy of Arts. In addition, he is the Chief Advisor on Kelantan-China International Trade for theKelantan State Government, Malaysia, Executive Advisor for Bureau of Commerce, Henan Province ofPRC, International Consultant for the New District in the Eastern Part of Zhengzhou, Henan and ChiefAdvisor for Culture Exchange and Promotion Worldwide of Henan, PRC.
Choo Chee Kong was appointed as the Executive Vice Chairman of our Company on 20 September2011 and joined our Group since December 2006. He is responsible for the formulation of the strategicdirection and expansion plans as well as the corporate governance of our Group. He has been involved inthe successful listing of more than 200 companies from Singapore, Malaysia, the PRC, Hong Kong,Philippines, Taiwan and Australia. He is currently also serving as an independent director of SecondChance Properties Ltd and FDS Networks Group Ltd, both companies listed on the Main Board of theSGX-ST. He is also a senior advisor to CMIA Capital Partners Pte. Ltd., a Singapore home grown privateequity firm focused on growth capital investment opportunities in the PRC and Southeast Asia. ChooChee Kong started his career in 1981 as a project engineer with Esso Singapore Pte Ltd and left in 1984
to pursue master’s level studies in United Kingdom. He joined DBS Bank Ltd in 1986 and held theposition of assistant vice president of corporate planning from 1986 to 1991 and vice president ofinvestment banking from 1992 to 2000. From 2000 to 2006, he was the chief executive officer of SGX-listed Westcomb Financial Group Limited (now known as Asiasons WFG Financial Ltd) which he co-founded and was in charge of its strategic planning and direction, marketing and distribution function andmaintaining relationships with the members of the stock broking and investment community. From 2006 to2008, he was the deputy chairman of Westcomb Financial Group Limited. Choo Chee Kong holds aBachelor of Engineering in Mechanical Engineering (First Class Honours) from Liverpool University,United Kingdom and a Master in Business Administration from University of Bradford, United Kingdom.
Lim Kuoh Yang was appointed as an Executive Director and the Chief Executive Officer of our Companyon 11 August 2011. He was seconded to our Group from Innovation Worldwide Group Pte Ltd sinceDecember 2006 and joined our Group since January 2010. He is responsible for implementing thestrategic plans and policies as well as managing the mining operations of our Group. He started hiscareer in 2000 as the chief operation officer of Innovation World-Wide Trader Pte Ltd and its group ofcompanies, which are principally engaged in the business of trading of building materials and mining,processing, marketing, distribution and sale of dimension stones. From 2004 to 2009, he was aconsultant with Innovation Worldwide Group Pte Ltd where he provided consulting and projectmanagement services in association with sub-contracted mining projects. Lim Kuoh Yang had attained aGCE “A” Level Certification and attended Deakin University, Australia for his tertiary education.
Kuan Cheng Tuck was appointed as an Independent Director and the Chairman of the Audit Committeeof our Company on 20 September 2011. He also currently serves as an independent director of FDSNetworks Group Ltd which is listed on the Main Board of the SGX-ST. He has more than 16 years ofexperience in the fields of accounting, auditing as well as business and financial advisory. Kuan ChengTuck worked with various international accounting firms in Singapore and Malaysia between 1994 andearly 2004. He set up and managed his own business and financial consulting firms in 2004 and his ownaccounting practice in 2005. Kuan Cheng Tuck holds a Bachelor of Accountancy degree from theNanyang Technological University of Singapore and a Bachelor of Laws (Honours) degree from theUniversity of London. He is a fellow member of the Association of Chartered Certified Accountants,United Kingdom, and a member of the Institute of Certified Public Accountants of Singapore and theSingapore Institute of Directors. He is also an associate member of the Singapore Association of Instituteof Chartered Secretaries and Administrators.
Tan Poh Chye Allan was appointed as an Independent Director and Chairman of the RemunerationCommittee of our Company on 20 September 2011. He is currently a partner at Colin Ng & Partners LLPand practises in the field of corporate finance. He was admitted to the Singapore Bar in 1994. He is alsopresently an independent director of Adventus Holdings Limited, a company listed on Catalist of theSGX-ST, and Avexa Limited, a company listed on the Australian Stock Exchange. Tan Poh Chye Allanstarted practice as a commercial and banking litigation lawyer in 1995 at Shook Lin & Bok LLP and left in1998. He joined Singapore Press Holdings Ltd from 1999 to 2000 and Strategic Intelligence Pte Ltd from2000 to 2002 as one of their legal counsels, focusing on corporate and commercial transactional work.He was a partner at Authur Loke Bernard Rada & Lee from 2002 to 2003 and an associate director ofYeo-Leong & Peh LLC from 2004 to 2006, practising in the field of corporate finance. Tan Poh Chye Allanholds a Bachelor of Laws (Honours) degree from the University of Buckingham (United Kingdom) and aMasters degree in Law from London-Guild University. He is also a Barrister-at-law of Gray’s Inn.
Lim Yeok Hua was appointed as an Independent Director and the Chairman of the NominatingCommittee of our Company on 20 September 2011. He is also presently an independent director and theChairman of the Nominating Committee of Manufacturing Integration Technology Limited. He is alsoserving as an independent director of Tritech Group Limited and JK Tech Holdings Limited. Lim Yeok Huahas been a fellow member of the Association of Chartered Certified Accountants since 1985. He hasmore than 20 years of experience in the fields of accounting, auditing as well as business and financialadvisory. Lim Yeok Hua has worked with various accounting firms in Singapore between 1972 and 1992.He set up and managed his own auditing and tax consulting firm from 1992 to 2000. Presently, he runshis own management consultancy firm. He is also a member of the Institute of Certified PublicAccountants of Singapore and the Singapore Institute of Directors as well as an accredited tax advisorwith the Singapore Institute of Accredited Tax Professionals.
DIRECTORS, MANAGEMENT AND STAFF
126
Our Directors will be briefed by the Legal Adviser to the Company, Shook Lin & Bok LLP on their rolesand responsibilities as directors of a listed company. Choo Chee Kong, Kuan Cheng Teck, Tan Poh ChyeAllan and Lim Yeok Hua have current experience as a director of a public listed company in Singapore,and are familiar with the roles and responsibilities of a director of a public listed company in Singapore.Professor Lin Xiang Xiong and Lim Kuoh Yang had attended the relevant training by the SingaporeInstitute of Directors on 8 June 2011 to update and familiarise themselves with the roles andresponsibilities of a director of a public listed company in Singapore.
Save as disclosed in this section and in the section entitled “Shareholders – Shareholding and OwnershipStructure” of this Offer Document, none of our Directors are related to each other, our Executive Officersor our Substantial Shareholders.
Our Independent Directors do not have any existing business or professional relationship of a materialnature with our Group, our Directors or Substantial Shareholders. None of our Independent Directors areappointed to the board of any subsidiary or associated company in our Group.
The list of present and past directorships of each Director over the last five (5) years preceding the dateof this Offer Document, excluding those held in our Company, is set out below:
Name Present Directorships Past Directorships
Professor Lin Xiang Xiong Group Companies Group Companies
CMNM NilCNMCCMNM-JYMCSCNMC-Nalata
Other Companies Other Companies
Innovation Biotechnology Limited Nil Innovation (China) LimitedInnovation Fund LimitedInnovation International Consultants Alliance Pte. Ltd.Innovation Worldwide Group Pte Ltd
Choo Chee Kong Group Companies Group Companies
CMNM NilCNMCMCSCNMC-Nalata
Other Companies Other Companies
CK Agrifeed Sdn Bhd Falmac LimitedCK BioGroup (Malaysia) Pte. Ltd. Asiasons WFG Capital Pte. Ltd.CK BioGroup Pte. Ltd. Asiasons WFG Financial Ltd.CNCM Capital Pte. Ltd. Asiasons WFG Securities Pte. Ltd.EP Capital Inc Eng Kong Holdings Pte. Ltd.FDS Networks Group Ltd National Eagle Holdings LimitedMessiah Ltd Right Venture Holdings LimitedMyKampung Suria Sdn Bhd Westcomb Capital Sdn BhdSecond Chance Properties Ltd Westcomb Financial Group (HK)
FDS Networks Group Ltd Falmac LimitedKCT Consulting Pte. Ltd. ASA Group Holdings LtdKonifer Realty Sdn. Bhd. China Oilfield Technology Services Kreston Consulting Pte. Ltd. Group LtdSG Tech Holdings Limited FAST Wah Lei International HoldingsTahua Realty Sdn. Bhd. Limited
Tan Poh Chye Allan Group Companies Group Companies
Nil Nil
Other Companies Other Companies
Adventus Holdings Limited Cardsmith.Com Asia Pacific Pte LtdAvexa Limited Censtar Holdings Pte. LtdJlu Global Ltd. Tianrong Investment Holdings Pte. Ltd.Knowledge Economy.Com Pte LtdTell Business Pte Ltd
Lim Yeok Hua Group Companies Group Companies
Nil Nil
Other Companies Other Companies
Manufacturing Integration Technology Ltd NilRadiant M&A Pte. Ltd.Radiant Management Services Pte Ltd Tritech Group Limited JK Tech Holdings Limited
KEY EXECUTIVE OFFICERS
The day-to-day operations are entrusted to our Executive Directors who are assisted by an experiencedand qualified team of Executive Officers. The particulars of our Executive Officers are set out below:
Country ofPrincipal
Name Age Residential Address Residence Principal Occupation
Cheam Chee Chian 40 Blk 128D Punggol Field Walk Singapore Group Finance Manager#02-323Singapore 824128
Chia Chee Ching 27 177 Tanjong Rhu Road Singapore Group Administration, #11-17 Singapore 436607 Human Resource and
Information Technology Manager
DIRECTORS, MANAGEMENT AND STAFF
128
The business and working experience, education and professional qualifications, if any, and areas ofresponsibility of our Executive Officers are set out below:
Chen Yan joined our Group as the Chief Financial Officer since November 2008. She is responsible formatters relating to accounting, finance, compliance and reporting requirements of our Group. She startedher career in 2001 as an executive with KPMG Singapore’s corporate restructuring services departmentwhere she was in employment until 2003. From 2003 to 2006, she was with the corporate financedepartment of Westcomb Capital Pte Ltd where she last held the position of senior associate, providingcapital markets advisory services to local and overseas corporations in various industries for their listingson the SGX-ST. Chen Yan received a Bachelor of Science in Accounting (First Class Honours) degreefrom The University of North Carolina at Greensboro, USA in 1998 and a Master in ProfessionalAccounting degree from The University of Texas at Austin, USA in 1999. She is a Certified PublicAccountant and member of the Texas State Board of Public Accountancy, a Certified Internal Auditor andmember of the Institute of Internal Auditors, and a Certified Gold Investment Analyst from the Departmentof Labor of PRC. She is also a member of the Institute of Certified Public Accountants of Singapore andthe Singapore Institute of Directors. Chen Yan is currently an independent director of Foreland FabrictechHoldings Limited, which is listed on the Main Board of the SGX-ST.
Cheam Chee Chian joined our Group as the Group Finance Manager since February 2011 and isresponsible for its financial functions and to assist the Chief Financial Officer. Prior to joining our Group,he was an audit manager of LTC LLP and Deloitte Touche Tohmatsu from 2008 to 2011 and 2006 to2008, respectively. He worked as a consultant with Teleplan Technology Services Sdn Bhd under a six-month contract from March 2006 to August 2006. He was an accountant cum project coordinator of UMWOil & Gas from 2005 to 2006. He worked with various audit firms between 1993 to 2005 includingPricewaterhouseCoopers, Malaysia, KPMG, Singapore and Deloitte Touche Tohmatsu, Papua NewGuinea. Cheam Chee Chian holds a Diploma in Accoutancy from Ungku Omar Polytechnic, Malaysia. Heis a member of The Malaysian Association of Certified Public Accountants and a chartered accountantand a member of the Malaysian Institute of Accountants.
Chia Chee Ching joined our Group as the accounts and administration manager since February 2009and was appointed the Group Administration, Human Resource and Information Technology Managersince January 2010. She was seconded to our Group from Financial Frontiers Pte Ltd from September2007 and from Innovation Worldwide Group Pte Ltd from June 2008. She is responsible for the fullspectrum of our Group’s administration, human resouce and information technology functions. Prior tojoining our Group, she was an audit junior with Robert Tan & Co. From 2006 to 2007, she was a taxassistant with William C.H. Tan Consultancy Sdn. Bhd. Chia Chee Ching holds a Bachelor of Arts inAccounting and Finance with Second Class (Upper Division) Honours from University of East London.
Save as disclosed in this section and in the section entitled “Shareholders – Shareholding and OwnershipStructure” of this Offer Document, there is no family relationship between any of our Directors, ExecutiveOfficers and Substantial Shareholders.
To the best of our knowledge, there is no arrangement or understanding with any of our SubstantialShareholders, customers, suppliers or any other person, pursuant to which any of our Directors orExecutive Officers was selected as our Director or Executive Officer.
The list of present and past directorships of each Executive Officer over the last five (5) years precedingthe date of this Offer Document, excluding those held in our Company, is set out below:
Name Present Directorships Past Directorships
Chen Yan Group Companies Group Companies
NIL NIL
Other Companies Other Companies
Foreland Fabrictech Holdings Limited NIL
DIRECTORS, MANAGEMENT AND STAFF
129
Name Present Directorships Past Directorships
Cheam Chee Chian Group Companies Group Companies
NIL NIL
Other Companies Other Companies
NIL NIL
Chia Chee Ching Group Companies Group Companies
NIL NIL
Other Companies Other Companies
NIL NIL
MANAGEMENT REPORTING STRUCTURE
Our management reporting structure is as follows:
Group Administration, HumanResource and Information
Technology ManagerChia Chee Ching
Executive ChairmanProfessor Lin Xiang Xiong
Board of Directors
Executive Director and ChiefExecutive OfficerLim Kuoh Yang
Chief Financial OfficerChen Yan
Group Finance Manager Cheam Chee Chian
Executive Vice ChairmanChoo Chee Kong
DIRECTORS, MANAGEMENT AND STAFF
130
EMPLOYEES
All the full-time employees of our Group for FY2008, FY2009, FY2010 and 1Q2010 are based inSingapore and Malaysia. The functional distribution of our Group’s full-time employees of the Group as at31 December 2008, 2009 and 2010 and 31 March 2011 are as follows:
As at As at As at As at 31 December 31 December 31 December 31 March
(1) Directors of our Group are classified under “Management”.
(2) Exclude foreign workers ranging from 9 to 16 whom our Group hired on a short-term assignment basis, the majority of whomare involved in the mining and extraction process.
The geographical distribution of our Group’s full-time employees as at 31 December 2008, 2009 and2010 and as at 31 March 2011 are as follows:
Geographical As at As at As at As at31 December 31 December 31 December 31 March
2008 2009 2010 2011
Singapore 6 9 11 12Malaysia 8 11 13(1) 23(1)
Total 14 20 24 35
Note:
(1) Exclude foreign workers ranging from 9 to 16 whom our Group hired on a short-term assignment basis, the majority of whomare involved in the mining and extraction process.
The number of employees increased from 31 December 2008 to 31 March 2011 in line with theexpansion of the business plans and scope of our Group. From time to time and depending onrequirements, our Group will employ workers on a temporary basis. As at 31 March 2011, our Group hadapproximately 25 temporary workers who are employed to assist in the mining operations in Malaysia.
The management of our Group is of the opinion that its dedicated and efficient employees areinstrumental to its success. The relationship between the management of our Group and its employees isgood and is expected to continue and remain as such in the future. The employees of our Group are notunionised and there have been no industrial disputes with the employees or any work stoppage whichaffected our Group’s operations since it commenced operations.
Other than amounts set aside or accrued in respect of mandatory employee funds, we have not set asideor accrued any amount of money to provide for pension, retirement or similar benefits to our employees.
DIRECTORS, MANAGEMENT AND STAFF
131
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED EMPLOYEES
Directors and Executive Officers
The compensation paid to our Directors and our Executive Officers by our Group for FY2009 and FY2010(being the two (2) most recent completed financial years), and the estimated compensation to be paid toour Directors and our Executive Officers for FY2011 by our Group (on an aggregate basis and inremuneration bands(1)(2)) are as follows:
FY2009 FY2010 FY2011(Estimated)
DirectorsProfessor Lin Xiang Xiong Band A(2)(3) Band B Band BChoo Chee Kong – Band A Band ALim Kuoh Yang Band A(2)(3) Band A Band A
Kuan Cheng Tuck – – Band ATan Poh Chye Allan – – Band ALim Yeok Hua – – Band A
Executive OfficersChen Yan Band A Band A Band ACheam Chee Chian – – Band AChia Chee Ching Band A Band A Band A
Notes:
(1) Band A: Compensation from S$1 to S$250,000 per annum
(2) Band B: Compensation from S$250,001 to S$499,999 per annum
(3) Includes the management fees paid by our Group to Innovation Worldwide Group Pte Ltd. Please refer to the section entitled“Interested Person Transactions” of this Offer Document for further details.
Related Employees
As at the Latest Practicable Date, there was no employee who was related to the Directors andSubstantial Shareholders of the Company.
SERVICE AGREEMENTS
On 20 September 2011, our Company entered into separate service agreements (collectively, the“Service Agreements” and individually, the “Service Agreement”) with Professor Lin Xiang Xiong, ChooChee Kong and Lim Kuoh Yang (collectively, the “Executives” and individually, the “Executive”).
Each Service Agreement will continue for an initial period of three (3) years and upon the expiry of suchperiod, the employment of each Executive shall be automatically renewed on a year-to-year basis onsuch terms and conditions as the parties may agree. During the initial period of three (3) years, eitherparty may terminate the Service Agreement by giving to the other party not less than six (6) months’notice in writing, or in lieu of notice, payment of an amount equivalent to six (6) months’ salary based onthe Executives’ last drawn monthly salary.
Notwithstanding the other provisions of the Service Agreement, our Company shall be entitled toterminate the appointment, but without prejudice to the rights and remedies of our Company for anybreach of the Service Agreement and to the Executive’s continuing obligations under the ServiceAgreement, in any of the following cases:
(a) if the Executive is guilty of any gross default or grave misconduct in connection with or affecting thebusiness of our Group;
DIRECTORS, MANAGEMENT AND STAFF
132
(b) in the event of any serious or repeated breach or non-observance by the Executive of any of thestipulations contained in the Service Agreement;
(c) if the Executive becomes bankrupt or has a receiving order made against him or makes anygeneral composition with his creditors; or
(d) if the Executive suffers any physical or mental ailment or incapacity which prevents him fromperforming any of the duties and obligations imposed by the Service Agreement; or
(e) if the Executive is convicted of any criminal offence and sentenced to any term of immediate orsuspended imprisonment.
There are no benefits payable to the Executives upon termination of their employment with our Group.
Pursuant to the terms of the respective Service Agreements, the monthly salary of the respectiveExecutives will be as follows:
Monthly salary S$
Professor Lin Xiang Xiong 25,000Choo Chee Kong 12,500Lim Kuoh Yang 20,000
Under the Service Agreements, the remuneration of the Executives is subject to review by theRemuneration Committee on the day falling one (1) week from the Board’s approval of the auditedfinancial statements for the immediate preceding financial year. The relevant Executive shall abstain fromvoting in respect of any resolution or decision to be made by the Board in relation to the terms andrenewal of his Service Agreement.
The Service Agreements provide that during the continuance of their employment with our Group, theExecutives shall, amongst other things, not engage in any other business or be concerned or interested,whether for reward or gratuitously, in any capacity in any trade or business or occupation of a similarnature to or competitive with that carried on by our Group. The Service Agreements also contain non-competition undertakings by each of the Executives which are effective during, as well as 12 months afterthe cessation of, their employment with our Group. During such period, the Executives shall not, amongstother things, engage in any other business to be concerned or interested, whether for reward orgratuitously, in any capacity in any trade or business or occupation of a similar nature to or competitivewith that carried on by our Group.
As the remuneration paid to the Executives in FY2010 is the same as that to be paid to the Executivespursuant to the Service Agreements, there will be no changes to the profit before tax, the net profitattributable to equity holders of our Group and the earnings per Share of our Group for FY2010.
There are no bonus or profit sharing plans or any other profit-linked agreements or arrangementsbetween the Company and any of our Directors or Executive Officers.
Save as disclosed above, there are no existing or proposed service contracts entered into or to beentered into by the Company or any of the subsidiaries of our Group with any of the Directors orExecutive Officers which provides for compensation in the form of stock options, or pension, retirement orother similar benefits, or other benefits, upon the termination of employment with our Group.
Subject to the approvals of the Shareholders of our Company, the SGX-ST and other regulatoryauthorities, where necessary, the Executives shall be eligible to participate in any other employeescheme or plan implemented by our Company on such terms as may be determined by ourRemuneration Committee at its sole and absolute discretion.
DIRECTORS, MANAGEMENT AND STAFF
133
In conjunction with our listing on Catalist we have adopted a performance share plan known as the“CNMC Performance Share Plan” which was approved at an Extraordinary General Meeting of ourShareholders held on 14 October 2011. A summary of the rules of the CNMC Performance Share Plan isset out below. Capitalised terms as used throughout this section, unless otherwise defined, shall bear themeanings as defined in Rule 2 of “Appendix H – Rules of the CNMC Performance Share Plan” of thisOffer Document. The detailed rules of the CNMC Performance Share Plan are set out in Appendix H ofthis Offer Document.
1. Objectives of the CNMC Performance Share Plan
The purpose of the CNMC Performance Share Plan is to provide an opportunity for GroupEmployees, who have met the CNMC Performance Conditions to be remunerated not just throughcash bonuses but also by an equity stake in the Company.
The CNMC Performance Share Plan is primarily a share incentive scheme that recognises theimportance of Group Employee to the success and continued well-being of our Group. Theobjectives of the CNMC Performance Share Plan are to:
(a) to motivate each Participant to optimise his performance standards and efficiency and tomaintain a high level of contribution to our Group;
(b) to retain key employees and Group Executive Directors whose contributions are essential tothe long-term growth and profitability of our Group;
(c) to instill loyalty to and a stronger identification by the Participants with the long-termprosperity of the Company;
(d) to attract potential employees with relevant skills to contribute to our Group and to createvalue for our Shareholders; and
(e) to align the interests of the Participants with the interests of our Shareholders.
Our Directors believe that with the CNMC Performance Share Plan and any other share-basedincentive scheme which our Group may adopt, our Group is equipped with a set of flexibleremuneration tools, with which our Group will be better able to attract and retain talent.
2. Rules of the CNMC Performance Share Plan
2.1 Eligibility
The following persons, who have attained the age of twenty-one (21) years on or prior to therelevant Award Date and are not undischarged bankrupts and have not entered into a compositionwith their respective creditors, shall be eligible to participate in the CNMC Performance Share Planat the absolute discretion of the Awards Committee:
(a) Group Employees (including Group Executive Directors);
(b) Associated Company Employees (including the directors of the Associated Company);
(c) Directors and employees of the Company’s parent company and its subsidiaries; and
(d) Controlling Shareholders and their Associates (subject to Rule 4.2 and Rule 8 of Appendix Hof this Offer Document).
CNMC PERFORMANCE SHARE PLAN
134
2.2 Awards
Awards represent the right of a Participant to receive fully paid Shares free of charge, provided thatcertain Performance Conditions are met upon expiry of the Performance Period.
The Awards Committee may amend or waive the Performance Period and/or the PerformanceConditions in respect of any Award and Awards may be granted at any time in the course of afinancial year. The CNMC Performance Share Plan provides specific provisions in relation to thevesting and lapsing of Awards. These provisions include, inter alia, the termination of theemployment or bankruptcy of a Participant.
Shares which are issued and allotted or transferred to a Participant pursuant to the grant of anAward shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or inpart, during a specified period (as prescribed by the Awards Committee in the Award Letter),except to the extent approved by the Awards Committee.
The Awards Committee, may in its absolute discretion, make a Release of an Award, wholly orpartly, in the form of cash rather than Shares.
2.3 Participants
Participation by a Group Employee, the quantum of Shares awarded and the prescribedperformance targets is subject to the absolute discretion of the Awards Committee but shall haveregard to factors such as the rank, job performance, year(s) of service and potential for futuredevelopment, his contribution to the success and development of the Group and the extent of effortrequired to fulfill the Performance Conditions within the Performance Period of the Participant.
2.4 Details of Awards
The Awards Committee shall decide in relation to an Award:
(a) the Participant;
(b) the Award Date;
(c) the Performance Period;
(d) the number of Shares which are the subject of the Award;
(e) the Performance Condition;
(f) the Release Schedule; and
(g) any other condition(s) which the Awards Committee may determine in its discretion.
2.5 Timing
Subject to the Rules of the CNMC Performance Share Plan, the Awards Committee may grantAwards to the Participants at any time during the period when the CNMC Performance Share Planis in force, except that the Awards Committee shall not grant any Awards during the periodcommencing two (2) weeks before the announcement of the Company’s financial statements foreach of the first three (3) quarters of its financial year, or one (1) month before the announcementof the Company’s half-year or full-year financial statement, as the case may be, and ending on thedate of announcement of the relevant result. In addition, in the event that an announcement on anymatter of an exceptional nature involving unpublished price sensitive information is made, Awardsmay only be granted on or after the second Market Day on which such announcement is made.
An Award Letter confirming the Award and specifying, amongst others, the PerformanceConditions, the Performance Period and the Release Schedule, will be sent to each Participant assoon as is reasonably practicable after the granting of an Award.
CNMC PERFORMANCE SHARE PLAN
135
2.6 Events Prior to Vesting
Special provisions for the vesting, lapsing and/or cancellation of Awards apply in certaincircumstances including the following:
(a) in the event of misconduct on the part of a Participant as determined by the AwardsCommittee in its discretion;
(b) in the event of the bankruptcy of the Participant or the happening of any other event whichresults in his being deprived of the legal or beneficial ownership of such Award;
(c) subject to Rule 6.2(a), upon the Participant ceasing to be in the employment of the Group orAssociated Company (as the case may be) for any reason whatsoever; or
(d) the completion of a fixed-term contract for a Participant (who is on a fixed-term contract);
(e) in the event of an order being made or a resolution passed for the winding-up of theCompany on the basis, or by reason, of its insolvency.
(f) where the Participant ceases to be in the employment of the Group or Associated Company(as the case may be) by reason of:
(i) ill health, injury or disability (in each case, evidenced to the satisfaction of the AwardsCommittee);
(ii) redundancy;
(iii) retirement at or after the legal retirement age;
(iv) retirement before the legal retirement age with the consent of the Committee;
(v) the company by which he is employed or to which he is seconded, as the case maybe, ceasing to be a company within our Group or the undertaking or part of theundertaking of such company being transferred otherwise than to another companywithin our Group; or
(vi) any other event approved by the Awards Committee;
(h) the death of a Participant; or
(i) any other event approved by the Awards Committee.
2.7 Size and Duration of the CNMC Performance Share Plan
The total number of new Shares which may be issued pursuant to Awards granted under theCNMC Performance Share Plan, when added to (i) the number of new Shares issued and issuablein respect of all Awards granted thereunder; and (ii) any other share incentive schemes adopted bythe Company for the time being in force, shall not exceed 15% of the issued share capital of ourCompany on the day preceding the relevant Award Date. The aggregate number of Sharesavailable under the CNMC Performance Share Plan shall not exceed 15% of the total issued Sharecapital of our Company post-Placement and from time to time.
CNMC PERFORMANCE SHARE PLAN
136
In addition, in accordance with Rule 844 of the Catalist Rule, the following limits must not beexceeded:
(a) the aggregate number of Shares available to Controlling Shareholders and their Associatesshall not exceed 25% of the aggregate number of Shares which may be granted under theCNMC Performance Share Plan;
(b) the aggregate number of Shares available to each Controlling Shareholder or his Associateshall not exceed 10% of the Shares available under the CNMC Performance Share Plan;and
(c) directors and employees of the Company’s parent company and subsidiaries are eligible toparticipate in the CNMC Performance Share Plan provided that (i) each grant to suchParticipant, if the number of Awards to be granted together with Awards already granted tosuch person under the CNMC Performance Share Plan, represents 5% or more of the totalnumber of Awards available to the aforesaid category of directors and employees; and (ii)the aggregate number of Awards to be made available for grant to all directors andemployees of the aforesaid category, shall be approved by the Independent Shareholders ina separate resolution.
The CNMC Performance Share Plan shall continue in force at the discretion of the AwardsCommittee, subject to a maximum period of 10 years commencing on the Adoption Date, providedalways that the CNMC Performance Share Plan may continue beyond the above stipulated periodwith the approval of Shareholders in general meeting and of any relevant authorities which maythen be required.
The expiry or termination of the CNMC Performance Share Plan shall not affect Awards whichhave been granted prior to such expiry or termination, whether such Awards have been Releasedor not.
2.8 Operation of the CNMC Performance Share Plan
In determining whether to issue New Shares to Participants or to purchase existing Shares fordelivery to particants or the payment of the aggregate Market Value in cash to Participants uponvesting of their Awards, the Awards Committee will take into account factors such as (but notlimited to) the number of Shares to be delivered, the prevailing market price of the Shares and thecost to our Company of either issuing new Shares or purchasing existing Shares or the amount ofcash available to the Group.
The Company shall apply to the SGX-ST for permission to deal in and for quotation of the NewShares which may be issued upon the grant of Awards under the CNMC Performance Share Planas soon as practicable. The approval of the SGX-ST is not to be taken as an indication of themerits of the Group or the Shares which are the subject of the Awards.
The financial effects of the above methods are discussed in paragraph 6 below.
New Shares allotted, and issued and existing shares procured by the Company for transfer, uponthe release of an Award shall be eligible for all entitlements, including dividends or otherdistributions declared or recommended in respect of the then existing Shares, the Record Date forwhich is on or after the relevant Vesting Date of the Award, and shall in all other respects rank paripassu with other existing Shares then in issue.
The Awards Committee shall have the discretion to determine whether the Performance Conditionhas been satisfied (whether fully or partially) or exceeded; and in making any such determination,the Awards Committee shall have the right to make computation adjustments to the audited resultsof the Company or the Group to take into account such factors as the Awards Committee maydetermine to be relevant, such as changes in accounting methods, taxes and extraordinary events,and further, the right to amend the Performance Conditions if the Awards Committee decides that achanged performance target would be a fairer measure of performance.
CNMC PERFORMANCE SHARE PLAN
137
3. Adjustments And Alterations Under The CNMC Performance Share Plan
The following describes the adjustment events under, and provisions relating to alterations of, theCNMC Performance Share Plan.
3.1 Adjustment Events
If a variation in the issued ordinary share capital of our Company (whether by way of acapitalisation of profits or reserves or rights issue or reduction) shall take place, then:
(a) the class and/or number of Shares which are the subject of an Award to the extent not yetvested; and/or
(b) the class and/or number of Shares over which future Awards may be granted under theCNMC Performance Share Plan,
shall be adjusted in such manner as the Awards Committee may determine to be appropriate,provided that no adjustment shall be made if as a result, the Participant receives a benefit that aShareholder does not receive.
Unless the Awards Committee considers an adjustment to be appropriate, the issue of securitiesas consideration for a private placement of securities or in connection with an acquisition of anyassets or upon the exercise of any options or conversion of any loan stock or any other securitiesconvertible into Shares or subscription rights of any warrants, or the cancellation of issued Sharespurchased or acquired by the Company by way of a market purchase of such Shares undertakenby the Company on the SGX-ST during the period when a share purchase mandate granted byShareholders (including any renewal of such mandate) is in force, shall not normally be regardedas a circumstance requiring adjustment.
Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by theAuditors (acting only as experts and not as arbitrators) that the adjustments are fair andreasonable in their opinion.
3.2 Modifications or Alterations to the CNMC Performance Share Plan
The CNMC Performance Share Plan may be modified and/or altered from time to time by aresolution of the Awards Committee subject to the prior approval of our Shareholders andcompliance with the Catalist Rules and such other regulatory authorities as may be necessary.
However, no modification or alteration shall adversely affect the rights attached to Awards grantedprior to such modification or alteration except with the written consent of such number ofParticipants under the CNMC Performance Share Plan who, if their Awards were Released to themupon the Performance Conditions for their Awards being satisfied in full, would become entitled tonot less than three-quarters of all the Shares which would be fall to be Vested upon Release of alloutstanding Awards under the CNMC Performance Share Plan.
4. Disclosures in Annual Reports
Our Company will make such disclosures (as applicable) in its annual report for so long as theCNMC Performance Share Plan continues in operation:
(a) the names of the members of the Awards Committee administering the CNMC PerformanceShare Plan;
(b) in respect of the following Participants:
(i) Directors of our Company;
(ii) Controlling Shareholders and their Associates; and
CNMC PERFORMANCE SHARE PLAN
138
(iii) Participants (other than those in paragraphs (i) and (ii) above) who have receivedShares pursuant to the Release of Awards granted under the CNMC PerformanceShare Plan which, in aggregate, represent 5% or more of the aggregate number ofnew Shares available under the CNMC Performance Share Plan;
the following information:
(aa) the name of the Participant;
(bb) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan during the financial year under review;
(cc) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan since the commencement of the CNMCPerformance Share Plan to the end of the financial year under review;
(dd) the aggregate number of Shares comprised in Awards granted to such Participantsunder the CNMC Performance Share Plan which have Vested since thecommencement of the CNMC Performance Share Plan to the end of the financial yearunder review and in respect thereof, the proportion of New Shares issued upon theRelease of the Vested Awards granted under the CNMC Performance Share Plan; and
(ee) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan which have not yet Vested, as at the end ofthe financial year under review;
(c) (i) the names and number of terms of Awards granted to each director or employee ofthe Company’s parent company and its subsidiaries who receives 5% or more of thetotal number of Shares comprised in Awards available to all directors and employeesof the Company’s parent company and its subsidiaries under the CNMC PerformanceShare Plan, during the financial year under review; and
(ii) the aggregate number of Shares comprised in Awards to the directors and employeesof the Company’s parent company and its subsidiaries which have Vested for thefinancial year under review, and since the commencement of the CNMC PerformanceShare Plan to the end of the financial year under review; and
(d) such other information as may be required by the Catalist Rules or the Act.
If any of the above is not applicable, an appropriate negative statement shall be included therein.
5. Role and Composition of the Committee
The Remuneration Committee will be designated as the Awards Committee responsible for theadministration of the CNMC Performance Share Plan, and will comprise such Directors toadminister the CNMC Performance Share Plan, provided that no member of the Committee shallparticipate in any deliberation or decision in respect of Awards granted or to be granted to him.
6. Financial Effects of the CNMC Performance Share Plan
Financial Reporting Standard 102, Share-based payment (“FRS 102”) relating to share-basedpayment takes effect for all listed companies beginning 1 January 2005. Participants will receiveShares and the Awards would be accounted for as equity-settled share-based transactions, asdescribed in the following paragraphs.
CNMC PERFORMANCE SHARE PLAN
139
The fair value of employee services received in exchange for the grant of the Awards will berecognised as a charge to the income statement over the period between the grant date and thevesting date of an Award. The total amount of the charge over the vesting period is determined byreference to the fair value of each Award granted at the grant date and the number of Sharesvested at the vesting date, with a corresponding credit to reserve account. Before the end of thevesting period, at each accounting year end, the estimate of the number of Awards that areexpected to vest by the vesting date is subject to revision, and the impact of the revised estimatewill be recognised in the income statement with a corresponding adjustment to the reserveaccount. After the vesting date, no adjustment to the charge to the income statement is made.This accounting treatment has been referred to as the “modified grant date method” because thenumber of Shares included in the determination of the expense relating to employee services isadjusted to reflect the actual number of Shares that eventually vest but no adjustment is made tochanges in the fair value of the Shares since the grant date.
The amount charged to the profit and loss account would be the same whether the Companysettles the Awards by issuing new Shares or by purchasing existing Shares. The amount of thecharge to the income statement also depends on whether or not the performance target attachedto an Award is measured by reference to the market price of the Shares. This is known as a marketcondition. If the performance target is a market condition, the probability of the performance targetbeing met is taken into account in estimating the fair value of the Award granted at the grant date,and no adjustments to the amounts charged to the income statement are made if the marketcondition is not met. However, if the performance target is not a market condition, the fair value perShare of the Awards granted at the grant date is used to compute the amount to be charged to theincome statement at each accounting date, based on an assessment at that date of whether thenon-market conditions would be met to enable the Awards to vest. Thus, where the vestingconditions do not include a market condition, there would be no charge to the income statement ifthe Awards do not ultimately vest.
In the event that the Participants receive cash, our Company shall measure the fair value of theliability at grant date. Until the liability is settled, our Company shall re-measure the fair value of theliability at each accounting date and at the date of settlement, with changes in the fair valuerecognised in the income statement.
The following sets out the financial effects of the CNMC Performance Share Plan.
6.1 Share capital
The CNMC Performance Share Plan will result in an increase in our Company’s issued Shareswhere new Shares are issued to Participants. The number of new Shares issued will depend on,amongst others, the size of the Awards granted under the CNMC Performance Share Plan. In anycase, the CNMC Performance Share Plan provides that the number of new Shares to be issuedunder the said CNMC Performance Share Plan will be subject to the maximum limit of 15% of ourtotal issued Shares. The aggregate number of Shares available under the CNMC PerformanceShare Plan shall not exceed 15% of the total issued Share capital of our Company from time totime.
If instead of issuing new Shares to Participants, treasury shares are transferred to Participants ourour Company pays the equivalent cash value, the CNMC Performance Share Plan would have noimpact on our Company’s total number of issued Shares.
6.2 NTA
The CNMC Performance Share Plan will result in a charge to our Group’s profit and loss accountequal to the market value at which the new Shares are issued or the existing Shares arepurchased to meet delivery under the Awards. Accordingly, the consolidated NTA per share of ourGroup would decrease by the amount charged (after any adjustment for tax). Nonetheless, itshould be noted that the delivery of Shares to participants of the Performance Share Plan iscontingent upon the participants meeting prescribed Performance Conditions.
CNMC PERFORMANCE SHARE PLAN
140
Accordingly, any Award under the CNMC Performance Share Plan would have been premisedupon significant value having been added to our Group’s consolidated NTA before Shares aredelivered.
6.3 EPS
The CNMC Performance Share Plan will result in a charge to earnings over the period from thegrant date to the vesting date, equivalent to the market value at which existing Shares arepurchased or the market value on the date on which the new Shares are issued.
Although the CNMC Performance Share Plan will have a dilutive impact on our Group’sconsolidated EPS, it should be noted that the delivery of Shares to participants of the CNMCPerformance Share Plan is contingent upon the participants meeting prescribed conditions,resulting in, inter alia, added value to Shareholders. Accordingly, the earnings of our Group shouldhave grown before the Awards are granted and the Shares delivered.
6.4 Dilutive Impact
It is expected that the dilutive impact of the CNMC Performance Share Plan on the NTA per Shareand EPS will not be significant.
7. Participation of Group Executive Directors and Group Employees
The CNMC Performance Share Plan allows our Group to have a fair and equitable system toreward Group Executive Directors and Group Employees who have made and who continue tomake contributions to the long-term growth of our Group. The success of our Group’s business isdependent on our Group’s ability to attract and retain good personnel and our Directors believethat the CNMC Performance Share Plan will be an essential part of our Group’s strategy for therecruitment and retention of capable personnel.
Our Directors recognise that it is important to the well-being and stability of our Group that ourGroup acknowledges the services and contributions made by our Group Executive Directors andGroup Employees and that our Group continues to receive their support and contributions. OurDirectors believe that the CNMC Performance Share Plan will also enable us to attract, retain andprovide incentives to Group Executive Directors and Group Employees to optimise their standardsof performance as well as encourage greater dedication and loyalty by enabling our Company togive recognition to past contributions and services as well as motivating them generally tocontribute towards the long-term growth of our Group.
Group Non-Executive Directors are not eligible to participate in the CNMC Performance SharePlan.
9. Participation of Associated Company Employees
The extension of the CNMC Performance Share Plan to Associated Company Employees(including directors of the Associated Companies) allows our Group to have a fair and equitablesystem that recognises and benefits not only persons who are in the direct employment of ourCompany but also persons who are not employed but nevertheless work closely with our Companyand/or are in the position to contribute their experience, knowledge and expertise to thedevelopment and success of our Company through participation in the equity of our Group. Suchother persons include the directors and employees of the Associated Companies.
Our Directors believe that the CNMC Performance Share Plan will also strengthen our Group’sworking relationships with the directors and employees of the Associated Companies by inculcatingin them a stronger and more lasting sense of identification with our Group.
CNMC PERFORMANCE SHARE PLAN
141
10. Participation of Controlling Shareholders or Associates of Controlling Shareholders
The purpose of the participation of Controlling Shareholders and Associates of ControllingShareholders in the CNMC Performance Share Plan is to provide an opportunity for eligible GroupEmployees (including Group Executive Directors) who are Controlling Shareholders or Associatesof Controlling Shareholders who have contributed or continue to contribute significantly to thegrowth and performance of the Group to participate in the equity of the Company.
We acknowledge that the services and contributions of the employees who are ControllingShareholders or Associates of our Controlling Shareholders are important to the development andsuccess of our Group. The extension of the CNMC Performance Share Plan to the eligible GroupEmployees (including Group Executive Directors) who are Controlling Shareholders or Associatesof our Controlling Shareholders allows our Company to have a fair and equitable system forrewarding the eligible Group Employees (including Group Executive Directors) who have made andcontinue to make important contributions to the long-term growth of our Group notwithstanding thatthey are Controlling Shareholders or Associates of our Controlling Shareholders.
Although the Controlling Shareholders and/or their Associates may already have shareholdinginterests in the Company, including them in the CNMC Performance Share Plan will ensure thatthey are equally entitled with other eligible Group Executives (including Group Executive Directors)who are not Controlling Shareholders or Associates of Controlling Shareholders to take part andbenefit from this system of remuneration. We are of the view that a person who would otherwisebe eligible should not be excluded from participating in the CNMC Performance Share Plan solelyby reason that he/she is a Controlling Shareholders or an Associate of our Controlling Shareholder.
The specific approval of our independent Shareholders is required for the participation of and thegrant of Awards to such persons as well as the actual number of and terms of such Awards. Aseparate resolution must be passed for each such participant. In seeking such approval from ourindependent Shareholders, clear justification as to the participation of our Controlling Shareholdersand/or Associates of our Controlling Shareholders, the number of Shares and terms of the Awardsto be granted to them shall be provided. Accordingly, we are of the view that there are sufficientsafeguards against any abuse of the CNMC Performance Share Plan resulting from theparticipation of Controlling Shareholders and Associates of Controlling Shareholders.
As at the date of this Offer Document, (i) Choo Chee Kong is an Associate of a ControllingShareholder, Messiah Limited; and (ii) Professor Lin Xiang Xiong and Lim Kuoh Yang areAssociates of the other Controlling Shareholder, Innovation (China) Limited.
CNMC PERFORMANCE SHARE PLAN
142
CORPORATE GOVERNANCE
143
Corporate governance refers to the processes and structure by which the business and affairs of acompany are directed and managed, in order to enhance long-term shareholder value through enhancingcorporate performance and accountability. Good corporate governance therefore embodies bothenterprise (performance) and accountability (conformance).
Our Directors recognise the importance of corporate governance and the offering of high standards ofaccountability to our Shareholders, and will exert best efforts to implement the good practicesrecommended in the Code of Corporate Governance 2005 and outlined in the Code of CorporateGovernance issued by SGX-ST. As a result, our Company has implemented the corporate governancemodel as set out below:
Based on the above, our Directors are of the view that there are sufficient safeguards and checks toensure that the process of decision-making by our Board is independent and based on collectivedecision-making without our Executive Chairman being able to exercise considerable power or influence.
Board of Directors
Our Articles of Association provide that our Board will consist of not less than two (2) Directors.
We currently have six (6) Directors on our Board, comprising three (3) Executive Directors, and three (3)Independent Directors.
None of our Directors are appointed for any fixed term. Each Director shall retire from office at least onceevery three (3) years. Directors who retire are eligible to stand for re-election.
The Board will have overall responsibility for the corporate governance of our Group so as to protect andenhance long-term shareholder value. It will set the overall strategy for our Group and superviseexecutive management and monitor their performance. Apart from its statutory responsibilities, the Boardwill be responsible for:
(i) reviewing the financial performance and condition of our Group;
(ii) approving our Group’s strategic plans, key operational initiatives, major investment and fundingdecisions; and
(iii) identifying principal risks of our Group’s business and ensuring the implementation of appropriatesystems to manage the risks.
The Board will hold quarterly meetings every year, with additional meetings for particular mattersconvened when necessary. Our Directors shall also periodically review the internal control and riskmanagement systems of our Group to ensure that there are sufficient guidelines and procedures in placeto monitor its operations.
Board of Directors
Audit Committee Remuneration Committee
NominatingCommittee
Chairman Kuan Cheng Tuck
MembersLim Yeok Hua
Tan Poh Chye Allan
Chairman
MembersKuan Cheng Tuck
Lim Yeok Hua
ChairmanLim Yeok Hua
MembersKuan Cheng Tuck
Tan Poh Chye Allan
Tan Poh Chye Allan
CORPORATE GOVERNANCE
144
Audit Committee
Our Audit Committee, represented in the chart above, comprises our Independent Directors, Kuan ChengTuck, Lim Yeok Hua and Tan Poh Chye Allan. The Chairman of our Audit Committee is Kuan Cheng Tuck.
Our business and operations are presently under the management and close supervision of ourExecutive Directors who are assisted by our Executive Officers.
After our listing on Catalist, the Audit Committee will assist our Board of Directors with regards todischarging its responsibility to safeguard our Company’s assets, maintain adequate accounting records,and develop and maintain effective systems of internal controls with an overall objective to ensure thatour management has created and maintained an effective control environment in our Group, and that ourmanagement demonstrates and stimulates the necessary aspects of our Group’s internal controlstructure among all parties. The Audit Committee will provide a channel of communication between theBoard, the management and the external auditors of the Company on matters relating to audit.
Our Directors recognise the importance of corporate governance and the offering of high standards ofaccountability to the Shareholders. Our Audit Committee will meet at least quarterly to discuss and reviewthe following (non-exhaustive) functions where applicable:
(a) review with the external auditors the audit plan, their evaluation of the system of internal controls,their audit report, their management letter and our management’s response;
(b) review with the internal auditors the internal audit plan and their evaluation of the adequacy of ourinternal control and accounting system before submission of the results of such review to ourBoard for approval prior to the incorporation of such results in our annual report;
(c) review the financial statements before submission to our Board for approval, focusing in particular,on changes in accounting policies and practices, major risk areas, significant adjustments resultingfrom the audit, the going concern statement, compliance with accounting standards as well ascompliance with any stock exchange and statutory/regulatory requirements;
(d) review the internal control and procedures and ensure co-ordination between the external auditorsand our management, reviewing the assistance given by our management to the auditors, anddiscuss problems and concerns, if any, arising from the interim and final audits, and any matterswhich the auditors may wish to discuss (in the absence of our management where necessary);
(e) review and discuss with the external auditors any suspected fraud or irregularity, or suspectedinfringement of any relevant laws, rules or regulations, which has or is likely to have a materialimpact on our Group’s operating results or financial position, and our management’s response;
(f) review, where applicable, the scope and results of the internal audit procedures;
(g) review and approve interested person transactions and review procedures thereof;
(h) review potential conflicts of interest (if any) and to set out a framework to resolve or mitigate anypotential conflicts of interest;
(i) conduct periodic review of foreign exchange transactions and hedging policies (if any) undertakenby our Group;
(j) consider the appointment or re-appointment of the external auditors and matters relating toresignation or dismissal of the auditors;
(k) review our Group’s compliance with such functions and duties as may be required under therelevant statutes or the Catalist Rules, including such amendments made thereto from time to time;
CORPORATE GOVERNANCE
145
(l) undertake such other reviews and projects as may be requested by our Board of Directors andreport to our Board its findings from time to time on matters arising and requiring the attention ofour Audit Committee; and
(m) generally to undertake such other functions and duties as may be required by statute or theCatalist Rules, and by such amendments made thereto from time to time.
Our Board, with the concurrence of our Audit Committee, is of the opinion that the internal controls of ourGroup are adequate to address the financial, operational and compliance risks.
Notwithstanding the above, our Audit Committee shall also commission an annual internal controls audituntil such time as our Audit Committee is satisfied that our Group’s internal controls are robust andeffective enough to mitigate our Group’s internal control weaknesses that may arise (if any). Prior to thedecommissioning of such annual internal controls audit, our Board is required to report to the SGX-STand the Sponsor on how the key internal control weaknesses have been rectified, and the basis for theAudit Committee’s decision to decommission the annual internal controls audit. Thereafter, such auditsmay be initiated by our Audit Committee as and when it deems fit to satisfy itself that our Group’s internalcontrols remain robust and effective. Upon completion of the internal controls audit, appropriatedisclosure must be made via SGXNET on any material, price-sensitive internal controls weaknesses andany follow-up actions to be taken by the Board.
Apart from the duties listed above, our Audit Committee will also commission and review the findings ofinternal investigations into matters where there is any suspected fraud or irregularity, or failure of internalcontrols, or infringement of any Singapore law, rule or regulation which has or is likely to have a materialimpact on our Company’s operating results or financial position. In the event that a member of our AuditCommittee is interested in any matter being considered by our Audit Committee, he will abstain fromreviewing that particular transaction or voting on that particular transaction.
In addition, all future transactions with related parties shall comply with the requirements of the CatalistRules. As required by paragraph 9(e) of Appendix 4C of the Catalist Rules, our Directors shall alsoabstain from voting in any contract/arrangement or proposed contract/arrangement in which he hasdirectly or indirectly a personal material interest.
Our Audit Committee having (i) conducted an interview with Chen Yan and Cheam Chee Chian; (ii)considered the qualifications and past working experience of Chen Yan and Cheam Chee Chian (asdescribed in the section entitled “Directors, Management and Staff – Executive Officers” of this OfferDocument); (iii) observed their abilities, familiarity and diligence in relation to the financial matters andinformation of our Group; and (iv) discussed with our auditors and executive management team of ourGroup, is of the view that Chen Yan and Cheam Chee Chian are suitable for the position of the ChiefFinancial Officer and Group Finance Manager, respectively.
After making all reasonable enquiries, and to the best of their knowledge and belief, nothing has come tothe attention of our Audit Committee members to cause them to believe that Chen Yan, the ChiefFinancial Officer, does not have the competence, character and integrity expected of a Chief FinancialOfficer of a listed company.
Remuneration Committee
Our Remuneration Committee represented in the chart above comprises our Independent Directors,Kuan Cheng Tuck, Lim Yeok Hua and Tan Poh Chye Allan. The Chairman of our RemunerationCommittee is Tan Poh Chye Allan. Our Remuneration Committee is responsible for the following:
(a) to recommend to our Board a framework of remuneration for our Directors and Executive Officers,and to determine specific remuneration packages for each Executive Director and any ChiefExecutive Officer (or executive of equivalent rank), if a Chief Executive Officer is not an ExecutiveDirector, such recommendations to be submitted for endorsement by our entire Board and shouldcover all aspects of remuneration, including but not limited to director’s fees, salaries, allowances,bonuses, options, benefits in kind;
CORPORATE GOVERNANCE
146
(b) in the case of service contracts (if any) for any Director or Executive Officer, to consider whatcompensation commitments the Directors’ or Executive Officers’ contracts of service, if any, wouldentail in the event of early termination with a view to be fair and avoid rewarding poor performance;and
(c) in respect of any long-term incentive schemes including share schemes as may be implemented,to consider whether any Director should be eligible for benefits under such long-term incentiveschemes.
Each member of our Remuneration Committee shall abstain from voting on any resolution and makingany recommendations and/or participating in any deliberations of our Remuneration Committee in respectof matters in which he is interested.
The recommendations of our Remuneration Committee on the remuneration of Directors should besubmitted for endorsement by our entire Board. All aspects of remuneration, including but not limited toDirectors’ fees, salaries, allowances, bonuses, and benefits in kind shall be covered by our RemunerationCommittee.
The total remuneration of the employees who are related to our Directors will be reviewed annually by theRemuneration Committee to ensure that their remuneration packages are in line the staff remunerationguidelines and commensurate with their respective job scopes and level of responsibilities. In the eventthat a member of the Remuneration Committee is related to the employee under review, he will abstainfrom such review.
The remuneration paid to employees who are immediate family members of our Directors will bedisclosed in the annual report in the event such remuneration exceeds S$150,000 for that financial year.
Nominating Committee
Our Nominating Committee represented in the chart above comprises our Independent Directors, KuanCheng Tuck, Lim Yeok Hua and Tan Poh Chye Allan. The Chairman of our Nominating Committee is LimYeok Hua.
The Nominating Committee is responsible for the following:
(a) to make recommendations to the Board on all board appointments, including re-nominations,having regard, to the director’s contribution and performance (for example, attendance,preparedness, participation and candour) including, if applicable, as an Independent Director;
All Directors should be required to submit themselves for re-nomination and re-election at regularintervals and at least once every three (3) years;
(b) to determine annually whether or not a Director is independent;
(c) in respect of a Director who has multiple board representations on various companies, to decidewhether or not such Director is able to and has been adequately carrying out his/her duties asdirector, having regard to the competing time commitments that are faced when serving on multipleboards;
(d) reviewing and approving any new employment of related persons and the proposed terms of theiremployment; and
(e) to decide how the Board’s performance is to be evaluated and propose objective performancecriteria, subject to the approval by the Board, which address how the Board has enhanced longterm shareholders’ value. The Board will also implement a process to be proposed by theNominating Committee for assessing the effectiveness of the Board as a whole and for assessingthe contribution of each individual Director to the effectiveness of the Board (if applicable).
CORPORATE GOVERNANCE
Each member of the Nominating Committee shall abstain from voting on any resolution and making anyrecommendations and/or participating in any deliberations of our Nominating Committee in respect of theassessment of his performance or re-nomination as Director. In the event that any member of theNominating Committee has an interest in a matter being deliberated upon by the Nominating Committee,he will abstain from participating in the review and approval process relating to that matter.
Board Practices
Our Directors are appointed by our Shareholders at a general meeting, and the election of Directorstakes place annually. Each Director shall retire from office once every three (3) years and for thispurpose, at each annual general meeting, at least one-third of the Directors for the time being (or, if theirnumber is not a multiple of three (3), the number nearest to but not less than one-third) shall retire fromoffice by rotation (except for a Chief Executive Officer/Managing Director who may be appointed for aterm of up to three (3) years). A retiring Director shall be eligible for re-election at the meeting at whichhe retires. Further details on the appointment and retirement of Directors can be found in the sectionentitled “Selected Extracts of Our Articles of Association” in Appendix C of this Offer Document.
147
INTERESTED PERSON TRANSACTIONS
In general, transactions between our Group and any of our Interested Persons (namely, our Directors,Controlling Shareholders of our Company or the Associates of such persons) would constitute InterestedPerson Transactions for the purposes of Chapter 9 of the Catalist Rules.
This section sets out the material Interested Person Transactions entered into by our Group for FY2008,FY2009, FY2010, 1Q2011 and the period from 1 April 2011 up to the Latest Practicable Date (the“Relevant Period”) on the basis of each member of our Group (namely, our Company and oursubsidiaries) being an Entity at Risk and with Interested Persons being construed accordingly.
Save as disclosed in this section and in the sections entitled “Restructuring Exercise”, “Use of Proceedsand Listing Expenses”, “Directors, Management and Staff – Remuneration of Directors, ExecutiveOfficers and Related Employees” and “General Information on our Company and our Group – History” ofthis Offer Document, there have been no Interested Person Transactions over the Relevant Periodinvolving our Group which are material in the context of this Placement.
PAST INTERESTED PERSON TRANSACTIONS
Provision of services by Innovation Worldwide Group Pte Ltd
Innovation Worldwide Group Pte Ltd (“IWGPL”), a company incorporated in Singapore, is engaged in thebusiness of consultancy, trading and investment. Its issued and paid-up share capital is 99.99% owned byInnovation (China) Limited, one of the Controlling Shareholders of our Group while the balance is ownedby another two shareholders who are not related to our Directors, Controlling Shareholders and/or theirAssociates. In the past, IWGPL had been engaged to provide management services to oversee theoperations of our Group and the total approximate amount of management fees paid by our Group toIWGPL and the reimbursement of expenses incurred by IWGPL (such as travelling expenses and otheradministration expenses) during the Relevant Period were as follows:
1 April 2011to the LatestPracticable
US$’000 FY2008 FY2009 FY2010 1Q2011 Date
Management fees incurred 122 100 – – –to IWGPL
Reimbursement of 15 14 – – –expenses incurred
The management fees paid by our Group to IWGPL were based on the actual costs incurred. OurDirectors are of the opinion that the past transactions with IWGPL were not conducted on an arm’s lengthbasis as the fees were charged on an actual cost basis. As at the Latest Practicable Date, our Group hasceased the above transactions with IWGPL.
Provision of services by Financial Frontiers Pte Ltd
Financial Frontiers Pte Ltd (“FFPL”), a company incorporated in Singapore, is engaged in providingbusiness consultancy services. Its issued and paid-up share capital is 99.18% owned by Ng Eng Tiong,one of our Controlling Shareholders while the balance 0.82% is owned by Goh Siew Luan who is notrelated to the Directors, Controlling Shareholders and/or their Associates. Both Ng Eng Tiong and GohSiew Luan are also the directors of FFPL. In the past, our Group had engaged FFPL as a serviceprovider to provide management, accounting and human resource services to our Group and the totalamount of fees paid by our Group to FFPL during the Relevant Period were as follows:
1 April 2011to the LatestPracticable
US$’000 FY2008 FY2009 FY2010 1Q2011 Date
Fees incurred to FFPL 8 57 – – –
148
INTERESTED PERSON TRANSACTIONS
149
Our Directors are of the opinion that the past transactions with FFPL were not conducted on an arm’slength basis as the fees charged were not based on the then prevailing market rates during the RelevantPeriod. As at the Latest Practicable Date, our Group has ceased the above transactions with FFPL.
Loans from IWGPL and our Controlling Shareholder, Ng Eng Tiong
Our Group had also in the past obtained loans from IWGPL to fund the working capital needs of ourGroup. The loans granted by IWGPL were interest free, unsecured and had no fixed terms of repaymentand were not transacted on an arm’s length basis.
Our Group had also in the past obtained loans from Ng Eng Tiong, to fund the working capital needs ofour Group. The loans granted by Ng Eng Tiong were made at interest rates ranging from 0.5% to 2.0%per month. In FY2008, FY2009 and FY2010, CNMC had incurred interests of approximately US$13,000,US$28,000, and US$4,000 respectively, due to Ng Eng Tiong. These loans were unsecured, had no fixedterms of repayment and were transacted on an arm’s length basis due to the interest being chargedaccording to the then prevailing market interest rates.
The amount of loans (including interest incurred (if any)) extended by the relevant Interested Persons toour Group for the Relevant Period were as follows:
1 April 2011to the LatestPracticable
(US$’000) FY2008 FY2009 FY2010 1Q2011 Date
IWGPL – 138 – – –
Ng Eng Tiong 211 203 150 – –
211 341 150 – –
The amounts due (including interest incurred (if any)) from our Group to the relevant Interested Personsas at the end of each of the Relevant Period were as follows:
As at theAs at 31 As at 31 As at 31 As at 31 Latest
December December December March Practicable(US$’000) 2008 2009 2010 2011 Date
IWGPL – – – – –
Ng Eng Tiong 174 178 – – –
Total 174 178 – – –
During the Relevant Period, the largest amounts owed by our Group to the relevant Interested Persons,based on month-end balances of such amounts owing were:
Amount owing to: (US$’000)
IWGPL 104
Ng Eng Tiong 342
Convertible bonds issued to EP Capital Inc.
EP Capital Inc. (“EPCI”) is an investment holding company which is incorporated in the British VirginIslands. Choo Chee Kong, one of our Directors, is a 51% shareholder and a director of EPCI. Thebalance 49% interest of EPCI is held by investors who are high net worth individuals and are not relatedto our Directors, Controlling Shareholders and/or their Associates. Pursuant to a convertible bondagreement dated 13 June 2009 entered into between CNMC and EPCI, EPCI subscribed for convertible
INTERESTED PERSON TRANSACTIONS
150
bonds of principal amount of S$200,000 issued by CNMC with maturity of 12 months from the date of theconvertible bond agreement. On 13 June 2009, CNMC and EPCI entered into a separate convertiblebond agreement to, inter alia, extend the maturity date of the convertible bonds to 12 June 2010.Pursuant to the terms and conditions of the second agreement, CNMC has incurred interests ofapproximately US$9,000, US$15,000 and US$8,000 due to EPCI at an interest rate of 10% per annum inFY2008, FY2009 and FY2010 respectively. The subscription of the convertible bonds by EPCI wasconducted on an arm’s length basis and on normal commercial terms.
EPCI subsequently elected to convert all of the convertible bonds into shares in CNMC and 32,493ordinary shares in the share capital of CNMC were allotted and issued to EPCI on 9 July 2010accordingly. Upon such conversion, the right of EPCI to repayment of the principal amount and any or allfees, costs, expenses and other monies that may be payable by CNMC in relation to the principalamount, was released pursuant to the terms of the said convertible bond agreements.
Capitalised payments made on behalf of CNMC
During FY2010 and FY2011, there were some drilling and exploration expenses that were paid and/oragreed to be paid by Innovation (China) Limited, Messiah Limited and Ng Eng Tiong on behalf of ourGroup. Innovation (China) Limited, Messiah Limited and Ng Eng Tiong entered into an agreement dated1 October 2010 with CNMC to capitalise these payments made and/or to be made on behalf of ourGroup as non-reciprocal capital contributions in CNMC. The aggregate amount of all payments madeand/or to be made on behalf of CNMC was approximately US$2.56 million.
The abovementioned payments made and/or to be made by Innovation (China) Limited, Messiah Limitedand Ng Eng Tiong on behalf of our Group were not transacted on an arm’s length basis as there was nocharge to our Group from Innovation (China) Limited, Messiah Limited and Ng Eng Tiong for making oragreeing to make payment on our behalf. We do not expect to enter into future transactions of the abovenature with Innovation (China) Limited, Messiah Limited and Ng Eng Tiong.
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS
Loans from our Directors and their Associates
Our Group had in the past obtained loans from Choo Chee Kong to fund the working capital needs of ourGroup. The loans granted by Choo Chee Kong were made at interest rates ranging from 0.5% to 2.0%per month. In FY2008, FY2009 and FY2010, CNMC had incurred interests of approximately US$13,000,US$28,000 and US$9,000 respectively, due to Choo Chee Kong. Choo Chee Kong has since November2010 waived future interest incurred on these loans. These loans are unsecured, have no fixed terms ofrepayment and transacted on an arm’s length basis due to the interest being charged according to thethen prevailing market interest rates.
Our Group had also in the past obtained loans from Professor Lin Xiang Xiong to fund the working capitalneeds of our Group. The loans granted by Professor Lin Xiang Xiong are interest free, unsecured andhave no fixed terms of repayment and were not transacted on an arm’s length basis.
The amount of loans including interest incurred (if any) extended by the relevant Interested Persons toour Group for the Relevant Period were as follows:
1 April 2011to the LatestPracticable
(US$’000) FY2008 FY2009 FY2010 1Q2011 Date
Choo Chee Kong 190 165 10 – 185
Professor Lin Xiang Xiong – – 230 8 73
Total 190 165 240 8 258
INTERESTED PERSON TRANSACTIONS
151
The amounts due from our Group to the relevant Interested Persons as at the end of each of theRelevant Period were as follows:
As at theAs at 31 As at 31 As at 31 As at 31 Latest
December December December March Practicable(US$’000) 2008 2009 2010 2011 Date
Choo Chee Kong 174 178 97 99 285
Professor Lin Xiang Xiong – – 93 103 177
Total 174 178 190 202 462
Changes in amounts due to the relevant Interested Persons as at the end of each of the Relevant Periodare a combined result of additional loans extended during each period, repayments of loans, and/orexchange rate fluctuation between US$ and S$ or between US$ and MYR as loans are denominated inS$ or MYR.
During the Relevant Period, the largest amounts owed by our Group to each of the following InterestedPersons, based on month-end balances of such amounts owing to the respective Interested Persons,were:
Amount owing to: (US$’000)
Professor Lin Xiang Xiong 240
Choo Chee Kong 299
Other amounts due to our Directors and Controlling Shareholder
There have been amounts due to Professor Lin Xiang Xiong and Lim Kuoh Yang arising from salaries notcollected by them and Choo Chee Kong and Ng Eng Tiong arising from outstanding directors’ fees and/orsalaries in respect of FY2010, 1Q2011 and from 1 April 2011 to the Latest Practicable Date, for thepurpose of retaining these amounts in the Group as funding for our working capital. These amounts dueto them are interest free, unsecured and have no fixed terms of repayment and were not transacted onan arm’s length basis.
The amounts of salaries and/or directors’ fees owed to the relevant Interested Persons as at the end ofeach of the Relevant Period were as follows:
As at theAs at 31 As at 31 As at 31 As at 31 Latest
December December December March Practicable(US$’000) 2008 2009 2010 2011 Date
Choo Chee Kong – – 117 151 200
Professor Lin Xiang Xiong – – 86 92 183
Lim Kuoh Yang – – 67 71 141
Ng Eng Tiong – – 67 75 88
Total – – 337 389 612
Changes in amounts due to the relevant Directors as at the end of each of the Relevant Period are dueto additional directors’ salaries or fees incurred and/or paid during each period and/or exchange ratefluctuation between US$ and S$ during this period as all directors’ fees or salaries are denominated inS$.
INTERESTED PERSON TRANSACTIONS
152
During the Relevant Period, the largest amounts owed by our Group to each of the following InterestedPersons, based on month-end balances of such amounts owing to the respective Interested Persons,were:
Amount owing to:- (US$’000)
Professor Lin Xiang Xiong 193
Choo Chee Kong 200
Lim Kuoh Yang 155
Ng Eng Tiong 88
Provision of services by CMNM-JY
Professor Lin Xiang Xiong is currently a director of CMNM-JY and holds one subscriber share in CMNM-JY.
CMNM-JY engages in exploration, mining, extraction works and other related work. CMNM-JY hadprovided mining and extraction works to our Group from June 2011 to the Latest Practicable Date. Thetotal amount of fees payable by our Group to CMNM-JY for such services have not been billed byCMNM-JY to our Group and no payment has been made by our Group to CMNM-JY as at the LatestPracticable Date. The amount of fees incurred and/or payable to CMNM-JY for the services providedwere based on the actual costs incurred and are not expected to be material. Our Directors are of theopinion that the transactions with CMNM-JY were not conducted on an arm’s length basis as the feeswere charged on an actual cost basis.
On completion of the Joint Venture Agreement, CMNM-JY is proposed to be 51% owned by CMNM and49% owned by Xiamen Shenkun. Thereafter, the mining and extraction works undertaken by CMNM-JYwill be managed and supervised by our Group and would no longer be Interested Person Transactionswith the inclusion of CMNM-JY in our Group.
In the event the Joint Venture Agreement is not completed, we may carry out transactions similar to theabove as long as it is in our interests to do so, and in accordance with the guidelines and procedures forInterested Person Transactions set out under the section entitled “Guidelines and Review Procedures forOngoing and Future Interested Person Transactions” of this Offer Document.
Loans to CMNM-JY
Our Group had since April 2011 granted loans amounting to approximately US$227,000 to CMNM-JY asstart-up funds to fund the working capital needs of CMNM-JY. The loans granted to CMNM-JY areinterest free, unsecured and have no fixed terms of repayment and were not transacted on an arm’slength basis.
As at the Latest Practicable Date, loans of approximately US$227,000 are still outstanding and thelargest amount owed by CMNM-JY to our Group was US$227,000 during the Relevant Period. Oncompletion of the Joint Venture Agreement, CMNM-JY is proposed to be 51% owned by CMNM and 49%owned by Xiamen Shenkun. Thereafter, inter-company loans between CMNM-JY and other members ofthe Group would no longer be interested person transactions with the inclusion of CMNM-JY in ourGroup.
In the event the Joint Venture Agreement is not completed, we may carry out transactions similar to theabove as long as it is in our interests to do so, and in accordance with the guidelines and procedures forinterested person transactions set out under the section entitled “Guidelines and Review Procedures forOn-going and Future Interested Person Transactions” of this Offer Document.
INTERESTED PERSON TRANSACTIONS
153
GUIDELINES AND REVIEW PROCEDURES FOR ON-GOING AND FUTURE INTERESTED PERSONTRANSACTIONS
To ensure that future transactions with Interested Persons are undertaken on normal commercial termsand are consistent with our Group’s usual business practices and policies, which are generally no morefavourable than those extended to unrelated third parties, the following procedures and Chapter 9 of theCatalist Rules will be implemented by our Group:
(a) The Chief Financial Officer will maintain a register of Interested Persons. The register of InterestedPersons will be updated regularly and disclosed to the relevant personnel to enable identification ofInterested Persons. The register of Interested Persons will be reviewed by our Audit Committee atleast on a quarterly basis;
(b) The Chief Financial Officer will maintain a register of Interested Person Transactions, recording thebasis on which Interested Person Transactions are entered into and the approval or review by ourAudit Committee, Chief Financial Officer or any duly appointed Director as the case may be. Theregister shall also record the basis for entry into the transactions, including the quotations andother evidence obtained to support such basis. This register of Interested Person Transactions shallbe reviewed by our Audit Committee at least on a quarterly basis;
(c) In relation to any purchase of products or procurement of services from Interested Persons, quotesfrom at least two (2) unrelated third parties in respect of the same or substantially the same type oftransactions will be used as comparison wherever possible. The purchase price or procurementprice shall not be higher than the most competitive price of the two (2) comparative prices from thetwo (2) unrelated third parties. Our Audit Committee will review the comparables, taking intoaccount, the suitability, quality and cost of the product or service, and the experience and expertiseof the supplier;
(d) In relation to any sale of products or provision of services to Interested Persons, the price andterms of two (2) other completed transactions of the same or substantially the same type oftransactions to unrelated third parties are to be used as comparison wherever possible. TheInterested Persons shall not be charged at rates lower than the lowest price of that charged to theunrelated third parties;
(e) When renting properties from or to an Interested Person, the Directors shall take appropriate stepsto ensure that such rent is commensurate with the prevailing market rates, including adoptingmeasures such as making relevant enquiries with landlords of similar properties and obtainingsuitable reports or reviews published by property agents (where necessary), including independentvaluation report by property valuer, where appropriate. The rent payable shall be based on themost competitive market rental rate of similar property in terms of size and location, based on theresults of the relevant enquiries. Such transactions shall be subject to review by our AuditCommittee on a quarterly basis.
(f) Where it is not possible to compare against the terms of other transactions with unrelated thirdparties and given that the products and/or services may be purchased only from an InterestedPerson, the Interested Person Transaction will be approved by our Group’s Chief Executive Officerand Executive Director, the Chief Financial Officer or Group Finance Manager or an equivalent ofthe relevant company in the Group, who has no interest in the transaction, in accordance with ourGroup’s usual business practices and policies. In determining the transaction price payable to theInterested Person for such products and/or service, factors such as, but not limited to, quantity,requirements and specifications will be taken into account; and
(g) All interested persons transactions above S$100,000 are to be approved by a Director who shallnot be an Interested Person in respect of the particular transaction. Any contracts to be made withan Interested Person shall not be approved unless the pricing is determined in accordance with ourGroup’s usual business practices and policies, consistent with the usual margin given or pricereceived by our Group for the same or substantially similar type of transactions between our Groupand unrelated parties and the terms are no more favourable than those extended to or receivedfrom unrelated parties;
INTERESTED PERSON TRANSACTIONS
(h) For the purposes above, where applicable, contracts for the same or substantially similar type oftransactions entered into between our Group and unrelated third parties will be used as a basis forcomparison to determine whether the price and terms offered to or received from the InterestedPerson are no more favourable than those extended to unrelated parties;
(i) In addition, our Group shall monitor all Interested Person Transactions entered into by categorisingthe transactions as follows:
(i) a “category one” Interested Person Transaction is one where the value thereof is in excess of3.0% of the NTA of our Group; and
(ii) a “category two” Interested Person Transaction is one where the value thereof is below orequal to 3.0% of the NTA of our Group.
All “Category one” Interested Person Transactions must be approved by our Audit Committee priorto entry whereas “Category two” Interested Person Transactions need not be approved by our AuditCommittee prior to entry but shall be reviewed on a quarterly basis by our Audit Committee; and
Our Group will prepare the relevant information to assist our Audit Committee in its review.
Before any agreement or arrangement with an Interested Person that is not in the ordinary course ofbusiness of our Group is transacted, prior approval must be obtained from our Audit Committee. OurAudit Committee will review all Interested Person Transactions, if any, on a quarterly basis to ensure thatthey are carried out on an arm’s length basis and in accordance with the procedures outlined above. Itwill take into account all relevant non-qualitative factors. In the event that a member of our AuditCommittee is interested in any Interested Person Transactions, he will abstain from reviewing thatparticular transaction. Any decision to proceed with such an agreement or arrangement would berecorded for review by our Audit Committee.
Disclosure will be made in our Group’s annual report of the aggregate value of Interested PersonTransactions during the relevant financial year under review and in the subsequent annual reports for thesubsequent financial years of our Group.
Internal auditors will be appointed and their internal audit plan will incorporate a review of all theInterested Person Transactions at least on an annual basis. The internal audit report will be reviewed byour Audit Committee to ascertain whether the guidelines and procedures established to monitorInterested Person Transactions have been compiled with.
Our Audit Committee shall also review from time to time such guidelines and procedures to determine ifthey are adequate and/or commercially practicable in ensuring that Interested Person Transactions areconducted on normal commercial terms, on an arm’s length basis and do not prejudice the interests ofour Group and our Shareholders. Further, if during these periodic reviews by our Audit Committee, ourAudit Committee is of the opinion that the guidelines and procedures as stated above are not sufficient toensure that Interested Person Transactions will be on normal commercial terms, on an arm’s length basisand not prejudicial to the interests of our Group and our Shareholders, our Audit Committee will adoptsuch new guidelines and review procedures for future Interested Person Transactions as may beappropriate.
In addition, our Audit Committee will include the review of Interested Person Transactions as part of thestandard procedures while examining the adequacy of the internal controls of our Group. Our AuditCommittee will also review all Interested Person Transactions to ensure that the prevailing rules andregulations of the SGX-ST (in particular, Chapter 9 of the Catalist Rules) are complied with.
Our Group will also comply with the provisions in Chapter 9 of the Catalist Rules in respect of all futureInterested Person Transactions, and if required under the Catalist Rules, the Companies Act or the SFA,we will seek independent Shareholders’ approval for such transactions.
154
INTERESTED PERSON TRANSACTIONS
155
All the Independent Directors, who are members of our Audit Committee, are of the view that the reviewprocedures and systematic monitoring mechanism of all Interested Person Transactions as mentionedabove, are adequate in ensuring that such transactions will be on normal commercial terms and will notbe prejudicial to the interests of Shareholders in any way.
POTENTIAL CONFLICTS OF INTEREST
Save as disclosed in the sections entitled “Interested Person Transactions”, “Directors, Management andStaff – Service Agreements” and “Restructuring Exercise” of this Offer Document, none of our Directors,Executive Officers, Controlling Shareholders or any of their Associates have an interest, direct or indirect:
(a) in any transaction to which our Group was or is to be a party;
(b) in any entity carrying on the same business or dealing in similar services which competesmaterially and directly with the existing business of our Group; and
(c) in any enterprise or company that is our Group’s customer or supplier of goods and services.
Save as disclosed in the sections entitled “Interested Person Transactions” and “Directors, Managementand Staff – Service Agreements” of this Offer Document, none of our Directors have any interest in anyexisting contract or arrangement which is significant in relation to the business of our Company and oursubsidiaries, taken as a whole.
INTERESTS OF EXPERTS
No expert is employed on a contingent basis by our Company or our subsidiaries; or has a materialinterest, whether direct or indirect, in our Shares or the shares of our subsidiaries; or has a materialeconomic interest, whether direct or indirect, in our Company, including an interest in the success of thePlacement.
INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled “Generaland Statutory Information – Management and Placement Arrangements” of this Offer Document, ourCompany does not have any material relationship with the Manager and Sponsor and Joint PlacementAgent, PPCF, in relation to the Placement:
(a) PPCF is the Manager and Sponsor and Joint Placement Agent in relation to the Listing;
(b) PPCF will be the continuing Sponsor of our Company for a period of three (3) years from the dateour Company is admitted and listed on Catalist; and
(c) Pursuant to the Management Agreement and as part of PPCF’s fees as the Manager and Sponsor,our Company issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of theissued and paid-up share capital of our Company prior to the Placement, at the Placement Pricefor each Share. After completion of the relevant moratorium periods as set out in the section“Shareholders – Moratorium” of this Offer Document, PPCF will dispose of its shareholding interestin our Company at its discretion.
INTERESTED PERSON TRANSACTIONS
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT
In the reasonable opinion of our Directors, save as disclosed below and in the section entitled “Generaland Statutory Information – Management and Placement Arrangements” of this Offer Document, ourCompany does not have any material relationship with the other Joint Placement Agent, Asiasons WFG,in relation to the Placement:
(a) Asiasons WFG is the Joint Placement Agent in relation to the Listing; and
(b) Asiasons WFG’s parent company, Asiasons WFG Financial Ltd, a company listed on the MainBoard of the SGX-ST, is the sole shareholder of Raintree Strategic Consultancy Limited whichholds 6,262,500 Shares representing approximately 1.55% of the issued and paid-up share capitalof our Company post-Placement.
156
DESCRIPTION OF ORDINARY SHARES
157
The following statements are brief summaries of the rights and privileges of our Shareholders conferredby the laws of Singapore and the Articles of Association of our Company.
The following description summarises the material provisions of our Articles but is qualified by referenceto our Articles, a copy of which is available for inspection at our registered office during normal businesshours for a period of six (6) months from the date of this Offer Document.
Ordinary Shares
There are no founder, management, deferred or unissued shares reserved for issue for any purpose. Wehave only one class of shares, namely, our ordinary shares which have identical rights in all respects andrank equally with one another. All of our Shares are in registered form. Our Company may, subject to theprovisions of the Companies Act and the Catalist Rules, purchase its Shares. However, we may not,except in circumstances permitted by the Companies Act, grant any financial assistance for theacquisition or proposed acquisition of our Shares.
New Shares
New Shares may only be issued with the prior approval of our Shareholders in a general meeting. Theaggregate number of shares to be issued pursuant to such approval may not exceed 100% (or suchother limit as may be prescribed by the SGX-ST) of our issued share capital for the time being, of whichthe aggregate number of Shares to be issued other than on a pro rata basis to our shareholders may notexceed 50% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for thetime being (the percentage of issued share capital being based on our Company’s issued share capital atthe time such authority is given after adjusting for new Shares arising from the conversion of convertiblesecurities or employee share options on issue at the time such authority is given and any subsequentconsolidation or subdivision of Shares).
The approval, if granted, will lapse at the conclusion of the annual general meeting following the date onwhich the approval was granted or the date by which the annual general meeting is required by law to beheld, whichever is earlier but any approval may be previously revoked or varied by our Company ingeneral meeting. Subject to the foregoing, the provisions of the Companies Act and any special rightsattached to any class of shares currently issued, all new Shares are under the control of our Board ofDirectors who may allot and issue the same with such rights and restrictions as it may think fit.
Shareholders
Only persons who are registered in the Register of Members of our Company and, in cases in which theperson so registered is CDP, the persons named as the Depositors in the Depository Register maintainedby CDP for the Shares, are recognised as our Shareholders. We will not, except as required by law,recognise any equitable, contingent, future or partial interest in any Share or other rights for any Shareother than the absolute right thereto of the registered holder of that Share or of the person whose nameis entered in the Depository Register for that Share. Our Company may close our Register of Membersfor any time or times if we provide the Accounting and Corporate Regulatory Authority of Singapore withat least 14 days’ notice and the SGX-ST at least ten (10) clear market days’ notice. However, the registermay not be closed for more than 30 days in aggregate in any calendar year. We typically close ourRegister of Members to determine shareholders’ entitlement to receive dividends and other distributions.
Transfer of Shares
There is no restriction on the transfer of fully paid Shares except where required by law or the CatalistRules or the rules or by-laws of any stock exchange on which our Company is listed. Our Board ofDirectors may decline to register any transfer of Shares which are not fully paid Shares or Shares onwhich we have a lien. Our Shares may be transferred by a duly signed instrument of transfer in a formapproved by the SGX-ST or any stock exchange on which our Company is listed. Our Board of Directorsmay also decline to register any instrument of transfer unless, among other things, it has been duly
DESCRIPTION OF ORDINARY SHARES
158
stamped and is presented for registration together with the share certificate and such other evidence oftitle as they may require. We will replace lost or destroyed certificates for Shares if it is properly notifiedand if the applicant pays a fee which will not exceed $2 and furnishes any evidence and indemnity thatour Board of Directors may require.
General Meetings of Shareholders
We are required to hold an annual general meeting every year. Our Board of Directors may convene anextraordinary general meeting whenever it thinks fit and must do so if shareholders representing not lessthan 10% of the total voting rights of all Shareholders request in writing that such a meeting be held. Inaddition, two or more shareholders holding not less than 10% of our issued share capital may call ameeting. Unless otherwise required by law or by our Articles, voting at general meetings is by ordinaryresolution, requiring an affirmative vote of a simple majority of the votes cast at that meeting. An ordinaryresolution suffices, for example, for the appointment of directors. A special resolution, requiring theaffirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters underSingapore law, including voluntary winding up, amendments to the Memorandum of Association and ourArticles, a change of our corporate name and a reduction in the share capital, share premium account orcapital redemption reserve fund. We must give at least 21 days’ notice in writing for every generalmeeting convened for the purpose of passing a special resolution. Ordinary resolutions generally requireat least 14 days’ notice in writing. The notice must be given to each of our shareholders who has suppliedus with an address in Singapore for the giving of notices and must set forth the place, the day and thehour of the meeting and, in the case of special business, the general nature of that business.
Voting Rights
A Shareholder is entitled to attend, speak and vote at any general meeting, in person or by proxy. Proxiesneed not be Shareholders. A person who holds Shares through the SGX-ST book-entry settlementsystem will only be entitled to vote at a general meeting as a Shareholder if his name appears on theDepository Register maintained by CDP 48 hours before the general meeting. Except as otherwiseprovided in our Articles, two or more shareholders must be present in person or by proxy to constitute aquorum at any general meeting. Under our Articles, on a show of hands, every Shareholder present inperson and by proxy shall have one vote (provided that in the case of a Shareholder who is representedby two proxies, only one of the two proxies as determined by that shareholder or, failing suchdetermination, the chairman of the meeting in his sole discretion shall be entitled to vote on a show ofhands), and on a poll, every Shareholder present in person or by proxy shall have one vote for eachShare which he holds or represents. A poll may be demanded in certain circumstances, including by thechairman of the meeting or by any Shareholder present in person or by proxy and representing not lessthan 10% of the total voting rights of all Shareholders having the right to attend and vote at the meetingor by any two Shareholders present in person or by proxy and entitled to vote. In the case of a tie vote,whether on a show of hands or a poll, the chairman of the meeting shall be entitled to a casting vote.
Dividends
We may, by ordinary resolution of our Shareholders, declare dividends at a general meeting, but we maynot pay dividends in excess of the amount recommended by our Board of Directors. We must pay alldividends out of our profits. Our Board of Directors may also declare an interim dividend without theapproval of its shareholders. All dividends are paid pro rata among our Shareholders in proportion to theamount paid up on each Shareholder’s Shares, unless the rights attaching to an issue of any Shareprovides otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through thepost to each Shareholder at his registered address. Notwithstanding the foregoing, the payment by us toCDP of any dividend payable to a Shareholder whose name is entered in the Depository Register shall,to the extent of payment made to CDP, discharge us from any liability to that Shareholder in respect ofthat payment.
DESCRIPTION OF ORDINARY SHARES
159
Capitalisation and Rights Issues
Our Board of Directors may, with approval by our Shareholders at a general meeting, capitalise anyreserves or profits (including profits or money carried and standing to an reserve) and distribute the sameas shares credited as paid-up to the shareholders in proportion to their shareholdings. Our Board ofDirectors may also issue rights to take up additional Shares to Shareholders in proportion to theirshareholdings. Such rights are subject to any conditions attached to such issue and the regulations ofany stock exchange on which we are listed.
Takeovers
Under the Singapore Code on Take-overs and Mergers (“Singapore Take-over Code”), issued by theAuthority pursuant to section 321 of the SFA, any person acquiring an interest, either on his own ortogether with parties acting in concert with him, in 30% or more of the voting Shares must extend atakeover offer for the remaining voting Shares in accordance with the provisions of the SingaporeTakeover Code. In addition, a mandatory takeover offer is also required to be made if a person holding,either on his own or together with parties acting in concert with him, between 30% and 50% of the votingrights acquires additional voting shares representing more than 1% of the voting shares in any six-monthperiod. Under the Singapore Take-over Code, the following individuals and companies will be presumedto be persons acting in concert with each other unless the contrary is established:
(a) the following companies:
(i) a company;
(ii) the parent company of (i);
(iii) the subsidiaries of (i);
(iv) the fellow subsidiaries of (i);
(v) the associated companies of (i), (ii), (iii) or (iv);
(vi) companies whose associated companies include any of (i), (ii), (iii), (iv) or (v); and
(vii) any person who has provided financial assistance (other than a bank in the ordinary courseof business) to any of the above for the purchase of voting rights;
(b) a company with any of its directors (together with their close relatives, related trusts as well ascompanies controlled by any of the directors, their close relatives and related trusts);
(c) a company with any of its pension funds and employee share schemes;
(d) a person with any investment company, unit trust or other fund whose investment such personmanages on a discretionary basis, but only in respect of the investment account which suchperson manages;
(e) a financial or other professional adviser, including a stockbroker, with its customer in respect of theshareholdings of:
(i) the adviser and persons controlling, controlled by or under the same control as the adviser;and
(ii) all the funds which the adviser manages on a discretionary basis, where the shareholdingsof the adviser and any of those funds in the customer total 10% or more of the customer’sequity share capital;
DESCRIPTION OF ORDINARY SHARES
160
(f) directors of a company (together with their close relatives, related trusts and companies controlledby any of such directors, their close relatives and related trusts) which is subject to an offer orwhere the directors have reason to believe a bona fide offer for their company may be imminent;
(g) partners; and
(h) the following persons and entities:
(i) an individual;
(ii) the close relatives of (i);
(iii) the related trusts of (i);
(iv) any person who is accustomed to act in accordance with the instructions of (i);
(v) companies controlled by any of (i), (ii), (iii) or (iv); and
(vi) any person who has provided financial assistance (other than a bank in the ordinary courseof business) to any of the above for the purchase of voting rights.
Under the Singapore Take-over Code, a mandatory offer made with consideration other than cash mustbe accompanied by a cash alternative at not less than the highest price paid by the offeror or any personacting in concert within the preceding six (6) months.
Liquidation or Other Return of Capital
If our Company is liquidated or in the event of any other return of capital, holders of our Shares will beentitled to participate in any surplus assets in proportion to their shareholdings, subject to any specialrights attaching to any other class of shares.
Indemnity
To the extent permitted by Singapore law, our Articles provide that, subject to the Companies Act, ourBoard of Directors and Executive officers shall be entitled to be indemnified by us against any liabilityincurred in defending any proceedings, whether civil or criminal, which relate to anything done or omittedto have been done as an officer, director or employee and in which judgement is given in their favour orin which they are acquitted or in connection with any application under any statute for relief from liabilityin respect thereof in which relief is granted by the court. We may not indemnify our Directors andExecutive Officers against any liability which by law would otherwise attach to them in respect of anynegligence, default, breach of duty or breach of trust of which they may be liable of in relation to us.
Limitations on Rights to Hold or Vote Shares
Except as described in “Voting Rights” and “Takeovers” above, there are no limitations imposed bySingapore law or by our Articles on the rights of non-resident Shareholders to hold or vote in respect ofthe Shares.
Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected, inter alia, underSection 216 of the Companies Act, which gives the Singapore courts a general power to make any order,upon application by any of our shareholders, as they think fit to remedy any of the following situations:
(a) our affairs are being conducted or the powers of our Board of Directors are being exercised in amanner oppressive to, or in disregard of the interests of, one or more of our Shareholders; or
(b) we take an action, or threaten to take an action, or Shareholders pass a resolution, or propose topass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more ofthe shareholders, including the applicant.
DESCRIPTION OF ORDINARY SHARES
Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no waylimited to those listed in the Companies Act itself. Without prejudice to the foregoing, Singapore courtsmay:
(a) direct or prohibit any act or cancel or vary any transaction or resolution;
(b) regulate the conduct of the affairs of our Company in the future;
(c) authorise civil proceedings to be brought in our name of, or on behalf of, our Company by a personor persons and on such terms as the court may direct;
(d) make an order for the purchase of a minority Shareholder’s Shares by our other Shareholders orby us and, in the case of a purchase of Shares by us, a corresponding reduction of our sharecapital;
(e) make an order that the Memorandum of Association or the Articles be amended; or
(f) make an order that we be wound up.
Treasury Shares
Our Articles of Association expressly permits our Company to purchase or acquire shares or stocks ofour Company and to hold such shares or stocks (or any of them) as treasury shares in accordance withrequirements of Section 76 of the Companies Act. Our Company may make a purchase or acquisition ofour own Shares on a securities exchange if the purchase or acquisition has been authorised in advanceby our Company in general meeting; or otherwise than on a securities exchange if the purchase oracquisition is made in accordance with an equal access scheme authorised in advance by our Companyin general meeting. The aggregate number of Shares held as treasury shares shall not at any timeexceed 10% of the total number of Shares of our Company at that time. Any excess shares shall bedisposed or cancelled before the end of a period of six (6) months beginning with the day on which thatcontravention of limit occurs, or such further period as the Registrar may allow. Where Shares or stocksare held as treasury shares by our Company through purchase or acquisition by our Company, ourCompany shall be entered in the register as the member holding those shares or stocks.
Our Company shall not exercise any right in respect of the treasury shares and any purported exercise ofsuch a right is void. Such rights include any right to attend or vote at meetings and our Company shall betreated as having no right to vote and the treasury shares shall be treated as having no voting rights.
In addition, no dividend may be paid, and no other distribution (whether in cash or otherwise) of ourCompany’s assets (including any distribution of assets to members on a winding up) may be made to ourCompany in respect of the treasury shares. However, this would not prevent an allotment of shares asfully paid bonus shares in respect of the treasury shares or the subdivision or consolidation of anytreasury share into treasury share of a smaller amount, if the total value of the treasury shares after thesubdivision or consolidation is the same as the total value of the treasury share before the subdivision orconsolidation, as the case may be.
Where Shares are held as treasury shares, our Company may at any time (i) sell the Shares (or any ofthem) for cash; (ii) transfer the Shares (or any of them) for the purposes of or pursuant to an employees’share scheme; (iii) transfer the Shares (or any of them) as consideration for the acquisition of shares in orassets of another company or assets of a person; or (iv) cancel the Shares (or any of them).
161
EXCHANGE CONTROLS
162
Singapore and Hong Kong
As at the Latest Practicable Date, there are no laws or regulations in Singapore and Hong Kong that mayaffect (a) the repatriation of capital, including the availability of cash and cash equivalents for use by ourGroup; and (b) the remittance of profits that may affect dividends, interests or other payments toShareholders.
Malaysia
The foreign exchange administration rules in Malaysia are applied uniformly to transactions carried outwith all countries, except for the State of Israel for which special restrictions apply. There is no restrictionon amount of repatriation of capital, profits, and income earned from Malaysia. Repatriation of funds fromdivestment of Ringgit assets or profits and dividends arising from the investments in Malaysia, however,must be made in foreign currency other than the currency of the State of Israel.
TAXATION
163
The following is a discussion of certain tax matters arising under the current tax laws in Singapore, HongKong and Malaysia and is not intended to be and does not constitute legal or tax advice.
While this discussion is considered to be a correct interpretation of existing laws in force as at the date ofthis Offer Document, no assurance can be given that the courts or fiscal authorities responsible for theadministration of such laws will agree with this interpretation or that changes in such law, which may beretrospective, will not occur. The discussion is limited to a general description of certain taxconsequences in Singapore, Hong Kong and Malaysia with respect to ownership of the Shares bySingapore investors, and does not purport to be a comprehensive or exhaustive description of all of thetax considerations that may be relevant to a Shareholder’s decision with regard to the ownership of theShares.
Prospective investors should consult their tax advisers regarding Singapore, Hong Kong andMalaysia tax and other tax consequences of owning and disposing the Shares. It is emphasizedthat neither our Company, the Directors nor any other persons involved in this Placement acceptsresponsibility for any tax effects or liabilities resulting from the subscription, purchase, holding ordisposal of our Shares.
SINGAPORE TAXATION
The following discussion describes the material Singapore income tax, stamp duty, goods and servicestax and estate duty consequences of the purchase, ownership and disposal of the Shares.
Singapore Income Tax
Individual income tax
Individual taxpayers who are Singapore tax residents are subject to tax on income accrued or derivedfrom Singapore. All foreign-sourced income (except for income received through a partnership inSingapore) received on or after 1 January 2004 in Singapore by tax resident individuals will be exemptfrom tax. Certain Singapore-sourced investment income (such as interest from debt securities) derived bytax resident individuals on or after 1 January 2004 from certain financial instruments (other than incomederived through a partnership in Singapore or from the carrying on of a trade, business or profession) willbe exempt from tax.
A Singapore tax resident individual is taxed at progressive rates ranging from 2 per cent. to a maximumrate of 20 per cent. with effect from the year of assessment 2012.
Non-resident individuals, subject to certain exceptions, are generally subject to income tax on incomeaccrued in or derived from Singapore at a flat rate of 20 per cent. However, Singapore does not taxcapital gains. A nonresident individual (other than a director) exercising a short-term employment inSingapore for not more than 60 days may be exempt from tax in Singapore.
An individual is regarded as a tax resident in Singapore if in the calendar year preceding the year ofassessment, he was physically present in Singapore or exercised an employment in Singapore (otherthan as a director of a company) for 183 days or more, or if he ordinarily resides in Singapore.
Corporate income tax
A Singapore tax resident corporate taxpayer is subject to Singapore income tax on:
� income accrued in or derived from Singapore; and
� foreign sourced income received or deemed received in Singapore, unless otherwise exempted.
Foreign income in the form of branch profits, dividends and service fee income (“specified foreignincome”) received or deemed received in Singapore by a Singapore tax resident corporate taxpayer onor after 1 June 2003 are exempted from Singapore tax subject to meeting the qualifying conditions.
TAXATION
164
Tax credits are granted for foreign tax paid on income derived from treaty and non-treaty countries thatare received and assessable to tax in Singapore. The tax credit is limited to the lower of Singapore taxpayable on that foreign income and foreign tax paid.
A non-Singapore tax resident corporate taxpayer, subject to certain exceptions, is subject to Singaporeincome tax on income accrued in or derived from Singapore, and on foreign income received or deemedreceived in Singapore.
A company is regarded as tax resident in Singapore if the control and management of the company’sbusiness is exercised in Singapore. Normally, control and management of the company is vested in itsboard of directors and therefore if the board of directors meets and conducts the company’s business inSingapore, the company will be regarded as tax resident in Singapore.
The corporate tax rate in Singapore is 17% with effect from the Year of Assessment 2010 after allowingpartial tax exemption on the first S$300,000 of a company’s chargeable income as follows:
(i) 75 per cent. of up to the first S$10,000 of a company’s chargeable income (excluding Singaporefranked dividends); and
(ii) 50 per cent. of up to the next S$290,000 of a company’s chargeable income (excluding Singaporefranked dividends).
Further, companies will, subject to certain conditions, be eligible for full tax exemption on their normalchargeable income (other than Singapore dividends) of up to S$100,000 and 50% tax exemption on up tothe next S$200,000 of normal chargeable income in each of the company’s first three consecutive yearsof assessment. The remaining chargeable income (after the tax exemption) will be taxed at the applicablecorporate tax rate.
Dividend Distributions
As the Company will be tax resident in Singapore, dividends paid by the Company would be consideredas sourced from Singapore. There will not be any withholding tax levied on dividends paid by companieswho are tax residents in Singapore. Dividends paid by the Company are tax exempt in the hand of therecipients (both Singapore tax resident and non-tax resident).
Prior to 1 January 2003, Singapore operated an imputation system of taxation. Under the imputationsystem, the income tax paid by a Singapore tax resident company on its taxable income was imputed toand deemed to be paid on behalf of its shareholders, upon distribution. Where these profits weredistributed as dividends (commonly known as franked dividends) to shareholders, the dividends receivedby the shareholders were net of the corporate income tax paid by the Company. Shareholders were taxedon the gross amount of dividends (that is, the amount of net proceeds received plus an amount which theCompany had deducted from the gross proceeds and paid as corporate income tax). The income tax paideffectively becomes available to shareholders as a tax credit for set-off against their Singapore incometax liabilities.
With effect from 1 January 2003 (subject to certain transitional rules), Singapore has adopted the “One-Tier” Corporate Tax System (“One-Tier System”). Under this One-Tier System, the tax collected fromcorporate profits is the final tax and the Company can pay tax exempt (1-tier) dividends which are taxexempt in the hands of the shareholder, regardless of the tax residence status or the legal form of theshareholder.
During a five-year transitional period expiring on 31 December 2007, companies with unutilised dividendfranking credits may remain under the imputation system for the purpose of paying franked dividends.Such companies will automatically move to the One-Tier System when the dividend franking credits arefully utilised.
TAXATION
165
Companies, however, have the irrevocable option to move to the One-Tier System at an earlier datebefore the dividend franking credits are exhausted. The imputation credit system is available only up toyear of assessment 2008. Thereafter, the One-Tier System will take effect for all companies.
Where a company has income that is exempt from tax or taxed at concessionary tax rates or utiliseinvestment allowances or are granted tax rebates or receive foreign dividends for which a foreign taxcredit (obtained pursuant to a double taxation treaty with one of Singapore’s treaty partners or unilaterallygranted under the Singapore Income Tax Act, Chapter 134 of Singapore) has been allowed and paydividends out of these sources of income, the company may pay tax exempt dividends (referred to asnormal exempt dividends) out of such income. Normal exempt dividends paid to shareholders of shareswhich are not of a preferential nature are free from Singapore income tax. In the case of a companywhich is in the One-Tier System, such a company can pay tax exempt (one-tier) dividends (instead ofnormal exempt dividends) out of their exempt profits to shareholders. Hence, dividends paid by suchcompanies as tax exempt (one-tier) dividends to all their shareholders, including shareholders of sharesof a preferential nature, will not be subject to tax in the hands of these shareholders.
Capital Gains Tax
Singapore does not impose a tax on capital gains. However, there are no specific laws or regulationswhich deal with the characterisation of capital gains, and hence, gains may be construed to be of anincome nature and therefore be subject to tax if they arise from activities which the IRAS regards as thecarrying on of a trade or business in Singapore. Any profits from the disposal of the Shares are nottaxable in Singapore unless the seller is regarded as having derived gains of a trading nature inSingapore, in which case, the disposal profits would be taxable as trading income.
Bonus Shares
Under current Singapore tax law and practice, a capitalisation of profits followed by the issue of newshares, credited as fully paid, pro-rata to shareholders (“bonus issue”) does not represent a distributionof dividends by a company to its shareholders. Therefore, a Singapore resident shareholder receivingshares by way of a bonus issue should not have a liability to Singapore tax.
When a dividend is to be satisfied wholly or in part in the form of an allotment of ordinary shares creditedas fully paid, the dividend declared will be treated as income to its shareholders. However, as theCompany will move to the One-Tier System after 31 December 2007, any dividend paid on or after 1January 2008 will be exempt from Singapore tax. Similarly, when shareholders are given the right to electto receive an allotment of ordinary shares credited as fully paid in lieu of cash, the dividend declared willbe treated as exempt (one-tier) dividend income and will not be subject to Singapore tax.
Adoption of FRS 39 treatment for Singapore income tax purposes
On 30 December 2005, the IRAS issued a circular entitled “Income Tax Implications arising from theadoption of FRS 39-Financial Instruments: Recognition and Measurement” (the “FRS 39 Circular”).Legislative amendments to give effect to the FRS 39 Circular have been enacted via the Income Tax(Amendment) Act 2006, with such amendments having been deemed to come into operation on 1January 2005. The FRS 39 Circular generally applies, subject to the tax treatment under the FRS 39Circular should consult their own accounting and tax advisers regarding the Singapore income taxconsequences of their acquisition, holding or conversion of the Shares.
Stamp Duty
There is no stamp duty payable on the subscription, allotment or holding of our Shares.
Stamp duty is payable on the instrument of transfer of our Shares at the rate of S$2.00 for every S$1,000or any part thereof, computed on the consideration paid or market value of our Shares registered inSingapore, whichever is higher.
TAXATION
166
The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty ispayable if no instrument of transfer is executed (such as in the case of scripless shares, the transfer ofwhich does not require instruments of transfer to be executed) or if the instrument of transfer is executedoutside Singapore. However, stamp duty may be payable if the instrument of transfer which is executedoutside Singapore is subsequently received in Singapore.
However, as our Shares will be listed on Catalist and their transfers will be “scripless” transfers via theCDP, no stamp duty will be imposed on the transfers of our Shares via the CDP.
Goods and Services Tax (“GST”)
The sale of the Shares by an investor belonging to Singapore through a SGX-ST member or to anotherperson belonging in Singapore is an exempt sale not subject to GST. Any GST directly or indirectlyincurred by the investor in respect of this exempt sale will become an additional cost to the investor.
Where our Shares are sold by a GST-registered investor in the course of a business to a personbelonging outside Singapore, and that person is outside Singapore when the sale is executed, the saleshould generally, subject to satisfaction of certain conditions, be considered a taxable supply subject toGST at zero-rate. Any GST incurred by a GST-registered investor in the making of this supply in thecourse of furtherance of a business may, subject to the provisions of the Goods and Services Tax Act, beoffset against the investor’s GST liability and, in the event of an excess input tax credit, recovered fromthe Comptroller of GST of Singapore.
Services such as brokerage, handling and clearing services rendered by a GST-registered person to aninvestor belonging in Singapore in connection with the investor’s purchase, sale or holding of our Shareswill be subject to GST at the current rate of 7%. Similar services rendered to an investor belongingoutside Singapore is generally subject to GST at zero-rate, provided that the investor is outsideSingapore when the services are performed and the services provided do not benefit any Singaporepersons.
Estate duty
Singapore estate duty is imposed on the value of most immovable property situated in Singapore whichpasses on the death of a person, whatever the domicile of the deceased, subject to specific exemptionlimits. For persons domiciled in Singapore at the date of death, estate duty is also imposed on movableproperty, wherever situated, subject to specific exemption limits. Movable assets of non-domiciles areexempt from estate duty. The Shares are considered to be movable property situated in Singapore as theCompany is incorporated in Singapore.
Accordingly, the Shares held by an individual are subject to Singapore estate duty upon such individual’sdeath, if the individual is domiciled in Singapore. However, with effect from 15 February 2008, Singaporeestate duty has been abolished.
Individuals, whether or not domiciled in Singapore, should consult their own tax advisersregarding the Singapore tax and estate duty consequences of their ownership of the Shares.
HONG KONG TAXATION
The following discussion describes the material Hong Kong tax on dividend and tax on gains from sale:
Tax on Dividends
Under current practice of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong inrespect of dividend paid by CNMC.
TAXATION
167
Tax on Gains from Sales
No tax is imposed in Hong Kong in respect of capital gains. However, trading gains from sale of propertyby persons carrying on trade, profession or business in Hong Kong, where the gains are derived from orarising in Hong Kong from the trade, profession or business will be chargeable to Hong Kong profits tax,which is currently imposed at the rate of 16.5% on corporations and at a maximum rate of 15.0% onunincorporated business.
MALAYSIAN TAXATION
The following discussion describes the material Malaysian tax on dividend and tax on gains from sale.
Dividend Distributions
Under Malaysian law, income tax is payable on income accruing/derived from Malaysia or received inMalaysia. Dividends paid or credited by a company which is tax resident in Malaysia (“Malaysianresident company”) would be deemed to be derived from Malaysia and are thus taxable in Malaysia.
A company is tax resident in Malaysia if the control and management of its business are exercised inMalaysia.
A Malaysian resident company is entitled to deduct tax at the applicable corporate tax rate from suchdividends paid or credited to its shareholders in the basis period for the relevant year of assessment.
Subject to certain exceptions, the tax rate for year of assessment 2010 is 25%. Credit for the tax sodeducted is given against the tax payable by the shareholder.
Dividends paid by a Malaysian resident company from its tax-exempt income are tax-exempt in the handsof its shareholders.
The income of any person, other than a Malaysian resident company carrying on the business ofbanking, insurance or sea or air transport, for the basis year for a year of assessment derived fromsources outside Malaysia and received in Malaysia, is tax-exempt under the Malaysia Income Tax Act.
Gains on Disposal of the Shares in a Malaysian company
There is no capital gains tax in Malaysia except for real property gains tax (“RPGT”) which is chargedupon gains arising from the disposal of real property in Malaysia or shares in a real property companyincorporated in Malaysia. As such, any gains from the subsequent sale of the shares in a Malaysiancompany not being a real property company would not be subject to RPGT in Malaysia. However, anygains from the subsequent sales of shares in a Malaysian company by a person who deals in sharesmay be regarded as income so as to subject to income tax under the Malaysia Income Tax Act.
Single Tier System
Prior to 1 January 2008, Malaysia adopted the imputation system which required the imposition of tax onthe profit at corporate level and again at shareholders level. The principle behind the imputation system isto overcome the double taxation of income. Under the imputation system, companies resident in Malaysiaare required to deduct tax at source at the prevailing corporate tax rate on dividends paid to theirshareholders. The same income would be taxed twice if the credit is not imputed to the shareholders.
The single-tier tax system was introduced in Budget 2008 to replace the imputation system with effectfrom year of assessment 2008. Under this system, corporate income is taxed at corporate level and thisis a final tax. Dividends distributed to the shareholders are tax-exempted in their hands.
TAXATION
Transitional provisions for resident companies are in place to take into account the following:
(a) Companies with no sec 108 credit balances as at 31 December 2007
On 1 January 2008, companies with no sec 108 credit balances will automatically move to thesingle-tier tax system.
(b) Companies with sec 108 credit balances as at 31 December 2007
(i) Companies with sec 108 credit balances as at 31 December 2007 will be given a six-yeartransitional period from 1 January 2008 to 31 December 2013 to fully utilised creditbalances.
(ii) These companies will automatically move to the single-tier tax system on 1 January 2014although they may still have unutilised credit balances.
(iii) These companies will be given an option to make an irrevocable election to move to thesingle-tier tax system.
(iv) These companies which have fully utilised the credit balances at any time during thetransitional period will automatically move to the single-tier tax system.
(v) These companies will only be allowed to adjust its sec 108 credit balances downwards forany tax discharged, remitted or refunded in respect of taxes which have earlier beenaccounted for.
(vi) The tax on dividends paid to shareholders by small and medium companies is to bededucted from the sec 108 credit balance based on the highest current tax rate.
As our Group has elected to move to the single-tier tax system, the imputation system is no longerapplicable to us.
168
CLEARANCE AND SETTLEMENT
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement systemof the CDP, and all dealings in and transactions of the Shares through Catalist will be effected inaccordance with the terms and conditions for the operation of securities accounts with the CDP, asamended,supplemented or modified from time to time.
Our Shares will be registered in the name of CDP or its nominee and held by CDP for and on behalf ofpersons who maintain, either directly or through depository agents, securities accounts with CDP.Persons named as direct securities account holders and depository agents in the depository registermaintained by CDP, rather than CDP itself, will be treated, under our Articles of Association and theCompanies Act, as members of our Company in respect of the number of Shares credited to theirrespective securities accounts.
Persons holding our Shares in securities account with CDP may withdraw the number of Shares theyown from the book-entry settlement system in the form of physical share certificates. Such sharecertificates will, however, not be valid for delivery pursuant to trades transacted on Catalist, although theywill be prima facie evidence of title and may be transferred in accordance with our Articles of Association.A fee of S$10.00 for each withdrawal of 1,000 Shares or less and a fee of S$25.00 for each withdrawal ofmore than 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement systemand obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as ourDirectors may decide, is payable to the Share Registrar for each share certificate issued and a stampduty of S$0.20 per S$100.00 or part thereof of the last-transacted price is also payable where our Sharesare withdrawn in the name of a third party. Persons holding physical share certificates who wish to tradeon Catalist must deposit with CDP their share certificates together with the duly executedinstruments oftransfer in favour of CDP, and have their respective securities accounts credited with the number ofShares deposited before they can effect the desired trades. A fee of S$10.00 subject to Goods andServices Tax at the prevailing rate of 7 per cent. is payable upon the deposit of each instrument oftransfer with CDP. The above fees may be subject to such charges as may be in accordance with CDP’sprevailing policies or the current tax policies that may be in force in Singapore from time to time.
Transactions in our Shares under the book-entry settlement system will be reflected by the seller’ssecurities account being debited with the number of Shares sold and the buyer’s securities account beingcredited with the number of Shares acquired. No transfer of stamp duty is currently payable for theShares that are settled on a book-entry basis.
A Singapore clearing fee for trades in our Shares on Catalist is payable at the rate of 0.04 per cent of thetransaction value subject to a maximum of S$600.00 per transaction. The clearing fee, instrument oftransfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax atthe prevailing rate of 7 per cent. (or such other rate prevailing from time to time).
Dealings of our Shares will be carried out in S$ and will be effected for settlement on CDP on a scriplessbasis. Settlement of trades on a normal “ready” basis on Catalist generally takes place on the thirdMarket Day following the transaction date, and payment for the securities is generally settled on thefollowing business day. CDP holds securities on behalf of investors in securities accounts. An investormay open a direct account with CDP or a sub-account with a CDP depository agent. The CDP depositoryagent may be a member company of the SGX-ST, bank, merchant bank or trust company.
169
GENERAL AND STATUTORY INFORMATION
170
INFORMATION ON DIRECTORS AND EXECUTIVE OFFICERS
(1) Save as disclosed below, none of our Directors, Executive Officers and Controlling Shareholders:
(a) has, at any time during the last ten (10) years, had an application or a petition under anybankruptcy laws of any jurisdiction filed against him or against a partnership of which he wasa partner at the time he was a partner or at any time within two (2) years from the date heceased to be a partner;
(b) has, at any time during the last ten (10) years, had an application or a petition under any lawof any jurisdiction filed against an entity (not being a partnership) of which he was a directoror an equivalent person or key executive at the time when he was a director or an equivalentperson or a key executive of that entity or at any time within two (2) years from the date heceased to be a director or an equivalent person or a key executive of that entity, for thewinding up or dissolution of that entity or, where that entity is the trustee of a business trust,that business trust, on the ground of insolvency;
(c) has any unsatisfied judgement against him;
(d) has ever been convicted of any offence, in Singapore or elsewhere, involving fraud ordishonesty which is punishable with imprisonment, or has been the subject of any criminalproceedings (including any pending criminal proceedings of which he is aware) for suchpurpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach ofany law or regulatory requirement that relates to the securities or futures industry inSingapore or elsewhere, or has been the subject of any criminal proceedings (including anypending criminal proceedings of which he is aware) for such breach;
(f) has, at any time during the last ten (10) years, had judgement entered against him in anycivil proceedings in Singapore or elsewhere involving a breach of any law or regulatoryrequirement that relates to the securities or futures industry in Singapore or elsewhere, or afinding of fraud, misrepresentation or dishonesty on his part, nor has he been the subject ofany civil proceedings (including any pending civil proceedings of which he is aware)involving an allegation of fraud, misrepresentation or dishonesty on his part;
(g) has ever been convicted in Singapore or elsewhere of any offence in connection with theformation or management of any entity or business trust;
(h) has ever been disqualified from acting as a director or equivalent person of any entity(including the trustee of a business trust), or from taking part directly or indirectly in themanagement of any entity or business trust;
(i) has ever been the subject of any order, judgement or ruling of any court, tribunal orgovernmental body, permanently or temporarily enjoining him from engaging in any type ofbusiness practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in Singaporeor elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatoryrequirement governing corporations in Singapore or elsewhere; or
(ii) any entity (not being a corporation) which has been investigated for a breach of anylaw or regulatory requirement governing such entities in Singapore or elsewhere; or
(iii) any business trust which has been investigated for a breach of any law or regulatoryrequirement governing business trusts in Singapore or elsewhere; or
GENERAL AND STATUTORY INFORMATION
171
(iv) any entity or business trust which has been investigated for a breach of any law orregulatory requirement that relates to the securities or futures industry in Singapore orelsewhere,
in connection with any matter occurring or arising during the period when he was soconcerned with the corporation or partnership entity or business trust; and
(k) has ever been the subject of any current or past investigation or disciplinary proceedings, orhas been reprimanded or issued any warning, by the Authority or any other regulatoryauthority, exchange, professional body or government agency, whether in Singapore orelsewhere.
Disclosures pertaining to Professor Lin Xiang Xiong and Lim Kuoh Yang
Bankruptcy petition filed in 1983
In 1983, a supplier filed a bankruptcy petition against Professor Lin Xiang Xiong in respect of asum of approximately S$24,000 for goods being sold and delivered to the tiles supply business inMalaysia then owned by Professor Lin Xiang Xiong and subsequently obtained a bankruptcy orderagainst him. These goods were Italian tiles which were shipped to Malaysia, but Professor LinXiang Xiong’s company did not have sufficient funds to make payment due to a sharp increase inimport tax resulting from a change in import regulations in Malaysia. In 1995, that supplieraccepted and approved a scheme of arrangement proposed by Professor Lin Xiang Xiong, and theReceiving and Adjudication Orders made against him were rescinded and annulled.
Bankruptcy petition filed in 2004
In July 2004, DBS Bank Ltd filed a bankruptcy petition against Lim Kuoh Yang in respect of a sumof approximately S$25,000 owing due to unpaid credit card bills. The bankruptcy petition waswithdrawn in November 2004.
Bankruptcy petition filed in 2005
Inno-Sino Investments Pte Ltd (“Inno-Sino”) is an investment holding company incorporated inSingapore and was controlled and managed by Professor Lin Xiang Xiong, his wife (Tan SweeNgin) and son (Lim Kuoh Yang). Innovation World-Wide Trader Pte Ltd (“IWWT”), a companyincorporated in Singapore, was principally engaged in the business of trading of building materialsand mining, processing, marketing, distribution and sale of dimension stones and was controlledand managed by Professor Lin Xiang Xiong and his wife. Lim Kuoh Yang was the chief operationofficer of IWWT.
In April 1996, Professor Lin Xiang Xiong provided personal guarantee in favour of Bank of ChinaLimited (“BOC”) to secure overdraft and trust receipts facilities granted by BOC to IWWT (the“Loan I”). The Loan I was used by IWWT to fund its working capital requirements and to invest indimension stone mining and processing projects.
In January 1997, both Professor Lin Xiang Xiong and Lim Kuoh Yang provided personalguarantees in favour of BOC to secure overdraft and term loan facilities, granted by BOC to Inno-Sino (the “Loan II”). The Loan II was used by Inno-Sino to fund the acquisition of light industrialbuilding at No. 63 Kaki Bukit Place Singapore 416270 (the “Property”) which was purchased in1995.
IWWT was not able to make repayment of the Loan I due to its inability to generate sufficientrevenue after losing a major customer who accounted for approximately 95% of IWWT’s revenue.Inno-Sino was not able to make repayment of the Loan II as it was not able to lease out theProperty due to the financial crisis which affected the lease market for light industrial buildingsadversely. The Property was subsequently sold by BOC and the guarantors were held liable for thebalance of the Loan II.
GENERAL AND STATUTORY INFORMATION
172
A bankruptcy petition was filed against Professor Lin Xiang Xiong by BOC in January 2005,claiming an amount of approximately S$10.0 million, being the aggregate principal amountsoutstanding under Loan I and Loan II plus accrued and unpaid interests thereon. Professor LinXiang Xiong was adjudged a bankrupt in May 2005.
A bankruptcy petition was simultaneously filed against Lim Kuoh Yang by BOC in January 2005,claiming an amount of approximately S$7.6 million, being the aggregate principle amountoutstanding of the Loan II plus accrued and unpaid interests thereon. Lim Kuoh Yang was adjudgeda bankrupt in May 2005.
In November 2009, Professor Lin Xiang Xiong was discharged from his bankruptcy after his partpayment of the outstanding debts owing to his creditors through the recommendation of his officialassignee having considered the circumstances leading to his bankruptcy and the cooperationextended by him during the bankruptcy period. Lim Kuoh Yang was discharged from his bankruptcyafter his part payment of the outstanding debts owing to his creditors in December 2009 on thesame ground.
In view of the aforesaid bankruptcy action, United Overseas Bank Limited which granted amortgage loan to Lim Kuoh Yang and his mother in respect of certain properties owned by themalso filed legal suit against them in 2005 to enforce the mortgage loan and to effect a sale of themortgaged properties in exercise of its power of sale as mortgagee.
Winding up petition against Inno-Sino
A winding up petition was filed against Inno-Sino by BOC in January 2005 in light that Inno-Sinowas unable to make repayment of the Loan II due to the reasons disclosed above. Inno-Sino waswound up by the court on grounds of insolvency in February 2005.
Winding up petition against IWWT
A winding up petition was filed against IWWT by BOC in January 2005 in light that IWWT wasunable to make repayment of the Loan I due to the reasons disclosed above. IWWT was wound upby the court on grounds of insolvency in February 2005.
Traffic offence
Lim Kuoh Yang was involved in a drink driving incident on 26 October 2007 (“Drink Driving”). Hewas subsequently convicted for the Drink Driving charge on 15 November 2007 and was finedS$2,500 and suspended from driving for a period of 18 months commencing from 15 November2007. Lim Kuoh Yang has since served the period of suspension and his driving suspension hassince been lifted on 14 May 2009.
Disclosures pertaining to Choo Chee Kong and Kuan Cheng Tuck
Past directorships in Falmac Limited
The Company understands from our Directors, Choo Chee Kong and Kuan Cheng Tuck, who werethe directors of Falmac Limited but have both since resigned as the directors of Falmac Limited on29 August 2011, that there is an ongoing law suit initiated by Falmac Limited against certain of itsformer director(s), for breaches of directors’ fiduciary duties. The Company further understandsfrom Choo Chee Kong and Kuan Cheng Tuck that the first hearing was conducted between 14 July2011 and 16 July 2011, and it is expected that the second hearing will be conducted between 28November 2011 and 2 December 2011.
Please refer to the section entitled “Risk Factors – Some of our Directors may not be able to fullydevote their time to perform their respective roles in the Company in the event that they arerequired to defend themselves against potential legal action” of this Offer Document for furtherdetails on the disclosures pertaining to Choo Chee Kong and Kuan Cheng Tuck.
GENERAL AND STATUTORY INFORMATION
173
Warning letter from the Authority in 2004
In 2004, the Authority issued a warning to Choo Chee Kong for breach of the then Regulation 5 ofthe Securities and Futures (Licensing and Conduct of Business) Regulations for failure to notify theAuthority of changes in his particulars in relation to (i) his resignation and subsequent re-instatement as a director of Westcomb Capital Pte Ltd; and (ii) his appointment as a director ofWestcomb Securities Pte Ltd within 14 days of such resignation and such appointments. Nocharges were laid and no further action was taken by the Authority in relation to the above.
Warning letter from the Authority in 2007
In 2007, the Authority issued a warning to Choo Chee Kong for breach of the then Regulation 5 ofthe Securities and Futures (Licensing and Conduct of Business) Regulations for failure to notify theAuthority of a change in his particulars in relation to his appointment as a non-executive director ofCNMC within 14 days of such appointment. Choo Chee Kong was appointed as a director ofCNMC on 15 December 2006 and notified the Authority of his appointment on 8 January 2007,which was not within 14 days of the appointment. No charges were laid and no further action wastaken by the Authority in relation to the above.
(2) There is no shareholding qualification for Directors under the Articles of Association of ourCompany.
(3) Save as disclosed in the sections entitled “Restructuring Exercise” and “Interested PersonTransactions” of this Offer Document, none of our Directors is interested, directly or indirectly, inthe promotion of, or in any property or assets which have, within the two (2) years preceding thedate of this Offer Document, been acquired or disposed of by or leased to, our Company or oursubsidiaries.
(4) No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any firm inwhich such Director or expert is a partner or any corporation in which such Director or expert holdsshares or debentures, in cash or shares or otherwise, by any person to induce him to become, orto qualify him as, a Director, or otherwise for services rendered by him or by such firm orcorporation in connection with the promotion or formation of our Company.
(5) Save as disclosed above and in the sections entitled “Interested Person Transactions – PotentialConflicts of Interest” and “Restructuring Exercise” of this Offer Document:
(a) None of our Directors, Executive Officers, Substantial Shareholders or any of theirAssociates has had any interest, direct or indirect, in any transactions to which our Companywas or is to be a party;
(b) None of our Directors, Executive Officers, Substantial Shareholders or any of theirAssociates has any interest, direct or indirect, in any company carrying on the samebusiness or a similar trade which competes materially and directly with the existing businessof our Group;
(c) None of our Directors, Executive Officers, Substantial Shareholders or any of theirAssociates has any interest, direct or indirect, in any company that is our customer orsupplier of goods and services; and
(d) None of our Directors has any interest in any existing contract or arrangement which issignificant in relation to the business of our Company and our subsidiaries, taken as awhole.
GENERAL AND STATUTORY INFORMATION
174
SHARE CAPITAL
(1) As at the Latest Practicable Date, there is only one class of shares in the capital of our Company.There are no founder, management or deferred shares. The rights and privileges attached to ourShares are stated in the Articles of Association.
(2) Save as disclosed below and in the sections entitled “Share Capital” and “Restructuring Exercise”of this Offer Document, there are no changes in the issued and paid-up share capital of ourCompany and our subsidiaries within the last three (3) years preceding the date of this OfferDocument.
(3) Save as disclosed below and in the sections entitled “Share Capital” and “Restructuring Exercise”of this Offer Document, no shares in, or debentures of, our Company or any of our subsidiarieshas been issued, or are proposed to be issued, as fully or partially paid for cash or for aconsideration other than cash, during the last three (3) years preceding the date of lodgement ofthis Offer Document.
(4) Save as disclosed below and in the sections entitled “Share Capital” and “Restructuring Exercise”of this Offer Document, no option to subscribe for shares in, or debentures of, our Company or oursubsidiaries has granted to, or was exercised by, any of our Directors or Executive Officers withinthe two (2) financial years.
(5) Apart from the CNMC Performance Share Plan and the issue of the Employee Shares to ChenYan, the Chief Financial Officer of our Company, our Company does not have any arrangementthat involves the issue or grant of shares to the employees of our Group.
(6) The interests of our Directors and Substantial Shareholders in our Shares as at the LatestPracticable Date and as recorded in the Register of Directors’ Shareholdings and the Register ofSubstantial Shareholders maintained under the provisions of the Companies Act are set out in thesection entitled “Shareholders” of this Offer Document.
MEMORANDUM AND ARTICLES OF ASSOCIATION
(1) Memorandum of Association
The Memorandum of Association of our Company states, among others, that the liability ofmembers of our Company is limited.
The principal purpose of our Company is investment holding. The Memorandum of Association isavailable for inspection at our registered office as stated in the section entitled “General andStatutory Information – Documents for Inspection” of this Offer Document.
(2) Articles of Association
An extract of the relevant provisions of the Articles of Association of our Company, providing, interalia, for (a) a Director’s power to vote on a proposal, arrangement or contract in which the Directoris interested; (b) the Director’s power to vote on remuneration for himself or for any other director;(c) borrowing powers exercisable by the Directors and variation thereof; (d) retirement or non-retirement of Directors under an age limit requirement; (e) number of shares, if any, required forDirector’s qualification; (f) the rights, preferences and restrictions attaching to each class of shares;(g) any change in capital; (h) any change in the respective rights of the various classes of shares;(i) any time limit after which a dividend entitlement will lapse; and (j) any limitation on the right toown Shares, are set out in Appendix C of this Offer Document.
The complete Articles of Association of our Company are available for inspection by Shareholdersat our registered office as stated in the section entitled “General and Statutory Information –Documents for Inspection” of this Offer Document.
GENERAL AND STATUTORY INFORMATION
175
MATERIAL CONTRACTS
(1) The following contracts, not being contracts entered into in the ordinary course of business, havebeen entered into by our Company and our subsidiaries within the two (2) years preceding thedate of lodgement of this Offer Document and are or may be material:
(i) Convertible loan agreement dated 28 October 2009 made between CNMC and Phuah BeeLee pursuant to which Phuah Bee Lee agreed to make available to CNMC a loan inaggregate principal amount of S$250,000;
(ii) Convertible loan agreement dated 28 October 2009 made between CNMC and CaravelHoldings Group Ltd pursuant to which Caravel Holdings Group Ltd agreed to make availableto CNMC a loan in aggregate principal amount of S$300,000;
(iii) Convertible loan agreement dated 28 October 2009 made between CNMC and Brilliant EliteHoldings Limited pursuant to which Brilliant Elite Holdings Limited agreed to make availableto CNMC a loan in aggregate principal amount of S$500,000;
(iv) Convertible loan agreement dated 12 January 2010 made between CNMC and Seow SengWei pursuant to which Seow Seng Wei agreed to make available to CNMC a loan inaggregate principal amount of S$500,000;
(v) Convertible loan agreement dated 2 February 2010 made between CNMC and Future GainEnterprises Limited pursuant to which Future Gain Enterprises Limited agreed to makeavailable to CNMC a loan in aggregate principal amount of S$300,000;
(vi) Conditional sale and purchase agreement dated 8 March 2010 (“Conditional SPA”) madebetween (i) CNMC; (ii) Falmac Limited; and (iii) Innovation (China) Limited, Messiah Limited,Sinomine Resource Exploration, Caravel Holdings Group Ltd, Tertius CNMC Limited,Raintree Strategic Consultancy Limited, Brilliant Elite Holdings Limited, Future GainEnterprises Limited, EP Capital Inc., Ng Eng Tiong, Sim Yap Kheng, Seow Seng Wei, PhuahBee Lee, Ma Kwan Chun, Wong Chock Puan, Albert and Chan Lie Leng (“original CNMCvendors”) in relation to the proposed acquisition of the entire issued share capital of CNMCby Falmac Limited from the original CNMC vendors, on and subject to the terms andconditions of the Conditional SPA;
(vii) Convertible loan agreement dated 22 March 2010 made between CNMC and Lim CheeHoong pursuant to which Lim Chee Hoong agreed to make available to CNMC a loan inaggregate principal amount of S$500,000;
(viii) A letter agreement dated 4 May 2010 made between CNMC and Lim Chee Hoong pursuantto which certain terms of the convertible loan agreement dated 22 March 2010 were varied;
(ix) Convertible loan agreement dated 18 May 2010 made between CNMC and Lim Peng LiangDavid Llewellyn pursuant to which Lim Peng Liang David Llewellyn agreed to make availableto CNMC a loan in aggregate principal amount of S$1,000,000;
(x) Convertible loan agreement dated 15 November 2010 made between CNMC and GrandePacific Limited pursuant to which Grande Pacific Limited agreed to make available to CNMCa loan in aggregate principal amount of S$3,000,000;
(xi) Joint Venture Agreement dated 28 January 2011 made between CMNM and XiamenShenkun pursuant to which both parties agreed to establish a joint venture company inKelantan with CMNM and Xiamen Shenkun holding 51% and 49% of its issued shares,respectively;
GENERAL AND STATUTORY INFORMATION
176
(xii) Supplemental agreement to the Conditional SPA dated 18 April 2011 made between (i)CNMC; (ii) Falmac Limited; (iii) the original CNMC vendors; and (iv) additional CNMCvendors namely Lim Chee Hoong, Lim Peng Liang David Llewellyn, Grande Pacific Limited,China Lawyee Holdings Limited, Bellarine Enterprise Ltd, Ng Han Meng and Yu Long Fei(“additional CNMC vendors”), pursuant to which the parties agreed to vary certain terms ofthe Conditional SPA;
(xiii) Tripartite agreement dated 21 April 2011 made between CNMC, CMNM and KSEDC tofurther give effect to the spirit and intent of the agreement dated 16 May 2007 madebetween CNMC and KSEDC; and
(xiv) Notification of termination dated 5 August 2011 from Falmac Limited to (i) CNMC; (ii) theoriginal CNMC vendors; and (iii) the additional CNMC vendors to cease and determine theConditional SPA.
Save as disclosed above, our Group has not entered into any material contracts, not beingcontracts entered into in the ordinary course of business, within the two (2) years preceding thedate of this Offer Document.
MATERIAL LITIGATION
(1) Save as disclosed below, to the best of our knowledge and belief, having made all reasonableenquiries, neither our Company nor any of our subsidiaries is engaged in any legal or arbitrationproceedings as plaintiff or defendant, including those which are pending or known to becontemplated, which may have or which have had in the 12 months immediately preceding thedate of lodgement of the Offer Document, a material effect on our Group’s financial position orprofitability of our Company or our subsidiaries or associated companies:
CMNM was recently involved in a dispute with a former employee of CMNM. Mr Ong Shih Shenwho has lodged a complaint with the Industrial Relations Department of Kelantan that he wasbeing dismissed by CMNM without just cause or excuse has sought reinstatement by CMNM andcompensation. CMNM had on 11 September 2011 settled this matter by paying a sum ofMYR1,824.10 to the said employee in lieu of pay and the remainder of the said employee’s annualleave. The said employee has stated that he is not interested in being reinstated by CMNM. TheIndustrial Relations Department of Kelantan had issued a letter dated 27 September 2011 statingthat this case is deemed closed by them on 11 September 2011.
MANAGEMENT AND PLACEMENT ARRANGEMENTS
(1) Pursuant to the Management Agreement dated 14 October 2011 entered into between ourCompany, the Vendors and PPCF as the Manager and Sponsor, our Company and the Vendorsappointed PPCF to sponsor and manage the Listing. PPCF will receive a management fee for suchservices rendered.
(2) Pursuant to the Placement Agreement dated 18 October 2011 entered into between our Company,the Vendors, PPCF and Asiasons WFG as the Joint Placement Agents, the Joint PlacementAgents have agreed to procure subscriptions and/or purchases for the Placement Shares for aplacement commission of 3.0% of the aggregate Placement Price for each Placement Share, to bepaid by our Company and the Vendors in the proportion in which the Placement Shares are offeredby the Vendors and our Company pursuant to the Placement. The Joint Placement Agents may, attheir absolute discretion, appoint one or more sub-placement agents for the Placement Shares.
(3) Subscribers of the Placement Shares may be required to pay a brokerage fee of up to 1.0% of thePlacement Price (and the prevailing GST, if applicable) to the Joint Placement Agents or any sub-placement agent that may be appointed by the Joint Placement Agents.
GENERAL AND STATUTORY INFORMATION
177
(4) Other than pursuant to the Placement Agreement, there are no contracts, agreements orunderstandings between our Company and any person or entity that would give rise to any claimfor brokerage commission, finder’s fees or other payments in connection with the subscription ofthe Placement Shares.
(5) Subject to the consent of the SGX-ST being obtained, the Management Agreement may beterminated by PPCF at any time before the close of the Application List on the occurrence ofcertain events including, but not limited to, the following:
(a) PPCF becomes aware of any material breach by our Company and/or its agent(s) of anywarranties, representations, covenants or undertakings given by our Company to PPCF inthe Management Agreement; or
(b) there shall have been, since the date of the Management Agreement any change orprospective change in or any introduction or prospective introduction of any legislation,regulation, policy, directive, guideline, rule or byelaw by any relevant government orregulatory body, whether or not having the force of law, or any other occurrence of similarnature that would materially change the scope of work, responsibility or liability required ofPPCF; or
(c) there is a conflict of interest for PPCF, or any dispute, conflict or disagreement with ourCompany and/or the Vendors or where our Company and/or the Vendors wilfully fails tocomply with any advice from or recommendation of PPCF.
(6) The Placement Agreement and the obligations of the Joint Placement Agents under the PlacementAgreement are conditional upon:
(a) the Offer Document having been registered with the SGX-ST, acting as agent on behalf ofthe Authority by the date on which the Offer Document shall be registered by the SGX-ST,acting as agent on behalf of the Authority or such other date as the Company and PPCFshall decide in accordance with the Catalist Rules;
(b) the registration notice being issued or granted by the SGX-ST for the admission of ourCompany to Catalist and for the dealing in, and for quotation of, all the issued Shares andthe New Shares on Catalist and such registration notice not being revoked or withdrawn onor prior to the date of closing of the Application List for the Placement Shares under thePlacement (“Closing Date”) not being revoked;
(c) the compliance by our Company and the Vendors to the satisfaction of the SGX-ST with allthe conditions imposed by the SGX-ST in issuing the registration notice, where suchconditions are required to be complied with by the Closing Date;
(d) such approvals as may be required for the transactions described in the PlacementAgreement and in the Offer Document in relation to the Listing and the Placement beingobtained, and not withdrawn or amended, on or before the date on which the Company isadmitted to Catalist (or such other date as the Company, the Vendors and the JointPlacement Agents may agree in writing) and the compliance in full to the satisfaction of allthe relevant authorities granting such approvals of all conditions (if any) attaching or inrelation thereto;
(e) there having been, in the opinion of the Joint Placement Agents, no material adversechange or any development likely to result in a material adverse change in the financial orother condition of our Group between the date of the Placement Agreement and the ClosingDate nor the occurrence of any event nor the discovery of any fact rendering untrue orincorrect in any respect, as at the Closing Date, any of the warranties or representations norany breach by our Company and the Vendors of any of their obligations under the PlacementAgreement;
GENERAL AND STATUTORY INFORMATION
(f) the compliance by our Company and the Vendors with all applicable laws and regulationsconcerning the Placement, the dealing in, and quotation of, all the issued Shares and theNew Shares on Catalist and the transactions contemplated in the Placement Agreement andthe Offer Document and no new laws, regulations and directives having been promulgated,published and/or issued and/or having taken effect or any other similar matter havingoccurred which, in the reasonable opinion of the Joint Placement Agents, has or may havean adverse effect on the Placement and the dealing in, and quotation of, all the issuedShares and the New Shares on Catalist;
(g) the delivery by our Company and the Vendors to the Joint Placement Agents on the ClosingDate of a certificate, in the form set out in the Schedule to the Placement Agreement, signedby the authorised signatories for and on behalf of the Company and the Vendorsrespectively;
(h) the delivery to the Joint Placement Agents of all legal due diligence reports in relation to theListing;
(i) the letters of undertaking referred to in the Offer Document in the section entitled“Moratorium” being executed and delivered to the Manager and the Joint Placement Agentsbefore the date of registration of the Offer Document with the SGX-ST, acting as agent onbehalf of the Authority; and
(j) the Management Agreement not being terminated or rescinded pursuant to the provisions ofthe Management Agreement.
(7) In the event that the Joint Placement Agents receive valid applications and payment for lessthan 90% of the Placement Shares by 12 noon on 24 October 2011 (or such later other dateand time as may be decided by the Joint Placement Agents), each of the Joint PlacementAgents shall have the right to terminate the Placement Agreement (by notice in writing tothe Company and the Vendors). Please refer to the section entitled “Plan of Distribution” ofthis Offer Document for details.
(8) In the reasonable opinion of our Directors, PPCF and Asiasons WFG do not have a materialrelationship with our Company, save as disclosed below:
(a) PPCF is the Manager and Sponsor in relation to the Listing;
(b) PPCF will be the continuing Sponsor of our Company for a period of three (3) years from thedate our Company is admitted and listed on Catalist;
(c) Pursuant to the Management Agreement and as part of PPCF’s fees as the Manager andSponsor, our Company issued and allotted 3,771,000 PPCF Shares to PPCF, representing0.99% of the issued share capital of our Company prior to the Placement at the PlacementPrice for each Share. After the completion of the relevant moratorium periods as set out inthe section entitled “Shareholders – Moratorium” of this Offer Document, PPCF will disposeof its shareholding interest in our Company at its discretion;
(d) PPCF and Asiasons WFG are the Joint Placement Agents of the Placement; and
(e) Asiasons WFG’s parent company, Asiasons WFG Financial Ltd, a company listed on theMain Board of the SGX-ST, is the sole shareholder of Raintree Strategic ConsultancyLimited which holds 6,262,500 Shares representing approximately 1.55% of the post-Placement issued and paid-up share capital of our Company.
178
GENERAL AND STATUTORY INFORMATION
179
MISCELLANEOUS
(1) The nature of the business of our Company has been stated earlier in this Offer Document. Thecorporations which by virtue of Section 6 of the Companies Act are deemed to be related to ourCompany are set out in the section entitled “Group Structure” of this Offer Document.
(2) There has been no previous issue of Shares by our Company or offer for sale of our Shares to thepublic within the two years preceding the date of this Offer Document.
(3) There has not been any public takeover offer by a third party in respect of our Shares or by ourCompany in respect of shares of another corporation or units of a business trust which hasoccurred between 1 January 2010 and the Latest Practicable Date.
(4) No expert is employed on a contingent basis by our Company or our subsidiaries, or has aninterest, whether direct or indirect, in the shares of our Company or our subsidiaries, or has amaterial economic interest, whether direct or indirect, in our Company, including an interest in thesuccess of the Placement.
(5) No amount of cash or securities or benefit has been paid or given to any promoter within the two(2) years preceding the Latest Practicable Date or is proposed or intended to be paid or given toany promoter at any time.
(6) Save as disclosed in the section entitled “General and Statutory Information – Management andPlacement Agreements” of this Offer Document, no commission, discount or brokerage has beenpaid or other special terms granted within the two years preceding the Latest Practicable Date or ispayable to any Director, promoter, expert, proposed director or any other person for subscribing oragreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in, ordebentures of, our Company or our subsidiaries.
(7) Application monies received by our Company in respect of successful applications (includingsuccessful applications which are subsequently rejected) will be placed in a separate non-interestbearing account with the Receiving Banker. In the ordinary course of business, the ReceivingBanker will deploy these monies in the inter-bank money market. All profits derived from thedeployment of such monies will accrue to the Receiving Banker. Any refund of all or part of theapplication monies to unsuccessful or partially successful applicants will be made without anyinterest or any share of revenue or any other benefit arising therefrom.
(8) Save as disclosed in this Offer Document, our Directors are not aware of any relevant materialinformation including trading factors or risks which are unlikely to be known or anticipated by thegeneral public and which could materially affect the profits of our Company and our subsidiaries.
(9) Save as disclosed in this Offer Document, the financial condition and operations of our Group arenot likely to be affected by any of the following:
(a) known trends or demands, commitments, events or uncertainties that will result in or arereasonably likely to result in our Group’s liquidity increasing or decreasing in any materialway;
(b) material commitments for capital expenditure;
(c) unusual or infrequent events or transactions or any significant economic changes that maymaterially affect the amount of reported income from operations; and
GENERAL AND STATUTORY INFORMATION
180
(d) the business and financial prospects and any significant recent trends in production, salesand inventory, and in the costs and selling prices of products and services and known trendsor uncertainties that have had or that we reasonably expect will have a material favourableor unfavourable impact on revenues, profitability, liquidity, capital resources or operatingincome or that would cause financial information disclosed to be not necessarily indicative ofthe future operating results or financial condition of our Company.
(10) Save as disclosed in this Offer Document, our Directors are not aware of any event which hasoccurred since the end of FY2010 to the Latest Practicable Date which may have a material effecton the financial position and results of our Group or the financial information provided in this OfferDocument.
(11) We currently have no intention of changing our auditors after the listing of our Company onCatalist.
CONSENTS
(1) The Independent Auditors and Reporting Accountants, KPMG LLP, has given and has notwithdrawn its written consent to the issue of this Offer Document with the inclusion herein of the“Independent Auditors’ Report” in relation to the Combined Financial Statements for the yearsended 31 December 2008, 2009 and 2010 as set out in Appendix A of this Offer Document andthe “Review Report” in relation to the Unaudited Condensed Interim Combined FinancialInformation for the three months ended 31 March 2011 as set out in Appendix B of this OfferDocument and all references thereto, in the form and context in which it is respectively includedand references to its name in the form and context in which they appear in this Offer Documentand to act in such capacity in relation to this Offer Document.
(2) BDA has given and has not withdrawn its written consent to the issue of this Offer Document withthe inclusion herein of the BDA Technical Report set out in Appendix F in the form and context inwhich it appears in this Offer Document and all references to its name in the form and context inwhich it appears in this Offer Document and to act in such capacity in relation to this OfferDocument.
(3) JLLS has given and has not withdrawn its written consent to the issue of this Offer Document withthe inclusion herein of the Independent Valuation Report set out in Appendix G in the form andcontext in which it appears in this Offer Document and all references to its name in the form andcontext in which it appears in this Offer Document and to act in such capacity in relation to thisOffer Document.
(4) Skrine has given and has not withdrawn its written consent to the issue of this Offer Document withthe inclusion herein of the Abridged Due Diligence Report and its legal opinion set out in AppendixD and Appendix E respectively in the form and context in which it appears in this Offer Documentand all references to its name in the form and context in which it appears in this Offer Documentand to act in such capacity in relation to this Offer Document.
(5) BNP Paribas has given and has not withdrawn its written consent to the issue of this OfferDocument with the inclusion herein of the statement under the section entitled “Prospects - PriceOutlook” of this Offer Document, viz “Analysts at BNP Paribas forecasted the average price of goldto be US$1,500/oz for 2011 and US$1,600/oz in 2012” with regard to its report “Gold Report” dated29 March 2011 and all references to its name in the form and context in which it appears in thisOffer Document.
GENERAL AND STATUTORY INFORMATION
181
(6) The Manager and Sponsor, the Joint Placement Agents, the Solicitors to the Placement and LegalAdviser to our Company on Singapore Law, the Legal Adviser to our Company on Malaysia Law,the Legal Adviser to our Company on Hong Kong Law, the Share Registrar, the Principal Bankersand the Receiving Banker, have each given and have not withdrawn their written consents to theissue of this Offer Document with the inclusion herein of their name and references thereto in theform and context in which they respectively appear in this Offer Document and to act in suchrespective capacities in relation to this Offer Document.
(7) Each of the Solicitors to the Placement and Legal Adviser to our Company on Singapore Law, theLegal Adviser to our Company on Malaysia Law, the Legal Adviser to our Company on Hong KongLaw, the Share Registrar, the Principal Bankers and the Receiving Banker do not make or purportto make any statement in this Offer Document or any statement upon which a statement in thisOffer Document is based and each of them makes no representation regarding any statement inthis Offer Document and to the maximum extent permitted by law, expressly disclaims and takesno responsibility for any liability to any persons which is based on, or arises out of, any statement,information or opinions in, or omission from, this Offer Document.
RESPONSIBILITY STATEMENT BY OUR DIRECTORS
(1) This Offer Document has been seen and approved by our Directors and they individually andcollectively accept full responsibility for the accuracy of the information given in this OfferDocument and confirm, after making all reasonable enquiries, that to the best of their knowledgeand belief, this Offer Document constitutes full and true disclosure of all material facts about thePlacement, the Company and its subsidiaries, and the Directors are not aware of any facts theomission of which would make any statement in this Offer Document misleading.
Where information in this Offer Document has been extracted from published or otherwise publiclyavailable sources or obtained from a named source, the sole responsibility of the Directors hasbeen to ensure that such information has been accurately and correctly extracted from thosesources and/or reproduced in the Offer Document in its proper form and context.
RESPONSIBILITY STATEMENT BY THE VENDORS
(1) This Offer Document has been seen and approved by the Vendors and the directors of the Vendors(where applicable) and they individually and collectively accept full responsibility for the accuracy ofthe information given in this Offer Document and confirm, after making all reasonable enquiries,that to the best of their knowledge and belief, this Offer Document constitutes full and truedisclosure of all material facts about the Placement, the Company and its subsidiaries, and theVendors and the directors of the Vendors (where applicable) are not aware of any facts theomission of which would make any statement in this Offer Document misleading.
Where information in this Offer Document has been extracted from published or otherwise publiclyavailable sources or obtained from a named source, the sole responsibility of the Vendors and thedirectors of the Vendors (where applicable) has been to ensure that such information has beenaccurately and correctly extracted from those sources and/or reproduced in the Offer Document inits proper form and context.
GENERAL AND STATUTORY INFORMATION
DOCUMENTS FOR INSPECTION
(1) The following documents or copies thereof may be inspected at our registered office at 5 ShentonWay, UIC Building #11-03 Singapore 068808, during normal business hours for a period of six (6)months from the date of registration of this Offer Document with the SGX-ST, acting as agent onbehalf of the Authority:
(i) the Memorandum and Articles of Association of our Company;
(ii) the Independent Auditors’ Report on the Combined Financial Statements for the yearsended 31 December 2008, 2009 and 2010 and the Combined Financial Statements for theyears ended 31 December 2008, 2009 and 2010 as set out in Appendix A of this OfferDocument;
(iii) the Review Report on the Unaudited Condensed Interim Combined Financial Information forthe three months ended 31 March 2011 and the Unaudited Condensed Interim CombinedFinancial Information for the three months ended 31 March 2011 as set out in Appendix B ofthis Offer Document;
(iv) the Abridged Due Diligence Report set out in Appendix D of this Offer Document;
(v) the Legal opinion from Skrine set out in Appendix E of this Offer Document;
(vi) the BDA Technical Report set out in Appendix F of this Offer Document;
(vii) the Independent Valuation Report set out in Appendix G of this Offer Document;
(viii) the rules of the CNMC Performance Share Plan set out in Appendix H of this OfferDocument;
(ix) the Service Agreements referred to in this Offer Document;
(x) the material contracts referred to in the subsection entitled “Material Contracts” of this OfferDocument; and
(xi) the letters of consent referred to in the subsection entitled “Consents” of this OfferDocument.
182
A-1
APPENDIX A – INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED
31 DECEMBER 2008, 2009 AND 2010
The Board of DirectorsCNMC Goldmine Holdings LimitedNo 5 Shenton Way#11-03 UIC BuildingSingapore 068808
We have audited the accompanying combined financial statements of CNMC Goldmine Holdings Limited(the “Company”) and its subsidiaries (the “Group”), which comprise the combined statements of financialposition as at 31 December 2008, 2009 and 2010 and the combined statements of comprehensiveincome, changes in equity and cash flows for the years then ended, and a summary of significantaccounting policies and other explanatory notes, as set out on pages A-3 to A-45.
Management’s responsibility for the combined financial statements
Management is responsible for the preparation and fair presentation of these combined financialstatements in accordance with the Singapore Financial Reporting Standards, and for devising andmaintaining a system of internal accounting controls sufficient to provide a reasonable assurance thatassets are safeguarded against loss from unauthorised use or disposition; and transactions are properlyauthorised and that they are recorded as necessary to permit the preparation of true and fair profit andloss accounts and balance sheets and to maintain accountability of assets.
Auditors’ responsibility
Our responsibility is to express an opinion on these combined financial statements based on our audit.We conducted our audit in accordance with Singapore Standards on Auditing. Those standards requirethat we comply with relevant ethical requirements and plan and perform the audit to obtain reasonableassurance whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe combined financial statements. The procedures selected depend on the auditor’s judgement,including the assessment of the risks of material misstatement of the combined financial statements,whether due to fraud or error. In making those risk assessments, the auditor considers internal controlrelevant to the entity’s preparation of the combined financial statements that give a true and fair view inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity’s internal control. An audit also includesevaluating the appropriateness of accounting principles used and the reasonableness of accountingestimates made by management, as well as evaluating the overall presentation of the combined financialstatements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.
A-2
APPENDIX A – INDEPENDENT AUDITORS’ REPORT ON THE COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED
31 DECEMBER 2008, 2009 AND 2010
Opinion
In our opinion, the combined financial statements of the Group are properly drawn up in accordance withthe provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of thestate of affairs of the Group as at 31 December 2008, 2009 and 2010 and the combined results, changesin equity and cash flows of the Group for each of the years ended 31 December 2008, 2009 and 2010.
This report has been prepared solely for inclusion in the Offer Document of the Company in connectionwith the Initial Public Offering of the shares of the Company on the Catalist Board of the SingaporeExchange Securities Trading Limited.
KPMG LLPPublic Accountants and Certified Public Accountants
Singapore18 October 2011
Tan Huay LimPartner
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
COMBINED STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2008, 2009 AND 2010
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Loss before income tax (2,289,475) (1,080,874) (991,053)Income tax credit/(expense) 20 358,845 (6) (180)
Loss for the year (1,930,630) (1,080,880) (991,233)Other comprehensive income/(loss)Exchange differences arising on consolidation offoreign subsidiaries 38,441 4,267 (26,919)
Total comprehensive loss for the year (1,892,189) (1,076,613) (1,018,152)
Loss attributable to:Owners of the Company (1,737,550) (1,079,681) (990,166)Non-controlling interests (193,080) (1,199) (1,067)
Loss for the year (1,930,630) (1,080,880) (991,233)
Total comprehensive loss attributable to:Owners of the Company (1,705,762) (1,075,852) (1,014,530)Non-controlling interests (186,427) (761) (3,622)
Total comprehensive loss for the year (1,892,189) (1,076,613) (1,018,152)
Loss per shareBasic loss per share (cents) 21 (13.67) (8.99) (8.46)
Diluted loss per share (cents) 21 (13.67) (8.99) (8.46)
(i) There is no tax effect on the component included in other comprehensive income/(loss).
The accompanying notes form an integral part of these combined financial statements..
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
COMBINED STATEMENTS OF CHANGES IN EQUITYYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Total attributableShare Translation Accumulated to equity holders Non-controlling Total capital reserve losses of the Company interests equity
US$ US$ US$ US$ US$ US$
GroupAt 1 January 2008 1,500,000 (164) (769,986) 729,850 – 729,850
Total comprehensive lossfor the year
Loss for the year – – (990,166) (990,166) (1,067) (991,233)Other comprehensive lossExchange differences arisingon consolidation of foreignsubsidiaries – (24,364) – (24,364) (2,555) (26,919)
Total comprehensive lossfor the year – (24,364) (990,166) (1,014,530) (3,622) (1,018,152)
Capital injection by non- controlling interests – – – – 31,060 31,060
At 31 December 2008 1,500,000 (24,528) (1,760,152) (284,680) 27,438 (257,242)
At 1 January 2009 1,500,000 (24,528) (1,760,152) (284,680) 27,438 (257,242)
Total comprehensive loss for the year
Loss for the year – – (1,079,681) (1,079,681) (1,199) (1,080,880)Other comprehensive lossExchange differences arising on consolidation of foreign subsidiaries – 3,829 – 3,829 438 4,267
Total comprehensive loss for the year – 3,829 (1,079,681) (1,075,852) (761) (1,076,613)
Transactions with owners of the Company, recogniseddirectly in equity
Contributions by owners of the Company
Issue of shares 550,560 – – 550,560 – 550,560
Total transactions with owners 550,560 – – 550,560 – 550,560
At 31 December 2009 2,050,560 (20,699) (2,839,833) (809,972) 26,677 (783,295)
The accompanying notes form an integral part of these combined financial statements.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-5
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
COMBINED STATEMENTS OF CHANGES IN EQUITYYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Total attributableShare Translation Accumulated to equity holders Non-controlling Total capital reserve losses of the Company interests equity
US$ US$ US$ US$ US$ US$
GroupAt 1 January 2010 2,050,560 (20,699) (2,839,833) (809,972) 26,677 (783,295)
Total comprehensive lossfor the year
Loss for the year – – (1,737,550) (1,737,550) (193,080) (1,930,630)Other comprehensive incomeExchange differences arisingon consolidation of foreignsubsidiaries – 31,788 – 31,788 6,653 38,441
Total comprehensive lossfor the year – 31,788 (1,737,550) (1,705,762) (186,427) (1,892,189)
Transactions with owners ofthe Company, recogniseddirectly in equity
Conversion of convertible notesand derivative financial instrument to shares 2,677,809 – – 2,677,809 – 2,677,809
Total transactions with owners 5,240,748 – – 5,240,748 – 5,240,748
At 31 December 2010 7,291,308 11,089 (4,577,383) 2,725,014 (159,750) 2,565,264
The accompanying notes form an integral part of these combined financial statements.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-6
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
COMBINED STATEMENTS OF CASH FLOWSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Note 2010 2009 2008US$ US$ US$
Operating activitiesLoss for the year (1,930,630) (1,080,880) (991,233)Adjustments for:Depreciation of property, plant and equipment 149,698 52,665 40,392Amortisation of mine properties 81,314 50,077 33,385Plant and equipment written off 3,539 – –Unwinding of discount on derivative financial instrument (267,440) (33,392) (4,582)Unwinding of discount on rehabilitation provision 1,810 – –Bad debts written off – – 56,428Interest income – (22) (420)Interest expense 184,580 149,292 56,518Income tax expense (358,845) 6 180
Operating loss before working capital changes (2,135,974) (862,254) (809,332)
Changes in working capital:Inventories (120,714) – –Other receivables, prepayments and deposits (438,928) 1,668 (52,838)Trade and other payables 841,198 (54,934) 218,727
Cash used in operations (1,854,418) (915,520) (643,443)Interest received – 22 420Interest paid (184,580) (149,292) (56,518)
Cash flows from operating activities (2,038,998) (1,064,790) (699,541)
Investing activitiesPurchase of property, plant and equipment (765,847) (805,751) (18,637)Payment for exploration and evaluation assets (75,981) (76,813) (341,834)
Cash flows from investing activities (841,828) (882,564) (360,471)
Financing activitiesDeposits pledged (1,606) – –Proceeds from issue of share capital – 550,560 –Proceeds from issuance of convertible notes 3,963,070 1,361,273 696,135Proceeds from loans from directors – – 347,450Capital injection by non-controlling interest – – 31,060Payment of finance lease liabilities (20,315) (5,313) (7,017)
Cash flows from financing activities 3,941,149 1,906,520 1,067,628
Net increase/(decrease) in cash and cash equivalents 1,060,323 (40,834) 7,616Cash and cash equivalents at beginning of the year 48,755 87,659 79,985Effect of exchange rate fluctuations on cash held 2,987 1,930 58
Cash and cash equivalents at end of the year 10 1,112,065 48,755 87,659
During the year ended 31 December 2010, the Group acquired property, plant and equipment with anaggregate cost of US$849,662 (31/12/2009: US$805,751 and 31/12/2008: US$35,308) of whichUS$18,487 (31/12/2009: US$Nil and 31/12/2008: US$16,672) was acquired by means of finance leaseand US$39,987 (31/12/2009: US$Nil and 31/12/2008: US$Nil) was included in rehabilitation provision(note 14). The total consideration of US$25,341 (31/12/2009: US$Nil and 31/12/2008: US$Nil) for theacquisition of property, plant and equipment from third parties is yet to be paid.
The Group also acquired exploration and evaluation assets with an aggregate cost of US$783,814(31/12/2009: US$2,223,766 and 31/12/2008: US$975,216) from third parties of which a totalconsideration of US$707,833 (31/12/2009: US$2,146,953 and 31/12/2008: US$633,382) is yet to be paid.
These notes form an integral part of the combined financial statements.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-7
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-8
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
These notes form an integral part of the combined financial statements
1 BUSINESS AND ORGANISATION
(a) Introduction
The combined financial statements of CNMC Goldmine Holdings Limited (the “Company”)and its subsidiaries (together referred to as the “Group” and individually as “Group entities”)have been prepared in accordance with the principles and the accounting policies set out innote 3.
The combined financial statements have been prepared solely for inclusion in the OfferDocument of CNMC Goldmine Holdings Limited in connection with the Initial Public Offeringof the shares of the Company on the Catalist Board of the Singapore Exchange SecuritiesTrading Limited.
These combined financial statements of the Group were authorised for issue by the directorsof the Company on 18 October 2011.
(b) The Company
CNMC Goldmine Holdings Limited was incorporated in the Republic of Singapore on 11August 2011 as CNMC Goldmine Holdings Pte Ltd, a private limited company and has itsregistered address at No.5 Shenton Way, #11-03 UIC Building, Singapore 068808. On 14October 2011, the Company changed its name to CNMC Goldmine Holdings Limited.
The principal activities of the Company are those of an investment holding company. Theprincipal activities of the subsidiaries are set out in note 1(d) to the combined financialstatements.
(c) The restructuring exercise
Pursuant to a group restructuring, the Company entered into a share swap agreement dated14 October 2011 with the shareholders of CNMC Goldmine Limited (“CNMC HK”) to acquirethe entire issued share capital of CNMC HK comprising 14,004,524 ordinary shares in thecapital of CNMC HK, for an aggregate consideration of approximately US$4,506,494.
The purchase consideration of US$4,506,494 was arrived at after taking into considerationthe net asset value of CNMC HK as at 31 December 2010. This was fully satisfied by theallotment of 374,999,999 new shares in the capital of the Company on 14 October 2011.Upon the completion of the restructuring exercise, the Company will become the holdingcompany of CNMC HK.
The restructuring exercise was accounted for as a combination of businesses undercommon control. The presentation reflects the economic substance of the combiningcompanies, which were under common control throughout the relevant period, as a singleeconomic enterprise, although the legal parent-subsidiary relationships were not establisheduntil after the reporting date.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-9
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(d) Subsidiaries
The combined financial statements of the Group have been prepared to reflect theoperations of the Company and the subsidiaries as a single economic enterprise and consistof those companies under common control during the financial years ended 31 December2008, 2009 and 2010.
As at 31 December 2008, 2009 and 2010, the subsidiaries of the Group are as follows:
Name of company Principal Place of Effective equityactivities incorporation held by the Group
2008 2009 2010% % %
Direct subsidiaryCNMC Goldmine Limited Investment holding company. Hong Kong SAR 100 100 100
Indirect subsidiariesSubsidiaries of CNMCGoldmine Limited
CMNM Mining Group Exploration and mining of Malaysia 81 81 81Sdn. Bhd. gold deposits.
MCS Mining Group Exploration and mining of Malaysia 87.5 87.5 87.5Sdn. Bhd. gold deposits. Currently
dormant.
CNMC-Nalata Mining Exploration and mining of Malaysia 80 80 80Sdn. Bhd gold deposits. Currently
dormant.
(e) Auditors
The following are the auditors of the statutory financial statements of the companies in theGroup for the financial years ended 31 December 2008, 2009 and 2010.
Name of company Auditors For the financial year/period ended
CNMC Goldmine Allen Kong & Co. 31 December 2008, 2009 and 2010Limited Certified Public Accountants,
Hong Kong SAR
CMNM Mining Group KPMG 31 December 2008, 2009 and 2010Sdn. Bhd. Chartered Accountants, Malaysia
MCS Mining Group KPMG 31 December 2008, 2009 and 2010Sdn. Bhd. Chartered Accountants, Malaysia
CNMC-Nalata Mining KPMG 31 December 2008, 2009 and 2010Sdn. Bhd. Chartered Accountants, Malaysia
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-10
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
The audited reports on the statutory financial statements of the companies within Group forthe financial years ended 31 December 2008, 2009 and 2010 were not subject any materialqualifications, modifications or disclaimers.
The statutory financial statements of CNMC HK for the relevant years have been prepared inaccordance with the Hong Kong Financial Reporting Standards.
The statutory financial statements of the Malaysian subsidiaries for the relevant years havebeen prepared in accordance with the Malaysian Financial Reporting Standards.
2. GOING CONCERN
The Group incurred net loss of US$991,233, US$1,080,880 and US$1,930,630 respectively for thefinancial years ended 31 December 2008, 2009 and 2010 and had negative cash flows fromoperating activities of US$699,541, US$1,064,790 and US$2,038,998 respectively for the financialyears ended 31 December 2008, 2009 and 2010. Notwithstanding this, the combined financialstatements of the Group have been prepared on a going concern basis, as certain directors of theGroup have undertaken to provide continuing financial support to enable the Group to continue tooperate as a going concern in the foreseeable future.
The combined financial statements of the Group do not include any adjustment relating to therecoverability and classification of reported asset amounts or the amounts and classification ofliabilities that might result if the going concern basis were found to be inappropriate.
3. SIGNIFICANT ACCOUNT POLICIES
The accounting policies set out below have been applied consistently to all periods presented inthese combined financial statements and have been applied consistently by Group entities.
(a) Statement of compliance
The combined financial statements have been prepared in accordance with SingaporeFinancial Reporting Standards (FRSs).
(b) Basis of preparation
These combined financial statements of the Group represent the combination or aggregationof all the financial statements of the companies in the Group, on the basis that the Grouphad been in existence prior to 1 January 2008.
The combined financial statements have been prepared on the historical basis except asotherwise disclosed below.
(c) Functional and presentation currency
These combined financial statements are presented in US dollars, which is the Company’sfunctional currency.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-11
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(d) Use of estimates and judgements
The preparation of the combined financial statements in conformity with FRSs requiresmanagement to make judgements, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets, liabilities, income and expenses.Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimates are revised and inany future periods affected.
Information about critical judgements in applying accounting policies that have the mostsignificant effect on the amounts recognised in the combined financial statements and,assumptions and estimation uncertainties that have a significant risk of resulting in amaterial adjustment within the next financial year is included in the following notes:
� Note 5 – Impairment and amortisation of mine properties� Note 6 – Impairment and depreciation of property, plant and equipment� Notes 7 and 20 – Estimation of provisions for current and deferred taxation
(e) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group hasthe power to govern the financial and operating policies of an entity so as to obtainbenefits from its activities. In assessing control, potential voting rights presentlyexercisable are taken into account. The financial statements of subsidiaries areincluded in the consolidated financial statements from the date that controlcommences until the date that control ceases. The accounting policies of subsidiarieshave been changed where necessary to align them with the policies adopted by theGroup.
(ii) Business combinations
Business combinations arising from transfers of interests in entities that are under thecommon control of the shareholders that control the Group are accounted for as if theacquisition had occurred at the beginning of the earliest comparative period presentedor, if later, at the date that common control was established. The assets and liabilitiesacquired are recognised in the combined financial statements at the carrying amountsrecognised in the acquired entities’ financial statements. The components of equity ofthe acquired entities are added to the same components within Group equity. Anydifference between the cash paid for the acquisition and net assets acquired isrecognised in equity.
All other business combinations are accounted for under the purchase method. Thecost of an acquisition is measured at the fair value of the assets given, equityinstruments issued and liabilities incurred or assumed at the date of exchange, pluscosts directly attributable to the acquisition. The excess of the Group’s interest in thenet fair value of the identifiable assets, liabilities and contingent liabilities over the costof acquisition is credited to the profit or loss in the period of the acquisition.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-12
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(iii) Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of thesubsidiary, any non-controlling interests and the other components of equity related tothe subsidiary. Any surplus or deficit arising on the loss of control is recognised inprofit or loss. If the Group retains any interest in the previous subsidiary, then suchinterest is measured at fair value at the date that control is lost. Subsequently it isaccounted for as an equity-accounted investee or as an available-for-sale financialasset depending on the level of influence retained.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expensesarising from intra-group transactions, are eliminated in preparing the consolidatedfinancial statements. Unrealised gains arising from transactions with equity-accountedinvestee are eliminated against the investment to the extent of the Group’s interest inthe investee. Unrealised losses are eliminated in the same way as unrealised gains,but only to the extent that there is no evidence of impairment.
(v) Acquisition of non-controlling interests
Acquisitions of non-controlling interests are accounted for as transactions with ownersin their capacity as owners and therefore no goodwill is recognised as a result of suchtransactions. The adjustments to non-controlling interests are based on aproportionate amount of the net assets of the subsidiary.
(f) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functionalcurrencies of Group entities at exchange rates at the dates of the transactions.Monetary assets and liabilities denominated in foreign currencies at the reporting dateare retranslated to the functional currency at the exchange rate at that date. Theforeign currency gain or loss on monetary items is the difference between amortisedcost in the functional currency at the beginning of the year, adjusted for effectiveinterest and payments during the year, and the amortised cost in foreign currencytranslated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that aremeasured at fair value are retranslated to the functional currency at the exchange rateat the date that the fair value was determined. Non-monetary items in a foreigncurrency that are measured in terms of historical cost are translated using theexchange rate at the date of the transaction.
Foreign currency differences arising on retranslation are recognised in profit or loss,except for differences arising on the retranslation of available-for-sale equityinvestments, a financial liability designated as a hedge of the net investment in aforeign operation that is effective, or qualifying cash flow hedges, which arerecognised in other comprehensive income.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-13
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair valueadjustments arising on acquisition, are translated to US dollars at exchange rates atthe reporting date. The income and expenses of foreign operations, excluding foreignoperations in hyperinflationary economies, are translated to US dollars at exchangerates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, andpresented in the foreign currency translation reserve (translation reserve) in equity.However, if the operation is a non-wholly-owned subsidiary, then the relevantproportionate share of the translation difference is allocated to the non-controllinginterests. When a foreign operation is disposed of such that control, significantinfluence or joint control is lost, the cumulative amount in the translation reserverelated to that foreign operation is reclassified to profit or loss as part of the gain orloss on disposal. When the Group disposes of only part of its interest in a subsidiarythat includes a foreign operation while retaining control, the relevant proportion of thecumulative amount is reattributed to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreignoperation is neither planned nor likely in the foreseeable future, foreign exchangegains and losses arising from such a monetary item are considered to form part of anet investment in a foreign operation and are recognised in other comprehensiveincome, and presented in the translation reserve in equity.
(g) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date thatthey are originated. All other financial assets (including assets designated at fair valuethrough profit or loss) are recognised initially on the trade date, which is the date thatthe Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cashflows from the asset expire, or it transfers the rights to receive the contractual cashflows on the financial asset in a transaction in which substantially all the risks andrewards of ownership of the financial asset are transferred. Any interest in transferredfinancial assets that is created or retained by the Group is recognised as a separateasset or liability.
Financial assets and liabilities are offset and the net amount presented in thestatement of financial position when, and only when, the Group has a legal right tooffset the amounts and intends either to settle on a net basis or to realise the assetand settle the liability simultaneously.
The Group classifies non-derivative financial assets into loans and receivablescategory.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments thatare not quoted in an active market. Such assets are recognised initially at fair valueplus any directly attributable transaction costs. Subsequent to initial recognition, loansand receivables are measured at amortised cost using the effective interest method,less any impairment losses.
Loans and receivables comprise cash and cash equivalents and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and in hand.
(ii) Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities onthe date that they are originated. All other financial liabilities are recognised initially onthe trade date, which is the date that the Group becomes a party to the contractualprovisions of the instrument.
The Group derecognises a financial liability when its contractual obligations aredischarged, cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in thestatement of financial position when, and only when, the Group has a legal right tooffset the amounts and intends either to settle on a net basis or to realise the assetand settle the liability simultaneously.
The Group classifies non-derivative financial liabilities into the other financial liabilitiescategory. Such financial liabilities are recognised initially at fair value plus any directlyattributable transaction costs. Subsequent to initial recognition, these financialliabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise loans and borrowings, and trade and otherpayables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to theissue of ordinary shares are recognised as a deduction from equity, net of any taxeffects.
Distribution of non-cash assets to owners of the Company
The Group measures a liability to distribute non-cash assets as a dividend to theowners of the Company at the fair value of the assets to be distributed. The carryingamount of the dividend is remeasured at each reporting date and at the settlementdates with any changes recognised directly in equity as adjustments to the amount ofthe distribution. On settlement of the transactions, the Group recognises thedifference, if any, between the carrying amount of the assets distributed and thecarrying amount of the liability in profit or loss.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-14
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-15
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(iv) Compound financial instruments
A convertible loan note is regarded as hybrid instrument, consisting of an embeddedderivative, the economic characteristic and risks of which are not closely related tothat of the host instrument, the loan.
At inception, the embedded derivative is bifurcated from the host instrument andrecorded as liability in accordance with FRS 39 – Financial Instruments: Recognitionand Measurement. For embedded derivative for which the fair value cannot bedetermined reliably, the fair value of the embedded derivative is the differencebetween the fair value of the hybrid instrument and the fair value of the host contract.
A derivative financial instrument is initially recognised at fair value on the date thecontract is entered into and is subsequently carried at fair value.
Fair value changes for derivative instruments that do not qualify for hedge accountingare included in the statement of comprehensive income in the financial year when thechanges arise.
Interests, dividends, losses and gains relating to the financial liability are recognised inthe statement of comprehensive income.
(h) Property, plant and equipment and mine properties
(i) Recognition and measurement
Upon completion of mine construction, the assets are transferred into property, plantand equipment or mine properties. Items of property, plant and equipment and mineproperties are measured at cost less accumulated depreciation and accumulatedimpairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.The cost of self-constructed assets includes the cost of materials and direct labour,any other costs directly attributable to bringing the assets to a working condition fortheir intended use, the costs of dismantling and removing the items and restoring thesite on which they are located, and capitalised borrowing costs. Purchased softwarethat is integral to the functionality of the related equipment is capitalised as part of theequipment.
When a mine construction project moves into production stage, the capitalisation ofcertain mine construction costs ceases and costs are either regarded as part of thecost of inventory or expensed, except for costs which qualify for capitalisation relatingto mining asset additions or improvements, underground mine development ormineable reserve development.
When parts of an item of property, plant and equipment and mine properties havedifferent useful lives, they are accounted for as separate items (major components) ofproperty, plant and equipment and mine properties.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-16
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
The gain or loss on disposal of an item of property, plant and equipment and mineproperties is determined by comparing the proceeds from disposal with the carryingamount of the property, plant and equipment and mine properties, and is recognisednet within other income/other expenses in profit or loss. When revalued assets aresold, any related amount included in the revaluation reserve is transferred to retainedearnings.
(ii) Subsequent costs
The cost of replacing a component of an item of property, plant and equipment isrecognised in the carrying amount of the item if it is probable that the future economicbenefits embodied within the component will flow to the Group, and its cost can bemeasured reliably. The carrying amount of the replaced component is derecognised.The costs of the day-to-day servicing of property, plant and equipment are recognisedin profit or loss as incurred.
(iii) Depreciation/Amortisation
Accumulated mine development costs are depreciated/amortised on a unit-of-production basis over the economically recoverable reserves of the mine concerned,except in the case of assets whose useful life is shorter than the life of the mine, inwhich case the straight-line method is applied. The unit of account for run of minescosts are recoverable ounces of gold. The unit-of-production rate for thedepreciation/amortisation of mine development costs takes into account expenditureincurred to date, together with sanctioned future development expenditure.
Mining rights are amortised to profit or loss on a straight-line basis over the assignedterm of the rights, from the date the rights is available for use.
Depreciation is based on the cost of an asset less its residual value. Significantcomponents of individual assets are assessed and if a component has a useful lifethat is different from the remainder of that asset, that component is depreciatedseparately.
For other plant and equipment, depreciation is recognised in profit or loss on astraight-line basis over the estimated useful lives of each component of an item ofproperty, plant and equipment. Leased assets are depreciated over the shorter of thelease term and their useful lives unless it is reasonably certain that the Group willobtain ownership by the end of the lease term.
The estimated useful lives for the current and comparative years of other plant andequipment are as follows:
� Buildings 5 years
� Plant and equipment 3 years
� Fixtures and fittings 2 to 3 years
� Motor vehicles 3 years
Depreciation methods, useful lives and residual values are reviewed at each reportingdate and adjusted if appropriate.
(i) Mineral exploration, evaluation and development expenditure
(i) Pre-mining rights costs
Costs incurred prior to obtaining mining rights are expensed in the period in whichthey are incurred.
(ii) Exploration and evaluation costs
Once the legal right to explore has been acquired, exploration and evaluationexpenditure is charged to profit or loss as incurred, unless the directors conclude thata future economic benefit is more likely than not to be realised. These costs includematerials and fuel used, surveying costs, drilling costs and payments made tocontractors.
In evaluating if expenditures meet the criteria to be capitalised, several differentsources of information are utilised. The information that is used to determine theprobability of future benefits depends on the extent of exploration and evaluation thathas been performed.
Drilling and related costs incurred on sites without an existing mine and on areasoutside the boundary of a known mineral deposit which contains proven and probablereserves are exploration and evaluation expenditures and are expensed as incurred tothe date of establishing that costs incurred are economically recoverable. Furtherexploration and evaluation expenditures, subsequent to the establishment of economicrecoverability, are capitalised and included in the carrying amount of the mineralassets.
Management evaluates the following criteria in its assessments of economicrecoverability and probability of future economic benefit:
� Geology – whether or not there is sufficient geologic and economic certainty ofbeing able to convert a residual mineral deposit into a proven and probablereserve at a development.
� Scoping – there is a scoping study or preliminary feasibility study thatdemonstrates the additional resources will generate a positive commercialoutcome. Known metallurgy provides a basis for concluding there is asignificant likelihood of being able to recoup the incremental costs of extractionand production.
� Accessible facilities – mining property can be processed economically ataccessible mining and processing facilities where applicable.
� Life of mine plans – an overall life of mine plan and economic model to supportthe mine and the economic extraction of resources/reserves exists. A long-termlife of mine plan, and supporting geological model identifies the drilling andrelated development work required to expand or further define the existingorebody.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-17
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-18
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Prior to capitalising exploration drilling and related costs, management will determinethat the following conditions have been met that will contribute to future cash flows:
� There is a probable future benefit that will contribute to future cash inflows;
� The Group can obtain the benefit and controls access to it;
� The transaction or event giving rise to the future benefit has already occurred;and
� Costs incurred can be measured reliably.
If after expenditure is capitalised, information becomes available suggesting that therecovery of expenditure is unlikely, the amount is written off in profit or loss in theperiod when the new information becomes available.
Once reserves are established and development is sanctioned, exploration andevaluation assets are tested for impairment and transferred to “Mines underconstruction”. No amortisation is charged during the exploration and evaluationphase.
(iii) Mines under construction
Upon transfer of ‘Exploration and evaluation costs’ into “Mines under construction”, allsubsequent expenditure on the construction, installation or completion of infrastructurefacilities is capitalised within “Mines under construction”. Development expenditure isnet of proceeds from all but the incidental sale of ore extracted during thedevelopment phase. After production starts, all assets included in “Mines underconstruction” are transferred to “Producing mines”.
(j) Inventories
Gold in process inventory consists of gold contained in the ore on leach ponds and in circuitmaterial within processing operation. Gold doré is gold awaiting refinement.
Gold inventories are measured at the lower of cost and net realisable value.
The cost of inventories is based on the weighted average principle, and includes expenditureincurred in acquiring the inventories, production or conversion costs and other costs incurredin bringing them to their existing location and conditions.
Net realisable value is the estimated selling price in the ordinary course of business, less theestimated costs of completion and selling expenses. The estimated selling price per ounceof gold is determined by the average of predicted future gold prices over the next twelvemonths. The estimated costs of completion are refining costs which are determined basedon current refining costs per ounce of gold charged by its suppliers. Consequently, there areno additional selling costs.
Materials and supplies are valued at the lower cost and net realisable value. Any provisionfor obsolescence is determined by reference to specific items of stocks. A regular review isundertaken to determine the extent of any provision for obsolescence.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-19
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(k) Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at eachreporting date to determine whether there is objective evidence that it is impaired. Afinancial asset is impaired if objective evidence indicates that a loss event hasoccurred after the initial recognition of the asset, and that the loss event had anegative effect on the estimated future cash flows of that asset that can be estimatedreliably.
Objective evidence that financial assets are impaired can include default ordelinquency by a debtor, restructuring of an amount due to the Group on terms thatthe Group would not consider otherwise, indications that a debtor or issuer will enterbankruptcy, adverse changes in the payment status of borrowers or issuers in theGroup.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both aspecific asset and collective level. All individually significant receivables are assessedfor specific impairment. All individually significant loans and receivables found not tobe specifically impaired are then collectively assessed for any impairment that hasbeen incurred but not yet identified. Loans and receivables that are not individuallysignificant are collectively assessed for impairment by grouping together loans andreceivables with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probabilityof default, the timing of recoveries and the amount of loss incurred, adjusted formanagement’s judgement as to whether current economic and credit conditions aresuch that the actual losses are likely to be greater or less than suggested by historicaltrends.
Losses are recognised in profit or loss and reflected in an allowance account againstloans and receivables. Interest on the impaired asset continues to be recognised.When a subsequent event causes the amount of impairment loss to decrease, thedecrease in impairment loss is reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Group’s non-financial assets, other than inventories anddeferred tax assets, are reviewed at each reporting date to determine whether there isany indication of impairment. If any such indication exists, then the asset’s recoverableamount is estimated. An impairment loss is recognised if the carrying amount of anasset or its related cash-generating unit (CGU) exceeds its estimated recoverableamount.
The recoverable amount of an asset or CGU is the greater of its value in use and itsfair value less costs to sell. In assessing value in use, the estimated future cash flowsare discounted to their present value using a pre-tax discount rate that reflects currentmarket assessments of the time value of money and the risks specific to the asset orCGU. For the purpose of impairment testing, assets that cannot be tested individually
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-20
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
are grouped together into the smallest group of assets that generates cash inflowsfrom continuing use that are largely independent of the cash inflows of other assets orCGU.
The Group’s corporate assets do not generate separate cash inflows and are utilisedby more than one CGU. Corporate assets are allocated to CGUs on a reasonable andconsistent basis and tested for impairment as part of the testing of the CGU to whichthe corporate asset is allocated.
Impairment losses are recognised in profit or loss. Impairment losses recognised inrespect of CGUs are allocated first to reduce the carrying amount of any goodwillallocated to the CGU (group of CGUs), and then to reduce the carrying amounts ofthe other assets in the CGU (group of CGUs) on a pro rata basis.
Impairment losses recognised in prior periods are assessed at each reporting date forany indications that the loss has decreased or no longer exists. An impairment loss isreversed if there has been a change in the estimates used to determine therecoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amountdoes not exceed the carrying amount that would have been determined, net ofdepreciation or amortisation, if no impairment loss had been recognised.
(l) Employee benefits
(i) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entitypays fixed contributions into a separate entity and will have no legal or constructiveobligation to pay further amounts. Obligations for contributions to defined contributionpension plans are recognised as an employee benefit expense in profit or loss in theperiods during which services are rendered by employees.
(ii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis andare expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cashbonus or profit-sharing plans if the Group has a present legal or constructiveobligation to pay this amount as a result of past service provided by the employee,and the obligation can be estimated reliably.
(m) Provisions
(i) General
A provision is recognised if, as a result of a past event, the Group has a present legalor constructive obligation that can be estimated reliably, and it is probable that anoutflow of economic benefits will be required to settle the obligation.
When the Group expects some or all of the provision to be reimbursed, for exampleunder an insurance contract, the reimbursement is recognised as a separate asset butonly when the reimbursement is virtually certain. The provision relating to anyprovision is presented in profit or loss net of any reimbursement.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-21
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Provisions are determined by discounting the expected future cash flows at a pre-taxrate that reflects current market assessments of the time value of money and the risksspecific to the liability. The unwinding of the discount is recognised as finance cost.
(ii) Rehabilitation provision
The Group records the present value of estimated costs of legal and constructiveobligations required to restore operating locations in the period in which the obligationis incurred. The nature of these restoration activities includes dismantling andremoving structures, rehabilitating mines and tailings dams, dismantling operatingfacilities, closure of plant and waste sites, and restoration, reclamation and re-vegetation of affected areas.
The obligation generally arises when the asset is installed or the ground/environmentis disturbed at the production location. When the liability is initially recognised, thepresent value of the estimated costs is capitalised by increasing the carrying amountof the related mining assets to the extent that it was incurred by the development /construction of the mine. Over time, the discounted liability is increased for the changein present value based on the discount rates that reflect current market assessmentsand the risks specific to the liability.
The periodic unwinding of the discount is recognised in profit or loss as a financecost. Additional disturbances or changes in rehabilitation costs will be recognised asadditions or charges to the corresponding assets and rehabilitation liability when theyoccur.
For closed sites, changes to estimated costs are recognised immediately in profit orloss.
(n) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable andrepresents amounts receivable for goods sold in the normal course of business, net ofdiscounts and sales related taxes.
Revenue from the sale of gold is recognised when there has been a transfer of risks andrewards to the customer, no further work or processing is required by the Group, the qualityof the goods has been determined with reasonable accuracy, the price is fixed ordeterminable, and collectability is reasonably assured. This is generally when title passesand the goods have been delivered to a contractually agreed location.
Interest income is recognised in profit or loss as it accrues, using the effective interestmethod.
(o) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-linebasis over the term of the lease. Lease incentives received are recognised as an integralpart of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the financeexpense and the reduction of the outstanding liability. The finance expense is allocated toeach period during the lease term so as to produce a constant periodic rate of interest onthe remaining balance of the liability.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-22
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Contingent lease payments are accounted for by revising the minimum lease payments overthe remaining term of the lease when the lease adjustment is confirmed.
Determining whether an arrangement contains a lease
At inception of an arrangement, the Group determines whether such an arrangement is orcontains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement isdependent on the use of that specified asset. An arrangement conveys the right to use theasset if the arrangement conveys to the Group the right to control the use of the underlyingasset.
At inception or upon reassessment of the arrangement, the Group separates payments andother consideration required by such an arrangement into those for the lease and those forother elements on the basis of their relative fair values. If the Group concludes for a financelease that it is impracticable to separate the payments reliably, then an asset and a liabilityare recognised at an amount equal to the fair value of the underlying asset. Subsequentlythe liability is reduced as payments are made and an imputed finance charge on the liabilityis recognised using the Group’s incremental borrowing rate.
(p) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognisedas it accrues in profit or loss, using the effective interest method.
Finance costs comprise interest expense on borrowings.
Borrowing costs that are not directly attributable to the acquisition, construction or productionof a qualifying asset are recognised in profit or loss using the effective interest method.
(q) Income tax
Income tax expense comprises current and deferred tax. Current tax and deferred tax isrecognised in profit or loss except to the extent that it relates to a business combination, oritems recognised directly in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for theyear, using tax rates enacted or substantively enacted at the reporting date, and anyadjustment to tax payable in respect of previous years. Current tax payable also includes anytax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carryingamounts of assets and liabilities for financial reporting purposes and the amounts used fortaxation purposes. Deferred tax is not recognised for:
� temporary differences on the initial recognition of assets or liabilities in a transactionthat is not a business combination and that affects neither accounting nor taxableprofit or loss;
� temporary differences related to investments in subsidiaries to the extent that it isprobable that they will not reverse in the foreseeable future; and
� taxable temporary differences arising on the initial recognition of goodwill.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-23
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Deferred tax is measured at the tax rates that are expected to be applied to temporarydifferences when they reverse, based on the laws that have been enacted or substantivelyenacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offsetcurrent tax liabilities and assets, and they relate to income taxes levied by the same taxauthority on the same taxable entity, or on different tax entities, but they intend to settlecurrent tax liabilities and assets on a net basis or their tax assets and liabilities will berealised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductibletemporary differences, to the extent that it is probable that future taxable profits will beavailable against which they can be utilised. Deferred tax assets are reviewed at eachreporting date and are reduced to the extent that it is no longer probable that the related taxbenefit will be realised.
(r) Loss per share
The Group presents basic and diluted loss per share data for its ordinary shares. Basic lossper share is calculated by dividing the profit or loss attributable to ordinary shareholders ofthe Company by the weighted average number of ordinary shares outstanding during theyear, adjusted for own shares held. Diluted loss per share is determined by adjusting theprofit or loss attributable to ordinary shareholders and the weighted average number ofordinary shares outstanding, adjusted for own shares held, for the effects of all dilutivepotential ordinary shares, which comprise convertible notes.
(s) Segment reporting
An operating segment is a component of the Group that engages in business activities fromwhich it may earn revenues and incur expenses, including revenues and expenses thatrelate to transactions with any of the Group’s other components. All operating segments’operating results are reviewed regularly by the Group’s chief operating decision maker tomake decisions about resources to be allocated to the segment and to assess itsperformance, and for which discrete financial information is available.
Segment results that are reported to the Group’s chief operating decision maker includeitems directly attributable to a segment as well as those that can be allocated on areasonable basis. Unallocated items comprise mainly corporate assets, corporate expensesand income tax assets and liabilities.
Segment capital expenditure is the total cost incurred during the year to acquire property,plant and equipment, mine properties and, exploration and evaluation costs.
(t) New standards and interpretations not adopted
A number of new standards, amendments to standards and interpretations are effective forannual periods beginning after 1 January 2010, and have not been applied in preparingthese combined financial statements. None of these is expected to have a significant effecton the combined financial statements of the Group.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-24
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
4. EXPLORATION AND EVALUATION ASSETS
2010 2009 2008US$ US$ US$
As at 1 January 3,198,982 975,216 –Expenditure incurred during the year 783,814 2,223,766 975,216Expenditure transferred to mine properties (3,964,321) – –
As at 31 December 2010 496,801 105,000 3,964,321 4,566,122
Accumulated amortisationAs at 1 January 2008 – – – –Amortisation charge for the year 33,385 – – 33,385
As at 31 December 2008 33,385 – – 33,385Amortisation charge for the year 50,077 – – 50,077
As at 31 December 2009 83,462 – – 83,462Amortisation charge for the year 50,078 – 31,236 81,314
As at 31 December 2010 133,540 – 31,236 164,776
Carrying amountAs at 1 January 2008 – – – –
As at 31 December 2008 463,416 – – 463,416
As at 31 December 2009 413,339 – – 413,339
As at 31 December 2010 363,261 105,000 3,933,085 4,401,346
The carrying amount of the mining rights represents the gold exploration and mining rights for theSokor gold field project located in the District of Tanah Merah, Kelantan, Malaysia for a period of 10years from 8 April 2008.
Mine design is not amortised until the contractor completes the mine design at the mine site.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-25
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Impairment of mine properties
The Group has substantial investments in mine properties for its mining operations in Malaysia.Management has identified the Group’s mine properties as a single cash-generating unit (CGU).
Impairment loss is recognised when events and circumstances indicate that the Group’s mineproperties may be impaired and the carrying amounts of mine properties exceed their recoverableamounts.
In assessing whether impairment is required for the carrying value of mine properties, its carryingvalue is compared with its recoverable amount. The recoverable amount is the higher of theasset’s fair value less costs to sell and value in use. Given the nature of the Group’s activities,information on the fair value of an asset is usually difficult to obtain unless negotiations withpotential purchasers or similar transactions are taking place. Consequently, unless indicatedotherwise, the recoverable amount used in assessing the impairment charges described below isvalue in use. The Group generally estimates value in use using a discounted cash flow model.
The calculation of value in use is most sensitive to the following assumptions:
� Production volumes
� Discount rates
� Gold prices
� Operating costs
Estimated production volumes are based on detailed life of mine plans. It is estimated that, if allproduction were to be reduced by 10% for the remaining useful life of the mining right, this wouldnot be sufficient to reduce the excess of recoverable amount over the carrying amounts of theCGU to zero. Consequently, management believes no reasonably possible change in theproduction assumption would cause the carrying amount of mine properties to exceed theirrecoverable amount.
The Group generally estimates value in use using a discounted cash flow model. The future cashflows are adjusted for risks specific to mine properties and discounted using a rate of 14.2%. Thisdiscount rate is derived from the Group’s post-tax weighted average cost of capital. Managementalso believes that currently there is no reasonably possible change in the discount rate, estimatedfuture gold prices and future operating costs which would reduce the Group’s excess ofrecoverable amount over the carrying amounts of the CGU to zero.
Based on the assessment, management determined that no impairment to the mine properties isconsidered necessary as at 31 December 2010.
Amortisation
The carrying amount of the mining right and mine design are amortised on a straight-line basisover the remaining useful life of the mining rights. For mine development costs recorded under“Producing mines”, the carrying amount is amortised based on units-of-production basis over theeconomically recoverable reserves of the mine concerned.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-26
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Management reviews and revises the estimates of the recoverable reserve of the mine and,remaining useful life and residual values of mine properties at the end of each financial year. Anychanges in estimates of the recoverable reserve of the mine and, the useful life and residual valuesof the mine properties would impact the amortisation charges and consequently affect the Group’sresults.
At 31 December 2008 – 15,804 18,145 52,923 – 86,872
At 31 December 2009 25,124 48,795 1,208 36,459 728,372 839,958
At 31 December 2010 729,208 692,987 9,194 72,209 32,785 1,536,383
The carrying amounts of leased motor vehicles as at 31 December 2008, 2009 and 2010 wereUS$50,030, US$25,863 and US$5,267 respectively.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-27
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Impairment
Impairment loss is recognised when events and circumstances indicate that the Group’s property,plant and equipment may be impaired and the carrying amounts of the property, plant andequipment exceed their recoverable amounts.
The recoverable amount is determined based on value-in-use calculation. The value-in-usecalculation uses cash flow projections over the period of five years and is discounted using a rateof 14.2%. Based on the assessments, management determined that no impairment to theproperty, plant and equipment is considered necessary as at 31 December 2010.
Depreciation
The carrying amount of the property, plant and equipment is depreciated on a straight-line basisover the remaining useful life of each property, plant and equipment. Management reviews andrevises the estimates of the remaining useful life and residual values of the property, plant andequipment at the end of each financial year based on their age and condition at that time.Changes in the way the property, plant and equipment are used and other factors (such as marketor technological factors) could impact the useful life and residual values of the property, plant andequipment, therefore future depreciation charges could be revised. Any changes in the useful lifeand residual values of the property, plant and equipment would impact the depreciation chargesand consequently affect the Group’s results.
7. DEFERRED TAX ASSETS
Unrecognised deferred tax assets
2010 2009 2008US$ US$ US$
Deductible temporary differences – 167,807 86,110
The deductible temporary differences do not expire under current tax legislation. No deferred taxassets have been recognised as at 31 December 2008 and 2009 because it is not probable thatfuture taxable profits will be available against which the Group can utilise the benefits.
For the financial year ended 31 December 2010, deferred tax assets was recognised bymanagement based on their assessment of available future taxable profits of a subsidiary of theGroup which will be available to be utilised. Management will review the amount of deferred taxassets recognised at each reporting date and will reduce the extent of deferred tax assetsrecognised if it is no longer probable that the related tax benefit will be realised.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-28
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
8. INVENTORIES
2010 2009 2008US$ US$ US$
Gold doré bars 78,563 – –Consumables 42,151 – –
120,714 – –
9. OTHER RECEIVABLES, PREPAYMENTS AND DEPOSITS
2010 2009 2008US$ US$ US$
Amounts owing by shareholders (non-trade) 333,182 – –Loans to directors – – 14,226Other receivables 22,604 24,374 4,565Deposits 35,411 28,485 28,569
Loan and receivables 391,197 52,859 47,360Prepayments 151,000 50,410 57,577
542,197 103,269 104,937
The non-trade amounts owing by shareholders is unsecured, do not bear interest and arerepayable on demand.
The Group’s exposure to credit and currency risks and impairment losses related to otherreceivables, prepayments and deposits is disclosed in note 25.
10 CASH AND CASH EQUIVALENTS
2010 2009 2008US$ US$ US$
Cash at banks and in hand 1,112,065 48,755 87,659Fixed deposits 1,606 – –
Cash and cash equivalents in the statements of cash flows 1,112,065 48,755 87,659
Deposits pledged represents balance placed with a bank for corporate credit card facility for amanagement personnel of a subsidiary.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-29
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
11 SHARE CAPITAL AND RESERVE
Share capital
2010 2009 2008US$ US$ US$
Issued and fully paid:At 1 January 2,050,560 1,500,000 1,500,000Issue of shares – 550,560 –Issue of shares upon conversion of convertible notes 2,677,809 – –Non-reciprocal capital contributions 2,562,939 – –
At 31 December 7,291,308 2,050,560 1,500,000
CNMC Goldmine Limited (“CNMC HK”) issued the following shares:
(a) On 12 May 2009, CNMC HK increased its issued and paid up capital from US$1,500,000 toUS$2,050,560 via the issue of 487,000 new ordinary shares for cash at an issue price ofUS$550,560.
(b) On 9 July 2010, CNMC HK issued 1,087,438 ordinary shares upon the conversion ofconvertible notes amounting to US$2,677,809.
During the financial year ended 31 December 2010, certain directors of the Company entered intoan agreement with CNMC HK to capitalise payments made on behalf by the directors on behalf ofCNMC HK as non-reciprocal capital contributions in CNMC HK.
For the purposes of preparing the combined financial statements, the share capital as at 31December 2008, 2009 and 2010 comprises the share of the Company and its subsidiaries.
The holders of ordinary shares are entitled to receive dividends as declared from time to time andare entitled to one vote per share at meetings of the Company. All shares rank equally with regardto the Company’s residual assets.
Capital management
The Group defines capital as total shareholders’ equity attributable to equity holders of theCompany excluding non-controlling interest. The Board’s policy is to maintain a strong capital baseso as to maintain investor, creditor and market confidence and to sustain future development of thebusiness. Capital consists of share capital, reserves and non-controlling interests of the Group.
The Board closely monitors the cash flow forecasts and working capital requirements of the Groupto ensure that there are sufficient financial resources available to meet the needs of the business.
There were no changes in the Group’s approach to capital management during the financial yearsended 31 December 2008, 2009 and 2010. The Company and its subsidiaries are not subject toexternally imposed capital requirements.
Translation reserve
The translation reserve comprises foreign exchange differences arising from the translation of thefinancial statements of foreign operations whose functional currencies are different from thefunctional currency of the Company.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-30
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
CurrentCurrent portion of convertible notes – 693,669 682,172Current portion of finance lease liabilities 8,046 6,759 6,167
8,046 700,428 688,339
Total interest-bearing borrowings 3,089,492 1,940,854 738,968
Maturities of liabilities (excluding financial lease liabilities)Within 1 year – 693,669 682,172After 1 year but within 5 years 3,039,837 1,195,702 –After 5 years – – –
3,039,837 1,889,371 682,172
Terms and debt repayment schedule
Terms and conditions of outstanding interest-bearing borrowings were as follows:
Nominal Year of Carrying Currency interest rate maturity Face value amount
% US$ US$
At 31 December 2008Convertible notes S$ 10% and 12% 1 year 694,900 682,172Finance lease liabilities RM 2.8% and 4.5% 7 and 9 years 69,584 56,796
764,484 738,968
At 31 December 2009Convertible notes S$ 6% and 10% 1 and 2 years 2,066,250 1,889,371Finance lease liabilities RM 2.5% to 4.5% 7 and 9 years 61,420 51,483
2,127,670 1,940,854
At 31 December 2010Convertible notes S$ 6% and 10% 1.3 to 3 years 3,501,000 3,039,837Finance lease liabilities RM 2.5% to 4.5% 7 and 9 years 57,519 49,655
3,558,519 3,089,492
Finance lease liabilities
Finance lease liabilities are repayable as follows:
Futureminimum
leasepayments Interest Principal
US$ US$ US$
At 31 December 2008Within 1 year 9,453 3,286 6,167After 1 year but within 5 years 37,812 8,346 29,466After 5 years 22,589 1,426 21,163
69,854 13,058 56,796
At 31 December 2009Within 1 year 9,612 2,853 6,759After 1 year but within 5 years 38,450 6,536 31,914After 5 years 13,358 548 12,810
61,420 9,937 51,483
At 31 December 2010Within 1 year 10,672 2,626 8,046After 1 year but within 5 years 41,198 5,107 36,091After 5 years 5,649 131 5,518
57,519 7,864 49,655
Convertible notes
2010 2009 2008US$ US$ US$
At 1 January 1,889,371 682,172 –Proceeds from issue of convertible notes 3,963,070 1,361,273 696,135Conversion rights (refer to note 13) (284,284) (164,151) (12,728)Convertible notes converted during the year (2,677,809) – –Exchange differences 149,489 10,077 (1,235)
At 31 December 3,039,837 1,889,371 682,172
During the financial years ended 31 December 2008, 2009 and 2010, a subsidiary of theCompany, CNMC Goldmine Limited (“CNMC HK”) issued convertible notes which are unsecuredand bear interests ranging from 6% to 12% per annum with a total principal amount ofS$8,200,000 (US$6,702,500).
The main terms of the convertible notes are as follows:
(a) The convertible notes are convertible into the CNMC HK’s shares based on the lower pricingof:
(i) the conversion price of S$0.40 per share; or
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-31
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-32
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
(ii) at 40% / 50% discount on:
- the initial public offering share price of the listing company;
- the offer price from a third party for a reverse takeover of CNMC HK; or
- the valuation pricing of CNMC HK ranging from S$50 million to S$100 million.
(b) The principal amounts of the convertible notes can be redeemed at an agreed-upon earlyredemption date or at maturity ranging from 12 to 36 months from the commencement dateof the convertible notes.
On 9 July 2010, CNMC HK converted US$2,677,809 convertible loan notes which bear interests of6% to 10% per annum into 1,087,438 ordinary shares.
As the fair value of the embedded derivative relating to the conversion rights could not be reliablymeasured, the fair value of the embedded derivative was calculated as the difference between thefair value of the whole instrument and the fair value of the host debt. The value of the conversionright of US$284,284 (2009: US$164,151; 2008: US$12,728), being the difference between theprincipal amount of the convertible notes of US$3,963,700 (2009: US$2,043,445; 2008:US$696,135) and its present value of US$3,678,786 (2009: US$1,879,294; 2008: US$683,407),discounted at an estimated market interest rate of 12.42% (2009: 12.19%; 2008: 12.27%), hadbeen separately accounted for as a derivative liability (refer to note 13).
13. DERIVATIVE FINANCIAL INSTRUMENT
2010 2009 2008US$ US$ US$
At 1 January 138,905 8,146 –Conversion right recognised during the year (refer to note 12) 284,284 164,151 12,728Unwinding of discount on derivative financial instrument (267,440) (33,392) (4,582)
At 31 December 155,749 138,905 8,146
Conversion rights - current 115,440 83,638 8,146- non-current 40,309 55,267 –
155,749 138,905 8,146
The unwinding of discount on derivative financial instrument due to the conversion of convertiblenotes to shares of the Company for the financial year ended 31 December 2010 amount toUS$113,570 (2009: Nil; 2008: Nil). The Group’s derivative financial instrument did not qualify forhedge accounting.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-33
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
14. REHABILITATION PROVISION
2010 2009 2008US$ US$ US$
At 1 January – – –Additions 39,987 – –Unwinding of discount on rehabilitation provision 1,810 – –
At 31 December 41,797 – –
The Group makes full provision for the future cost of rehabilitating the mine site and relatedproduction facilities on a discounted basis at the time of developing the mine and installing andusing those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to the minesite, which are expected to be incurred up to 2018. These provisions have been created based onthe Group’s internal estimates. Assumptions, based on the current economic environment, havebeen made which management believes are a reasonable basis upon which to estimate the futureliability. These estimates are reviewed regularly to take into account any material changes to theassumptions. However, actual rehabilitation costs will ultimately depend upon future market pricesfor the necessary decommissioning works required which will reflect market conditions at therelevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine ceaseto produce at economically viable rates. This, in turn, will depend upon future gold prices, whichare inherently uncertain.
15. TRADE AND OTHER PAYABLES
2010 2009 2008US$ US$ US$
Trade payables 104,854 30,511 10,189Other payables 1,140 90,074 –Amount due to affiliated corporations (non-trade) – 50,092 –Amount due to contractors 21,646 1,867,448 554,221Accrued operating expenses 1,475,382 913,350 316,260Remuneration and fees due to key management 406,683 – –Loan from directors 229,510 356,250 347,450
2,239,215 3,307,725 1,228,120
An affiliated corporation is defined as one:
a) in which a director/shareholder of the Group has substantial financial interests or who is in aposition to exercise significant influence; and/or
b) which directly or indirectly, through one or more intermediaries, are under the control of acommon shareholder.
The non-trade amounts due to affiliated corporations do not bear interest and are repayable ondemand.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-34
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
16. OTHER OPERATING INCOME
2010 2009 2008US$ US$ US$
Unwinding of discount on derivative financial instrument 267,440 33,392 4,582Rental income on operating lease – – 4,159Net foreign exchange gain – – 54,835
267,440 33,292 63,576
17. AMORTISATION AND DEPRECIATION
2010 2009 2008US$ US$ US$
Amortisation of mine properties 81,314 50,077 33,385Depreciation of property, plant and equipment 146,698 52,665 40,392
228,012 102,742 73,777
18. OTHER OPERATING EXPENSES
2010 2009 2008US$ US$ US$
Bad debts written off – – 56,428Pre-feasibility cost written off – – 213,380Net foreign exchange loss 305,499 28,314 –Others 13,751 3,397 5,117
319,250 31,711 274,925
19. FINANCE INCOME AND EXPENSES
2010 2009 2008US$ US$ US$
Finance incomeInterest income on cash and cash equivalents – 22 420
Finance expensesInterest expense on finance lease liabilities (3,145) (3,370) (2,829)Unwinding of discount on rehabilitation provision (1,810) – –Interest expense on directors’ loans (13,460) (54,674) (25,203)Interest expense on convertible notes (167,975) (91,248) (28,486)Cost of borrowings – Arrangement fees (35,507) (21,393) –
(221,897) (170,685) (56,518)
Net finance expenses recognised in profit or loss (221,897) (170,663) (56,098)
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-35
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
20. INCOME TAX (CREDIT)/EXPENSE
2010 2009 2008US$ US$ US$
Current tax expenseCurrent year – 6 180
Deferred tax creditOrigination and reversal of temporary differences (181,426) – –Recognition of previously unrecognised deferred tax assets (177,419) – –
(358,845) – –
Total income tax (credit)/expense (358,845) 6 180
The Group’s operations are mainly in Malaysia. The tax expense on the loss differs from theamount that would arise using Malaysian income tax rates are explained below:
2010 2009 2008US$ US$ US$
Reconciliation of effective tax rateLoss for the year (1,930,630) (1,080,880) (991,233)Total income tax (credit)/expense (358,845) 6 180
Loss excluding income tax (2,289,475) (1,080,874) (991,053)
Income tax using Malaysian income tax rate (2010: 25%;2009: 25%; 2008: 26%) (572,369) (270,219) (257,674)
Effect of tax rates in foreign jurisdictions 81,840 46,869 59,473Non-deductible expenses 309,103 144,304 134,463Effect of deferred tax assets not recognised – 81,687 61,909Recognition of previously unrecognised deferred tax assets (177,419) – –Others – (2,635) 2,009
(358,845) 6 180
The Group is subject to income and revenue taxes in a few jurisdictions. Significant judgement isrequired in determining the capital allowances, the types and rates of taxes payable, deductibility ofcertain expenses, and taxability of certain income during the estimation of the provision for incometaxes. There are many transactions and calculations for which the ultimate tax determination isuncertain during the ordinary course of business. The Group recognises liabilities for anticipatedtax audit issues based on estimates of whether additional taxes will be due. Where the final taxoutcome of these matters is different from the amounts that were initially recorded, suchdifferences will impact the revenue, provision for income tax and deferred income tax provisions inthe period in which such determination is made.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-36
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
21. LOSS PER SHARE
2010 2009 2008US$ US$ US$
Basic and diluted loss per share is based on:Net loss attributable to ordinary shareholders (1,737,550) (1,079,681) (990,166)
Weighted average number of ordinary shares
2010 2009 2008Number Number Number
of shares of shares of shares’000 ’000 ’000
Issued ordinary shares as at 1 January 12,187 11,700 11,700Effect of new shares issued on 12 May 2009 – 311 –Effect of new shares issued upon conversion ofconvertible loan notes on 9 July 2010 524 – –
Weighted average number of ordinary shares 12,711 12,011 11,700
For the financial years ended 31 December 2008, 2009 and 2010, the convertible notes (refer tonote 12) were not included in the determination of diluted loss per share of the Group, as theconvertible notes are considered to be anti-dilutive potential ordinary shares.
In this connection, the diluted loss per share is the same as basic loss per share for the financialyears ended 31 December 2008, 2009 and 2010.
22. SEGMENT INFORMATION
Business segments
The Group has one reportable segment as described below. For the reportable segment, theGroup’s chief operating decision maker reviews internal management reports on at least aquarterly basis. The following summary describes the operations in the Group’s reportablesegment:
Gold mining: Exploration, development, mining and marketing of gold.
Other operations include investment holding company and provision of corporate services.
Information regarding the results of the reportable segment is included below. Performance ismeasured based on segment profit before income tax, as included in the internal managementreports that are reviewed by the Group’s chief operating decision maker. Segment profit is used tomeasure performance as management believes that such information is the most relevant inevaluating the results of certain segments relative to other entities that operate within theseindustries. Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well asthose that can be allocated on a reasonable basis. Unallocated items mainly comprise tax assetsand liabilities and corporate revenue, assets, expenses and liabilities.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-37
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Information about reportable segments
Other Inter-segmentGold mining operations eliminations Total
US$ US$ US$ US$
Year ended 31 December 2008Interest income 420 – – 420Interest expense (2,829) (53,689) – (56,518)Amortisation and depreciation (55,968) (17,809) – (73,777)
Reportable segment losses before taxation (420,632) (570,421) – (991,053)
Combined total liabilities (5,526,367) (5,387,598) (1,975,342)
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-38
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Geographical segments
The operations of the Group are principally located in Malaysia.
Major customers
There is one major customer which solely account for 100% of the Group’s revenue for thefinancial year ended 31 December 2010. The Group do not have any revenue from externalcustomers for the financial years ended 31 December 2008 and 2009.
23. COMMITMENTS
(a) Capital commitments
At the respective reporting dates, the Group entered into contracts for:
2010 2009 2008US$ US$ US$
Exploration and evaluation assets 195,000 767,195 2,483,584Plant and equipment 627,946 – –
822,946 767,195 2,483,584
(b) Operating lease commitments
Leases entered into as lessee
The total future minimum lease payments under non-cancellable operating leases in respectof properties are payable as follows:
2010 2009 2008US$ US$ US$
Within 1 year 95,510 85,686 2,048After 1 year but within 5 years 93,968 169,290 1,024After 5 years – – –
189,478 254,976 3,072
24. RELATED PARTIES
(a) Key management personnel compensation
Key management personnel are directors and those persons having authority andresponsibility for planning, directing and controlling the activities of the Company, directly orindirectly. The amounts stated below for key management compensation are for all theexecutive directors and other key management personnel. The amounts do not includecompensation, if any, of certain key management personnel and directors of the Companywho received compensation from related corporations in their capacity as directors and, orexecutives of those related corporations.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-39
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Compensation payable to key management personnel comprise:
Included in key management personnel compensation is remuneration of certain directorsamounting to US$760,747 (2009: US$13,241; 2008: Nil). Director’s remuneration includessalaries, bonuses, fees and other emoluments.
(b) Significant transactions with related parties
Other than disclosed elsewhere in the financial statements, transactions with related partiesin the normal course of business on terms agreed between the parties are as follows:
2010 2009 2008US$ US$ US$
Transactions with affiliated corporationsInterest expenses – 145,922 53,689Management services – 155,628 130,202Payment made on behalf – 13,856 14,697
25. FINANCIAL RISK MANAGEMENT
Overview
The Group has exposure to the following risks from its use of financial instruments:
� credit risk
� liquidity risk
� market risk
This note presents information about the Group’s exposure to each of the above risks, the Group’sobjectives, policies and processes for measuring and managing risk, and the Group’s managementof capital.
Risk management framework
Risk management is integral to the whole business of the Group. The management has a systemof controls in place to create an acceptable balance between the cost of risks occurring and thecost of managing the risks. The management continually monitors the Group’s risk managementprocess to ensure that an appropriate balance between risk and control is achieved. Riskmanagement policies and systems are reviewed regularly to reflect changes in market conditionsand the Group’s activities.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-40
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Credit risk
As the Group does not hold any collateral, the maximum exposure to credit risk for each class offinancial instruments is the carrying amount of that class of financial instruments presented on thecombined statement of financial position and in notes 8 and 9 to the combined financialstatements.
Cash and cash equivalents are placed with banks and financial institutions which are regulated.
Liquidity risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet itsobligations when they fall due, or will have to do so at excessive cost. The risk can arise frommismatches in the timing of cash flows. Funding risk arises when the necessary liquidity to fundilliquid asset positions cannot be obtained at the expected terms and when required.
Management of liquidity risk
The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always havesufficient liquidity to meet its liabilities when due, under normal and stressed conditions, withoutincurring unacceptable losses or risking damage to the Group’s reputation.
Typically the Group ensures that it has sufficient cash on demand to meet expected operationalexpenses for a period of 18 months, including the servicing of financial obligations; this excludesthe potential impact of extreme circumstances that cannot be reasonably predicted, such asnatural disasters.
The directors of the Company have carried out a review of cash flow forecast of the Group for thetwelve months ending 31 December 2011 after taking into account the Group’s net currentliabilities as at 31 December 2010 and negative operating cash flows for the year ended 31December 2010. The Group is expected to raise funds from loans and borrowings and issue ofshares of the Company in connection with the initial public offering. In addition, certain directors ofthe Company have also undertaken to provide continuing financial support to the Group and theGroup currently also relies on funding from certain directors of the Company to finance the Group’soperations.
The directors believe that, based on the review of the cash flow forecast, the various plans in placeto procure funding and the financial support from certain directors of the Company, the Group willbe able to secure adequate funding to continue its operations and to pay its debts as and whenthey fall due in the next twelve months. However, as with all assumptions relating to future events,these are subject to inherent limitations and uncertainties and some or all of these assumptionsmay not be realised.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-41
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Exposure to liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interestpayments and excluding the impact of netting arrangements:
Carrying Cash Within Within 1 to More thanamount outflow 1 year 5 years 5 years
Market risk is the risk that changes in market prices, such as interest rate and foreign exchangerates will affect the Group’s income or the value of its holdings of financial instruments. Theobjective of market risk management is to manage and control market risk exposures withinacceptable parameters, while optimising the return on risk.
Interest rate risk
The Group does not have any of its borrowing in variable rate instruments. Accordingly, theexposure to interest rate risk is minimum and no sensitivity analysis is performed.
Commodity price risk
The Group is exposed to the changes in market prices of gold and the outlook of this mineral. TheCompany does not have any hedging or other commodity-based risk in respect of its operations.
Gold prices historically fluctuated widely and are affected by, but not limited to, industrial and retaildemand, central bank lending, forward sales by producers and speculators, level of worldwideproduction, short-term changes in supply and demand because of speculative hedging activitiesand certain other factors related to gold.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-42
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Currency risk
The Group’s revenue is denominated in United States Dollars (US$). However, the Group’s mainoperations are in Malaysia where the operating expenses are primarily incurred in SingaporeDollars (S$), Ringgit Malaysia (RM), US$ and Chinese Renminbi (RMB). The results of the Group’soperations are subject to currency transaction risk and currency translation risk. The operatingresults and financial position of the Group are reported in US$ in the Group’s combined financialstatements.
The fluctuation of the abovementioned currencies in relation to the US$ will consequently have animpact on the profitability of the Group and may also affect the value of the Group’s assets and theamount of shareholders’ equity.
The Group has not entered into any agreements or purchased any instruments to hedge possiblecurrency risks at the respective reporting dates.
Exposure to currency risk
The Group’s exposure to foreign currency risk was as follows based on notional amounts:
USD SGD MYR RMB TotalUS$ US$ US$ US$ US$
At 31 December 2008Loans and receivables – 29,150 18,210 – 47,360Cash and cash equivalents – 76,199 11,460 – 87,659Interest-bearing borrowings – (682,172) (56,796) – (738,968)Trade and other payables (557,364) (461,539) (153,626) (55,591) (1,228,120)
Net financial liabilities (557,364) (1,038,362) (180,752) (55,591) (1,832,069)Less: Net financial liabilitiesdenominated in therespective entities’ functionalcurrency 557,364 – 13,983 – 571,347
Net currency exposure – (1,038,362) (166,769) (55,591) (1,260,722)
A 10% strengthening of United States dollar against the Singapore dollar, Ringgit Malaysia andChinese Renminbi at the respective reporting dates would increase equity and decreaseaccumulated losses by the amounts shown above. This analysis assumes that all other variables,in particular interest rates, remain constant.
A 10% weakening of United States dollar against the Singapore dollar, Ringgit Malaysia andChinese Renminbi would have had the equal but opposite effect to the amounts shown above, onthe basis that all other variables remain constant.
Estimation of fair values
The following summarises the significant methods and assumptions used in estimating the fairvalues of financial instruments of the Group.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present valueof future principal and interest cash flows, discounted at the market rate of interest at the reportingdate.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year(including other receivables, prepayments and deposits, cash and cash equivalents, and trade andother payables) are assumed to approximate their fair values because of the short period tomaturity. All other financial assets and liabilities are discounted to determine their fair values.
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-44
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
Fair value versus carrying amount
The fair values of financial assets and liabilities with the carrying amounts shown in the combinedstatements of financial position are as follows:
Other Total Loans and financial carryingreceivables liabilities amount Fair value
Note US$ US$ US$ US$
At 31 December 2008AssetsOther receivables and deposits 9 47,360 – 47,360 47,360Cash and cash equivalents 10 87,659 – 87,659 87,659
135,019 – 135,019 135,019
LiabilitiesInterest-bearing borrowings 12 – 738,968 738,968 738,968Trade and other payables 15 – 1,228,120 1,228,120 1,228,120
– 1,967,088 1,967,088 1,967,088
At 31 December 2009AssetsOther receivables and deposits 9 52,859 – 52,859 52,859Cash and cash equivalents 10 48,755 – 48,755 48,755
101,614 – 101,614 101,614
LiabilitiesInterest-bearing borrowings 12 – 1,940,854 1,940,854 1,940,854Trade and other payables 15 – 3,307,725 3,307,725 3,307,725
– 5,248,579 5,248,579 5,248,579
At 31 December 2010AssetsOther receivables and deposits 9 391,197 – 391,197 391,197Cash and cash equivalents 10 1,113,671 – 1,113,671 1,113,671
1,504,868 – 1,504,868 1,504,868
LiabilitiesInterest-bearing borrowings 12 – 3,089,492 3,089,492 3,089,492Trade and other payables 15 – 2,239,215 2,239,215 2,239,215
– 5,328,707 5,328,707 5,328,707
APPENDIX A – COMBINED FINANCIAL STATEMENTS FOR THEYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-45
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
NOTES TO THE COMBINED FINANCIAL STATEMENTSYEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
26 SUBSEQUENT EVENTS
On 14 October 2011, the holders of the convertible notes of approximately US$3,039,837 haveconverted the convertible notes which bear interests of 6% to 10% per annum into 730,086ordinary shares.
On 14 October 2011, the Company issued and aggregate of 374,999,999 ordinary shares to theshareholders of CNMC HK as consideration for the acquisition of their shares in CNMC HK.
Pursuant to an extraordinary general meeting held on 14 October 2011, the Company’sshareholders approved, inter alia, the following:
(a) the conversion of the Company into a public listed company and the consequential changeof name to CNMC Goldmine Holdings Limited;
(b) the adoption of a new set of Articles of Association;
(c) the allotment and issue of 3,771,000 ordinary shares to PrimePartners Corporate FinancePte. Ltd. in part satisfaction of their management fee as Manager and Sponsor of the InitialPublic Offering of the Company;
(d) the allotment and issue of 2,022,000 ordinary shares to Chen Yan, the Chief FinancialOfficer of the Company;
(e) the allotment and issue of 23,900,000 ordinary shares in connection with the Initial PublicOffering of the shares of the Company on the Catalist Board of the Singapore ExchangeLimited. The new shares, when fully paid up will rank pari passu in all respects with theexisting shares of the Company;
(f) the approval of the listing and quotation of all issued ordinary shares (including the newordinary shares to be issued and allotted pursuant to the Initial Public Offering) and theordinary shares awarded under the CNMC Performance Share Plan on the Catalist Board ofthe Singapore Exchange Limited;
(g) the adoption of the CNMC Performance Share Plan, and the authorisation of the Company’sDirectors, pursuant to Section 161 of the Companies Act, to allot and issue ordinary sharesgranted under the CNMC Performance Share Plan; and
(h) that authority be given to the Directors, pursuant to Section 161 of the Companies Act andby way of ordinary resolution in a general meeting to issue shares by way of right, bonus,agreements, options, warrants, debentures, convertible securities or other instrumentsconvertible into ordinary shares. Any issue of shares will need to comply with SGX-STListing Manual Section B: Rules of Catalist.
The Board of DirectorsCNMC Goldmine Holdings LimitedNo. 5 Shenton Way#11-03 UIC BuildingSingapore 068808
Introduction
We have reviewed the accompanying unaudited condensed interim combined financial information ofCNMC Goldmine Holdings Limited (the “Company”) and its subsidiaries (the “Group”), which comprisethe condensed combined statement of financial position of the Group as at 31 March 2011, thecondensed combined statement of comprehensive income, statement of changes in equity and statementof cash flows of the Group for the three months then ended and certain explanatory notes as set out onpages B-2 to B-15 (the “Interim Financial Information”). Management is responsible for the preparationand presentation of this Interim Financial Information in accordance with Singapore Financial ReportingStandard (“FRS”) 34 Interim Financial Reporting. Our responsibility is to express a conclusion on thisInterim Financial Information based on our review.
The interim financial information of the Group for the three months ended 31 March 2010 have not beenaudited or reviewed and have been included for comparative purposes only.
Scope of review
We conducted our review in accordance with Singapore Standard on Review Engagements 2410 Reviewof Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interimfinancial information consists of making inquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. A review is substantially less inscope than an audit conducted in accordance with Singapore Standards on Auditing and consequentlydoes not enable us to obtain assurance that we would become aware of all significant matters that mightbe identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanyinginterim financial information is not prepared, in all material respects, in accordance with FRS 34 InterimFinancial Reporting.
This report has been prepared solely for inclusion in the Offer Document of the Company in connectionwith the Initial Public Offering of the shares of the Company on the Catalist Board of the SingaporeExchange Securities Trading Limited.
KPMG LLPPublic Accountants andCertified Public Accountants
Singapore18 October 2011
Tan Huay LimPartner
B-1
APPENDIX B – REVIEW REPORT ON THE UNAUDITED CONDENSED INTERIM COMBINED FINANCIAL INFORMATION FOR THE THREE MONTHS
ENDED 31 MARCH 2011
Condensed combined statement of financial positionAs at 31 March 2011
Inventories 10 123,385 120,714Other receivables, prepayments and deposits 11 517,182 542,197Cash and cash equivalents 12 448,925 1,113,671
Current assets 1,089,492 1,776,582
Total assets 8,234,457 8,091,631
Equity attributable to equity holders of the CompanyShare capital 7,291,308 7,291,308Accumulated losses (5,210,218) (4,577,383)Translation reserve 10,231 11,089
Interest-bearing borrowings 13 1,985,921 8,046Derivative financial instrument 14 109,171 115,440Trade and other payables 16 3,030,523 2,239,215Current tax liabilities 109 114
Current liabilities 5,125,724 2,362,815
Total liabilities 6,339,319 5,526,367
Total equity and liabilities 8,234,457 8,091,631
The accompanying notes form an integral part of the interim financial information.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-2
Condensed combined statement of comprehensive incomeFor the three months ended 31 March 2011
UnauditedThree months ended
31 March 2011 31 March 2010Note US$ US$
Revenue 537,320 –Other operating income 97,083 22,297Amortisation and depreciation (123,057) (26,094)Changes in inventories of finished goods (12,808) –Employees’ compensation (200,792) (43,299)Exchange loss (net) (122,275) (194,680)Key management remuneration (177,646) (209,278)Marketing and publicity expenses (37,165) (9,583)Office and administration expenses (30,175) (12,924)Professional fees (126,194) (64,185)Rental expense on operating lease (73,771) (22,001)Royalty fee expenses (46,130) –Site and factory expenses (164,161) (21,197)Travelling and transportation expenses (42,740) (9,792)Other operating expenses (59,566) (40,389)
Results from operating activities (582,077) (631,125)
Finance income – –Finance expenses (101,112) (73,931)
Net finance costs (101,112) (73,931)
Loss before income tax (683,189) (705,056)
Income tax credit 14,534 –
Loss for the period 17 (668,655) (705,056)
Other comprehensive lossExchange differences arising on consolidation of foreign subsidiaries (1,471) 23,548
Total comprehensive loss for the period (670,126) (681,508)
Loss attributable to:Owners of the Company (632,835) (637,428)Non-controlling interests (35,820) (67,628)
Loss for the period (668,655) (705,056)
Total comprehensive loss attributable to:Owners of the Company (633,693) (617,719)Non-controlling interests (36,433) (63,789)
Total comprehensive loss for the period (670,126) (681,508)
Basic loss per share (cents) 19 (5.04) (5.79)
Diluted loss per share (cents) 19 (5.04) (5.79)
The accompanying notes form an integral part of the interim financial information.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-3
Condensed combined statements of changes in equityFor the three months ended 31 March 2011
Total attributable
to equityholders Non-
Share Translation Accumulated of the controlling Total capital reserve losses Company interests equity
US$ US$ US$ US$ US$ US$
Group
At 1 January 2011 7,291,308 11,089 (4,577,383) 2,725,014 (159,750) 2,565,264
Total comprehensive loss for the period
Loss for the period – – (632,835) (632,835) (35,820) (668,655)
Other comprehensive loss
Exchange differences arising on consolidation of foreign subsidiaries – (858) – (858) (613) (1,471)
Total comprehensive loss for the period – (858) (632,835) (633,693) (36,433) (670,126)
At 31 March 2011 7,291,308 10,231 (5,210,218) 2,091,321 (196,183) 1,895,138
At 1 January 2010 2,050,560 (20,699) (2,839,833) (809,972) 26,677 (783,295)
Total comprehensive loss for the period
Loss for the period – – (637,428) (637,428) (67,628) (705,056)
Other comprehensive
incomeExchange differences arising on consolidation of foreign subsidiaries – 19,709 – 19,709 3,839 23,548
Total comprehensive loss for the period – 19,709 (637,428) (617,719) (63,789) (681,508)
At 31 March 2010 2,050,560 (990) (3,477,261) (1,427,691) (37,112) (1,464,803)
The accompanying notes form an integral part of the interim financial information.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-4
Combined statement of cash flowsFor the three months ended 31 March 2011
UnauditedThree months ended
31 March 2011 31 March 2010 Note US$ US$
Operating activitiesLoss for the period (668,655) (705,056)Adjustments for:Depreciation of property, plant and equipment 97,049 13,575Amortisation of mine properties 26,008 12,519Unwinding of discount on derivative financial instrument (37,507) (22,297)Unwinding of discount on rehabilitation provision 979 –Interest expense 75,561 73,931Income tax expense (14,534) –
Operating loss before working capital changes (521,099) (627,328)
Changes in working capital:Inventories (2,671) –Other receivables, prepayments and deposits 25,015 27,440Trade and other payables 147,517 76,140
Cash used in operations (351,238) (523,748)Interest paid (75,561) (73,931)
Cash flows from operating activities (426,799) (597,679)
Investing activitiesPurchase of property, plant and equipment (257,575) (51,132)
Cash flows from investing activities (257,575) (51,132)
Financing activitiesProceeds from issuance of convertible notes – 676,940Payment of finance lease liabilities (2,195) (1,693)
Cash flows from financing activities (2,195) 675,247
Net (decrease)/increase in cash and cash equivalents (686,569) 26,436Cash and cash equivalents at beginning of the period 1,112,065 48,755Effect of exchange rate fluctuations on cash held 21,778 1,187
Cash and cash equivalents at end of the period 13 447,274 76,378
During the three months ended 31 March 2011, the Group acquired property, plant and equipment withan aggregate cost of US$728,706 (31/3/2010: US$51,132) of which an amount of US$471,131(31/3/2010: US$Nil) is included in trade and other payables (note 16).
The accompanying notes form an integral part of the interim financial information.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-5
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-6
These notes form an integral part of the interim financial information.
1 Significant accounting policies
Basis of preparation
The unaudited condensed interim combined financial information (the “interim financialinformation”) of CNMC Goldmine Holdings Limited (the “Company”) and its subsidiaries(collectively, the “Group”) has been prepared on a condensed basis in accordance with SingaporeFinancial Reporting Standard FRS 34 Interim Financial Reporting.
The interim financial information, which does not include the full disclosures of the type normallyincluded in a complete set of financial statements, are to be read in conjunction with the combinedfinancial statements for the financial years ended 31 December 2008, 2009 and 2010 (“CombinedFinancial Statements”) as set out in Appendix A of this Offer Document.
For the purposes of the interim financial information, the subsidiaries of the Group consist of thosecompanies under common control during the financial period from 1 January to 31 March 2011,and will after 31 March 2011, continue to be under common control or will come under the controlof the Company.
Accounting policies and methods of computation used in the interim financial information areconsistent with those applied in the Combined Financial Statements as set out in Appendix A ofthis Offer Document.
2 Going concern
The Group incurred net loss of US$705,056 and US$668,655 respectively for the three monthsended 31 March 2010 and 31 March 2011 and had negative cash flows from operating activities ofUS$597,679 and US$426,799 respectively for the three months ended 31 March 2010 and 2011.Notwithstanding these, the interim financial information of the Group have been prepared on agoing concern basis, as certain directors of the Group have undertaken to provide continuingfinancial support to enable the Group to continue operating as a going concern in the foreseeablefuture.
The interim financial information of the Group do not include any adjustment relating to therecoverability and classification of reported asset amounts or the amounts and classification ofliabilities that might result if the going concern basis were found to be inappropriate.
3 Seasonal operations
The Group does not generally experience seasonality in its business. However, adverse weatherduring north-east monsoon season in Peninsula Malaysia which starts around November andcontinues until end January, may affect the mining activities of the Group. Measures will be takenby the Group to shelter its key production areas to mitigate such risk.
4 Dividends
No dividend is declared or recommended for the three months ended 31 March 2011 (31/3/2010:Nil).
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-7
5 Restructuring exercise
The Group implemented a restructuring exercise to rationalise the Group’s structure in preparationfor the listing of the Company’s shares on the Catalist Board of the Singapore Exchange SecuritiesTrading Limited. Further details of the restructuring exercise are set out in note 1(c) to theCombined Financial Statements as set out in Appendix A of this Offer Document. As a result ofthe restructuring exercise, the Company became the holding company of the Group.
6 Exploration and evaluation assets
Unaudited Audited31 March 31 December
2011 2010US$ US$
At beginning of the period/year 18,475 3,198,982Expenditure incurred during the period/year 184,733 783,814Expenditure transferred to mine properties – (3,964,321)
At end of the period/year 203,208 18,475
7 Mine properties
MineMining design in Producing rights progress mines TotalUS$ US$ US$ US$
UnauditedCostAt 31 December 2010 and 1 January 2011 496,801 105,000 3,964,321 4,566,122Additions – 25,000 – 25,000
At 31 March 2011 496,801 130,000 3,964,321 4,591,122
Accumulated depreciationAt 31 December 2010 and 1 January 2011 133,540 – 31,236 164,776Amortisation charge for the period 12,519 – 13,489 26,008
At 31 March 2011 146,059 – 44,725 190,784
Carrying amountAt 31 December 2010 363,261 105,000 3,933,085 4,401,346
At 31 March 2011 350,742 130,000 3,919,596 4,400,338
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
CurrentCurrent portion of convertible notes 1,977,510 –Current portion of finance lease liabilities 8,411 8,046
1,985,921 8,046
Total interest-bearing borrowings 3,147,669 3,089,492
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-10
Unaudited Audited31 March 31 December
2011 2010US$ US$
Maturities of liabilities (excluding financial lease liabilities)Within 1 year 1,977,510 –After 1 year but within 5 years 1,122,699 3,039,837After 5 years – –
3,100,209 3,039,837
Terms and debt repayment schedule
Terms and conditions of outstanding interest-bearing borrowings were as follows:
Nominal Year of CarryingCurrency interest rate maturity Face value amount
% US$ US$
UnauditedAt 31 March 2011Convertible notes S$ 6% and 10% 1.3 to 3 years 3,501,000 3,100,209Finance lease liabilities RM 2.5% to 4.5% 7 and 9 years 54,818 47,460
3,555,818 3,147,669
AuditedAt 31 December 2010Convertible notes S$ 6% and 10% 1.3 to 3 years 3,501,000 3,039,837Finance lease liabilities RM 2.5% to 4.5% 7 and 9 years 57,519 49,655
3,558,519 3,089,492
Finance lease liabilities
Finance lease liabilities are repayable as follows:
Futureminimum
lease payments Interest Principal
US$ US$ US$
UnauditedAt 31 March 2011Within 1 year 10,972 2,561 8,411After 1 year but within 5 years 41,443 4,724 36,719After 5 years 2,403 73 2,330
54,818 7,358 47,460
AuditedAt 31 December 2010Within 1 year 10,672 2,626 8,046After 1 year but within 5 years 41,198 5,107 36,091After 5 years 5,649 131 5,518
57,519 7,864 49,655
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-11
Convertible notes
Unaudited Audited31 March 31 December
2011 2010US$ US$
At beginning of the period/year 3,039,837 1,889,371Proceeds from issue of convertible notes – 3,963,070Conversion rights (refer to note 14) – (284,284)Convertible notes converted during the period/year – (2,677,809)Exchange differences 60,372 149,489
At end of the period/year 3,100,209 3,039,837
14 Derivative financial instrument
Unaudited Audited31 March 31 December
2011 2010US$ US$
At beginning of the period/year 155,749 138,905Conversion right recognised during the year (refer to note 13) – 284,284Unwinding of discount on derivative financial instrument (37,507) (267,440)
At end of the period/year 118,242 155,749
Conversion rights - current 109,171 115,440- non-current 9,071 40,309
118,242 155,749
The Group’s derivative financial instrument did not qualify for hedge accounting.
15 Rehabilitation provision
Unaudited Audited31 March 31 December
2011 2010US$ US$
At beginning of the period/year 41,797 –Additions – 41,797Unwinding of discount on rehabilitation provision 979 –
At end of the period/year 42,776 41,797
The Group makes full provision for the future cost of rehabilitating the mine site and relatedproduction facilities on a discounted basis at the time of developing the mine and installing andusing those facilities.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-12
The rehabilitation provision represents the present value of rehabilitation costs relating to the minesite, which are expected to be incurred up to 2018. These provisions have been created based onthe Group’s internal estimates. Assumptions, based on the current economic environment, havebeen made which management believes are a reasonable basis upon which to estimate the futureliability. These estimates are reviewed regularly to take into account any material changes to theassumptions. However, actual rehabilitation costs will ultimately depend upon future market pricesfor the necessary decommissioning works required which will reflect market conditions at therelevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine ceaseto produce at economically viable rates. This, in turn, will depend upon future gold prices, whichare inherently uncertain.
16 Trade and other payables
Unaudited Audited31 March 31 December
2011 2010US$ US$
Trade payables 227,106 104,854Other payables 1,172 1,140Amount due to contractors 511,966 21,646Accrued operating expenses 1,699,043 1,475,382Remuneration and fees due to key management 389,225 406,683Loan from directors 202,011 229,510
3,030,523 2,239,215
17 Loss for the period
The following items have been charged or (credited) in arriving at loss for the period:
UnauditedThree months ended
31 March 31 March2011 2010US$ US$
Cost of borrowings – arrangement fees 24,578 24,139Interest expense on convertible notes 75,054 73,931Interest expense on directors’ loans – 5,343Interest expense on finance lease liabilities 507 236Unwinding of discount on derivative financial instrument (37,507) (22,297)Unwinding of discount on rehabilitation provision 979 –
18 Segmental information
Business segments
The Group has one reportable segment as described below. For the reportable segment, theGroup’s chief operating decision maker reviews internal management reports on at least aquarterly basis. The following summary describes the operations in the Group’s reportablesegment:
Gold mining: Exploration, development, mining and marketing of gold.
Other operations include investment holding company and provision of corporate services.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-13
Information regarding the results of the reportable segment is included below. Performance ismeasured based on segment profit before income tax, as included in the internal managementreports that are reviewed by the Group’s chief operating decision maker. Segment profit is used tomeasure performance as management believes that such information is the most relevant inevaluating the results of certain segments relative to other entities that operate within theseindustries. Inter-segment pricing is determined on an arm’s length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well asthose that can be allocated on a reasonable basis. Unallocated items mainly comprise tax assetsand liabilities and corporate revenue, assets, expenses and liabilities.
UnauditedThree months ended 31 March 2011Total revenue from external customers 537,320 – – 537,320Interest expense (507) (75,054) – (75,561)Amortisation and depreciation (121,505) (1,552) – (123,057)Reportable segment losses before taxation (244,909) (420,223) – (665,132)
UnauditedThree months ended 31 March 2010Total revenue from external customers – – – –Interest expense (236) (73,695) – (73,931)Amortisation and depreciation (24,273) (1,821) – (26,094)Reportable segment losses before taxation (396,019) (309,037) – (705,056)
19 Loss per share
UnauditedThree months ended
31 March 31 March2011 2010US$ US$
Basic and diluted loss per share is based on:Net loss attributable to ordinary shareholders 668,655 705,056
UnauditedThree months ended
31 March 2011 31 March 2010Number of Number of
shares shares
Weighted average number of ordinary shares 13,274,438 12,187,000
For the 3 months ended 31 March 2010 and 2011, the convertible notes (refer to note 13) were notincluded in the determination of diluted loss per share of the Group, as the convertible notes areconsidered to be anti-dilutive potential ordinary shares.
In connection with this, the diluted loss per share is the same as basic loss per share for the 3months ended 31 March 2010 and 2011.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-14
20 Net asset value per share
Unaudited Audited31 March 31 December
2011 2010US$ US$
Net asset value per share (cents) 14.28 21.05
Net asset value per share for the 3 months ended 31 March 2010 and 2011 have been calculatedbased on number of ordinary shares of 12,187,000 and 13,274,438 shares respectively.
21 Commitments
(a) Capital commitments
At the respective reporting dates, the Group entered into contracts for:
Unaudited Audited31 March 31 December
2011 2010US$ US$
Exploration and evaluation assets 2,157,741 195,000Plant and equipment – 627,946
2,157,741 822,946
(b) Operating lease commitments
Leases entered into as lessee
The total future minimum lease payments under non-cancellable operating leases in respectof properties are payable as follows:
Unaudited Audited31 March 31 December
2011 2010US$ US$
Within 1 year 90,771 95,510After 1 year but within 5 years 67,374 93,968After 5 years – –
158,145 189,478
22 Significant related party transactions
Identity of related parties
For the purpose of these interim financial information, parties are considered to be related to theGroup if the Group has the ability, directly or indirectly, to control the party or exercise significantinfluence over the party in making financial and operating decisions, or vice versa, or where theGroup and the party are subject to common control or common significant influence. Relatedparties may be individuals or other entities.
Related party transactions
Other than disclosed elsewhere in the interim financial information, there were no significantrelated party transactions.
APPENDIX B – UNAUDITED CONDENSED INTERIM COMBINED FINANCIALINFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-15
23 Subsequent events
On 14 October 2011, the holders of the convertible notes of approximately US$3,039,837 haveconverted the convertible notes which bear interests of 6% to 10% per annum into 730,086ordinary shares.
On 14 October 2011, the Company issued and aggregate of 374,999,999 ordinary shares to theshareholders of CNMC HK as consideration for the acquisition of their shares in CNMC HK.
Pursuant to an extraordinary general meeting held on 14 October 2011, the Company’sshareholders approved, inter alia, the following:
(a) the conversion of the Company into a public listed company and the consequential changeof name to CNMC Goldmine Holdings Limited;
(b) the adoption of a new set of Articles of Association;
(c) the allotment and issue of 3,771,000 ordinary shares to PrimePartners Corporate FinancePte. Ltd. in part satisfaction of their management fee as Manager and Sponsor of the InitialPublic Offering of the Company;
(d) the allotment and issue of 2,022,000 ordinary shares to Chen Yan, the Chief FinancialOfficer of the Company;
(e) the allotment and issue of 23,900,000 ordinary shares in connection with the Initial PublicOffering of the shares of the Company on the Catalist Board of the Singapore ExchangeLimited. The new shares, when fully paid up will rank pari passu in all respects with theexisting shares of the Company;
(f) the approval of the listing and quotation of all issued ordinary shares (including the newordinary shares to be issued and allotted pursuant to the Initial Public Offering) and theordinary shares awarded under the CNMC Performance Share Plan on the Catalist Board ofthe Singapore Exchange Limited;
(g) the adoption of the CNMC Performance Share Plan, and the authorisation of the Company’sDirectors, pursuant to Section 161 of the Companies Act, to allot and issue ordinary sharesgranted under the CNMC Performance Share Plan; and
(h) that authority be given to the Directors, pursuant to Section 161 of the Companies Act andby way of ordinary resolution in a general meeting to issue shares by way of rights, bonus,agreements, options, warrants, debentures, convertible securities or other instrumentsconvertible into ordinary shares. Any issue of shares will need to comply with SGX-STListing Manual Section B: Rules of Catalist.
The discussion below provides information about certain provisions of our Memorandum and Articles ofAssociation and the laws of Singapore. This description is only a summary and is qualified by referenceto the laws of Singapore and our Articles.
The instruments that constitute and define our Company are the Memorandum and Articles ofAssociation of our Company.
Memorandum of Association
The registration number with which our Company was incorporated is 201119104K. Our Memorandum ofAssociation states that the liability of our Shareholders is limited to the amount, if any, for the time beingunpaid on the shares respectively held by them.
Articles of Association
The provisions in the Articles of Association of our Company relating to:
(a) a Director’s power to vote on a proposal, arrangement or contract in which the Director isinterested
Article 100
A Director shall not vote in respect of any contract or arrangement or any other proposalwhatsoever in which he has any personal material interest, directly or indirectly. A Director shall notbe counted in the quorum at a meeting in relation to any resolution on which he is debarred fromvoting.
(b) the Director’s power to vote on remuneration (including pension or other benefits) for himself or forany other director, and whether the quorum at a meeting of the board of Directors to vote onDirectors’ remuneration may include the director whose remuneration is the subject of the vote
Article 77
The ordinary remuneration of the Directors, which shall from time to time be determined by anOrdinary Resolution of the Company, shall not be increased except pursuant to an OrdinaryResolution passed at a General Meeting where notice of the proposed increase shall have beengiven in the notice convening the General Meeting and shall (unless such resolution otherwiseprovides) be divisible among the Directors as they may agree, or failing agreement, equally, exceptthat any Director who shall hold office for part only of the period in respect of which suchremuneration is payable shall be entitled only to rank in such division for a proportion ofremuneration related to the period during which he has held office. The ordinary remuneration ofan executive Director may not include a commission on or a percentage of turnover and theordinary remuneration of a non-executive Director shall be a fixed sum, and not by a commissionon or a percentage of profits or turnover.
Article 78
Any Director who holds any executive office, or who serves on any committee of the Directors, orwho otherwise performs services which in the opinion of the Directors are outside the scope of theordinary duties of a Director, may be paid such extra remuneration by way of salary, commission orotherwise as the Directors may determine, provided that such extra remuneration (in case of anexecutive Director) shall not be by way of commission on or a percentage of turnover and (in thecase of a Director other than a non-executive Director) shall be a fixed sum, and not by acommission on or a percentage of profits or turnover.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-1
Article 79
The Directors may repay to any Director all such reasonable expenses as he may incur inattending and returning from meetings of the Directors or of any committee of the Directors orGeneral Meetings or otherwise in or about the business of the Company.
Article 80
The Directors shall have power to pay and agree to pay pensions or other retirement,superannuation, death or disability benefits to (or to any person in respect of) any Director for thetime being holding any executive office and for the purpose of providing any such pensions orother benefits to contribute to any scheme or to pay premiums.
(c) borrowing powers exercisable by the Directors and how such borrowing powers can be varied
Article 108
Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise allthe powers of the Company to borrow money, to mortgage or charge its undertaking, property anduncalled capital and to issue debentures and other securities, whether outright or as collateralsecurity for any debt, liability or obligation of the Company or of any third party.
(d) retirement or non-retirement of Directors under an age limit requirement
Article 89
At each Annual General Meeting, one-third of the Directors for the time being (or, if their number isnot a multiple of three, the number nearest to but not less than one-third) shall retire from office byrotation, Provided that no Director holding office as Managing Director shall be subject toretirement by rotation or be taken into account in determining the number of Directors to retire. Forthe avoidance of doubt, each Director (other than a Director holding office as Managing Director)shall retire at least once every three years.
Article 90
The Directors to retire by rotation shall include (so far as necessary to obtain the number required)any Director who is due to retire at a General Meeting by reason of age or who wishes to retireand not to offer himself for re-election. Any further Directors so to retire shall be those of the otherDirectors subject to retirement by rotation who have been longest in office since their last re-election or appointment and so that as between persons who became or were last re-electedDirectors on the same day, those to retire shall (unless they otherwise agree among themselves)be determined by ballot. A retiring Director shall be eligible for re-election.
Article 91
The Company at a General Meeting at which a Director retires under any provision of theseArticles may by Ordinary Resolution fill the office being vacated by electing thereto the retiringDirector or some other person eligible for appointment. In default, the retiring Director shall bedeemed to have been re-elected except in any of the following cases:
(a) where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost; or
(b) where such Director has given notice in writing to the Company that he is unwilling to be re-elected; or
(c) where the default is due to the moving of a resolution in contravention of the next followingArticle; or
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-2
(d) where such Director has attained any retiring age applicable to him as Director.
The retirement shall not have effect until the conclusion of the meeting except where a resolution ispassed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected ordeemed to have been re-elected will continue in office without a break.
(e) the number of shares, if any, required for Director’s qualification
Article 76
A Director shall not be required to hold any shares of the Company by way of qualification. ADirector who is not a Member of the Company shall nevertheless be entitled to receive notice ofand to attend and speak at General Meetings.
(f) rights, preferences and restrictions attaching to each class of shares
Article 3
(A) Subject to the Act and to these Articles, no shares may be issued by the Directors withoutthe prior approval of the Company in General Meeting pursuant to Section 161 of the Act,but subject thereto and the terms of such approval, and to Article 5, and to any special rightsattached to any shares for the time being issued, the Directors may allot and issue shares orgrant options over or otherwise dispose of the same to such persons on such terms andconditions and for such consideration and at such time and whether or not subject to thepayment of any part of the amount thereof in cash or otherwise as the Directors may thinkfit, and any shares may, subject to compliance with Sections 70 and 75 of the Act, be issuedwith such preferential, deferred, qualified or special rights, privileges, conditions orrestrictions, whether as regards Dividend, return of capital, participation in surplus assetsand profits, voting, conversion or otherwise, as the Directors may think fit, and preferenceshares may be issued which are or at the option of the Company are liable to be redeemed,the terms and manner of redemption being determined by the Directors in accordance withthe Act, Provided Always that no options shall be granted over unissued shares except inaccordance with the Act and the Designated Stock Exchange’s listing rules.
(B) The Directors may, at any time after the allotment of any share but before any person hasbeen entered in the Register of Members as the holder, recognise a renunciation thereof bythe allottee in favour of some other person and may accord to any allottee of a share a rightto effect such renunciation upon and subject to such terms and conditions as the Directorsmay think fit to impose.
(C) Except so far as otherwise provided by the conditions of issue or by these Articles, all newshares shall be issued subject to the provisions of the Statutes and of these Articles withreference to allotment, payment of calls, lien, transfer, transmission, forfeiture or otherwise.
Article 8
(A) In the event of preference shares being issued, the total number of issued preference sharesshall not at any time exceed the total number of the issued ordinary shares. Preferenceshareholders shall have the same rights as ordinary shareholders as regards receiving ofnotices, reports and balance-sheets and attending General Meetings of the Company, andpreference shareholders shall also have the right to vote at any General Meeting convenedfor the purpose of reducing capital or winding-up or sanctioning a sale of the undertaking ofthe Company or where the proposal to be submitted to the General Meeting directly affectstheir rights and privileges or when the Dividend on the preference shares is more than sixmonths in arrear.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-3
(B) The Company has power to issue further preference capital ranking equally with, or inpriority to, preference shares already issued.
Article 9
(A) Whenever the share capital of the Company is divided into different classes of shares, thevariation or abrogation of the special rights attached to any class may, subject to theprovisions of the Act, be made either with the consent in writing of the holders of three-quarters of the total number of the issued shares of the class or with the sanction of aSpecial Resolution passed at a separate General Meeting of the holders of the shares of theclass (but not otherwise) and may be so made either whilst the Company is a going concernor during or in contemplation of a winding-up. To every such separate General Meeting allthe provisions of these Articles relating to General Meetings of the Company and to theproceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall betwo or more persons holding at least one-third of the total number of the issued shares ofthe class present in person or by proxy or attorney and that any holder of shares of the classpresent in person or by proxy or attorney may demand a poll and that every such holdershall on a poll have one vote for every share of the class held by him where the class is aclass of equity shares within the meaning of Section 64(1) of the Act or at least one vote forevery share of the class where the class is a class of preference shares within the meaningof Section 180(2) of the Act, Provided Always that where the necessary majority for such aSpecial Resolution is not obtained at such General Meeting, the consent in writing, ifobtained from the holders of three-quarters of the total number of the issued shares of theclass concerned within two months of such General Meeting, shall be as valid and effectualas a Special Resolution carried at such General Meeting.
(B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preferencecapital (other than redeemable preference capital) and any variation or abrogation of therights attached to preference shares or any class thereof.
(C) The special rights attached to any class of shares having preferential rights shall not unlessotherwise expressly provided by the terms of issue thereof be deemed to be varied by thecreation or issue of further shares ranking as regards participation in the profits or assets ofthe Company in some or all respects pari passu therewith but in no respect in prioritythereto.
Article 14
Every person whose name is entered as a Member in the Register of Members shall be entitled,within ten market days (or such period as the Directors may determine having regard to anylimitation thereof as may be prescribed by the Designated Stock Exchange from time to time) afterthe closing date of any application for shares or (as the case may be) the date of lodgement of aregistrable transfer, to one certificate for all his shares of any one class or to several certificates inreasonable denominations each for a part of the shares so allotted or transferred.
Article 34
(A) There shall be no restriction on the transfer of fully paid up shares (except where required bylaw or by the rules, bye-laws or listing rules of the Designated Stock Exchange) but theDirectors may in their discretion decline to register any transfer of shares upon which theCompany has a lien, and in the case of shares not fully paid up, may refuse to register atransfer to a transferee of whom they do not approve, Provided Always that in the event ofthe Directors refusing to register a transfer of shares, the Company shall within ten marketdays (or such period as the Directors may determine having regard to any limitation thereofas may be prescribed by the Designated Stock Exchange from time to time) after the dateon which the application for a transfer of shares was made, serve a notice in writing to theapplicant stating the facts which are considered to justify the refusal as required by theStatutes.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-4
(B) The Directors may decline to register any instrument of transfer unless:
(i) such fee not exceeding S$2.00 (or such other fee as the Directors may determinehaving regard to any limitation thereof as may be prescribed by the Designated StockExchange from time to time) as the Directors may from time to time require is paid tothe Company in respect thereof;
(ii) the amount of proper duty (if any) with which each instrument of transfer is chargeableunder any law for the time being in force relating to stamps is paid;
(iii) the instrument of transfer is deposited at the Office or at such other place (if any) asthe Directors may appoint accompanied by a certificate of payment of stamp duty (ifstamp duty is payable on such instrument of transfer in accordance with any law forthe time being in force relating to stamp duty), the certificates of the shares to which itrelates, and such other evidence as the Directors may reasonably require to show theright of the transferor to make the transfer and, if the instrument of transfer is executedby some other person on his behalf, the authority of the person so to do; and
(iv) the instrument of transfer is in respect of only one class of shares.
Article 41
A reference to a Member shall be a reference to a registered holder of shares in the Company, orwhere such registered holder is CDP, the Depositors on behalf of whom CDP holds the shares,Provided that:
(a) a Depositor shall only be entitled to attend any General Meeting and to speak and votethereat if his name appears on the Depository Register maintained by CDP forty-eight (48)hours before the General Meeting as a Depositor on whose behalf CDP holds shares in theCompany, the Company being entitled to deem each such Depositor, or each proxy of aDepositor who is to represent the entire balance standing to the Securities Account of theDepositor, to represent such number of shares as is actually credited to the SecuritiesAccount of the Depositor as at such time, according to the records of CDP as supplied byCDP to the Company, and where a Depositor has apportioned the balance standing to hisSecurities Account between two proxies, to apportion the said number of shares betweenthe two proxies in the same proportion as previously specified by the Depositor in appointingthe proxies; and accordingly no instrument appointing a proxy of a Depositor shall berendered invalid merely by reason of any discrepancy between the proportion of Depositor’sshareholding specified in the instrument of proxy, or where the balance standing to aDepositor’s Securities Account has been apportioned between two proxies the aggregate ofthe proportions of the Depositor’s shareholding they are specified to represent, and the truebalance standing to the Securities Account of a Depositor as at the time of the GeneralMeeting, if the instrument is dealt with in such manner as is provided above;
(b) the payment by the Company to CDP of any Dividend payable to a Depositor shall to theextent of the payment discharge the Company from any further liability in respect of thepayment;
(c) the delivery by the Company to CDP of provisional allotments or share certificates in respectof the aggregate entitlements of Depositors to new shares offered by way of rights issue orother preferential offering or bonus issue shall to the extent of the delivery discharge theCompany from any further liability to each such Depositor in respect of his individualentitlement; and
(d) the provisions in these Articles relating to the transfers, transmissions or certification ofshares shall not apply to the transfer of book-entry securities (as defined in the Statutes).
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-5
Article 42
Except as required by the Statutes or law, no person shall be recognised by the Company asholding any share upon any trust, and the Company shall not be bound by or compelled in anyway to recognise (even when having notice thereof) any equitable, contingent, future or partialinterest in any share, or any interest in any fractional part of a share, or (except only as by theseArticles or by the Statutes or law otherwise provided) any other right in respect of any share,except an absolute right to the entirety thereof in the registered holder and nothing in theseArticles contained relating to CDP or to Depositors or in any depository agreement made by theCompany with any common depository for shares shall in any circumstances be deemed to limit,restrict or qualify the above.
Article 63
In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in personor by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for thispurpose seniority shall be determined by the order in which the names stand in the Register ofMembers or, as the case may be, the order in which the names appear in the Depository Registerin respect of the joint holding.
Article 64
Where in Singapore or elsewhere a receiver or other person (by whatever name called) has beenappointed by any court claiming jurisdiction in that behalf to exercise powers with respect to theproperty or affairs of any Member on the ground (however formulated) of mental disorder, theDirectors may in their absolute discretion, upon or subject to production of such evidence of theappointment as the Directors may require, permit such receiver or other person on behalf of suchMember, to vote in person or by proxy at any General Meeting, or to exercise any other rightconferred by Membership in relation to General Meetings.
Article 65
No Member shall be entitled in respect of shares held by him to vote at a General Meeting eitherpersonally or by proxy or to exercise any other right conferred by membership in relation toGeneral Meetings if any call or other sum payable by him to the Company in respect of suchshares remains unpaid.
(g) any change in capital
Article 10
The Company may by Ordinary Resolution:
(a) consolidate and divide all or any of its share capital;
(b) sub-divide its shares, or any of them, Provided Always that in such subdivision theproportion between the amount paid and the amount (if any) unpaid on each reduced shareshall be same as it was in the case of the share from which the reduced share is derived;
(c) convert or exchange any class of shares into or for any other class of shares; and/or
(d) cancel the number of shares which at the date of the passing of the resolution in that behalfhave not been taken or agreed to be taken by any person or which have been forfeited anddiminish the amount of its share capital by the number of the shares so cancelled.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-6
Article 11
(A) The Company may reduce its share capital or any other undistributable reserve in anymanner permitted, and with, and subject to, any incident authorized, and consent orconfirmation required, by law.
(B) The Company may purchase or otherwise acquire its issued shares subject to and inaccordance with the provisions of the Statutes and any applicable rules of the DesignatedStock Exchange (hereafter, the “Relevant Laws”), on such terms and subject to suchconditions as the Company may in General Meeting prescribe in accordance with theRelevant Laws. Any shares purchased or acquired by the Company as aforesaid shall,unless held in treasury in accordance with the Act, be deemed to be cancelled immediatelyon purchase or acquisition by the Company. On the cancellation of any share as aforesaid,the rights and privileges attached to that share shall expire. In any other instance, theCompany may hold or deal with any such share which is so purchased or acquired by it insuch manner as may be permitted by, and in accordance with the Relevant Laws. Withoutprejudice to the generality of the foregoing, upon cancellation of any share purchased orotherwise acquired by the Company pursuant to these Articles and the Statutes, the numberof issued shares of the Company shall be diminished by the number of shares so cancelled,and, where any such cancelled share was purchased or acquired out of the capital of theCompany, the amount of share capital of the Company shall be reduced accordingly.
(h) any change in the respective rights of the various classes of shares including the action necessaryto change the rights
Article 9
(A) Whenever the share capital of the Company is divided into different classes of shares, thevariation or abrogation of the special rights attached to any class may, subject to theprovisions of the Act, be made either with the consent in writing of the holders of three-quarters of the total number of the issued shares of the class or with the sanction of aSpecial Resolution passed at a separate General Meeting of the holders of the shares of theclass (but not otherwise) and may be so made either whilst the Company is a going concernor during or in contemplation of a winding-up. To every such separate General Meeting allthe provisions of these Articles relating to General Meetings of the Company and to theproceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall betwo or more persons holding at least one-third of the total number of the issued shares ofthe class present in person or by proxy or attorney and that any holder of shares of the classpresent in person or by proxy or attorney may demand a poll and that every such holdershall on a poll have one vote for every share of the class held by him where the class is aclass of equity shares within the meaning of Section 64(1) of the Act or at least one vote forevery share of the class where the class is a class of preference shares within the meaningof Section 180(2) of the Act, Provided Always that where the necessary majority for such aSpecial Resolution is not obtained at such General Meeting, the consent in writing, ifobtained from the holders of three-quarters of the total number of the issued shares of theclass concerned within two months of such General Meeting, shall be as valid and effectualas a Special Resolution carried at such General Meeting.
(B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preferencecapital (other than redeemable preference capital) and any variation or abrogation of therights attached to preference shares or any class thereof.
(C) The special rights attached to any class of shares having preferential rights shall not unlessotherwise expressly provided by the terms of issue thereof be deemed to be varied by thecreation or issue of further shares ranking as regards participation in the profits or assets ofthe Company in some or all respects pari passu therewith but in no respect in prioritythereto.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-7
(i) dividends and distribution
Article 123
The Company may by Ordinary Resolution declare Dividends but no such Dividend shall exceedthe amount recommended by the Directors.
Article 124
If and so far as in the opinion of the Directors, the profits of the Company justify such payments,the Directors may declare and pay the fixed Dividends on any class of shares carrying a fixedDividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed forthe payment thereof and may also from time to time declare and pay interim Dividends on sharesof any class of such amounts and on such dates and in respect of such periods as they think fit.
Article 125
Subject to any rights or restrictions attached to any shares or class of shares and except asotherwise permitted under the Act:
(a) all Dividends in respect of shares must be paid in proportion to the number of shares heldby a Member, but where shares are partly paid, all Dividends must be apportioned and paidproportionately to the amounts paid or credited as paid on the partly paid shares; and
(b) all Dividends must be apportioned and paid proportionately to the amounts so paid orcredited as paid during any portion or portions of the period in respect of which the Dividendis paid.
For the purposes of this Article, an amount paid or credited as paid on a share in advance of a callis to be ignored.
Article 126
(A) No Dividend shall be paid otherwise than out of profits available for distribution under theprovisions of the Statutes. The payment by the Directors of any unclaimed dividends or othermoneys payable on or in respect of a share into a separate account shall not constitute theCompany a trustee in respect thereof. All Dividends remaining unclaimed after one year fromhaving been first payable may be invested or otherwise made use of by the Directors for thebenefit of the Company, and any Dividend or any such moneys unclaimed after six yearsfrom having been first payable shall be forfeited and shall revert to the Company ProvidedAlways that the Directors may at any time thereafter at their absolute discretion annul anysuch forfeiture and pay the Dividend so forfeited to the person entitled thereto prior to theforfeiture. If CDP returns any such Dividend or moneys to the Company, the relevantDepositor shall not have any right or claim in respect of such Dividend or moneys againstthe Company if a period of six years has elapsed from the date of the declaration of suchDividend or the date on which such other moneys are first payable.
(B) A payment by the Company to CDP of any Dividend or other moneys payable to a Depositorshall, to the extent of the payment made, discharge the Company from any liability to theDepositor in respect of that payment.
Article 127
No Dividend or other monies payable on or in respect of a share shall bear interest as against theCompany.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-8
Article 128
(A) The Directors may retain any Dividend or other monies payable on or in respect of a shareon which the Company has a lien and may apply the same in or towards satisfaction of thedebts, liabilities or engagements in respect of which the lien exists.
(B) The Directors may retain the Dividends payable upon shares in respect of which any personis under the provisions as to the transmission of shares herein before contained entitled tobecome a Member, or which any person is under those provisions entitled to transfer, untilsuch person shall become a Member in respect of such shares or shall transfer the same.
Article 129
The waiver in whole or in part of any Dividend on any share by any document (whether or notunder seal) shall be effective only if such document is signed by the Member (or the personentitled to the share in consequence of the death or bankruptcy of the holder) and delivered to theCompany and if or to the extent that the same is accepted as such or acted upon by the Company.
Article 130
The Company may upon the recommendation of the Directors by Ordinary Resolution directpayment of a Dividend in whole or in part by the distribution of specific assets (and in particular ofpaid-up shares or debentures of any other company) and the Directors shall give effect to suchresolution. Where any difficulty arises with regard to such distribution, the Directors may settle thesame as they think expedient and in particular, may issue fractional certificates, may fix the valuefor distribution of such specific assets or any part thereof, may determine that cash payments shallbe made to any Member upon the footing of the value so fixed in order to adjust the rights of allparties and may vest any such specific assets in trustees as may seem expedient to the Directors.
Article 131
Any Dividend or other moneys payable in cash on or in respect of a share may be paid by chequeor warrant sent through the post to the registered address appearing in the Register of Members or(as the case may be) the Depository Register of the Member or person entitled thereto (or, if twoor more persons are registered in the Register of Members or (as the case may be) entered in theDepository Register as joint holders of the share or are entitled thereto in consequence of thedeath or bankruptcy of the holder, to any one of such persons) or to such person and suchaddress as such Member or person or persons may by writing direct. Every such cheque orwarrant shall be made payable to the order of the person to whom it is sent or to such person asthe holder or joint holders or person or persons entitled to the share in consequence of the deathor bankruptcy of the holder may direct and payment of the cheque or warrant by the banker uponwhom it is drawn shall be a good discharge to the Company. Every such cheque or warrant shallbe sent at the risk of the person entitled to the money represented thereby.
Article 132
If two or more persons are registered in the Register of Members or (as the case may be) theDepository Register as joint holders of any share, or are entitled jointly to a share in consequenceof the death or bankruptcy of the holder, any one of them may give effectual receipts for anyDividend or other moneys payable or property distributable on or in respect of the share.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-9
Article 133
Any resolution declaring a Dividend on shares of any class, whether a resolution of the Companyin General Meeting or a resolution of the Directors, may specify that the same shall be payable tothe persons registered as the holders of such shares in the Register of Members or (as the casemay be) the Depository Register at the close of business on a particular date and thereupon theDividend shall be payable to them in accordance with their respective holdings so registered, butwithout prejudice to the rights inter se in respect of such Dividend of transferors and transferees ofany such shares.
(j) any limitation on the right to own Shares, including limitations on the right of non-resident orforeign Shareholders to hold or exercise voting rights on their Shares
Article 5
(A) Subject to any direction to the contrary that may be given by the Company in GeneralMeeting or except as permitted by the rules of the Designated Stock Exchange, all newshares shall before issue be offered to such persons who as at the date (as determined bythe Directors) of the offer are entitled to receive notices from the Company of GeneralMeetings in proportion, as far as the circumstances admit, to the number of the existingshares to which they are entitled. The offer shall be made by notice specifying the number ofshares offered, and limiting a time within which the offer, if not accepted, will be deemed tobe declined, and, after the expiration of that time, or on the receipt of an intimation from theperson to whom the offer is made that he declines to accept the shares offered, theDirectors may dispose of those shares in such manner as they think most beneficial to theCompany. The Directors may likewise so dispose of any new shares which (by reason of theratio which the new shares bear to shares held by persons entitled to an offer of newshares) cannot, in the opinion of the Directors, be conveniently offered under this Article5(A).
(B) Notwithstanding Article 5(A) above, the Company may by Ordinary Resolution in GeneralMeeting give to the Directors a general authority, either unconditionally or subject to suchconditions as may be specified in the Ordinary Resolution, to:
(a) (i) issue shares in the capital of the Company (“shares”) whether by way of rights,bonus or otherwise; and/or
(ii) make or grant offers, agreements or options (collectively, “Instruments”) thatmight or would require shares to be issued, including but not limited to thecreation and issue of (as well as adjustments to) warrants, debentures or otherinstruments convertible into shares; and
(b) (notwithstanding the authority conferred by the Ordinary Resolution may have ceasedto be in force) issue shares in pursuance of any Instrument made or granted by theDirectors while the Ordinary Resolution was in force,
Provided that:
(1) the aggregate number of shares to be issued pursuant to the OrdinaryResolution (including shares to be issued in pursuance of Instruments made orgranted pursuant to the Ordinary Resolution) shall be subject to such limits andmanner of calculation as may be prescribed by the Designated StockExchange;
(2) in exercising the authority conferred by the Ordinary Resolution, the Companyshall comply with the provisions of the listing rules of the Designated StockExchange for the time being in force (unless such compliance is waived by theDesignated Stock Exchange) and these Articles; and
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-10
(3) (unless revoked or varied by the Company in General Meeting) the authorityconferred by the Ordinary Resolution shall not continue in force beyond theconclusion of the Annual General Meeting of the Company next following thepassing of the Ordinary Resolution, or the date by which such Annual GeneralMeeting of the Company is required by law to be held, or the expiration of suchother period as may be prescribed by the Act (whichever is the earliest).
(C) The Company may, notwithstanding Articles 5(A) and 5(B) above, authorize the Directors notto offer new shares to Members to whom by reason of foreign securities laws, such offersmay not be made without registration of the shares or a offer document or other document,but to sell the entitlements to the new shares on behalf of such Members on such terms andconditions as the Company may direct.
Article 34
(A) There shall be no restriction on the transfer of fully paid up shares (except where required bylaw or by the rules, bye-laws or listing rules of the Designated Stock Exchange) but theDirectors may in their discretion decline to register any transfer of shares upon which theCompany has a lien, and in the case of shares not fully paid up, may refuse to register atransfer to a transferee of whom they do not approve, Provided Always that in the event ofthe Directors refusing to register a transfer of shares, the Company shall within ten marketdays (or such period as the Directors may determine having regard to any limitation thereofas may be prescribed by the Designated Stock Exchange from time to time) after the dateon which the application for a transfer of shares was made, serve a notice in writing to theapplicant stating the facts which are considered to justify the refusal as required by theStatutes.
(B) The Directors may decline to register any instrument of transfer unless:
(a) such fee not exceeding S$2.00 (or such other fee as the Directors may determinehaving regard to any limitation thereof as may be prescribed by the Designated StockExchange from time to time) as the Directors may from time to time require is paid tothe Company in respect thereof;
(b) the amount of proper duty (if any) with which each instrument of transfer is chargeableunder any law for the time being in force relating to stamps is paid;
(c) the instrument of transfer is deposited at the Office or at such other place (if any) asthe Directors may appoint accompanied by a certificate of payment of stamp duty (ifstamp duty is payable on such instrument of transfer in accordance with any law forthe time being in force relating to stamp duty), the certificates of the shares to which itrelates, and such other evidence as the Directors may reasonably require to show theright of the transferor to make the transfer and, if the instrument of transfer is executedby some other person on his behalf, the authority of the person so to do; and
(d) the instrument of transfer is in respect of only one class of shares.
Article 42
Except as required by the Statutes or law, no person shall be recognised by the Company asholding any share upon any trust, and the Company shall not be bound by or compelled in anyway to recognise (even when having notice thereof) any equitable, contingent, future or partialinterest in any share, or any interest in any fractional part of a share, or (except only as by theseArticles or by the Statutes or law otherwise provided) any other right in respect of any share,except an absolute right to the entirety thereof in the registered holder and nothing in theseArticles contained relating to CDP or to Depositors or in any depository agreement made by theCompany with any common depository for shares shall in any circumstances be deemed to limit,restrict or qualify the above.
APPENDIX C – SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
C-11
I. CMNM MINING GROUP SDN. BHD (Company No. 757691-M) (“CMNM”)
A. CORPORATE MATTERS
1. CMNM was duly incorporated in Malaysia under the Companies Act 1965 (“Companies Act”) on27 December 2006 under its present name to carry on the business of gold mining.
2. The present authorised, issued and paid-up share capital of CMNM is MYR500,000.00 comprisingof 500,000 ordinary shares of MYR1.00 each. The shareholders of CMNM as at the date of thisReport and their respective shareholding are as follows:
Number of Percentage ofName of Shareholders Shares held Shares held
Perbadanan Kemajuan Iktisad Negeri Kelantan (“KSEDC”) 50,000 10%
Enrich Merger Sdn. Bhd. 25,000 5%
CNMC Goldmine Limited (“CNMC”) 405,000 81%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 20,000 4%
Total 500,000 100%
3. The present directors of CMNM are Hu Pang Chaw, Abdul Halim bin Mohd Yusoff, Lin Xiang Xiong@ Lin Ye and Choo Chee Kong and the Secretary of CMNM is Tan Siew Chin.
4. As at the date of this Report, CMNM does not have any subsidiaries. Notwithstanding this, CMNMhad on 28 January 2011 entered into a joint venture agreement with Xiamen, Shen Kun Group Co.Ltd (“Xiamen”) to incorporate a joint venture company which will contract with CMNM and otherCNMC subsidiaries for Lead-Zinc rock mining at the mining site and to jointly manage miningproduction.
On 13 March 2011, CMNM-Juyuan Mining Service Sdn. Bhd. (“CMNM-Juyuan”) was incorporatedas the joint venture company. Pursuant to the joint venture agreement, CMNM and Xiamen shallhold shares in CMNM-Juyuan in the agreed proportion of 51%:49%.
As at the date of this Report, 3 subscriber shares have been issued and allotted to 3 individuals,namely, Lin Xiang Xiong @ Lin Ye, Yeap Kok Seng and Abdul Halim bin Mohd Yusoff, who are alsothe present directors of CMNM-Juyuan. The Management has informed us that the 3 subscribershares will be transferred and new shares will be issued and allotted to CMNM and Xiamenrespectively in the proportion of 51% : 49%. Notwithstanding this, as at the date of this Report, theManagement has informed us that the shares have yet to be issued and allotted to CMNM andXiamen. CMNM-Juyuan is therefore not a subsidiary of CMNM as at the date of this Report.
B. GOVERNMENT REGULATIONS AND APPROVALS
1. Mining Rights
1.1 The Kelantan State Authority had approved a mining lease to be issued to KSEDC vide letterPTG.KN.SG.20/2/178(33) dated 23 April 2007 for the purpose of undertaking the operation ofexploring, mining, removing, processing and selling gold in an area covering approximately 957.52hectares within Sokor block known as Sungai Amang and Sungai Sejana, Mukim Sokor, Sokor,Tanah Merah, Kelantan, Malaysia (“Sokor Block”).
1.2 On 16 May 2007, KSEDC and CNMC entered into an agreement (“Original Agreement”) wherethe parties agreed to combine their respective resources to explore, exploit, win and obtain goldand other minerals from the Sokor Block through CMNM.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-1
1.3 Following the payment by CNMC of an amount of MYR1,018,020.00 to the Department of Landsand Mines of Kelantan on 13 June 2007 as stipulated under the Original Agreement, the mininglease for Lot 2014 pursuant to ML 2/2008 (“Mining Lease”) was issued to KSEDC pursuant to theKelantan Mineral Enactment 2001 (“Mineral Enactment”) for a term of 10 years commencing from8 April 2008 and expiring on 7 April 2018. There are conditions attached to the Mining Lease aswell as statutory conditions to which the holder of the Mining Lease must comply with. We areunable to independently verify the compliance with the conditions by the holder of the MiningLease however the Management has informed us that to the best of their knowledge all conditionsto the Mining Lease as well as the statutory conditions have been complied with.
1.4 Subsequent to the issuance of the Mining Lease, in order to rectify several issues relating to thevalid grant of the mining rights under the Original Agreement and treatment of revenue by CMNMand CNMC, a tripartite agreement dated 21 April 2011 (“Tripartite Agreement”) was entered intobetween CNMC, CMNM and KSEDC to further give effect to the spirit and intent of the OriginalAgreement wherein:
(a) certain terms of the Original Agreement were revised as more particularly described inParagraph B1.5.3 below.
(b) CMNM is included as a party to the Original Agreement wherein the terms and obligationsstated therein were extended to CMNM; and
(c) the Tripartite Agreement is supplemental to the Original Agreement and the OriginalAgreement shall continue to have full force and effect.
The Original Agreement and the Tripartite Agreement are collectively referred to as “Agreements”.
1.5 Mining Rights
1.5.1 Under the Original Agreement, it is stated that CNMC shall have the full rights (“MiningRights”) to carry on the mining, removing, processing and selling of the gold (“Works”) onthe Sokor Block for a period of 10 years from the date of issuance of the Mining Lease. Itshould be noted that the Mining Lease is held by KSEDC and not by CNMC orCMNM. CNMC and CMNM have only been granted Mining Rights in contractualnature pursuant to the Agreements. It is provided under the Original Agreement thatKSEDC shall use its best endeavour before 1 year from the expiry of the Mining Lease toapply for the renewal of the Mining Lease in CNMC’s name for the next 21 years subject tothe consent and approval of the Kelantan State Authority and the right of first refusal byCNMC provided always that CNMC had settled all payments due to the Kelantan StateAuthority and also subject to the parties entering into a new agreement.
1.5.2 It is further stated in the Original Agreement that CNMC shall carry out all the Works andall operations for the exploration of mining, development and production of precious metalsincluding gold and other minerals (“Mining Operations”) on the Sokor Block throughCMNM which has been set up for this purpose.
1.5.3 After the Mining Lease was issued, CMNM, CNMC and KSEDC entered into the TripartiteAgreement. The Tripartite Agreement states inter alia that:
(a) KSEDC, as the holder of the Mining Lease, grants CMNM the exclusive right to carryout the Works and the Mining Operations at the Sokor Block as stated in the OriginalAgreement;
(b) all Works and Mining Operations carried out by CMNM subject to the CMNM Boardof Director’s approvals to such Works done in accordance with the OriginalAgreement prior to the date of the Tripartite Agreement when entered into are ratifiedby KSEDC and CNMC;
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-2
(c) all gold and minerals mined, processed and obtained by CMNM shall belong to andbeneficially-owned by CMNM;
(d) CMNM shall pay KSEDC a tribute amounting to 5% of the gross proceeds of thesales value of other minerals when executed from the Said Area, subject to StateApproval;
(e) the undertakings and covenants given by KSEDC to CNMC are extended to CMNM;and
(f) the covenants and agreements of KSEDC and the rights and benefits of CNMC areextended by KSEDC to CMNM.
1.6 Royalties and Tributes – The Agreements stipulate that CMNM shall pay:
1.6.1 a royalty amounting to 5% of the gross proceeds of the sales value of gold when executedto the Kelantan State Authority and the payment of royalty to be effected as prescribed inthe Kelantan Mineral Regulations 2002;
1.6.2 a tribute amounting to 3% of the gross proceeds of the sales value of primary gold whenexecuted to KSEDC;
1.6.3 a tribute amounting to 10% of the gross proceeds of the sales value of alluvial and eluvialgold when executed to KSEDC; and
1.6.4 a tribute amounting to 5% of the gross proceeds of the sales value of other minerals whenexecuted to KSEDC.
The Management has confirmed that as at the date of this Report, all royalties and tribute havebeen paid to the relevant parties and authorities.
1.7 Change in Shareholding and Directors in CMNM
1.7.1 Under the Original Agreement, 10% of the shares in CMNM are to be allocated to KSEDC.On 29 May 2007, 50,000 shares in CMNM constituting 10% of the share capital of CMNMwere issued and allotted to KSEDC.
1.7.2 Any disposal of interest in all or any of the shares in CMNM or any change, addition,substitution or increase in the number of shareholders of CMNM must obtain the priorwritten consent of KSEDC. The shareholding in CMNM shall be maintained in theproportion of 80% (CNMC), 10% (KSEDC) and 10% (local Kelantan company) respectively.KSEDC must also be notified of any change, addition or substitution of the directors ofCMNM.
1.7.2 We note that there has been a change in shareholding in CMNM through the transfer of5,000 shares from Hu Pang Chaw to CNMC Goldmine Ltd on 16 July 2011 and a changein directors in CMNM with the resignation of Lee Kong Hian as director of CMNM. CMNMhas on 16 August 2011 obtained the written consent of KSEDC in relation to the abovechanges.
2. Approved Operational Mining Scheme
2.1 The Department of Mineral and Geosciences of Kelantan had on 19 July 2010 issued its approvalto KSEDC under Section 10 of the Mineral Development Act 1994 (“MDA”) for the operationalmining scheme dated 31 May 2010 to carry out small scale operation by CMNM on the SokorBlock. The approved operational mining scheme expired on 29 June 2011 and was renewed for afurther period from 30 June 2011 to 29 June 2012.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-3
2.2 The approved operational mining scheme is subject to certain conditions. We are unable toindependently verify compliance with the conditions under the approved operations mining schemehowever the Management has informed us that all the conditions under the approved operationalmining scheme have been complied with.
3. Notice of commencement of development and mining work
3.1 Under Section 74(1) of the Mineral Enactment, a written notice must be submitted to the Directorand the Superintendant of Mines upon commencement of any development work on the landwhich is the subject of the Mining Lease and within 14 days before commencing to mine the saidland.
3.2 CMNM had issued a letter dated 21 February 2011 notifying the Department of Mineral andGeosciences of Kelantan of the commencement of work on the land under the Mining Lease fromJuly 2010. Notwithstanding the aforesaid, it should be noted that the notice was issued after thecommencement of the mining of the said land.
4. Manufacturing Licence
4.1 CMNM holds a manufacturing licence (Licence No. A017922, Serial No. A 030462) dated 2December 2010 issued by the Ministry of International Trade and Industry (“MITI”) to manufacture“gold dore bars” with effect from 21 June 2010 at the Sokor Block.
4.2 The manufacturing licence is subject to conditions including the requirement to notify MITI in theevent of a change in the shareholding structure of composition of the board of directors of CMNMand to utilise the services of Malaysian citizens including appointment of distributors which areowned by Malaysian citizens where at least 30% of domestic sales are to be distributed byBumiputera distributors. We are unable to independently verify compliance with the conditionsunder the manufacturing licence however the Management has confirmed that all conditionsattached to the manufacturing licence have been complied with.
5. Factories and Machineries
5.1 Section 19 of the Factories and Machinery Act 1967 (“FMA”) requires certain machineries to beissued with valid certificates of fitness before it is permitted to be operated. As at the date of thisReport, CMNM is in possession of two unfired pressure vessels (air compressor) which requirecertificates of fitness. We have sighted the certificates of fitness for both unfired pressure vessels.
5.2 In addition, the aforesaid unfired pressure vessels cannot be installed without the prior approval ofthe Chief Inspector of Factories and Machinery (“CI(FM)”). CMNM had lodged the prescribednotices with the CI(FM) to install various machineries on 10 January 2011 and 16 March 2011.Notwithstanding this, it should be noted that the prescribed notices were served on the CI(FM)subsequent to the installation of the machinery. The CI(FM) has approved the installation of themachineries listed in the prescribed notices above.
5.3 Section 34 of the FMA provides that no person is to use any premises as a factory until 1 monthafter he has served on the CI(FM) a notice in the prescribed form. CMNM had served theprescribed notice on CI(FM) however it should be noted that the prescribed notice was served onCI(FM) after the premises commenced its use as a factory in July 2010. Notwithstanding that, itshould be noted that CI(FM) had responded on 14 April 2011 that CMNM had been duly registeredwith the Department of Occupational Safety and Health (“DOSH”) and provided CMNM with aWorkplace Registration Number.
6. Certificate of Registration for Generators
6.1 Section 21(2) of the Electricity Supply Act 1990 inter alia prohibits a person from possessing oroperating installations unless the installations are registered on a valid Certificate of Registration.Installations are defined under the Electricity Supply Act 1990 to include generators.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-4
6.2 As at the date of this Report, CMNM is in possession of three generators, one of which is a back-up generator. The two generators are required to be issued with certificates of registration whereasthe back-up generator does not need to be issued with a certificate of registration in accordance toSection 21(2) of the Electricity Supply Act 1990.
6.3 We have sighted the certificates of registration issued by the Energy Commission for bothgenerators owned by CMNM.
6.4 The certificates of registration are subject to conditions imposed by the Energy Commission. TheManagement has confirmed to us that all conditions attached to the Certificate of Registration forgenerators have been complied with.
7. Control of Supplies Act 1961
7.1 Section 20 (1) of the Control of Supplies Act 1961 read together with Regulation 9(2) and theSchedule of the Control of Supplies Regulations 1974 requires a person to possess letters ofauthority in order to purchase and store diesel fuel.
7.2 We have sighted a letter of authority issued by the Ministry of Domestic Trade, Consumerism andCo-operatives pursuant to the Control of Supplies Act issued to CMNM to purchase and store amaximum of 24,570 litres of diesel at Sokor Block. This letter is valid for a period from 8 June 2011to 7 June 2012.
7.3 The letter of authority is subject to conditions imposed by the Ministry of Domestic Trade,Consumerism and Co-operatives. The Management has confirmed to us that all conditionsattached to the letter of authority have been complied with.
8. Pioneer Status Incentive
8.1 The Malaysian Industrial Development Authority (“MIDA”) had on 18 June 2010 approved CMNM’sapplication for a pioneer status incentive under the Promotion of Investments Act 1986 whereCMNM is granted with 100% tax exemption on statutory income for 5 years for the production of‘gold dore bars’ subject to the following conditions:
(a) CMNM shall operate at the factory site in Kelantan Darul Naim state.
(b) The value added on the product shall attain 92% as proposed.
(c) The total staff at the management, technical and supervisory levels shall attain 57% of thetotal work force of CMNM as proposed.
The value added is assessed as total gross sales minus the costs of raw materials.
8.2 CMNM is required to apply for a Pioneer Certificate within a period of 24 months from the date ofthe approval by submitting the relevant corporate documents to MIDA. CMNM is also required toinform MIDA if CMNM changes its factory site. The Management has informed us that CMNM hasyet to apply for the pioneer certificate.
9. Approval for Employment Expatriates
9.1 CMNM has been issued with approval by MIDA on 18 June 2010 to employ a total of 4 expatriatepersonnel comprising 2 expatriate Metallurgy Engineers and 2 expatriate Mechanical and ElectricalEngineers, for a period of 5 years and subject to the condition that CMNM shall train Malaysiancitizens to take over this position upon the expiry of the said period.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-5
9.2 The 2 expatriates from the People’s Republic of China (“PRC”) were appointed, namely LianLihong and Li LianGuo, both of whom are engineers providing technical support in the installationdrilling machine at the Sokor Block. We have sighted a copy of their professional visit passeswhich entitles both Lian Lihong and Li LianGuo to enter West Malaysia and Sabah and remain until24 June 2011 and 4 July 2011 respectively.
9.3 The Management has informed us that the employment contract for Li LianGuo has expired andthat he has returned to PRC. We have also been informed that Lian Lihong has returned to PRCon paid leave.
10. Competent Person to Work and Operate Installation or Electrical Plant Equipment
10.1 Section 23 of the Electricity Supply Act 1990 and Condition 7 of the licences for generators issuedby the Energy Commission to CMNM required the generators owned by CMNM to be worked oroperated by or under the control of competent persons qualified under the Electricity Supply Act1990 and the Electricity Regulations 1994.
10.2 The Management has hired a competent person with the Energy Commission to work and operatethe generators owned by CMNM. As such, they are in compliance with Section 23 of the ElectricitySupply Act and Condition 7 of the licence.
C. ENVIRONMENTAL AND HEALTH AND SAFETY MATTERS
1. Compliance with Environmental Quality Act 1974 (“EQA”)
1.1 The Kelantan Department of Environment (“Kelantan DOE”) had on 21 June 2009 approved theEnvironmental Impact Assessment (“EIA”) Report submitted by CMNM for the Sokor Blockpursuant to Section 34A of the EQA, subject to certain conditions (“EIA Approval”). The EIAApproval conditions include inter alia:
(i) compliance by CMNM with the EQA and the approved operational mining scheme;
(ii) control of earth works;
(iii) control and monitoring of water quality;
(iv) control and monitoring of air quality;
(v) noise control and management;
(vi) proper waste handling;
(vii) emergency and security control;
(viii) submission of various reports to the DOE;
(ix) preparation of an Environmental Management Plan;
(x) preparation of a restoration and abandonment plan; and
(xi) various administration conditions.
1.2 The Kelantan DOE had issued three notices to CMNM on 15 July 2010, 25 October 2010 and 14April 2011 respectively (“DOE Notices”) stating that CMNM had failed to comply with severalconditions under the EIA Approval and accordingly directed and ordered CMNM to comply with thesaid outstanding conditions before the mining operations and processes can be implemented.
1.3 The Kelantan DOE subsequently issued a letter dated 22 June 2011 confirming that CMNM hadcomplied with and carried out all directions and orders under the DOE Notices.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-6
2. Compliance with Safety and Health Laws
2.1 CMNM is in compliance with all safety and health laws, including establishing a safety and healthcommittee, having safety and health committee meetings, formulating safety and health policies,appointing a safety and health officer and notifying DOSH of accidents and dangerousoccurrences.
2.2 DOSH has sent a notice dated 17 March 2011 to CMNM ordering CMNM to comply with certainsafety and health matters immediately and to submit a status report by 17 April 2011. CMNM hasresponded to DOSH by submitting a status report on 12 April 2011 stating that they have compliedwith or are in the midst of taking steps to comply with the outstanding matters stated in the notice.
2.3 Subsequently, DOSH issued a letter to CMNM on 20 July 2011 stating that DOSH is satisfied withthe remedial work carried out by CMNM pursuant to DOSH’s notices.
D. EMPLOYEES
1. As at the date of this Report, CMNM hired a total of 63 workers, all of which are Malaysians.CMNM has also employed two expatriates from PRC namely Lian Lihong and Li Lianguo who areexpatriate engineers appointed pursuant to MIDA’s letter of approval to CMNM dated 18 June2010. The Management has confirmed that that the employment contract for Li Lianguo hasexpired and that he has returned to PRC and that Lian Lihong has returned to PRC on paid leave.
2. We have sighted the latest Employee Provident Fund (“EPF”) contribution statements for themonths of July, August and September 2011 and Employee’s Social Security (“SOCSO”)contribution statements for the months of June, July and August 2011 filed by CMNM for all localworkers evidencing that CMNM has contributed EPF and SOCSO for all local workers for thatmonth in accordance to the Employee’s Provident Fund Act 1991 and the Employee’s SocialSecurity Act 1969. The Management has also confirmed that all EPF and SOCSO contributionsare up-to-date.
3. A former employee of CMNM, Mr. Ong Shih Sheh, had lodged a complaint pursuant to Section 20of the Industrial Relations Act 1967 against CMNM where the former employee is alleging that hewas dismissed without just cause or excuse by CMNM and is seeking reinstatement by CMNM. Anaction under Section 20 of the Industrial Relations Act 1967 must be brought by an employee whois seeking reinstatement in his former employment. Pursuant to this complaint, the Minister ofLabour may if he thinks fit, refer the complaint to the Industrial Court for an award. We understandthat the matter is still undergoing negotiations.
4. The Industrial Relations Department of Kelantan had on 9 August 2011 issued a notice to CMNMto attend for negotiation on 21 August 2011 to be attended by CMNM, the former employee andthe Industrial Relations Department of Kelantan. The negotiation was subsequently postponed toSeptember 2011.
5. However, the Management has informed us that the Industrial Relations Department of Kelantanhas indicated that they will drop the case since Mr. Ong Shih Sheh is not interested in seekingreinstatement. However, as at the date of this Report, no formal notice has been issued by theDepartment.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-7
II. CNMC-NALATA MINING SDN. BHD (Company No. 804206-X) (“CNMC-NALATA”)
A. CORPORATE MATTERS
1. CNMC-Nalata was duly incorporated in Malaysia under the Companies Act on 24 January 2008under its present name to carry on the business as mining, planters, cultivators and landdevelopers. We have been informed by the Management that as at the date of this Report, CNMC-Nalata is dormant and does not have any operations.
2. The authorized, issued and paid-up share capital of CNMC-Nalata as at the date of this Report isMYR500,000.00 comprising of 500,000 ordinary shares of MYR1.00 each. As at the date of thisReport, the shareholders of CNMC-Nalata and their respective shareholding are as follows:
Number of Percentage of Name of Shareholders Shares held Shares held
CNMC 400,000 80%
Enrich Merger Sdn. Bhd. 30,000 6%
Hu Pang Chaw 25,000 5%
Nalata Enterprise Sdn. Bhd. 25,000 5%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 20,000 4%
Total 500,000 100%
3. As at the date of this report, the directors of CNMC-Nalata are Hu Pang Chaw, Abdul Halim binMohd Yusoff, Lin Xiang Xiong @ Lin Ye and Choo Chee Kong and the Secretary of CNMC-Nalatais Tan Siew Chin.
4. As at the date of this Report, CNMC-Nalata does not have any subsidiaries or associatedcompanies.
B. GOVERNMENT REGULATIONS AND APPROVALS
1. A mining certificate dated 14 October 1997 was issued by the Kelantan State Authority to NalataEnterprise Sdn. Bhd. (“Nalata”) for the Kuala Krai Mining Area located at PT. 541, District of KualaKrai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia (“Kuala Krai Mining Area”). The miningcertificate was issued for a term of 10 years and has therefore expired on 13 October 2007.
2. On 14 November 2007, Nalata and CNMC entered into an Agreement for Transfer of Mining Lease(“Transfer Agreement”) to incorporate a joint venture company in Malaysia, namely CNMC-Nalata.It is stated in the Transfer Agreement that Nalata is in the process of renewing the mining licencefor the Kuala Krai Mining Area and it was agreed that CNMC shall pay to the Director of Lands andMines of Kelantan the sum of MYR125,370.00 being fees for renewal of the mining licence and latesubmission and arrears of quit rent on or before 14 November 2007. In consideration of CNMCpaying the renewal application fees to the authority, Nalata shall obtain an approval letter from theDirector of Land and Mines for renewal of the mining licence for a period of 10 + 21 years. TheTransfer Agreement shall immediately terminate if the approval for the renewal of the mininglicence is not given to CNMC-Nalata within 6 months from the date of the Transfer Agreement.
3. There are no renewals submitted by or issued to Nalata in respect of the mining certificate. TheManagement confirmed that there is currently no renewal to the mining certificate but intends toapply for the renewal of the said mining certificate subject to geologist’s analysis of potential. TheManagement also verbally confirmed that no renewal fees have been paid by CNMC as required inthe Transfer Agreement so far. Notwithstanding that CNMC-Nalata has not been issued with anymining licence at the Kuala Krai Mining Area, the Management has informed us that the TransferAgreement is still subsisting.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-8
III. MCS MINING GROUP SDN. BHD (Company No. 668128-K) (“MCS”)
A. CORPORATE MATTERS
1. MCS was duly incorporated in Malaysia under the Companies Act on 4 October 2004 under itspresent name. We had been informed by the Management that as at the date of this Report, MCSis dormant and does not have any operations.
2. The authorized, issued and paid-up share capital of MCS as at the date of this Report isMYR1,000,000.00 comprising of 1,000,000 ordinary shares of MYR1.00 each. As at the date ofthis Report, the shareholders of MCS and their respective shareholding are as follows:
Number of Percentage of Name of Shareholders Shares held Shares held
Kho Ah Tee JP 25,000 2.5%
Hu Pang Chaw 30,000 3%
Enrich Merger Sdn. Bhd. 30,000 3%
CNMC 875,000 87.5%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 40,000 4%
Total 1,000,000 100%
3. As at the date of this Report, the directors of MCS are Hu Pang Chaw, Abdul Halim bin MohdYusoff, Lin Xiang Xiong @ Lin Ye and Choo Chee Kong and the present Secretary of MCS is TanSiew Chin.
4. As at the date of this Report, MCS does not have any subsidiaries or associated companies.
B. GOVERNMENT REGULATIONS AND APPROVALS
1. The Kelantan Chief Minister’s Office had on 17 May 2005 issued a letter to MCS (“ChiefMinister’s Letter”) stating that subject to formal approval from the State Authority, MCS is grantedauthorization to explore all minerals in the State Land (Forest Reserve) covering an area ofapproximately 8,330 acres (33.71 sq km) in the Districts of Kuala Krai, Jeli and Tanah Merah inKelantan, Malaysia. The Chief Minister’s Letter refers to this initial area of 8,330 acres (33.71 sqkm) as First Phase. It further states that a remaining area of 21,670 acres (87.69 sq km) will beapproved as the Second Phase of the exploration based on an exploration plan which has notbeen submitted by MCS to the State Authority.
2. The Chief Minister’s Letter states that subject to the formal approval to be issued by the StateAuthority, the following fees are payable to the State Authority by MCS:
i) License to Extract: MYR500.00;
ii) Annual Holding Fee: MYR3,300.00;
iii) Sale Royalty: 5% of the total sale amount per transaction.
3. We have not sighted any proof of payment from MCS to the State Authority in relation to the feespayable under the Chief Minister’s Letter.
4. Subsequently, a letter dated 14 July 2005 was issued by Director of Lands and Mines, Kelantan toMCS granting MCS the approval to explore gold in District of Tanah Merah, District of Jeli andDistrict of Kuala Krai over an area of 15,518.45 acres (62.8 sq km) (“State Authority’s Letter”).
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-9
5. Pursuant to the State Authority’s Letter, an Exploration Licence in Form E was issued to MCSdated 10 April 2006 to explore gold in District of Tanah Merah, District of Jeli and District of KualaKrai over an area of 15,518.45 acres (62.8 sq km) (“Sokor Gold Zone”), from 10 April 2006 to 9April 2007 attaching the conditions to be complied.
6. The Exploration Licence had expired on 9 April 2007. We have sighted applications by MCS forthe renewal of the Exploration Licence for a total of 4,170.47 hectares (10,305.45 acres/ 41.7 sqkm) of land in various locations in Kelantan. The Management has confirmed that they are in theprocess of applying for the remaining 2,109.53 hectares (5,212.76 acres/ 21.09 sq km).Collectively, this forms the Sokor Gold Zone.
The details of the application are as follows:
Location Area (hectares/ acres/ sq km)
Mukim Kandek, Daerah Dabong, Jajahan Kuala Krai 2428.1/ 5,999.97/ 24.28
Mukim Kandek, Daerah Dabong, Jajahan Kuala Krai 707.39/ 1,748.00/ 7.07
Mukim Sokor, Daerah Sokor, Mukim Sokor, Jajahan Tanah Merah 1034.98/ 2,557.49/ 10.34
7. As at the date of this Report, the State Authority has not granted approval for the application forExploration License set out in Paragraph B6 above.
8. There is a discrepancy between the areas stated in the Chief Minister’s Letter and the StateAuthority’s Letter. Notwithstanding this, the Chief Minister’s Letter is not conclusive that approval toexplore in the areas stated in the letter has been granted as the power to grant the mining leaselies in the State Authority pursuant to the Mineral Enactment. We are therefore of the view that the62.8 sq km stated in the State Authority’s Letter and the Exploration Licence dated 10 April 2006is conclusive as the area in which the exploration licence is granted. We are also unable toconfirm if the 21,670 acres of land stated as Second Phase in the Chief Minister’s Letter has beenapproved by the State Authority.
9. The State Authority had also on 26 July 2005 issued a Prospecting Licence for 375 hectares(926.65 acres/ 3.75 sq km) to MCS to prospect the area known as Mukim Kerilla, DaerahTemangan, Machang with certain conditions to be complied with. The Management confirmed to usthat MCS did not breach any terms and conditions under the prospecting licence.
10. The Prospecting Licence subsequently expired on 25 July 2006. MCS has submitted freshapplications for prospecting licences to prospect gold for a total of 1,610.32 hectares (3,979.19acres/ 16.10 sq km) of land in various locations in Kelantan. The details of the application are asfollows:
Location Area (hectares/ acres/ sq km)
Mukim Lubuk Bongor, Daerah Kuala Balah, Jajahan Jeli 20.23/ 50.00/ 0.20
Mukim Lubuk Bongor, Daerah Kuala Balah, Jajahan Jeli 25.89/ 63.96/ 0.25
Mukim Sokor, Daerah Sokor, Mukim Sokor, Jajahan Tanah Merah 298.84/ 738.45/ 2.98
Mukim Sokor, Daerah Sokor, Mukim Sokor, Jajahan Tanah Merah 58.67/ 144.98/ 0.58
Mukim Sokor, Daerah Sokor, Mukim Sokor, Jajahan Tanah Merah 77.09/ 190.49/ 0.77
Mukim Sokor, Daerah Sokor, Mukim Sokor, Jajahan Tanah Merah 295.01/ 728.99/ 2.95
Mukim Bunga Tanjung & Lubuk Bongor, Daerah Kuala Balah, 465.59/ 1,150.50/ 4.65Jajahan Jeli
Mukim Jeli Tepi Sungai, Mukim Sokor, Mukim Lubok Bongor, 369.0/ 911.81/ 3.69Daerah Jeli, Daerah Sokor, Daerah Kuala Balah, Jajahan Tanah Merah, Jajahan Jeli
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-10
11. As at the date of this Report, the State Authority has not granted approval for the application forprospecting licenses as set out in Paragraph B10 above.
12. The Management confirmed that the project to prospect iron ore in Temangan has been aborted.And that no mining activities are being carried out at District of Tanah Merah, District of Jeli andDistrict of Kuala Krai as MCS is dormant as at the date of this Report.
APPENDIX D – ABRIDGED DUE DILIGENCE REPORT
D-11
29 September 2011
The Board of DirectorsCNMC Goldmine Holdings Pte LtdNo. 5 Shenton Way, #11-03, UIC Building, Singapore 068808
Offer Document (“Offer Document”) to be issued by CNMC Goldmine Holdings Pte Ltd (“CNMC”)in connection with the Proposed Listing of CNMC on Catalist of the Singapore ExchangeSecurities Trading Limited through an Initial Public Offering
We are a law firm practicing in Kuala Lumpur, Malaysia. We had conducted a legal due diligence reviewon CMNM Mining Group Sdn. Bhd. (“CMNM”), MCS Mining Group Sdn. Bhd. (“MCS”) and CNMC-NalataMining Sdn. Bhd. (“CNMC-Nalata”) (collectively, “Subsidiaries”).
In such capacity, we have examined copies of documents, corporate records, approvals, licences,permits, certificates and letters issued by government authorities and other instruments provided to us byCNMC and the Subsidiaries (collectively, “the Group”) which fall within the terms of reference and scopeof our legal due diligence exercise carried out on the Subsidiaries. In such examination, we haveassumed the genuineness of all signatures and the authenticity of all documents submitted to us asoriginals and the conformity to the original documents of all documents submitted to us as photocopies,and the signatures, chops and seals on all such documents which bear such signatures, chops and sealsare genuine.
In addition, the Group has also confirmed and represented to us the disclosures made during the legaldue diligence exercise in written and unwritten forms.
We do not purport to be an expert on or to be generally familiar with or qualified to express legal opinionsbased on any laws other than the laws of Malaysia. Therefore our opinion expressed herein relates onlyto the laws of Malaysia currently in force and all references herein to “applicable Malaysian laws” shall beconstrued accordingly.
Based on the foregoing, we are of the opinion that:
1. Due Incorporation
1.1 Each of the Subsidiaries were duly incorporated under the Companies Act 1965 (the “CompaniesAct”) and are validly existing in Malaysia and each of the Subsidiaries have the status of anindependent legal entity, having full capacity, power and authority to enter into legally binding andenforceable contracts and undertakings, with full power to sue or to be sued in its own name. Theprincipal business activity of CMNM is mining, whereas the Group has confirmed to us that MCSand CNMC-Nalata are both dormant and do not have any ongoing business operations.
1.2 Each of the Subsidiaries have full power and authority to own, use, lease and operate itsproperties and other assets and to conduct its business as it is now being conducted and the sameis described in its memorandum of association (“Memorandum”) and its articles of association(“Articles”) and other constitutive documents, including but not limited to its certificate ofincorporation.
APPENDIX E – LEGAL OPINION FROM SKRINE
E-1
APPENDIX E – LEGAL OPINION FROM SKRINE
E-2
1.3 The Articles of the Subsidiaries constitute a legal document regulating the relationship between therespective Subsidiaries and each of its shareholders and among the shareholders inter se, and isvalid and legally binding and enforceable by the shareholders against one another.
1.4 To the best of our knowledge, there are no provisions or irregularities, inconsistencies or othermatters contained in the records of the Subsidiaries which would adversely affect:
1.4.1 the status of each of the Subsidiaries as a duly incorporated or established independentlegal entity;
1.4.2 the business by each of the Subsidiaries as presently conducted and as set out in itsMemorandum and Articles of Association; or
1.4.3 the Subsidiaries’ power and authority to own, use, lease and operate its properties andother assets.
1.5 Based on our review, the Subsidiaries had not complied with several provisions under theCompanies Act in the past however these past material non-compliance issues have beenresolved.
2. Compliance with Laws, Approvals and Licences
2.1 The Subsidiaries are required to comply with and hold valid licences, permits and approvals tocarry on its mining operations. Most of these licences, permits and approvals are issued subject toconditions to be complied with.
2.2 To the best of our knowledge, CMNM has obtained the relevant material licences, permits andapprovals for its mining operations and has complied with the conditions imposed thereunder.
2.3 There are certain past non-compliances with conditions imposed on CMNM in relation to thevarious governmental approvals, licenses and permits in relation to its mining operations inMalaysia, including but not limited to the environmental impact assessment and mining leaseapprovals and factory operations. In addition, certain licences, permits and approvals required forits mining operations had not been obtained by CMNM in the past. We understand from the Groupthat steps were taken to rectify these non-compliances as well as to apply for the requiredlicences, permits and approvals. These rectification actions do not exonerate the Group, itsemployees and/or the directors of the Group from such non-compliances. Consequently, the Groupmay still be liable for statutory penalties and enforcement actions including, inter alia, finesenforced by the relevant authorities for the non-compliances, suspension of the mining operationsand revocation or cancellation of any licences or rights previously granted to CMNM.
3. Title to or Validity and Enforceability of the Rights to any Assets
3.1 CMNM has been granted a contractual right by the holder of the mining lease, Kelantan StateEconomic Development Corporation (“KSEDC”) to conduct mining operations at Lot 2014, Sg.Sejana, Sg. Amang, Sg. Ketubung & Sg. Long, Mukim Sokor, Daerah Sokor, Jajahan Tanah Merah,Kelantan (“Sokor Mining Area”), pursuant to the terms of the mining lease issued to KSEDC. Themining lease is not issued in CMNM’s name and CMNM’s right to mine in the Sokor Mining Area isonly a contractual right.
3.2 MCS had previously been granted a prospecting licence and an exploration licence by the Directorof Lands and Mines, Kelantan which had expired on 25 July 2006 and 9 April 2007 respectivelywhereas CNMC-Nalata had been granted a contractual right by Nalata Enterprise Sdn. Bhd tomine on a Mining Certificate over the Kuala Krai Mining Area which expired on 14 October 1997.Accordingly, MCS and CNMC-Nalata presently do not hold any licence or right to prospect, exploreor mine in Malaysia.
APPENDIX E – LEGAL OPINION FROM SKRINE
E-3
4. Litigation
4.1 The Subsidiaries and its property or assets do not have any right of immunity, on the grounds ofsovereignty or otherwise, from any legal action, writ or proceeding, from the giving of relief in anylegal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any competentcourt, from service of process upon them or any agent, from attachment prior to judgement, fromattachment in aid of execution, or from execution or any other process for the enforcement of anyjudgement or other legal process in Malaysia.
4.2 There are no public searches available in Malaysia to investigate whether the Subsidiaries areinvolved in litigation proceedings. Upon our due inquiries, we are informed by the Group that saveas disclosed in Paragraph 4.3 below, the Subsidiaries are not engaged in any litigation, mediationor arbitration either as plaintiff or defendant in respect of any claims or amounts.
4.3 There is a potential industrial relations dispute between CMNM and a former employee, Mr. OngShih Sheh, who had lodged an action pursuant to Section 20 of the Industrial Relations Act 1967against CMNM where the former employee is alleging that he was dismissed without just cause orexcuse by CMNM and is seeking reinstatement by CMNM. The matter is set for negotiations inSeptember 2011 which will be attended by CMNM, the former employee and the IndustrialRelations Department of Kelantan. Pursuant to this complaint, the Minister of Labour may if hethinks fit, refer the complaint to the Industrial Court for an award.
5. Share Capital of the Subsidiaries
5.1 The authorised share capital, the issued and paid-up capital and the respective percentages ofshareholdings of the existing shareholders of the Subsidiaries pursuant to the register ofshareholders of the Subsidiaries as at the date of this letter are as follows:-
CMNM:
Authorised capital RM500,000 divided into 500,000 ordinary shares of RM1.00 each
Issued and paid-up capital RM500,000 divided into 500,000 ordinary shares of RM1.00 each
MCS:
Authorised capital RM1,000,000 divided into 1,000,000 ordinary shares of RM1.00 each
Issued and paid-up capital RM1,000,000 divided into 1,000,000 ordinary shares of RM1.00 each
CNMC-Nalata:
Authorised capital RM500,000 divided into 500,000 ordinary shares of RM1.00 each
Issued and paid-up capital RM500,000 divided into 500,000 ordinary shares of RM1.00 each
5.2 The present shareholders of the Subsidiaries and their respective shareholdings are as follows:
CMNM:
Number of Percentage of Name of Shareholders Shares held Shares held
CNMC 405,000 81%
KSEDC 50,000 10%
Enrich Merger Sdn. Bhd. 25,000 5%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 20,000 4%
Total 500,000 100%
MCS:
Number of Percentage ofName of Shareholders Shares held Shares held
CNMC 875,000 87.5%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 40,000 4%
Hu Pang Chaw 30,000 3%
Enrich Merger Sdn. Bhd. 30,000 3%
Kho Ah Tee JP 25,000 2.5%
Total 1,000,000 100%
CNMC-Nalata:
Number of Percentage ofName of Shareholders Shares held Shares held
CNMC 400,000 80%
Enrich Merger Sdn. Bhd. 30,000 6%
Hu Pang Chaw 25,000 5%
Nalata Enterprise Sdn. Bhd. 25,000 5%
YAM Tengku Muhammad Fakhry Petra Ibni Sultan Ismail Petra 20,000 4%
Total 500,000 100%
5.3 All issues, allotments and transfers of shares in the capital of each of the Subsidiaries and thepresent authorised share capital of each of the Subsidiaries are valid and have been effected inaccordance with the respective Subsidiaries’ Memorandum and Articles and the Companies Act.
6. General
6.1 This opinion is intended to be used in the context which is specifically referred to herein and eachparagraph should be looked at as a whole and no part should be extracted and referred toindependently.
6.2 Headings are for reference and shall not in any manner affect the interpretation of this opinion.
The Sokor Kelantan State in northern Peninsular Malaysia is currently owned 81%by CNMC Goldmine Limited CNMC through its subsidiary CMNM Mining Group Sdn. Bhd .CMNM holds the rights to mine and produce gold from an area of approximately 10 square kilometres km2
in the Ulu Sokor area in Kelantan (the . CNMC, through its subsidiary MCS Mining Group Sdn.Bhd., has also made application for a renewal of an exploration licence covering up to 62.8km2 surrounding the Sokor Block. CNMC has commissioned the construction of a 60,000 tonne per annum vat leaching facility; the first production gold pour took place on 14 July 2010.
On 5 August 2011 CNMC announced that it plans a listing on the Catalist Board of the Singapore Exchange- . CNMC is being advised
by Prime Partners Corporate Finance Pte. Ltd.
CNMC has requested that ies out a technical due diligencereview of the project and prepares an independent technical report and risk assessment, consistent with therequirements of the Rules Governing the Listing of Securities on the Catalist Board of the SGX-ST.
BDA is the Australian subsidiary of Behre Dolbear & Company Inc., an international minerals industryconsulting group which has operated continuously worldwide since 1911, with offices in Denver, New York, Toronto, Vancouver, Guadalajara, Santiago, Hong Kong, London and Sydney. Behre Dolbear specialises in mineral evaluations, due diligence studies, independent expert reports, independent engineer certification,valuations, and technical audits of resources, reserves, mining and processing operations and project feasibilitystudies.
This report contains forecasts and projections based on data provided by CNMC the resources/reserves, production schedule, the projected capital and operating costs and the estimate of mine lifeare based on technical reviews of project data and discussions with technical personnel. BDA has reviewed the relevant data to assess the reasonableness of such projections. However, these forecasts and projections cannotbe assured and factors both within and beyond the control of the company could cause the actual results to be
ns contained in this report.
APPENDIX F – BDA TECHNICAL REPORT
F-2
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 2
BEHRE DOLBEAR
This report provides an independent assessment of the technical aspects of the Sokor gold project and potential risks. The report is provided to the Directors of CNMC in relation to the proposed Catalist Board listing on theSGX-ST; it should not be used or relied upon for any other purpose. The report does not constitute a technical or legal audit. Neither the whole nor any part of this report nor any reference thereto may be included in, or with, or attached to any documewhich it appears.
Yours faithfully
BEHRE DOLBEAR AUSTRALIA PTY LTD
Malcolm C HancockExecutive Director - BDA
John S McIntyre Managing Director - BDA
APPENDIX F – BDA TECHNICAL REPORT
F-3
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 3
BEHRE DOLBEAR
INDEPENDENT TECHNICAL REVIEW
SOKOR GOLD PROJECT - KELANTAN MALAYSIA - CNMC GOLDMINE LIMITED
10.1 General10.2 Metallurgical Testwork 10.3 Plant Design10.4 Further Process Development10.5 Operating History
11.0 INFRASTRUCTURE
11.1 Site Access and Climate11.2 Power and Water Supply11.3 Mine Site Facilities
APPENDIX F – BDA TECHNICAL REPORT
F-4
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 4
BEHRE DOLBEAR
12.0 ENVIRONMENTAL AND COMMUNITY ISSUES
12.1 Environmental Issues12.2 Social Issues
13.0 LIFE OF MINE PRODUCTION SCHEDULE
14.0 CAPITAL COSTS
14.1 Initial Development Capital14.2 Future Mine Expansion Capital
15.0 OPERATING COSTS
16.0 STATEMENT OF CAPABILITY
17.0 STATEMENT OF INDEPENDENCE
18.0 LIMITATIONS AND CONSENT
LIST OF FIGURES
Figure 1 Project Location Figure 2 Local Geology and Location of DepositsFigure 3 Resource Cross SectionsFigure 4 Resource Cross Sections Ketubong DepositsFigure 5 Lode and New Discovery Open Pits and Vat Leach Site PlanFigure 6
APPENDICES
Appendix 1 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004Edition
Appendix 2 Chinese Resources and Reserves Reporting Standard 1999
Appendix 3 Glossary of Technical Terms, Abbreviations and Units of Measurement
APPENDIX F – BDA TECHNICAL REPORT
F-5
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 5
BEHRE DOLBEAR
INDEPENDENT TECHNICAL REVIEW
SOKOR GOLD PROJECT - KELANTAN MALAYSIA - CNMC GOLDMINE LIMITED
1.0 INTRODUCTION
CNMC Goldmine Limited through its subsidiary CMNM Mining Group Sdn. Bhd.holds an 81% interest in the Sokor gold project (Figure 1). CMNM holds the rights to mine and
produce gold from an area of approximately 10 square kilometres km2 in the Ulu Sokor area in Kelantan (the. CNMC has also lodged an
application for renewal of an exploration licence covering up to 62.8km2 surrounding the Sokor Block. CNMC has commissioned the construction of a 60,000 tonne per annum vat leaching facility; the first productiongold pour took place on 14 July 2010.
On 5 August 2011 CNMC announced that it plans a listing on the Catalist Board of the Singapore Exchange-
by Prime Partners Corporate Finance Pte. Ltd. has requested that Behre Dolbear Australia Ptyies out a technical due diligence review of the project and prepares an independent
technical report and risk assessment, consistent with the requirements of the Rules Governing the Listing of Securities on the Catalist Board of the SGX-ST.
CNMC commenced exploration in 2007 within the Sokor Block in an area previously subjected to gold exploration and small scale gold mining. CNMC has completed geological mapping, soil sampling, geophysicalsurveys and surface trenching and diamond drilling. The exploration has defined sufficient resources andmineable reserves contained in four separate deposits for CNMC to commence gold production based on mining and treating near surface oxide ore from two of the deposits. Gold mineral resources (inclusive of ore reserves)currently tota
Ore reserves total 989,000t at 2.21g/t Au with contained gold of 70,300ozs, of which provedgold reserves amount to 204,000t at a grade of 3.64g/t Au with contained gold of 23,900ozs, and probable gold reserves amount to 785,000t at a grade of 1.84g/t Au with contained gold of 46,000ozs.
The initial mine development consists of construction of a crushing and stockpile facility, vat leaching and goldprocessing plant with a capacity to treat around 60,000tpa at an estimated head grade of 5.0g/t Au from the
and with a gold metal recovery of 80%. CNMC completed thefirst gold pour during July 2010 and continues to ramp up plant throughput to the planned production rate of60,000tpa. CNMC plans to increase throughput to around 80,000tpa during the second year of production,through commissioning of a heap leach facility and also increasing the size of the vat leach facility.
CNMC plans to use the revenue from gold production, supplemented by capital raising, to continue exploration over the remainder of the Sokor Block and within the surrounding EL of up to 62.8km2 in order to increase goldresources and mineable reserves, and to complete a feasibility study on the exploitation of the primary sulphide
BDA is the Australian subsidiary of Behre Dolbear & Company Inc., an international minerals industryconsulting group which has operated continuously worldwide since 1911, with offices in Denver, New York, Toronto, Vancouver, Guadalajara, Santiago, Hong Kong, London and Sydney. Behre Dolbear specialises in mineral evaluations, due diligence studies, independent expert reports, independent engineer certification,valuations, and technical audits of resources, reserves, mining and processing operations and project feasibilitystudies.
BDA is well acquainted with the Sokor gold project. BDA first visited the project site at Ulu Sokor in October
further visit to review initial exploration drilling results and ongoing exploration procedures in April 2008. Morerecently BDA made site visits in June and August 2010.
s and reserves, mining, processing, infrastructure, environmental and social aspects of the project, project approvals, project implementation, capital and operating costs and project risks.
BDA has reviewed the project resources and reserves in accordance with Australian industry standards and for compliance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy,
BDAhas not undertaken an audit of the data or re-estimated the resources or reserves and has relied on the data,
APPENDIX F – BDA TECHNICAL REPORT
F-6
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 6
BEHRE DOLBEAR
reports and information which have been provided by CNMC; BDA has nevertheless made such enquiries andexercised its judgement as it deems necessary and has found no reason to doubt the reliability of the data, reportsand information which have been provided by CNMC.
CNMC has reported its mineral resource estimate under the Chinese 1999 Classification of Resources/Reservesfor Solid Fuels and Mineral Commodities (GB/T 17766- The resource estimates were
examination of the allocation of geological confidence under the Chinese Code as applied to the Sokor resource estimates suggests that in terms of broad categorisation, the levels of geological confidence are similar to thosewhich would be ascribed to Measured and Indicated resources under the JORC Code, considering aspects suchas the ranges of drill hole spacing, cut-off and quality limitations.
BDA has reviewed the mineral resource estimates reported by CNMC and has tabulated the respective resourcesaccording to the comparable JORC Code categorisation in this report. BDA has reviewed the data, reports and information provided and has used consultants with appropriate experience and expertise relevant to the varioustechnical aspects in this report and believes that the resources and reserves as reported by CNMC and which have been tabulated in this report according to the comparable JORC Code categorisation have been reasonablymade and are in compliance with the reporting standards under the JORC Code. Malcolm C Hancock and JohnS McIntyre, directors of BDA and fellows of the Australian Institute of Mining and Metallurgy, and Mr George Brech, Senior Geological Consultant and Member of the Australasian Institute of Mining and Metallurgy, fulfilthe requirements of qualified persons and accept responsibility for the independent technical report and thecomparable JORC Code categorisation of the resource estimate as tabulated in the form and context in which itappears in this report.
BDA has not reviewed the tenement status with respect to any legal or statutory issues. CNMC advises thatthere are no title impediments to the proposed operation and that all project tenements are in good standing.BDA notes that CNMC has appointed Malaysian legal advisors Skrine to report on the validity of relevantproject licences, permits and approvals which CNMC requires to carry on its mining operations. opinion states that to the best of its knowledge and based on the disclosures by CNMC to Skrine, CMNM has obtained the relevant material licences, permits and approvals for its mining operation and has complied with theconditions imposed thereunder.
This report contains forecasts and projections based on data provided by CNMCproduction schedule, the projected capital and operating costs and the estimate of mine life are based ontechnical reviews of project data and discussions with technical personnel. BDA has reviewed the relevant datato assess the reasonableness of such projections. However, these forecasts and projections cannot be assured and factors both within and beyond the control of the company could cause the actual results to be materially
This report provides an independent assessment of the technical aspects of the Sokor gold project and potential risks. The report is provided to the Directors of CNMC for the purpose of the proposed listing on the Catalist Board of the SGX-ST; it should not be used or relied upon for any other purpose. The report does not constitutea technical or legal audit. Neither the whole nor any part of this report nor any reference thereto may be
form and context in which it appears.
APPENDIX F – BDA TECHNICAL REPORT
F-7
ULU SOKORPROJECT AREAULU SOKORPROJECT AREA
Kota Bharu
Tanah Merah
K E L A N T A N
S T A T E
T H A I L A N D
M A L A Y S I A
500
000
E
400
000
E
450
000
E
6 150 000 N
6 100 000 N
6 200 000 N
6 250 000 N
Legend
Sealed Road
Unsealed Road
Mining Licence
Exploration Licence (EL 2/2006)
Sokor
Gold ProjectSokor
Gold Project
THAILAND
CHINA
CAMBODIA
LAOS
VIET
NA
M
PHILIPPINES
INDONESIA
MALAYSIA
MYANMAR
SOUTH
CHINA
SEA
12
0°
00
"
11
0°
00
"
10
0°
00
"
13
0°
00
"
10° 00"
20° 00"
0° 00"
5000
Kilometres
Regional Location Plan
Kuantan
Singapore
KualaLumpur
PROJECT LOCATION PLANFigure 1
CNMC Goldmine Limited
250
Kilometres
BDA - 088 (02)
Sokor Gold Project
Behre Dolbear Australia Pty Ltd
APPENDIX F – BDA TECHNICAL REPORT
F-8
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 8
BEHRE DOLBEAR
2.0 EXECUTIVE SUMMARY
2.1 Background
BDA has conducted an independent technical review of the Sokor gold project in Kelantan State in northern Peninsular Malaysia, the proposed development plans and the current state of gold production on site. Site visitshave been undertaken to the project in 2007 and 2008 and more recently in June and August 2010. BDA has reviewed resource and reserve estimates, details of mining plans and schedules, processing operations,metallurgical testwork, proposed flowsheets, environmental aspects and approval status, implementation plansand projected capital and operating costs, consistent with the requirements of the Rules Governing the Listing ofSecurities on the Catalist Board of the Singapore Exchange Securities Trading Limited. Discussions have been held with project and management personnel.
2.2 Project Overview
The Sokor gold project is currently owned 81% by CNMC Goldmine Limited through its subsidiary CMNMMining Group Sdn. Bhd. The project is located in the Ulu Sokor region of Kelantan State in Malaysia. Theproject is approximately 80km southwest of Kota Bharu, the state capital. CNMC commenced exploration in 2007 within the Sokor Block in an area previously subjected to gold exploration and small scale gold mining. CNMC has completed geological mapping, soil sampling, geophysical surveys and surface trenching anddiamond drilling within the Sokor Block. CNMC through its subsidiary MCS Mining Group Sdn. Bhd. has alsolodged an application for renewal of an exploration licence covering up to 62.8km2 surrounding the Sokor Block.
Exploration has defined sufficient resources and mineable reserves contained in four separate deposits for CNMC to commence gold production based on mining and treating near surface oxide ore from two of thedeposits. Gold mineral resources (inclusive of ore reserves) currently total 2.2Mt at 2.62g/t Au with containedgold of 183,500ozs. Ore reserves total 989,000t at 2.21g/t Au with contained gold of 70,300ozs, of which proved gold reserves amount to 204,000t at a grade of 3.64g/t Au with contained gold of 23,900ozs, and probable gold reserves amount to 785,000t at a grade of 1.84g/t Au with contained gold of 46,000ozs.
The initial mine development consists of construction of a crushing and stockpile facility, vat leaching and goldprocessing plant with a capacity to treat 60,000tpa at an estimated head grade of 5.0g/t AuLode and New Discovery deposits, and with a projected gold metal recovery of 80%. CNMC completed the first gold pour during July 2010. Between July and December 2010 CNMC treated approximately 6,000 tonnes of ore and completed five gold pours for a production of 554ozs at an estimated gold recovery of 74%, and iscontinuing ramp up of plant throughput. CNMC plans to increase throughput to around 80,000tpa during 2011
fourth quarterof 2011 and through increasing the size of the vat leach facility.
The project has obtained mining and environmental approvals from the state government. The Mining Schemeapproval was obtained in January 2010 and is subject to initial mine production not exceeding 300,000tpa ofmined ore. CNMC advises that this condition will be relaxed on submission to government of a full feasibility study and mine plan directed at expanding the project to include treatment of the primary gold sulphidemineralisation using a carbon in leach process. CNMC plans to continue exploration in parallel with goldproduction and aims to complete a feasibility study on an expanded project in the first half of 2012.
January 2008 and a supplementary EIA report in March 2009 with approval received in June 2009. Anwas submitted in February 2010 and an EMP - Additional
Information report in March 2010, with approval received in April 2010. The EIA and EMP include approvalfor both heap leach and vat leach processing of gold ore at the Sokor mine site.
Corporate income tax in Malaysia is 25%. CMNM submitted an application to the Malaysian IndustrialPioneer Tax Status which will entitle the project to 100% income tax
exemption on statutory income for a period of five years, subject to certain conditions including the application for a Pioneer Certificate within 24 months from the date of such approval. CNMC advises that this application was approved by MIDA on 18 June 2010. However, as CMNM has not yet applied for the Pioneer Certificateand has not fulfilled the relevant conditions, tax exemption under the Pioneer Tax Status does not apply toCMNM at present.
CNMC plans to use the revenue from gold production, supplemented by capital raisings, to continue exploration over the remainder of the Sokor Block and within the surrounding EL in order to increase gold resources and mineable reserves, and to complete a feasibility study on the exploitation of the primary sulphide ore at depthusing a carbon in leach process.
APPENDIX F – BDA TECHNICAL REPORT
F-9
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 9
BEHRE DOLBEAR
Ownership/Tenement Holdings
CNMC through its subsidiary CMNM Mining Group Sdn. Bhd. holds an 81% interest in the Sokor gold project.A 10% share of the project is held by the Kelantan State Government and the remaining 9% is held byother investors in Kelantan State. The 19% share held by the government and local investors is a non-contributory share during both exploration and development and mine production stages.
CNMC signed an agreement with the 16May 2007 which led to the granting of mining rights to CMNM on 8 April 2008 for a period of 10 years over a10km2 concession area in Ulu Sokor, referred to as the Sokor Block, and the granting of the first right of refusalfor a 21 year mining rights renewal extension. CNMC through its subsidiary MCS Mining Group Sdn. Bhd. wasalso granted an Exploration Licence (EL2/2006) covering an area of up to 62.8km2, with the exact areadepending on availability of and access to land surrounding the Sokor Block. This EL licence has expired andan application for a renewal of the licence has been lodged by CNMC and is currently being processed.
A gold royalty of 5% of gross revenue is payable to KSG, and an additional tribute payment of 3% of grossrevenue is payable to KSEDC.
BDA has not undertaken any due diligence review of the ownership or tenement status for the project. CNMChas advised BDA that s to the Sokor gold project are in good standing. BDA notes thatCNMC has appointed Malaysian legal advisors Skrine to report on the validity of relevant project licences,permits and approvals which CNMC requires to carry on its mining operations. Skrinto the best of its knowledge and based on the disclosures by CNMC to Skrine, CMNM has obtained the relevantmaterial licences, permits and approvals for its mining operation and has complied with the conditions imposedthereunder.
Geology/Mineralisation
The Sokor gold project is located in the Central Belt of Peninsular Malaysia which extends from the Thailandborder to Johore in the south of the peninsula and contains base metal and gold mineralisation. The Ulu Sokor area is underlain by north-south trending metasediments and volcanic rocks (Figure 2). CMNM concession area is divided into two parts by the north-south trending Ketubong-Rixen fault. The southern and eastern partsare dominated by calcareous and argillaceous sediments interbedded with carbonate rocks which dip eastwardsat 10-40º. The western part of the concession is dominated by tuffaceous volcanic rocks interbedded with minorcalcareous phyllites and carbonate rocks.
Gold mineralisation in the concession is both lithologically and structurally controlled. CNMC has defined three deposits in the southern part of the concession
mineralisation is generally hosted in acid tointermediate volcanic rocks and in carbonate-rich rocks, and is associated with major fault structures. The goldmineralisation ranges in thickness from a few metres up to 35m and generally dips to the east at relativelyshallow angles of 10-30º. Gold is typically enriched near the surface and is associated with pyrite and minorbase metal sulphides including chalcopyrite, galena and sphalerite. The depth to the base of oxidation variesbetween deposits from a shallow depth of less than 3m in Ketubong to 40-
of 450m and has been defined by 120 drill holes totalling
The New Discovery deposit is located approximately 500m west-
holes totalling 3,238m. The deposit has been drilled on a 20m x 20m grid in the oxide zone and on a 20m x 40mgrid in the primary zone to a depth of 200m and remains open at depth. Drill hole gold grades range from 1-9g/tAu, averaging around 3.6g/t Au; silver and base metal grades are typically low.
Thenorthwards of the New Discovery deposit along the Ketubong-Rixen fault. The deposit has been defined bytrenching and 10 drill holes totalling 1,743m over a strike length of 680m and remains open to the north. The deposit has limited potential for oxide resources due to the shallow depth of oxidation. The deposit requires additional drilling to adequately test the primary resource. Drill hole gold grades typically range from 1-10g/tAu in the primary zone, averaging around 2.6g/t Au; silver and base metal grades are low.
4,904m. The deposit has been closely drilled on a 20m x 20m grid. Mineralisation consists of a mix of primary
associated with the Ketubong-Rixen fault zone and has been defined over a strike length of 200m by 51 drill
semi-massive sulphide mineralisation with lead, zinc and minor copper and the oxidised equivalent in the form ofmassive gossan. Drill hole gold grades in mineralisation range from 1-8g/t Au averaging around 3.5g/t Au; the silvergrade averages around 92g/t Ag. Base metal grades average 2.2% Pb and 2.1% Zn; minor copper is also present.
APPENDIX F – BDA TECHNICAL REPORT
F-10
750
750
250
500 250
250
500
500
750
750
1000
1000
500
500
6 167 0006 167 000
444
000
E444
000
E
446
000
E446
000
E
6 166 000 N6 166 000 N
6 168 000 N6 168 000 N
6 164 000 N6 164 000 N
Rixen’sDepositRixen’sDeposit
‘D’‘D’ ‘D’‘D’
‘C’‘C’ ‘C’‘C’
‘B’‘B’ ‘B’‘B’
‘A’
‘A’
‘A’
‘A’
KetubongDepositKetubongDeposit
NewDiscovery
Deposit
NewDiscovery
Deposit Manson’s LodeDepositManson’s LodeDeposit
S.L
iang
River
Sejana LodeSejana Lode
Legend
Mineralization Zone
Quartz/Granitic Porphyry
Mining Licence
Area of IP Survey
Area Soil Sampling
Area Soil Sampling
Phyllite
Silicified Zone
Slate
Acid Intermediate Volcanics
Alluvium
Faults
Tracks/Roads
LOCAL GEOLOGY AND DEPOSIT LOCATIONSOKOR MINING LICENCEFigure 2
CNMC Goldmine Limited
10000
Metres
Sokor Gold Project
BDA - 088 (02) Behre Dolbear Australia Pty Ltd
APPENDIX F – BDA TECHNICAL REPORT
F-11
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 11
BEHRE DOLBEAR
cess plant. Gold mineralisation iscontained in silicified volcanic rocks to the west of the Ketubong-Rixen fault. The deposit has been delineatedby soil sampling over a strike length of 800m and defined by drilling on a 100m x 100m grid over a strike lengthof 300m with nine drill holes totalling 904m. The deposit requires additional drilling to confirm continuity ofgrade and thickness in the area already drilled and step-out drilling along strike and down dip to test forextensions to the mineralisation. Drill hole gold grades average around 1.9g/t Au.
Gold, silver and base metal grades were determined by ALS Group by analysing the trench and diamond coresamples from the trenching and drilling carried out by CNMC during the period 2007 to 2010.
There is considerable exploration potential to locate additional gold resources within CM concession area and in the surrounding exploration licence which has yet to be systematically explored. Potential exists forextensions to the known deposits and in areas within the concession where to date only limited reconnaissance exploration has taken place. CNMC plans to commence a 10,000m diamond drilling programme in the firstquarter of 2011 with the objective of increasing the resource base of the project by initially drill testing
converting Inferred resources to Measured and Indicated resources and thence to Proved and Probable reserves. This programme will be supplemented by a 2,500m RC drilling (the first RC drilling to be undertaken by CNMC) designed exclusively to infill the Rixen
In conjunction with the resource drilling programme, CNMC plans to conduct additional metallurgical testworkoxide resources to heap leaching and to test primary resources from all
four deposits for carbon-in-leach processing.
Resources/Reserves
The Sokor gold mineral resource estimate (inclusive of ore reserves) as of June 2010 is shown in Table 2.1. The share of the gold mineral resources attributable to CNMC is 81%. Resources have been estimated for fourknown deposits, , byused the Chinese guidelines for resource estimation methodology and the 1999 Chinese Code for resource categorisation. BDA has reviewed the resource estimate and tabulated the resources according to thecomparable JORC Code categorisation.
Table 2.1
Summary of Sokor Gold Resources - June 2010Deposit Type Category Category Tonnage Gold Grade Contained Au
Note: cut off 0.5g/t Au; kt = thousand tonnes, kozs = thousandounces; the total gold resources of 2,182kt includes gold ore reserves of 989kt
To date ore reserves have been estimated only for backfill, alluvial and oxide ore reserves are shown in Table 2.2. The share of the gold ore reserves
attributable to CNMC is 81%. There has been no metallurgical testwork or mining studies completed on theprimary mineral resource to enable it to be converted to ore reserves. CNMC plans to evaluate the primarymineral resource in the future, on completion of additional resource drilling.
APPENDIX F – BDA TECHNICAL REPORT
F-12
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 12
BEHRE DOLBEAR
Table 2.2
Sokor Gold Ore Reserves - June 2010Deposit Type Category Tonnage Gold Grade Contained Au
Oxide Probable 785 1.84 46.4Sub-Total Oxide Subtotal 785 1.84 46.4Total All Proved 204 3.64 23.9Total All Probable 785 1.84 46.4Total All Prov/Prob 989 2.21 70.3
Note: cut off 0.5g/t Au; Mining Recovery 100%: Mining Dilution 5% at zero grade
The designed open pits include approximately 380kt of Inferred oxide resource at an average grade of 2.2g/t Au;in accordance with the JORC Code this material has not been included in ore reserves and has been designated aswaste in the mining schedules; however, there are reasonable expectations that much of this material will be proved up during grade control drilling.
Based on the projected mining rate the defined ore reserve will support a two year mine life (2011-2012), with awaste to ore stripping ratio of approximately 1.6:1. CNMC has assumed oxide ore reserves from 2013 will be generated by conversion of Inferred resources to ore reserves and by an increase in the current resource base
CNMC also plans to treat primary resources which isplanned to be converted to ore reserves on successful completion of metallurgical testwork demonstrating thatthe primary material is suitable for processing though a CIL plant.
Dilution has been estimated at 5% at zero grade and mining recovery at 100%; BDA suggests both figures arelikely to prove optimistic.
BDA considers that the remainder of the Sokor Block and the surrounding exploration licence are prospective and that there is good potential to add significantly to the resource and reserve base over time with ongoing systematic exploration.
Mining
The mine plan has extraction of ore from three separate pits, New Discovery and R using open pit mining of ore and waste based on conventional open pit mining methods with hydraulic excavators anddump trucks. The planned Man New Discovery pits are located within a radius of approximately1km from the treatment plant, while the planned R pit and associated heap leach pads are approximately 5km north of the treatment plant.
The deposits are hosted in intermediate to acid tuffaceous rocks and carbonate rocks. The ore zones at each of the deposits, which range in thickness from a few metres to over 35m, strike approximately north-south and dip gradually to the east at between 10-20°. Generally the rock strengths range from relatively weak in the oxidisedzone to strong in the primary rock types in the hanging and footwall of the fault/shear zones that contain themajority of the mineralisation.
A mining study has been coptimisation parameters were supplied by CSU or derived in consultation with CSU and are consistent with anominal 300-600ktpa on-site mineral processing operation. The pit slope angles were assumed at 48-50° for the hangingwall of the orebodies and 26-42° for the footwall. Dilution allowances of a nominal 5% have been included in the estimates and mining recovery has been assumed to be 100%. CSU was commissioned byCNMC to prepare an Ore Reserve estimate which was based on the open pit designs prepared from the optimisation work. The oxide ore reserve for the three pits totals 989,000t at a grade of 2.21g/t Au and the totaloxide and primary ore within the pit designs together with the Inferred resources totals 1.88Mt at a grade of 2.6g/t Au.
Mining operations are planned to be conducted by contractors using 1.8 m3 hydraulic excavatorsand 20t rear-dump trucks. The mining contract will initially be carried out by a small scale contractor supervisedby CNMC mining engineers but for the higher rates of production CNMC intends to engage a Chinese miningcompany to undertake the mining operation.
APPENDIX F – BDA TECHNICAL REPORT
F-13
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 13
BEHRE DOLBEAR
All pits are planned to be backfilled after completion of mining, and reclamation work carried out.
Most of the material will be drilled and blasted with 5m to holes and use of emulsion explosives due to the likely presence of water. Grade control in the pit will beconducted using reverse circulation drills.
BDA is unaware of any specific geotechnical investigations and recommends that an assessment based on drill-hole logs and core analysis be used to identify possible structures and determine rock strength. Geotechnicalassessment has not been carried out in any detail but the footwall slope angles of the planned pits are reasonablyconservative; the hangingwall pit slopes angles are between 45-50 and while the planned pits are relativelyshallow, further review of the slope angles prior to mining is considered important.
CNMC has identified that groundwater inflow to the pits is an important issue at Sokor. Perimeter drains are planned to be established at each pit to prevent the inflow of runoff water from rainfall. Low lying areas of thepit rim are planned to be bunded to protect against inflow in the event of high rainfall events.
Processing
subsequently to design a process for recovery of gold and silver from Sokor ores. A vat leaching plant wasconstructed on the site in early 2010 and operations commenced in July 2010. About 6,000t of ore had beenprocessed by the end of December 2010.
CNMC plans to add a heap leaching plant in the fourth quarter of 2011 for further processing of oxide ore and, subsequently, a CIL plant to process primary material. Process throughput is projected by CNMC to increasefrom 6kt of ore in the half year from July to December 2010 to 84kt in 2011 and then to an average of around 900ktpa from 2012 to 2014. In the period from July to December 2010 approximately 6,000t of ore wasprocessed and 554ozs of gold were recovered, equivalent to approximately 74% recovery from a head gradeestimated at 3.9g/t Au.
Process testwork has indicated that the oxidised ore is amenable to heapleaching. However, BDA has some reservations concerning the project site water balance which will be subjected to monsoonal rain storms. Heap permeability can be affected by heavy rainfall onto the surface of aheap and high inflows of water must be contained and detoxified prior to discharge.
No process testwork has yet been carried out on primary ore to test the proposed CIL processing route.Projections of performance on primary ore may therefore not be accurate.
Infrastructure
The Sokor gold project site is located around 75km south of Kota Bharu, in the state of Kelantan, Malaysia.Access to the site from Kota Bharu is mainly by sealed highways and local roads except for the final 18km,which is via a logging track which necessitates four-wheel-drive capability.
The climate is tropical monsoonal with the wettest months being November to January.
Power to the plant is provided by diesel generators with a total capacity of 950kW. Smaller units supply power to offices and the accommodation camp. Process water is sourced from local streams, with potable water being trucked to the site. Offices, camp, assay laboratory and maintenance facilities have been constructed on site. Communications are based on a satellite telephone system.
The infrastructure is considered appropriate for an operation of the style planned at Sokor.
Environmental and Community Issues
The project has obtained its mining and environmental approvals from the KSG. The Mining Scheme approvalwas obtained in January 2010.
Environmental approvals for the project include submission of an Environmental Impact Assessment in January2008 and a supplementary EIA report in March 2009 with approval received in June 2009. An EnvironmentalManagement Plan was submitted in February 2010 and an EMP - Additional Information report in March 2010, with approval received in April 2010. The EIA and EMP include approval for both heap leach and vat leach processing of gold ore at the Sokor mine site.
The project is in a high rainfall area. Kelantan has a tropical monsoonal climate, the wettest months occurringl is in the range 2,032 - 2,540mm. The
nearest meteorological station is 40km east of Sokor and at a lower elevation; this station highest recorded annual rainfall is 2,752mm and its lowest is 1,543mm.
APPENDIX F – BDA TECHNICAL REPORT
F-14
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 14
BEHRE DOLBEAR
The main environmental risk areas of the project as proposed, relate to the potential for offsite watercontamination via contaminated water run-off from the proposed heap leach area, the Tailings Storage Facility
TSF , the plant area and mining areas. The inclusion of environmental (settling) ponds and the proposed heap leach plant stormwater (safety) pond will mitigate the risk of offsite water contamination during operations.Water treatment may be necessary for an unspecified time following mine closure to handle residual cyanidewithin the heap leach structures whilst the heaps are being detoxified.
Specific drainage design elements, infrastructure layouts, erosion control structures and inclusion of astormwater (safety) dam are planned to mitigate the risk of offsite water contamination occurring.
CNMC has identified the key potential environmental impacts arising from the passociated mitigation measures which are being implemented. The project has an Environmental ManagementPlan which is approved by the Government agency and if implemented appropriately, should minimise the risk of environmental pollution.
The main social risk area relates to local communities becoming disenchanted from access to river fishing areas, employment issues, in-migration, disturbance from traffic or other social issues. To date however there appears to be a measure of goodwill, and anticipation of employment and other benefits which the Sokor minedevelopment will bring.
CNMC has already made substantial efforts to integrate its project activities with the local communities and isassisting them in social and economic development programmes. The CNMC Group has a corporate policy onSocial Responsibility and has been participating in community development projects which include emergencyrelief, poverty alleviation and education.
Life of Mine Production Schedule
The production schedule shown in Table 2.3 is based on the production forecasts in the CNMC report for theperiod 2010 to 2014. The initial production for the period from 2010 to 2012 is based on ore reserves at a cut off grade of 0.5g/t Au while a further two years production is based on primary ore, Inferred resources and possible
Under the mine plan for the first initial period to 2012, ore production increases from an initial rate of 84,000tpaof ore in 2011 up to 705,000tpa of ore in 2012. The waste to ore stripping ratio over this period averagesapproximately 1.5:1. BDA notes that under the present terms of the mining approval, production is limited to 300,000tpa and further mining approval will be required during 2012.
heap leaching plant in the fourth quarter of 2011 and a CIL plant to process primary ore in 2013. Production islargely dependent on operation of the heap leaching process, which BDA considers could be affected bymonsoonal rainfall. BDA also notes that a gold recovery of 80% has been assumed on primary ore, on which notestwork has yet been completed.
For the extended mine life to 2014 an additional ore mine inventory of 2.0Mt has been assumed with an overallore and waste mining rate of around 3.3Mtpa. Ore production is forecast at 600,000tpa of ore to the heap leach
230,000t of primary ore will be treated in the CIL plant increasing to 490,000t in2014. The waste to ore stripping ratio over the extended production period is approximately 2.3:1. While the initial mining is based on ore reserves estimated from a mine plan developed by CSU, the extended productionschedule is based on more conceptual mine plans. The overall mine production schedule provides a generalguide to the planned production but further work is required to confirm the parameters, resources and reservesused to prepare the mine plan.
APPENDIX F – BDA TECHNICAL REPORT
F-15
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 15
BEHRE DOLBEAR
Table 2.3
Sokor Gold Operation - Projected Production Schedule
Note: production to 2012 is based on current reserves; reserves for 2013-2014 are still to be defined
Capital Costs
The initial capital cost for the project was reported by CNMC as US$1.18M and is summarised in Table 2.4.
Table 2.4
Sokor Gold Project Development Capital Expenditure to July 2010 Item Total Capital
US$M
Mining Capital Costs Nil Process Plant Costs 0.92Site Infrastructure Costs 0.26Total 1.18
Note: CNMC reported capital costs in Malaysian Ringgit, conversion to US$ at an exchange rate of 0.32
The forecast capital costs for expansion of the project in the period 2011 to 2013 are estimated by CNMC to beUS$8.14M. These forecast costs are summarised in Table 2.5.
Table 2.5
Sokor Gold Project Forecast of Future Capital Expenditure 2011-2012Item Total Capital
US$M
Expanding production capacity of plant 0.20Multi-lift heap leaching system 1.50CIL plant design and construction (500t/d) 3.50Exploration Expenses 2.00
0.20Project Contingency 0.74Total 8.14
The heap leach costs are spent primarily in 2011 and the CIL costs in 2012. The mine plan is to use contractorsto carry out the mining operation removing the requirement to purchase mine equipment; all other mining costs are considered within the mine operating costs. There may be some capital costs within the mine, not identifiedin Table 2.5, such as the establishment cost of the Rixen mining area and mobilisation cost for the contractor asCNMC plans to use Chinese contractors; these costs are usually considered capital costs.
Operating Costs
Site operating costs as set out in report from CNMC dated June 2010 are shown in Table 2.6; these cost estimates were prepared by CSU. Total site costs are projected to be US$16.6M over the initial period from2010 to 2012; process plant and mine operating costs comprise 37% and 26% of the total respectively. Othercosts include administration and realisation costs and royalties. Cash cost of gold produced is projected to
APPENDIX F – BDA TECHNICAL REPORT
F-16
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 16
BEHRE DOLBEAR
average US$438/oz for the first three years of the mine life and average US$489/oz in the two further years of extended mine life.
Mine operating costs include both ore mining of US$2.65/t of ore mined and waste mining costs of US$1.76/t ofwaste mined. Ore mining includes the mining of the ore and grade control; waste mining includes both theinitial mining and the subsequent reclamation of waste. It is planned to use a contractor to carry out the miningoperation but at this stage there are no contract tenders to indicate the likely contract mining rates; generally BDA considers the mining costs to be preliminary.
Processing costs are estimated to average US$11/t processed. Heap leach, vat leach and CIL processing costshave been estimated at US$8/t, US$10/t and US$20/t respectively. These cost estimates are considered by BDA to be of a preliminary nature and likely to be accurate to ±50%.
Table 2.6
Projected Operating Costs for the Sokor Gold Project
*Note: Unit costs are combined for vat leach, heap leach and CIL; royalty is based on a gold price of US$1,300/oz
Administration charges are estimated at US$540k per annum for 2011 and 2012 increasing to US$660k for theperiod when the CIL plant will be operating in 2013-2014. A royalty is payable to the KSG equal to 5% of gross revenue and an additional tribute equal to 3% of gross revenue is payable to KSEDC.
Overall BDA considers the operating costs preliminary and accurate to ±50%.
APPENDIX F – BDA TECHNICAL REPORT
F-17
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 17
BEHRE DOLBEAR
3.0 RISK SUMMARY
3.1 Project Risk Summary
When compared with many industrial and commercial operations, mining is a relatively high risk business. Each orebody is unique. The nature of the orebody, the occurrence and grade of the ore, and its behaviour during mining and processing can never be wholly predicted.
Estimations of the tonnes, grade and overall metal content of a deposit are not precise calculations but are basedon interpretation and on samples from drilling which, even at close drill hole spacing, remain a very smallsample of the whole orebody. There is always a potential error in the projection of drill hole data whenestimating the tonnes and grade of the surrounding rock. Even with close-spaced drilling, significant variationsmay occur.
Comprehensive metallurgical testwork can reduce the processing risks, but the questions of representivity and scale-up remain. Estimations of project capital and operating costs are rarely more accurate than 15% and, depending on the status of the estimate, several areas may be nearer to 20-30%. Mining project revenues are subject to variations in metal prices and exchange rates.
In reviewing , BDA has considered areas where there is perceived technical risk to the operation, particularly where the risk component could materially impact the projected cashflows. The assessment is necessarily subjective and qualitative. Risk has been classified from low through to high. InSection 3.2, BDA has considered factors which may ameliorate some of these risks.
Risk Component Comments
Resources/ReservesMedium Risk
The geology and mineralisation controls at Sokor are reasonably wellunderstood. Manso
defined; both deposits require additional drilling to fully define resources.The polygonal estimation methodology used to estimate gold resources is regarded in the mining industry as relatively simplistic and vulnerable to over-estimation of grades, particularly in gold deposits. There is a possibility the average gold resource grades have been overestimated using this method,particularlyestimation is relatively small.The currently defined oxide ore reserve is sufficient for a two year mine life atthe production rate planned by CNMC. The production schedule for the period 2013 to 2014 assumes the proving up of Inferred oxide resources and potential
and treatment via heap leach and the treatment of Measured and Indicated primary resources in a CIL plant. Definition of these oxide resources and conversion to ore reserves will require additional drilling. Conversion of the primary resources to reserves will requiresuccessful completion of metallurgical testwork that demonstrates suitability forprocessing through a CIL plant.
Open Pit MiningLow/Medium Risk
The mining rate increases significantly over the proposed LOM, probably requiring equipment additions each year; a contractor should be able to meetthese requirements, but at a cost. There is some risk that the operation may beconstrained by poor performance due to high rainfall and the use of rigid trucks.There has been no specific assessment of rock mechanics. There is some risk oflocalised wall failures, but the use of conservative wall angles on the footwall ofeach pit should minimise any material impact, together with the flexibility provided by multiple pits. It is proposed that most of the waste will be backfilled which will require doublehandling; careful scheduling may minimise double handling and reduce costs.Additional technical risks relate to the topography and rainfall. The impact ofhigh rainfall needs to be taken into account in terms of pit and dump stabilities.
APPENDIX F – BDA TECHNICAL REPORT
F-18
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 18
BEHRE DOLBEAR
Risk Component Comments
ProcessingMedium Risk
Testwork indicates that oxidised ore is amenable to heap leaching with a forecastgold recovery of 80%. Testwork is yet to be completed on primary ore, howeverthe production schedule assumes a gold recovery of 80%. There is a possibility that this recovery target will not be achieved.The majority of gold production during the period 2011-2014 is projected to bevia a heap leach plant. BDA has reservations concerning the viability of a heapleach operation in a tropical monsoonal environment given the need to control the water balance in such a plant.
Services and UtilitiesLow/Medium Risk
Power costs will be relatively high due to the use of diesel fuel but alternatives (hydro and grid) would have a prohibitive capital cost given the scale of theoperation. Water supply from local streams is considered adequate.
Tenement and TitleLow Risk
The granted mining tenements, together with Government mining approval arethe over-riding legal documents for the ongoing exploration and development ofthe Sokor project, and appear to provide a sound basis for exploration and theproposed project expansion.
Social Issues Low Risk
The main social risk area relates to local communities becoming disenchantedfrom access to river fishing areas, employment issues, in-migration, disturbance from traffic or other social issues. To date however there appears to be a measure of goodwill, and anticipation of employment and other benefits whichthe Sokor mine development will bring.
Environmental Issues Medium Risk
The main environmental risk areas of the project as proposed, relate to the potential for offsite water contamination via site contaminated water run-off fromthe proposed heap leach area, the TSF, the plant area and mining areas. The inclusion of environmental (settling) ponds and a proposed heap leach plantstormwater (safety) pond will mitigate the risk of offsite water contamination during operations. Water treatment may be necessary for an unspecified timefollowing mine closure to handle residual cyanide within the heap leachstructures whilst the heaps are being detoxified.
Production
Medium/High Risk
The proposed mining schedules are considered preliminary. The mine schedulefor the initial period from 2010 to 2012 allows for the mining of the majority ofthe current ore reserves but the extended mine schedule (2013-2014) includes primary ore, Inferred resources and anticipated additional resources and hence has a higher risk.Maintaining production at the design rate with a high proportion of the projectedounces relating to a wet climate heap leaching operation is likely to bechallenging.
Capital CostHigh Risk
No details of the capital cost estimation have been provided and there is a significant risk of underestimation of the initial capital costs. No estimate hasbeen provided for the mobilisation of Chinese contractors to site.The capital cost of the proposed CIL plant is preliminary as CIL comminutionand leaching testwork has not yet been undertaken. Costs may be higher thanprojected if the ore is harder than projected or longer residence times are required in the leaching circuit.
Operating CostHigh Risk
Mine operating costs have been estimated by CSU but no details have beenprovided as to the method of estimation or indications of current costs. BDA considers the mining and processing cost estimates are at a scoping study level and there is a significant risk of variation in the estimates.
Country and Political Risk BDA is not expert in this area and makes no assessment of country or political risk. However, BDA observes that progress to date on the Sokor project has significantly reduced perception of country risk, and the efficacy of the miningtenements has been demonstrated through the exploration and development phases of the project to date. In terms of government approvals, access to land,local employment and local community relations, there appear to be nooutstanding difficulties.
APPENDIX F – BDA TECHNICAL REPORT
F-19
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 19
BEHRE DOLBEAR
3.2 Risk Mitigation Factors
There are a number of factors which combine to reduce some of the risks identified above. Principal amongst these are:
The geological investigations to date have been thorough and the drilling, logging, sampling and assay procedures adopted are appropriate and generally in accordance with industry standards. Overall thegeological database forms an appropriate and reasonable basis for resource and reserve estimation.
has committed to undertaking a 10,000m diamond drilling programme in the first quarter of 2011 and a 2,500m RC drilling programme commencing in the latter part of 2011. These programmes are designed toinfill and extend together with drill testing of other targets within the Sokor Block.
The surrounding exploration licence remains prospective for location of additional gold resources.
The proposed wall angles are reasonably conservative and the pits relatively shallow, but failures may stilloccur, particularly in the weathered zones. It is intended to establish drainage channels around the pitperimeter to reduce the quantity of water entering the pit and damaging the walls.
The project has obtained the necessary mining and environmental approvals from the state government.
APPENDIX F – BDA TECHNICAL REPORT
F-20
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 20
BEHRE DOLBEAR
4.0 SOURCES OF INFORMATION
BDA has undertaken recent site visits to the Sokor gold project site in June and August 2010. Discussions havebeen held with technical and management staff on site, and in Singapore. The drilling undertaken to date hasbeen reviewed, and drill core from several holes inspected. The location of the various prospects, plannedmining areas, plant site and TSF site have been reviewed. Resources, reserves, mining, processing and wastedisposal plans and environmental and social issues have been reviewed and discussed. The principal technicalreports and documents reviewed are listed below:
CNMC Technical Data
Rixen Geology Report and Drill Logs, Asia Mining Sdn. Bhd., 1991 Sokor Metallurgical Testwork, Asia Mining Sdn. Bhd., 1991 Metallurgical Testwork, Changchun Institute, 2008EIA report, CNMC Goldmine Limited, January 2008EIA Supplementary Report, CNMC Goldmine Limited, March 2009EMP Report, Goldmine Limited, February 2010 EMP Supplementary Report, March 2010Trench and Drill Hole Assay Database, CNMC Goldmine Limited, June 2010 Geological Cross Sections for Man s Lode, New Discovery, Ketubong and Rixen Deposits, CNMCGoldmine Limited, June 2010
etubong Deposits, Scale 1:1000, CNMC GoldmineLimited, June 2010 Geology Map of Rixen s Deposit, Scale 1:5000, CNMC Goldmine Limited, June 2010Description Report for Gold Exploration Project (2007-2010) in Sokor District, Kelantan State, Malaysia,CNMC Goldmine Limited, June 2010
General Data
Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves - Report of the JointCommittee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists andMinerals Council of Australia, December 2004.
The Chinese 1999 Classification of Resources/Reserves for Solid Fuels and Mineral Commodities (GB/T 17766-1999).
APPENDIX F – BDA TECHNICAL REPORT
F-21
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 21
BEHRE DOLBEAR
5.0 SOKOR GOLD PROJECT
5.1 Project Location
The Sokor gold project is located in the Ulu Sokor region of Kelantan State in Malaysia. The project isapproximately 80km southwest of Kota Bharu, the state capital. Access is by sealed road to Kampong BukitPauh, the closest village 18km from the site, and thence by an all-weather gravel logging track (Figure 1).
The nearest town is the district centre of Tanah Merah which is approximately 40km from the site. Tanah Merah is approximately 40km from the state capital, Kota Bharu, which is serviced daily by jet aircraft from KualaLumpur entailing a 55 minute flight.
The project is located in the upper catchment of the Sungai Sokor River. The topography consists of moderately steep hill ridges and narrow valleys. Elevations range from 200m to 900m above sea level. Vegetation cover is dense tropical rainforest that has been disturbed by logging and mineral prospecting. The area has a hot, tropical monsoonal climate with rain falling mainly in the November to January period. Annual rainfall in Kelantanaverages between 2,000 - 2,500mm, but can be considerably more at Ulu Sokor.
5.2 Project Ownership and Approvals
CNMC through its subsidiary CMNM Mining Group Sdn. Bhd. holds an 81% interest in the Sokor gold project.A 10% share of the project is held by the Kelantan State Government and the remaining 9% is held by otherinvestors in Kelantan State. The 19% share held by the government and local investors is a non-contributoryshare during both exploration and development and mine production stages. These interests are summarised inTable 5.1 below.
Table 5.1
Assets and Interests
Country/Asset CNMC Interest%
Development Status
Expiry Date Areakm2
Type of MineralDeposit
Remarks
Malaysia ML 2/2008 81 Development 7.4 2018 10 Gold Mining Rights
CNMC signed an agreement with the Kelantan State Economic Development Corporation on 16 May 2007 which led to the granting of mining rights to CMNM on 8 April 2008 for a period of 10 years over a 10km2
concession area in Ulu Sokor, referred to as the Sokor Block, and the granting of the first right of refusal for a 21 year mining rights renewal extension. CNMC through its subsidiary MCS Mining Group Sdn. Bhd. was also granted an Exploration Licence (EL2/2006) covering an area of up to 62.8km2, with the exact area depending on availability of and access to land surrounding the Sokor Block. An application for a renewal of this licence hasbeen lodged by CNMC and is currently being processed.
A gold royalty of 5% of gross revenue is payable to KSG, and an additional tribute payment of 3% of grossrevenue is payable to KSEDC.
The project has obtained mining and environmental approvals from KSG. The Mining Scheme approval was obtained in January 2010 and is subject to initial mine production not exceeding 300,000tpa of mined ore. Thiscondition will be relaxed on submission to government of a full feasibility study and mine plan directed at expanding the project to include treatment of the primary gold sulphide mineralisation using a carbon in pulp process. CNMC plans to continue exploration in parallel with gold production and aims to complete a feasibility study on an expanded project by the first half of 2012.
Environmental approvals for the project include submission of an Environmental Impact Assessment in January2008 and a supplementary EIA report in March 2009 with approval received in June 2009. An EnvironmentalManagement Plan was submitted in February 2010 and an EMP - Additional Information report submitted in March 2010, with approval received in April 2010. The EIA and EMP include approval for both heap leach and pond (vat) leach processing of gold ore at the Sokor mine site.
Corporate income tax in Malaysia is 25%. CNMC submitted an application to the Malaysian IndustrialDevelopment Authority for Pioneer Tax Status which will entitle the project to 100% income tax exemption onstatutory income for a period of five years, subject to certain conditions including the application for a PioneerCertificate within 24 months from the date of such approval. CNMC advises that this application was approvedby MIDA on 18 June 2010. However, as CMNM has not yet applied for the Pioneer Certificate and has notfulfilled the relevant conditions, tax exemption under the Pioneer Tax Status does not apply to CMNM atpresent.
APPENDIX F – BDA TECHNICAL REPORT
F-22
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 22
BEHRE DOLBEAR
BDA has not undertaken any due diligence review of the ownership or tenement status for the project. CNMChas appointed Malaysian legal advisors, Skrine, to review all project licences, permits and approvals which CNMC requires to carry on its mining operations. Skrine has reported that all relevant material licences, permits
5.3 Exploration and Mining History
The Ulu Sokor area has a long history of gold prospecting and small scale alluvial and hard rock mining. Theearliest, significant exploration, including trenching and development of a number of shafts and adits, was
Since the 1960s, a number of companies have carried out exploration in the area of the old Duff workings,including geological mapping, soil and stream sediment sampling, and diamond core and RC drilling.
1966 and 1970. EMM completed a drilling programme of 104 holes totalling 2,963m and reported primary basemetal mineralisation of 227,000t with gold grades ranging from 1.94 - 3.33g/t Au and oxide mineralisation of156,000t with gold grades ranging from 2.85 - 5.34g/t Au.
Asia AM conducted mapping, soil sampling, rock chip sampling and drilling between1989 and 1991. AM completed a drilling programme consisting of 55 holes totalling 2,705m. AM carried outmetallurgical testwork and operated a heap leach facility during the period 1995-96. The operation processedaround 40,000t of near-surface gossan ore approximately 3,200ozs ofgold. Assuming a gold recovery of 80%, these reported figures indicate a calculated head grade of 3.1g/t Au.AM also delineated a gold resource in the Rixen area totalling 4.1Mt at 1.2g/t Au at a cut-off grade of 0.5g/tAu.
TRA conducted geological mapping, rock chip and stream sedimentsampling and RC drilling between 1997 and 1998. The RC drilling consisted of 33 holes totalling 2,630m and was carried out on the
CNMC obtained AM reports on the geology of the Rixen area and the metallurgical testwork carried out on. CNMC was unable to obtain historical drilling data
relating to exploration completed by EMM and TRA.
5.4 Project Status
CNMC commenced exploration in 2007 in the known areas of mineralisation, includDiscovery, Ketubo
within the Sokor Block, excavated 27surface trenches, and completed 190 diamond drill holes totalling 10,566m.
CNMC has defined gold resources in three deposits, . Resourcesconsist of shallow oxide gold mineralisation and deeper primary gold mineralisation associated with sulphidemineralisation, including pyrite and chalcograde, bulk mineable gold mineralisation within acid volcanic rocks; trenching and drilling in this area is at anearly stage although CNMC has defined an oxide resource.
CNMC has commenced treating oxide gold ore using a vat leach process. Revenue from this operation, togetherwith funds from proposed capital raisings ewhere in the concession. At a later date CNMC plans to expand exploration to include the EL which surrounds theSokor Block. CNMC plans to complete a detailed feasibility study during the first half of 2012, based on anexpanded project which will include mining and processing of the primary sulphide ore.
CNMC commenced commissioning of a 60,000tpa vat leach facility and gold recovery plant in July 2010. The plant is designed to treat up to 10t per month of activated carbon. Initial production of oxide ore which will besourced from the New Discovery deposits. Production will be expanded during 2011 to84,000tpa by expanding the vat leach operation.
The first gold pour took place on 14 July 2010 with the recovery of 76ozs of gold and 17ozs of silver from aninitial batch of 500t of ore. The ore was a mix of approximately 400t of New Discovery ore and 100t of
The head grade was estimated from augur sampling of the ore after placement in the pond; the head grade was estimated to be 6.2g/t Au. Gold recovery through the plant was estimated at approximately76%. Between July and December 2010 CNMC completed five gold pours for a production of 554ozs at anestimated gold recovery of 74% and is continuing ramp up of plant throughput.
APPENDIX F – BDA TECHNICAL REPORT
F-23
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 23
BEHRE DOLBEAR
CNMC plans to increase production to 84,000tpa during 2011 by commissioning a heap leach facility to treatoxide ore from deposit. infill drilling of the resource to assist with the pit design and production scheduling Measured oxide resources which require additional metallurgical testing to establish whether the iron-rich, gold-bearing gossan ore (after massivesulphide) is amenable to vat leaching or whether it is more suitable to conventional heap leaching.
Mine site facilities prese vats,pregnant solution, barren solution and clean water ponds, eight carbon adsorption columns and a gold recoveryplant which includes a furnace for smelting gold dore. Construction of a tailings storage facility with a capacity of 400,000t, sufficient for approximately 2.5 years of production, was 90% complete at the end of October 2010.CNMC is currently locating a new site in order to construct a larger TSF for future production expansion.CNMC has a fully equipped laboratory on site for assaying production samples for gold using atomic absorption
diesel generators; water supply is sourced from a local river.
Mining equipment includes excavators and trucks which are leased by CNMC. Mining is relativelystraightforward and consists of stripping the near surface oxide ore which rarely extends below a depth of 12m.Sulphide ore, which is not being treated at present, is left in place.
CNMC has entered into a contract with G4S plc CNMC also has a gold refining contract in place with the Perth Mint, Australia.
Mining and environmental approvals for the initial mining development have been received from the stategovernment. The current mining approval limits production to a maximum of 300,000tpa; this condition will berelaxed on submission to the government of the feasibility study for the expanded oxide and primary ore projectand approval of a detailed mine plan scheduled for completion in 2012.
APPENDIX F – BDA TECHNICAL REPORT
F-24
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 24
BEHRE DOLBEAR
6.0 GEOLOGY AND MINERALISATION
6.1 Regional Geology
The Sokor Gold Project is located in the Central Belt of Peninsular Malaysia. Peninsular Malaysia is dividedstructurally into three main belts, the Eastern, Central and Western. The main tectonic trend of these belts isnorth-south to northwest-southeast. The Eastern and Western Belts are dominated by tin-bearing granites and associated tin and wolfram mineralisation.
The Central Belt consists of Permian to Triassic age metasediments including phyllite, slate, sandstone andlimestone, and felsic to intermediate volcanic rocks. The metasediments and volcanic rocks are intruded by LateTriassic to Tertiary age, acid to intermediate stocks and dykes. The Central Belt extends from the Thailand border in the north to Johore in the south of the peninsula and contains base metal mineralisation including copper, lead, zinc, antimony and manganese and gold mineralisation.
The eastern (Lebir Fault) and western (Bentong-Raub Fault) boundaries of the Central Belt are major fault zonesfeaturing dextral rotation and strike slippage of 5-10km. Known gold deposits in the Central Belt include Raub,Selinsing and Penjom, all located south of Ulu Sokor. The Sokor gold mineralisation is located towards themiddle of the Central Belt and is associated with the intersection of two major north-south trending structureswith northeast to northwest trending secondary structures.
6.2 Local Geology
The Ulu Sokor area is underlain by north-south trending meta-sediments including phyllite, slate, conglomerate,limestone and felsic to intermediate volcanic rocks (Figure 2). The meta-sediments are lower greenschist faciesand appear to form an asymmetric anticline with shallow easterly dips in the eastern part of the concession andsteeper westerly dips in the west. Locally the rocks are highly folded and display variable shallow to steep dips.
The concession area is divided into two parts by the north-south trending Ketubong-Rixen fault zone. Theeastern part is dominated by calcareous and argillaceous sediments interbedded with carbonate rocks which dip eastwards at 10-40º. The western part of the concession is dominated by tuffaceous volcanics interbedded withminor calcareous phyllites and carbonate rocks. The acid to intermediate volcanic rocks consist of volcanicbreccias and crystal tuffs. Silicification in the volcanic rocks is widespread.
Structure
Interpretation of Landsat imagery by CNMC suggests that the Ulu Sokor area lies between two major north-south trending faults approximately 2km apart. The western fault (Ketubong-Rixen fault) is located in themiddle of the concession and can be traced on the Landsat image for more than 10km. Field evidence suggeststhese structures dip east at 40-60º. North-northeast and northwest trending secondary faults with variable dipsranging from 10-70º run between and in some cases cut the north-south structures. The intersection of north,north-northeast and northwest structures appear to control the mineralisation in the concession.
The Ketubong-Rixen fault strikes 10º west of north in the central and northern parts of the concession andchanges to 10º east of north towards the southern part around New Discovery deposit. This fault and similarnorth-south trending structures appear to form brecciated shear zones with widths ranging from a few metres upto 35m. Minor fault splays are developed along the main fault zone. The main fault zone is intensely shearedand typically contains disseminated pyrite and occasional, small lenses of semi-massive sulphide, mainly pyritewith minor chalcopyrite and galena.
Intrusive Rocks
Intrusive rocks in the concession are dominated by quartz porphyry dykes with widths of 2-50m that have been intruded predominantly along east to northeast trending faults and occasionally along north-northwest trending faults. Typically, the quartz porphyry dykes display pervasive silicification and/or sericitisation and kaolinisation. Dykes contain minor, disseminated pyrite mineralisation, particularly close to contact zones.
Narrow, north-south trending diorite porphyry dykes have been mapped west of the main north-south fault.
APPENDIX F – BDA TECHNICAL REPORT
F-25
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 25
BEHRE DOLBEAR
6.3 Deposit Geology and Mineralisation
Gold mineralisation at Ulu Sokor is both lithologically and structurally controlled. In the southern section of theconcession, CNMC has defined three deposits , New Discovery and Ketubong. New Discoveryand Ketubong are located on the same mineralised zone covering a strike length ofLode to the east of New Discovery extends over a strike of around 400m (Figure 2).
Ketubong. Based on soil sampling results, gold mineralisation in this area extends over a strike length of morethan 1,000m.
Gold mineralisation is generally hosted in acid to intermediate tuffaceous rocks and in carbonate-rich rocks.There is a strong link between mineralisation and fault structures and the degree of deformation along thestructures. High grade gold mineralisation is typically associated with intense shearing and brecciation, veining and pervasive alteration including silicification and sericite-chlorite-pyrite alteration. Veining consists of massive quartz veins and stockwork veining and veinlets, with dominant quartz-pyrite and lesser quartz-carbonate. Brecciation, in some cases, appears to be post gold-base metal sulphide mineralisation. The golddeposits range in thickness from a few metres up to 35m. Mineralisation generally dips to the east at relativelyshallow angles of 10-30º (Figures 3 and 4).
Field evidence suggests that quartz porphyry dykes could be the causative feeder intrusions for goldmineralisation, with intrusions occurring along fault zones. Disseminated pyrite and locally anomalous gold grades are present in some quartz porphyry dykes.
Gold is strongly associated with pyrite although base metal sulphides are present as minor minerals, including chalcopyrite, galena and sphalerite. Mineralogical examination of polished sections indicates that the gold isgenerally fine grained. This conclusion is supported by extremely consistent assay results between duplicatecheck samples.
Supergene enrichment of gold is widespread in the Sokor area with development of a typical surface mushroom-shaped dispersion pattern for the near-surface high grade gold values. This type of enrichment results in thewidth of the mineralisation at surface being generally wider than at depth. Typically the near-surface gold grade can be between two and five times higher than the grade at depth, with enrichment normally restricted to the top 2-10m. CNMC is aware of the supergene enrichment at Sokor and has taken appropriate measures to distinguish between higher grade surface trench intercepts and the deeper drill hole intercepts with respect to resource estimation.
35m, averaging 13m and in New Discovery it ranges from 2m to 17m, averaging 7m. Oxidation in Ketubong generally penetrates to a depthpenetrates to a depth of between 20m and 60m.
BDA notes that a transition zone was not defined by CNMC although examination of the core by BDA indicatesthat such a zone does exist in parts of the deposits. Although definition of a transition zone does not impact on the evaluation of the oxide mineralisation, BDA recommends that drill holes are re-logged to distinguishtransitional material from primary mineralisation; this may be important for future evaluation of the primarymineralisation for an expanded mining operation and CIL processing. Metallurgical recovery for transitionalmineralisation could be significantly different to recovery for primary mineralisation and therefore selection ofseparate representative transitional and primary samples may be necessary for future metallurgical testwork.
Deposit
partially replacing a silicified limestone unit which is intercalated with phyllitic sediments. The mineralised zone extends over a strike length of 450m, trending 060º,and is marked by old surface workings and a number of shallow shafts that have been excavated to depths of upto 30m. 120 drill holes totalling 4,904m.
The average width of mineralisation exposed in trenches in the old open cut area is 15m, varying from a few metres to 34m. The thickness of mineralisation is variable ranging from 5m to 20m; the dip of the mineralisationis shallow (10-15º) to the southeast. Trench mapping by CNMC suggests that the mineralisation is associatedwith a breccia zone. A quartz porphyry dyke which is exposed to the southeast may be acausative intrusion for the base metal-gold mineralisation. The dyke contains pyrite mineralisation asdisseminations and veinlets, with rock chips returning gold grades of 0.5-0.7g/t Au. Most of the surface area hasbeen disturbed by previous mining activity and hence the relationship between the different rock types is notclear.
GEOLOGICAL SECTIONSBehre Dolbear Australia Pty Ltd
Figure 4
CNMC Goldmine LimitedSokor Gold Project
BDA - 088 (02)
500
Metres
500
Metres
APPENDIX F – BDA TECHNICAL REPORT
F-28
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 28
BEHRE DOLBEAR
Mineralisation consists of a mix of primary semi-massive to massive sulphide mineralisation partially andirregularly replacing a limestone unit, and the oxidised equivalent in the form of massive gossan. In addition there is backfill mineralisation which consists of material that was previously mined and discarded as too lowgrade to process at that time.
Sulphide mineralisation consists of pyrite, pyrrhotite, galena, sphalerite with minor chalcopyrite andarsenopyrite. The mineralisation has been strongly oxidised with the formation of massive gossan althoughsulphides are still present at surface in some places. Drill hole gold grades in the oxide gossan and primarymineralisation range from 1-8g/t Au, averaging around 4.3g/t Au. Backfill material generally averages around1.8g/t Au. Silver is present but mineral species are not reported by CNMC. Silver grade averages around 92g/tAg ranging up to 1,000g/t Ag for a one metre sample; silver is generally associated with elevated lead grades.
New Discovery Deposit
The New Discovery prospect is located approximately 500m west-northwest mineralisation is associated with the Ketubong-Rixen fault that runs through the central part of the concession area. The mineralisation has been defined by surface trenching over a strike length of 200m. Trench exposuresindicate mineralised widths of 7-35m, trending 010º with a dip of around 30º to the east. In the north, themineralised zone appears to be displaced to the west by a northwest trending fault. The deposit has been drilleddown dip to a depth of 200m from surface and generally remains open at depth. The mineralisation continuesnorth as the Ketubong prospect. The deposit has been defined by 51 drill holes totalling 3,238m.
Based on trench mapping, mineralisation consists of gold in association with weak stockwork and disseminatedpyrite hosted in sheared and brecciated phyllite and in an adjacent limestone unit. The phyllite is generally strongly altered close to the fault zone with pervasive sericite-chlorite-epidote alteration, silicification andcarbonate veining.
BDA noted the presence of carbonaceous phyllite developed along shear zones within the current New Discovery mining face; the presence of carbon could present a potential problem with preg-robbing duringprocessing of the ore. Drill hole gold grades typically range from 1-9g/t Au, averaging around 3.6g/t Au; silver,lead and zinc grades are low. There is minor copper present in the form of chalcopyrite with the highest grade of1,700ppm Cu but typically copper is in the range 50-400ppm. BDA notes that silver and base metal assays wereonly determined for the early drill holes; later drill holes were only assayed for gold.
Ketubong Deposit
The Ketubong prospect is located approximately 6 and immediatelynorth of New Discovery. Ketubong represents the continuation northwards of the north-south trending andeasterly dipping mineralisation present in New Discovery; mineralisation dips to the east at around 20-30º.
The deposit has been delineated by trenching and drilling over a strike length of 680m and by gold-in-soil and IPanomalies which are open to the north. Mineralisation is contained in highly folded phyllite and intercalatedlimestone over widths of 2-40m, based on trench exposures. Based on trench mapping, gold is associated withdisseminated-stockwork quartz-sulphide mineralisation and more massive sulphide consisting predominantly ofpyrite with minor, sporadic galena, chalcopyrite and sphalerite. Drilling indicates the mineralisation is closely associated with a limestone unit within phyllite.
Drilling demonstrates poor continuity between drill holes of both the grade and thickness of mineralisation and a general narrowing of the thickness at depth compared with trench exposures. The deposit has been defined by10 drill holes totalling 1,743m; additional drilling is required to adequately test the potential of the primarymineralisation. The base of oxidation is at a shallow depth in Ketubong thus limiting the potential for a substantial oxide resource.
Drill hole gold grades typically range from 1-10g/t Au in the primary mineralisation, averaging around 2.6g/tAu. Silver and base metal grades are generally very low. Copper ranges up to 370ppm and zinc 120ppm.
mineralisation is contained within acid volcanic rocks to the west of the Ketubong-Rixen fault. The deposit wasdefined initially by soil sampling and an IP survey which indicated an anomalous zone trending north-south with a strike length of 800m. Initial drilling has targeted a zone of pervasively silicified tuffs that extends over astrike of 500m.
To date a total of nine holes have been drilled for a total of 904m. A 15-30m thick tabular zone of goldmineralisation dipping 5-10º to the east has been intersected in four drill holes on two sections 100m apart. Gold
Base metal grades average 2.2% Pb and 2.1% Zn with minor copper present.
APPENDIX F – BDA TECHNICAL REPORT
F-29
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 29
BEHRE DOLBEAR
is associated with a stockwork zone of quartz-pyrite veins developed within silicified tuffs. Drill hole gold grades average around 1.9g/t Au and pyrite content is around 2-3%. The base of oxidation is deeper than at NewDiscovery and Ketubong, extending to a depth of 40-50m.
deposit appears to have potential for a substantial low grade gold resource. The deposit requires infilldrilling to confirm continuity of grade and thickness in the area already drilled and step-out drilling along strikeand down dip to test for extensions to the mineralisation.
Gold, silver and base metal grades were determined by ALS Group by analysing the trench and diamond coresamples from the trenching and drilling carried out by CNMC during the period 2007 to 2010.
6.4 Exploration Potential
There is considerable exploration potential within CMNM concession area and in the surrounding exploration licence to locate additional gold resources. Potential exists for extensions to the known deposits and in areas within the concession where to date only limited reconnaissance exploration has taken place.
Known Deposits within Sokor Block
Current drilling indicates there is potential for extensions to mineralisation down dip in the New Discoverydeposit; also soil sampling indicates potential along strike to the south of the deposit. Soil and IP data suggestpotential for a strike extension to the Ketubong deposit north to the Sungai Liang area.
on the central part of the acid volcanic tuff unit covering a strike length of 500m. Based on mapping, soil sampling and IP results, the total prospective zone with potentialfor gold mineralisation within acid volcanic tuff extends over a strike length of around 2,000m; this includes an extension north of the current drilled area of around 800m and an extension south of 700m.
Remainder of Sokor Block
The New Found prospect is 500m southwest of the New Discovery deposit. CNMC has drilled three drill holesinto this prospect; drilling intersected altered phyllite and quartz porphyry intrusive rocks with gold intercepts of 1-4m with grades of 0.5-11g/t Au in the oxide zone. Massive sulphide float rock in the area returned 15.0g/t Au, indicating there maydeposit. The New Found prospect clearly warrants additional drilling.
There are also extensive areas in the concession that to date have only been subjected to reconnaissance mappingand rock chip sampling. Areas include south and east -Rixen fault inthe northern part of the concession. for replacement style base metal-of the Ketubong-Rixen fault is considered to have potential for structurally controlled gold mineralisation.
CNMC is also presently evaluating alluvial gold mineralisation in the Sejana Lode area (Figure 2). To date CNMC has completed a pitting programme which indicates alluvial gold grades in excess of 1.0 gram per cubic metre. CNMC considers the alluvial mineralisation could be exploited and has the potential to increase gold production in the medium term.
Exploration Licence
Exploration licence EL2/2006 covers an area of approximately 62.8km2 surrounding the Sokor Block. CNMChas not completed any exploration in the licence area to date. The area covers a prospective section of theCentral Belt. Known gold occurrences in the area include the presence of alluvial gold in a number of the riversand hard rock gold mineralisation in the Sungai Tapis area to the northwest of the Sokor Block. The SungaiTapis area is considered by CNMC to be prospective for gold mineralisation and to be possibly associated with a northern extension of the Ketubong-Rixen fault zone.
Structural interpretation of satellite imagery indicates a number of major north-south and northeast-southwesttrending structures which are associated with gold mineralisation elsewhere in the Central Belt. The area surrounding a major intersection of these two sets of structures located to the southeast of the Sokor Blockcontains evidence from satellite imagery of three circular structures that could indicate buried intrusive bodiesand also one exposed intrusion. This geological setting is regarded as prospective for gold and base metalmineralisation.
APPENDIX F – BDA TECHNICAL REPORT
F-30
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 30
BEHRE DOLBEAR
Future Exploration Programme
CNMC plans to increase the resource base of the project by initially drill testing potential extensions to the
Measured and Indicated resources. CNMC plans to drill an additional 10,000m of diamond drilling to achievethis objective. This programme is scheduled to commence during the first quarter of 2011. An additionalprogramme of 2,500m of RC dril
In conjunction with the resource drilling programme, CNMC plans to conduct additional metallurgical testworkprogrammes oxide resources to heap leaching and totest primary resources from all four deposits for carbon-in-leach processing. Testwork will also be carried outon samples of base metal sulphides to investigate the potential of using a flotation process to recover base metals
Conclusions
The geology and mineralisation controls at Sokor are reasonably well understood, with mineralisation beingboth structurally and lithologically controlled.
to have potential for extensions whereas New Discovery remains open at depth and warrants additional drill testing. more widely drilledand the geology is generally less-well defined. Both deposits require additional drilling to fully defineresources. ional low grade gold resources both north and south of the presently defined resource.
The amount of drilling completed to date by CNMC of around 10,800m is quite modest relative to other projects at a similar stage of advanced exploration and early mine development. BDA considers this partly a result ofCNMC relying exclusively on diamond drilling for its exploration and resource definition drilling, rather than the more rapid and cost effective method of RC drilling. BDA notes that CNMC is planning an additional10,000m of diamond drilling BDA recommends that the ongoing exploration programme planned by CNMC includes a higher proportion of RC drilling to boost the drill metreage capability and thereby enable a more rapid testing of prospective areasand expansion of drill-indicated resources within the concession.
To date CNMC has focussed its exploration on the known prospects within the Sokor Block and hence there are a number of areas within the concession that have been subjected to little or no exploration; the surroundingexploration licence also has not been subjected to any systematic investigation. These areas are prospective forgold and base metal mineralisation and CNMC plans to expand its exploration programme in the future toassess these areas and also in the surrounding exploration licence.
APPENDIX F – BDA TECHNICAL REPORT
F-31
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 31
BEHRE DOLBEAR
7.0 GEOLOGICAL DATA
CNMC has completed geological mapping, soil sampling and IP geological surveys over a significant portion ofthe Sokor Block. The results of this exploration were used to locate surface trenches and drill holes in order to define gold resources within the concession. Surface trench and drill hole assay samples were used as the basisfor the estimation of gold resources. BDA has inspected surface trenches and drill cores on site in June 2010 and reviewed drill logs and core photographs in August 2010. Drilling, logging, bulk density testing, sampling procedures and data quality aspects were discussed and reviewed with CNMC staff. BDA also visited the Sokor site during the early stages of exploration in October 2007 and again in April 2008 to review exploration procedures including drill hole logging, sampling and assaying.
7.1 Trenching and Drilling
surface trenches and a total of 10,791m of diamond core drilling. Trenches were excavated by a backhoe to adepth of 3-4m at spacing varying from 50m to 100m. Diamond drilling was completed on all four deposits witha mix of inclined and vertical drill holes with drill sections orientated normal to the strike of the mineralisation.The flattest drill hole angle was -60º. Drill holes were collared with PQ size core, reducing to HQ whencompetent rock was intersected below the highly weathered zone. Typically core size was reduced to NQ size at around 100m depth. Double tube core barrel equipment was utilised. The initial drilling programme in 2007 experienced low core recovery and consequently the first six holes drilled by CNMC were excluded from theresource estimation. Core recovery in subsequent programmes was satisfactory with most holes in excess of 90% core recovery.
was defined by 120 drill holes totalling 4,904m and drilled on a 20m x 20m grid over a strikelength of 450m. The three northernmost sections were drilled on a 20m x 25m grid with drill holes spaced at25m along the sections. New Discovery was drilled by 51 holes totalling 3,238m over a strike length of 200m.Drill hole spacing varied from 20m x 20m to 20m x 40m. Drilling at Ketubong consists of 10 widely spaced drill holes totalling 1,743904m over a strike length of 300m on a 100m x 100m drill grid.
7.2 Survey
CNMC has completed a topographic survey over a seven square kilometre area covering the four deposits; thislocal detailed survey has been tied into the Mala using a number of MNG surveycontrol points. This survey work was carried out operated by qualified and experienced surveyors. All soil sampling, IP survey, trenches and drill hole collarshave been located using EDM equipment. This survey provided adequate data to produce a digital terrain
tructure layout.
All drill holes have been surveyed using down hole survey equipment. Holes were surveyed at 50m intervalsdown the hole; hole deviations are reported to be minimal.
7.3 Logging
Trenches are geologically mapped to differentiate bedrock from eluvial/alluvial intervals prior to sampling. Drill hole cores are logged for lithology, weathering, alteration, structure, mineralisation and for geotechnical dataincluding core recovery, RQD (rock quality designator) and fracture frequency measurements. All drill core isphotographed using a digital camera. All potentially mineralised core is marked up for sampling. BDA notesthat logging defined only two oxidation zones, oxide and primary. Drill core examined by BDA during the sitevisit indicated the presence of a partially oxidised transitional zone between oxide and primary; BDArecommends that future logging distinguishes transitional material from primary mineralisation.
7.4 Sampling and Sample Preparation
Trenches are sampled by continuous channel samples over lengths varying from 1-1.5m. All potentiallymineralised core is diamond sawn, with half core dispatched for analysis and half retained in the core box as a permanent record. Core is stored on site close to the plant and administrative office. Sample lengths of drillcore take into account geological boundaries but are a minimum length of 0.5m and a maximum of 1.5m.
Sample security is the responsibility of the site geologists who supervise the sampling of the core, the labellingand recording of the samples, and the transport and dispatch for sample preparation and analysis. Samplesecurity procedures instigated by CNMC included secure storage of all drill core on site or at Tanah Merahoffice on completion of each drill hole. Sampling of core was supervised by the Chief or Senior geologists at alltimes. Core samples are placed in calico bags, labelled and dispatched by air freight from Kota Bharu to Perth
APPENDIX F – BDA TECHNICAL REPORT
F-32
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 32
BEHRE DOLBEAR
for sample preparation and analysis. BDA considers sample security procedures are satisfactory and meetnormal industry standards.
Sample preparation is undertaken at ALS Group laboratory in Perth, Australia. Sample weights rangefrom 1-3kg. Samples are dried, crushed to 6mm and the whole sample pulverized to 85% passing 75 microns. A pulp sample of 200 g is split for assay and the pulp reject bagged and retained.
7.5 Assaying
The standard suite of analyses includes Au, Ag, Cu, Pb, and Zn. Gold analyses are by 30g fire assay with AASfinish, with a detection limit of 0.01g/t Au. Ag, Cu, Pb and Zn are analysed by four acid digest and ICP Atomic
ME-OG62.
7.6 Quality Assurance/Quality Control
QA/QC protocols consist of insertion of duplicates which were submitted at a rate of approximately one per batch of 20 samples and blanks inserted at a frequency of one in every 40 samples. A total of 258 core duplicates were prepared by cutting quarter core from the half core retained in the core boxes. Duplicate core samples showed acceptable results for values below 5g/t Au. Above 5g/t Au results showed a higher variance. BDA considers the variance in the higher assays is to be expected with quarter core samples.
Blanks were prepared by CNMC from material that was deemed to be barren from previous analysis. Results of blanks were generally acceptable however six blanks returned values in the range 1.4 to 2.2 g/t Au. Oninvestigation these samples were deemed by CNMC to have been mistakenly labelled.
CNMC did not insert its own standards prior to dispatch of samples to ALS. A total of 294 samples of 10different internal laboratory standards were routinely inserted by ALS. These standard samples returnedacceptable results with no significant bias or long term drift of standard results. BDA recommends that CNMCinserts its own standards in future drilling programmes rather than relying on ALS internal laboratory standards for monitoring of accuracy and precision of the assays.
A total of 91 pulp samples prepared by ALS were Results of check assays by SRL using the same fire assay method as ALS gave an 8% lower mean gradecompared with ALS and lower variance. This mean positive bias for ALS analyses was influenced mainly bydifferences between the two laboratories for results of eight samples greater than 12g/t Au. Sample variance ofALS samples was slightly higher for assays above 5g/t Au. Below 5g/t Au SRL assays gave comparable results.BDA recommends that CNMC carries out additional check assays particularly on samples greater than 10g/t Au.
Overall the QA/QC programme has confirmed the general reliability of the data and is considered to provide anappropriate base for resource and reserve estimation.
7.7 Bulk Density
Bulk density measurements have been made on selected core samples of approximately 0.2m in length using thewater immersion method, weighing in air and water. Samples were dried before measurement. A total of 169samples of oxide and primary mineralisation have been tested from the four deposits. Average bulk densities forunconsolidated backfill and alluvial mineralisation were determined using samples from 41 hand excavated,small pits with dimensions of 0.5m x 0.5m x 0.5m. Samples were air dried before weighing. Bulk densities forthe main mineralised lithologies are shown in Table 7.1.
Table 7.1
Dry Bulk Density ValuesDomain - Rock Type Bulk Density Value (t/m3)
Oxidised and Ketubong (36 core samples) 2.20Oxidised 2.70
1.85Alluvial material in New Discovery deposit (16 pits) 1.85Primary semi massive sulphide posit (48 core samples) 3.82Primary phyllite in New Discovery deposit (55 core samples) 2.95
Conclusions
BDA has not undertaken an audit of the geological data as part of this review. From discussions with projectstaff, and review of geological logs and drill core, BDA considers that the geological investigations have beenthorough and the drilling, logging, sampling and assaying procedures adopted are appropriate and inaccordance with industry standards. BDA recommends that future geological logging of the oxidation profileincludes identification of partially oxidised transitional rock.
APPENDIX F – BDA TECHNICAL REPORT
F-33
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 33
BEHRE DOLBEAR
QA/QC results indicate that the sampling and assaying data are generally reliable and without material bias, although QA/QC procedures could be improved by the submission of company standards and carrying outadditional inter-laboratory checks particularly of higher grade samples. Bulk density determination procedures appear generally appropriate. ate and reasonable basis for resource and reserve estimation.
APPENDIX F – BDA TECHNICAL REPORT
F-34
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 34
BEHRE DOLBEAR
8.0 RESOURCE AND RESERVE ESTIMATION
each of the deposits. BDA reviewed thedatabase and estimation methodology for each estimate and assessed the resources and reserves in terms of
CNMC reports its resources and reserves under the 1999 Chinese Code. BDA has made an assessment ofCNMC ves in terms of the comparable resource/reserve categories under theAustralian JORC Code. The two codes are different. The JORC Code is a non-prescriptive code, in that it doesnot lay out specific limits for resource classification in terms of such things as drill hole spacing. Instead itemphasises the principles of transparency, materiality and the role of the Competent Person. The Chinese Codeis a prescriptive code and does not include the role of the Competent Person. It uses a three component (EFG)system that considers the deposit economics (E), the level of mining feasibility studies that have been completed(F) and the level of geological confidence (G), using a numerical ranking.
An examination of the details of the Chinese Code suggests that in terms of broad categorisation, the levels of geological confidence ascribed to Measured and Indicated resources are quite similar in both codes. The rangesof drill hole spacing, thickness cut-offs and quality limitations that are enforced by the Chinese system would generally result in the same resource classification under the JORC Code.
The essential elements of the JORC and Chinese codes are presented in Appendices 1 and 2 respectively.
8.1 Standards and Definitions of the JORC Code
A mineral resource is defined in the Australasian Joint Ore Reserve Committee JORC Code as an identified in-situ mineral occurrence from which valuable or useful minerals may be recovered. The Sokor gold resource figures represent the total tonnage of in-situ mineralisation delineated within the drilled areas and above the defined cut-off. Resources are classified as Measured, Indicated or Inferred according to the degree of confidence in the estimate. A Measured Resource is one which has been intersected and tested by drill holes or other sampling procedures at locations which are close enough to confirm continuity and where geoscientificdata are reliably known. An Indicated Resource is one which has been sampled by drill holes or other samplingprocedures at locations too widely spaced to ensure continuity, but close enough to give a reasonable indication of continuity and where geoscientific data are known with a reasonable level of reliability. An Inferred Resource is one where geoscientific evidence from drill holes or other sampling procedures is such that continuity cannotbe predicted with confidence and where geoscientific data may not be known with a reasonable level ofreliability.
An ore reserve is defined in the Australasian JORC Code as that part of a Measured or Indicated Resource whichcould be mined and from which valuable or useful minerals could be recovered economically under conditionsreasonably assumed at the time of reporting. Reserve figures incorporate mining dilution and allow for mining losses, and are based on an appropriate level of mine planning, mine design and scheduling. CNMC s gold orereserves represent those portions of the resource which can be economically mined under the defined parameters,and which are planned to be mined within a designed open pit. The reserves are included within the overallresource figures. Proved and Probable Reserves are based on Measured and Indicated Resources respectively.Under the Australasian JORC Code, Inferred Resources are deemed to be too poorly delineated to be transferredinto a reserve category.
8.2 Mineral Resource Estimation
Geological Modelling
deposits are based on trench and drill hole data which was available at the end of May 2010. At that time,one hole in the
Ketubong deposit.
The geology for each deposit has been interpreted on cross secLode and New Discovery is 20m which aligns with the drill hole spacingmore widely drilled with section spacing of 50m and 100m respectively. A cut-off grade of 0.5g/t Au was usedto define mineralisation envelopes for each deposit.
Two oxidation domains, oxide and primary, were defined using geological logging of the degree of oxidation.Oxidised mineralisation is divided into three categories, backfill, alluvial and in-situ oxide based on geologicallogging. Backfill represents low grade material that was mined and discarded during previous mining operations
cuts through the New Discovery deposit. All four deposits contain in-situ oxide mineralisation; the base of oxide
APPENDIX F – BDA TECHNICAL REPORT
F-35
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 35
BEHRE DOLBEAR
is defined by the first appearance of sulphide minerals based on visual examination of the core during geologicallogging.
Lode is defined by eight surface trenches and 120 diamond drill holes totalling 4,904m over a strikelength of 450m. Resource sections are spaced at 20m except for the three northernmost sections where spacingincreases to 25m. Drill holes along sections are drilled at 20m spacing consists of a tabulardipping body of semi-massive to massive sulphide mineralisation associated with replacement of a limestoneunit. Gold and base metal grades tend to be highly variable within the replacement body. Completely oxidisedmassive gossan mineralisation grades into primary mineralisation containing base metals, gold and silver; thedominant base metals are galena and sphalerite, with minor chalcopyrite. Overlying and adjacent to oxidemineralisation is backfill material which generally contains low grade mineralisation.
New Discovery
New Discovery deposit is defined by six surface trenches and 51 diamond drill holes totalling 3,238m over astrike length of 200m. Resource sections are spaced at 20m and drill holes along sections spaced at between20m in the oxide mineralisation and 40m in the primary. New Discovery consists of shear and fault-related
gold mineralisation is associated with low levels of base metals although occasionally minor replacement-style semi-massive base metal and gold mineralisation is present. The mineralisation attains a maximum width of 50m and dips to the east at around 10-30º. The grade and thickness of mineralisation between sections exhibits reasonablecontinuity.
Ketubong
The Ketubong deposit is defined by 12 surface trenches and 10 drill holes totalling 1,743m over a strike length of 680m. Section spacing varies from 40m to 150m with one to three drill holes per section. Continuity of thegold grade and thickness between sections is generally poor; the deposit requires additional drilling todemonstrate continuity of the mineralisation along strike and down dip.
Ri
currently defined by nine drill holes totalling 904m over a strike length of 300m. Section spacing is 100m with one to three holes per section. Initial drilling indicates a relatively simple tabular geometrywith good continuity to the mineralisation, however additional drilling is required to test the continuity of grade and thickness between 100m spaced drill holes.
Gold mineralisation is hosted in acid volcanic rocks within an altered, silicified zone; mineralisation tends to below grade in the order of 2g/t Au and occurs disseminated and in veinlets within the volcanics.
Resource Methodology and Estimation Procedures
BDA has reviewed the June 2010 resource estimation processes and procedures and considers them reasonable,in accordance with industry standards and in compliance with the JORC Code.
The Sokor resource estimate represents the tonnage of in-situ mineralisation delineated within the drilled area and above the defined cut-off of 0.5g/t Au for each of the four deposits.
CNMC used a manual polygonal estimation method prescribed in the Chinese industry standards that are used inconjunction with the Chinese Code. The estimation methodology is similar to a conventional cross sectionalestimation method as used in Australia and elsewhere around the world.
Resource parameters used by CNMC were as follows:
a gold cut-off grade of 0.5g/t Au was used to define the mineralisation envelopes for the four deposits
a minimum thickness of mineralisation was set at 1m and maximum internal waste at 2m
a minimum block (polygon) grade was set at 1.0g/t Au
top cuts were applied to statistically anomalous trench and drill hole samples and log probability plots wereused to define the cut points; on average, the top 4% of the trench and drill hole samples were affected by thetop cutting and the weighted average sample grades were reduced by 14% for trench samples and by 6% fordrill hole samples
APPENDIX F – BDA TECHNICAL REPORT
F-36
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 36
BEHRE DOLBEAR
mineralisation volumes were estimated by measuring the area of each mineralisation type on each section andmultiplying by the section spacing; average section grades for each section were calculated by weighting thelength of each drill intercept with its grade and sectional average grades were weighted by section volumes toobtain a weighted average grade for each mineralisation type in each deposit
average bulk density values, as listed in Table 7.1, were applied to obtain resource tonnes for each deposit.
CNMC used the three component EFG system to categorise the resource into Measured, Indicated and Inferred. For the geological confidence component (G), categorisation took into account the drill hole spacing and thegeological complexity of each deposit.
Mineral Resource Estimate
The mineral resource estimate as determined for the June 2010 resource statement at a 0.5g/t Au cut-off is shown in Table 8.1. The gold mineral resources stated in this report are inclusive of gold ore reserves. The share of thegold mineral resources attributable to CNMC is 81%.
BDA has reviewed the resource estimation methodology and procedures and considers them generallyreasonable and appropriate except for the following aspects:
The polygonal estimation methodology used by CNMC is a method that was widely applied in the mining industry prior to computer-based resource estimation using geostatistical methods. It is a straightforward and relatively simplistic method that can deliver reasonable resource estimation results, however it can bevulnerable to over-estimation of the grade, particularly with gold deposits, due to the variability of goldgrades normally found in such deposits. Average grades can be overly influenced by a single high grade and thick drill intercept which, in this method, can be assigned a larger volume of resource than is appropriate. CNMC has correctly attempted to reduce this effect by applying a top cut to the sample grades, but thereremains the possibility that the estimation methodology may have over-estimated the gold grade particularly
the number of drill holes used in the estimation is small andtherefore each drill hole has more influence over the weighted average resource grade.
tains the largest proportion of oxide resources currently defined at Sokor. The deposit is presently drilled on a 100m x 100m grid and is categorised as having Indicated and Inferredresources. The Indicated resource has been categorised as such because of the apparent fairly simple andcontinuous distribution of mineralisation between 100m spaced holes. BDA considers this categorisation to be towards the limit of an Indicated category in a gold deposit to be reported under the JORC code and
thickness of the mineralisation.
BDA recommends that CNMC considers using a computer-based estimation methodology for its nextresource estimation update. This would entail creating a three dimensional block model of each deposit andapplying geostatistical methods for the resource estimation. BDA believes that this would provide CNMCwith a more robust global estimate of the gold resources at Sokor.
APPENDIX F – BDA TECHNICAL REPORT
F-37
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 37
BEHRE DOLBEAR
Table 8.1
Sokor Gold Mineral Resources 0.5g/t Au Cut-Off - June 2010Deposit Type Category Category Tonnage Gold Grade Contained Au
Primary Inferred 333 340 3.14 34.2All Total Meas/Ind 121b/122b 1,462 2.61 122.7All Total Inferred 333 720 2.63 60.8All Total Meas/Ind/Inf 121b/122b/333 2,182 2.62 183.5
Note: cut off 0.5g/t Au; the total gold resources of 2,182kt includes gold ore reserves of 989kt
CNMC also reports base metal mineral resources in the deposit estimated within the 0.5g/t Aucut-off mineralisation envelope which was used to define gold resources. Resources are estimated using a silvercut-off of 40g/t Ag or a 1% combined lead and zinc cut-off. The base metal mineral resources of lead and zincand associated silver resources are shown in Table 8.2.
Table 8.2
ead, Zinc and Silver Resources (0.5g/t Au Mineralisation Envelope) - June 2010 Type Category Tonnage Grade Grade Grade Lead Zinc Silver
Note: cut off 40g/t Ag or 1% Pb+Zn within the 0.5g/t Au mineralisation envelope
APPENDIX F – BDA TECHNICAL REPORT
F-38
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 38
BEHRE DOLBEAR
8.3 Ore Reserve Estimation
Under the JORC Code, ore reserves represent that part of a Measured or Indicated mineral resource which is planned to be mined, incorporating mining dilution and allowing for mining losses, and on which a sufficientlevel of mine planning, mine design and scheduling have been carried out to demonstrate economic viability.Under the JORC Code, Inferred resources are deemed to be too poorly delineated to be transferred into a reservecategory.
To date ore reserves have been estimated only for backfill, alluvial and oxide ore Optimised open pit designs for the three deposits are shown in Figures 5 and 6.
CNMC used the following reserve parameters:
reserves for each deposit were defined within an optimised pit; the optimised pits include all Measured and Indicated oxide resources that have been defined to date
mining dilution was set at 5% and mining recovery 100%
the economic cut-off grade was defined as 0.5g/t Au, the same cut-off that defined the mineralisationenvelope (equivalent to an in situ value of approximately US$20/t at a gold price of US$1,300/oz).
Based on the above parameters, in-pit ore reserves were defined as shown in Table 8.3. The share of the gold reserves attributable to CNMC is 81%.
Table 8.3
Sokor Gold Ore Reserves - June 2010Deposit Type Category Tonnage Gold Grade Contained Au
Oxide Probable 785 1.84 46.4Sub-Total Oxide Subtotal 785 1.84 46.4Total All Proved 204 3.64 23.9Total All Probable 785 1.84 46.4Total All Prov/Prob 989 2.21 70.3
Note: cut off 0.5g/t Au; mining recovery 100%, mining dilution 5% at zero grade
8.4 Future Reserve Potential
The designed open pits include 380kt of Inferred oxide resource, and approximately 500kt of Measured andIndicated ponwards with the assumption that the Inferred oxide resources will be converted to ore reserves on completion ofadditional drilling and that the Measured and Indicated primary resources will be converted to ore reservesthrough the completion of successful metallurgical testwork that indicates that the material is suitable forprocessing in a CIL plant. BDA considers that it is a reasonable assumption that at least a major portion of these
There is also a reasonable expectation that additional resources will be defined within the Sokor Block and in thesurrounding exploration licence, however this will require further systematic exploration and an increase in theamount of drilling that CNMC has completed to date.
Conclusions
The mineral resource estimation and modelling has been professionally undertaken and the resource methodology and categorisations are considered generally appropriate for reporting under the JORC Code.Ore reserves based on Measured and Indicated mineral resources have been defined in four open pits; orereserves are sufficient for two years of production at the planned production rates. CNMC will need to upgrade Inferred oxide resources with additional drilling and complete metallurgical testwork successfully on the primary resources to expand ore reserves and extend the mine life.
There is considerable potential remaining in the Sokor Block and surrounding exploration licence to locateadditional gold resources, however this will require a higher rate of drilling than CNMC has completed in thepast.
APPENDIX F – BDA TECHNICAL REPORT
F-39
120120
140140
160160
180180
260260
120120
140140
160 160
200200
200200
160160
ZKN6-5ZKN6-5
labora
tory
DamDam
PondPond
DamDam
New DiscoveryOpen Pit
New DiscoveryOpen Pit
Manson’s LodeOpen Pit
Manson’s LodeOpen Pit
Diversion DitchDiversion Ditch
UndergroundMining
UndergroundMining
CrusherStationCrusherStation
OreBinOreBin
AccommodationAccommodation
AccommodationAccommodation
PondsPonds
Vat LeachProcess Plant'
Vat LeachProcess Plant'
Lab.Lab.
Sed.PondSed.Pond
Sed.PondSed.Pond
SecuritySecurity
SiteAccess
SiteAccess
fromTanah Merah
fromTanah Merah
AdministrationAdministration
CarbonColumnsCarbon
Columns
SmeltingPlant
SmeltingPlant
SewageSewage
InitialTailings Storage
Site
InitialTailings Storage
Site
44
40
00
E4
44
000
E
444
500
E444
500
E
6 163 500 N6 163 500 N
6 163 000 N
Road & Tracks
LEGEND
River/Sungai
MANSON'S LODE AND NEW DISCOVERYOPEN PITS AND VAT LEACH SITE PLAN
Behre Dolbear Australia Pty Ltd
Figure 5
CNMC Goldmine Limited
2500
Metres
BDA - 088 (02)
Sokor Gold Project
APPENDIX F – BDA TECHNICAL REPORT
F-40
8080
100
100
200200
180180
240
240
220
220 20
020
0
180
180
160
160 14
014
0
120
120
100
100
8080
100100
8080
220220
200200
180180
160
160
140
140
120
120
100
100
8080
Rixen’s Open PitRixen’s Open Pit
Pit Limit
Pit Limit
Multi-lift HeapLeaching Pad
(B)
Multi-lift HeapLeaching Pad
(B)
Multi-lift HeapLeaching Pad
(A)
Multi-lift HeapLeaching Pad
(A)
Waste Rock
Waste Rock
Leaching Residual
Barren/FloodPond
Barren/FloodPond
PregnantPond (A)PregnantPond (A)
CarbonColumnsCarbon
Columns
PregnantPond (A)PregnantPond (A)
Road & Tracks
LEGEND
River/Sungai
Licence Boundary
6 167 000 N
6 167 500 N
6 166 500 N
444000 444200443800443600443400
444
000
E444
000
E
443
500
E443
500
E
RIXEN'S OPEN PIT ANDHEAP LEACH SITE PLAN'
Behre Dolbear Australia Pty Ltd
Figure 6
CNMC Goldmine Limited
2500
Metres
BDA - 088 (02)
Sokor Gold Project
APPENDIX F – BDA TECHNICAL REPORT
F-41
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 41
BEHRE DOLBEAR
9.0 MINING
9.1 Overview
A mining study has been carried out by CSU from Changsha, China. The study assumes open pit mining of ore and waste based on conventional open pit mining methods with hydraulic excavators and dump trucks. Themine plan has extraction of ore from three separate pits, Lode, New Discovery and R Theplanned New Discovery pits are located within a radius of approximately 1km from thetreatment plant, while the planned R pit and associated heap leach pads are approximately 5km north of the treatment plant.
The deposits are hosted in intermediate to acid tuffaceous rocks and carbonate rocks. The ore zones at each of the deposits, which range in thickness from a few metres to over 35m, strike approximately north-south and dip gradually to the east at between 10-20°. Generally the rock strengths range from relatively weak in the oxidisedzone to strong in the primary rock types in the hanging and footwall of the fault/shear zones that contain themajority of the mineralisation.
The project mine plan for the period 2011 to 2012 proposes an ore production rate increasing from 84,000tpa in2011 up to 705,000tpa in 2012. Ore will be treated through the vat leach for NewDiscovery deposits at a rate of approximately 60,000tpa, or stacked onto the heap leach pads at R at amaximum rate of approximately 670,000tpa. A mine schedule extending to 2014 has also been prepared.
The mining study defined an oxide ore reserve for the three pits totalling 989,000t at a grade of 2.21g/t Au. An optimised pit was outlined for each deposit including Measured primary resources as well as Inferred oxide resources totalling 1.88Mt at a grade of 2.6g/t Au.
9.2 Production Schedule
Mine planning in the study has been based on the following parameters and assumptions:
Geotechnical - no geotechnical report has been prepared for the pit slope assessment. CSU has assumed finalpit slopes of 48-50° for the hangingwall of all of the orebodies and 26-42° for the footwall.
Mining Losses and Dilution - a nominal dilution allowance of 5% has been included in the estimates withmining recovery assumed to be 100%; given the planned bench height of 5-10m and the general width of theore zone from 6-8m, BDA anticipates that mining dilution is likely to be higher.
Mining Costs - a unit cost of US$2.65/t has been estimated for ore mining and US$0.88/t for waste removaland a further US$0.88/t for reclamation which includes waste being backfilled into the open pits. Plans involve the use of contract mining, drilling and blasting, using 20t trucks, loaded by 1.8m3 hydraulicexcavators, and supported by the normal ancillary equipment.
Processing Costs - a unit cost of US$10/t has been estimated for vat leaching of ore fromNew Discovery deposits and US$8/t for heap leaching of ore from R .
Ore Type- mine planning has incorporated both oxide ore and primary ore in the open pit optimisation studyassuming a recovery of 80%. The recovery for oxide ore, based on testwork, is 70% for vat and heapleaching; recovery for primary ore is assumed to be 80% but testwork is required to confirm this figure.
CSU was commissioned by CNMC to prepare an Ore Reserve estimate. All optimisation parameters weresupplied by CSU or derived in consultation with CNMC and were consistent with a nominal 300-600ktpa on-sitemineral processing operation. Pits were optimised, and detailed staged and ultimate pit designs developed. Using the inventories from these detailed designs, a mining schedule was produced by CSU. Open-pit limitdetermination was done by DMINE software. The open-pit limit was determined using the cut off stripping ratiobased on the parameters provided. CNMC used a gold price of US$1,200 for the pit optimisation; a cut off gradeof 0.5g/t Au was used to define ore reserves.
Open pit designs were based on a bench height of 5 or 10m (5 or 10m for ore mining and 10m for waste mining), with approximately 10-25 m wide berms. The batter angle was set at 50º in weathered rock and 65º in fresh rock. CSU indicated that the overall inter-ramp angle (the slope from crest to crest in areas with no ramp) averaged 23-30º, but this is likely to be in the footwall section of the pit with the hangingwall slope angleplanned at 48-50°.
Lode, the initial open pit is also planned to provide access for underground mining of over 40,000tof primary ore exposed in the pit wall but not within the open pit plan. Adit development and open stope mining is planned to be used for recovery of this ore. At completion of the small underground operation, the mined-out
APPENDIX F – BDA TECHNICAL REPORT
F-42
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 42
BEHRE DOLBEAR
area is to be backfilled with waste rock obtained in stripping operations to maintain stability. The remainder ofLode pit will then be extracted.
All pits are planned to be backfilled after completion.
A summary of the contained resources and reserves within the three optimised pits of NewDiscovery and R are shown in Table 9.1. The resource tonnages include Measured primary resources andInferred oxide resources. The Ore Reserves only include the oxide ore component of the pits and excludeprimary material and Inferred oxide resources.
Table 9.1
Sokor Optimised Pits Contained Resources and Ore ReservesDeposit Units Contained Resources Ore Reserve
Ore Tonnage kt 319 142Grade - Au g/t 4.1 2.8Contained Au kozs 41.5 12.7New Discovery Ore Tonnage kt 437 63Grade - Au g/t 3.6 5.6Contained Au kozs 50.2 11.3
Ore Tonnage kt 1,120 785Grade - Au g/t 1.8 1.8Contained Au kozs 63.7 46.4
Mining operations are planned to be conducted by contractors using 1.8m3 hydraulic excavators and 20t rear-dump trucks. The contractor will initially be a small scale contractor supervised by CNMC mining engineers,but for the higher rates of production CNMC intends to engage a Chinese mining company to undertake themining operation. The fleet selection is considered relatively small but generally suitable for the proposed production activities, although the high rainfall and soft ground conditions may create some difficulties with theuse of the rigid frame dump trucks; the use of all wheel drive articulated trucks may suit the ground conditionsbetter than rigid trucks.
Most of the material will be drilled and blasted with 5m-10m high benches. CSU proposes a drill pattern of 4mx 3.5m with hole diameter of 115mm; the use of emulsion explosives is planned due to the likely presence of water. Grade control in the pit will be conducted using RC drills, with holes on an 8m x 10m pattern extending several benches below the current mining horizon with samples taken every 1.5m interval.
BDA has not viewed any specific geotechnical investigations and recommends that an assessment based on drill-hole logs and core analysis be used to identify possible structures and determine rock strengths. The footwallslope angles of the planned pits are reasonably conservative; the hangingwall pit slopes angles are between 45-50 ; further review of the slope angles prior to mining is considered appropriate.
CNMC has identified that groundwater inflow to the pits is an important issue at Sokor. In-pit groundwater and run-off water is planned to be collected in sumps for pumping to rivers near the pit perimeters, using dieselpowered pumps. Water will be pumped to sedimentation ponds and then reused or discharged after settling andneutralisation. Perimeter drains will be established at each pit to prevent the inflow of run-off water fromrainfall. Low lying areas of the pit rim are planned to be bunded to protect against inflow in the event of high rainfall events.
The production schedule shown in Table 9.2 is based on the table presented in the CNMC report for the initialperiod from 2010 to 2012 based on ore reserves. The ore reserve is based on a cut off grade of 0.5g/t Au and thewaste to ore stripping ratio over the period is approximately 1.6:1. Under the mine plan ore productioncommences at an initial rate of 84,000tpa in 2011 increasing to 705,000tpa in 2012. Total material movementranges from 265,000tpa in 2011 to 1.74Mtpa in 2012 and 3.94Mtpa in 2014. BDA considers a more even rate of mining would provide a better basis for mine planning so that a potential mine contractor could size his equipment to carry out the operations at a reasonably steady state rather than regularly mobilising furtherequipment each year at a cost to the operation. Under the present terms of the mining approval, production is limited to 300,000tpa of ore, and further mining approvals will be required prior to 2012.
APPENDIX F – BDA TECHNICAL REPORT
F-43
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 43
BEHRE DOLBEAR
Table 9.2
Sokor Gold Operation - Projected Mining Production Schedule
CNMC has prepared an extension of production for two years (2013-2014) based on primary ore, Inferred resources and possible extensions at pit. For the extended mine life an extra production of 2.0Mt of oremine inventory has been assumed at an overall mining rate around 3.3Mtpa. Ore production is forecast at600,000tpa of ore to the heap leach pads at Rixen while an initial 230,000t of primary ore will be treated in the CIL plant increasing to 490,000t in 2014. The waste to ore stripping ratio over the extended production period isapproximately 2.3:1.
Conclusions
BDA considers that the mine planning schedules provide a general outline of the likely development but are preliminary in nature. The mining recovery and dilution estimates are considered somewhat optimistic but overall the ore reserve provides a reasonable basis for the production schedule.
In respect of the extended life of mine production schedule, the mining inventory using primary ore and Inferred resources provides a reasonable guide to the forecast production but is preliminary and several assumptions are made including conversion of Inferred resources to ore reserves, definition of addiand metallurgical recovery of the primary ore; these assumptions require better definition.
Geotechnical assessment has not been carried out in any detail but the footwall slope angles of the planned pitsare reasonably conservative; the hangingwall pit slope angles are between 45-50 , further review of the slope angles prior to mining is considered justified.
There is always some mining risk in high rainfall areas but CNMC plans to provide drainage channels aroundthe open pits to minimise the effects to the operation. The mining equipment is considered generally appropriateto the conditions and the proposed scale of operations, although an all wheel drive truck fleet may be better suited to the conditions than the planned rigid rear drive trucks.
APPENDIX F – BDA TECHNICAL REPORT
F-44
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 44
BEHRE DOLBEAR
10.0 PROCESSING
10.1 General
CNMC engaged Changchun Gold Research Institute to carry out process testwork in 2008 and subsequently to design a process for recovery of gold and silver from the Sokor ores. A vat leaching plant was constructed on site in early 2010 and operations commenced in July 2010. Approximately 6,000t of ore had been processed bythe end of December 2010.
10.2 Metallurgical Testwork
In 1991 testwork carried out by Asia Mining Sdn. Bhd. included bottle roll tests carried out at Ammtec in Perth on oxide samples from Rixen ; gold recoveries ranging from 54-86% were obtained on leach feed crushed to -
-99%.
In 1991 AM carried out column leaching testwork on ten samples weighing between 1,000 and 1,350kg. The samples were obtained from the Liang, Rixen s, New Discovery, Manson s Lode and New Found areas. Table10.1 summarises sample lithologies and assays, and column leaching results.
Table 10.1
Summary Results- Asia Mining Testwork 1991
Col. No Area Lithology Head Assay (g/t) Recovery (%) Reagent Usage - kg/t PercolationAu Ag Au Ag NaCN Lime
1 Liang Gossan with secondary quartz 19.9 7.28 94.8 53.7 2.54 6.43 Good2 Liang Gossan. 2.73 176 87.1 7.1 1.22 2.33 Good3 New Disc. Gossanous bands 11.6 3.17 93.8 58.9 2.68 4.83 Good4 Rixen Clay-silica with vein quartz 0.65 1.76 87.8 20.0 0.83 2.07 Good5 Rixen Clay-silica with vein quartz 2.74 3.05 83.8 38.9 0.89 2.04 Good7 Rixen Silicified breccias 1.68 1.86 64.1 32.2 1.07 2.05 Good8 New Found Metasediment at dyke contact 8.80 2.33 71.2 51.2 1.71 3.86 Good9 Manson Oxide/sulphide transition 3.86 94.6 60.1 23.7 3.48 5.78 Good10 Liang Gossan with quartz 6.59 144 95.2 9.4 2.76 5.24 GoodNote: the previously named Liang area is now included in the New Discovery deposit
In 2008 CNMC contracted CGRI to carry out a testwork programme on two samples representing oxidised and primary mineralisation from several locations on the site. The oxide sample contained 400kg of material from
Ketubong. Unfortunately, the two samples werecombined by CGRI and testing took place on one mixed oxide and primary sample.
The single sample tested assayed 3.61g/t Au, 45.5g/t Ag, 0.055% Cu, 1.03% Pb, 1.38% Zn, 17.2% Fe, 0.27% As and 3.85% S. The gangue minerals present were mainly quartz, feldspar, sericite, chlorite, calcite and kaolin.
A detailed mineralogical examination concluded that the gold was either included in sulphides, oxidisedsulphides or in the gangue minerals, between grains of these minerals, and in fractures. Gold grains appeared to be pre-
80produced 6% gold recovery. A 24 hour cyanide leaching test at a p80 of 74μm produced 93-95% Au extraction,depending on cyanide addition rate. Column tests were carried out testing variables including crushed ore size(30mm and 50mm top size), cyanide addition rate (600-1,000g/t NaCN , and 7-35 dayleaching time. A test was carried out at optimised conditions of 30mm top size, pH11, 800g/t NaCN and 30 daysleaching time, achieving extraction of 80.6% of the gold and 11.6% of the silver.
CNMC plans to carry out further metallurgical testwork in the following areas:
hgm Lode ore for selection of a process route mineralogical and leaching testwork on primary ore from New Discovery and Ketubong.
APPENDIX F – BDA TECHNICAL REPORT
F-45
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 45
BEHRE DOLBEAR
10.3 Plant Design
CNMC, on the advice of CGRI, decided to opt for a vat leaching process rather than a heap leach. This decision was made because of the lack of suitable locations on the mine site for establishment of a leaching pad and due to the high rainfall on the site.
The plant comprises the following equipment:
nd a10mm vibrating screen to split the secondary crusher product into plus and minus 10mm materialthree concrete leaching vats each with a capacity of 1,500t of orepregnant, barren and raw water pondseight activated carbon columns set up in two trains of four columnsa gold room comprising an acid wash tank and an elution column each with a capacity of 1t of carbona 1,000kg carbon/day diesel-fired carbon regeneration furnacea pressurised electrowinning cell.
Crushed ore is trucked about 150m to the leaching vats and loaded into the vats using excavators. Barrensolution is pumped into the vat to saturate the ore and allow it to soak. The pregnant solution is then drainedfrom the vat into the pregnant solution pond. Pregnant solution is pumped through the carbon columns, anestimated 97% of the contained gold is captured on the carbon and the solution discharging from the columns isrecirculated to the barren pond, from where it is pumped back to the vat.
Carbon is transferred to the gold room for acid washing, elution and regeneration prior to recirculation to theadsorption columns. Eluate from the elution stage is circulated through an electrowinning process to produce a gold sludge which is dried and smelted to produce gold dore.
10.4 Further Process Development
CNMC has indicated it has developed costs for expanding capacity of the existing plant, for construction of amulti-lift heap leaching system and for construction of a carbon-in-leach plant with an initial capacity of 500tonnes per day. BDA has not been supplied with any details of the design of these plants. Given that testworkremains to be carried out on primary ore samples from deposits on which CIL processing is proposed, theprojected gold recovery and operating costs should be considered conceptual. The projected 80% gold recoveryfor primary ore requires confirmation from testwork on representative samples.
BDA has some concerns regarding the practicality of operating a heap leach process in a high rainfallenvironment such as at Sokor. Monsoon rainfall is likely to cause high inflows of water to the heap leach system, resulting in a requirement for detoxification and discharge of large volumes of excess water.
10.5 Operating History
Plant operations commenced in July 2010. Initially, ore was crushed without screening of the secondary crusherproduct and then loaded into Vat 1. However, the initial fill of the vat with solution indicated that percolation through the ore was poor and a decision was taken to screen the crushed ore into plus and minus 10mm fractions.
A total of 500t of the coarse fraction was loaded into Vat 3 and the fines were stockpiled for later processing. The ore loaded into the vat was augered on a 5m x 4m grid to obtain a feed sample and then leached for 10 days. Loaded carbon was acid washed and eluted and the eluate solution circulated through the electrowinning cell.The first gold production comprised a bar weighing 2.975kg and containing 79.8% Au and 17% Ag, equivalentto a gold content of 76.3ozs. Based on an assayed vat feed of 500t assaying 6.1g/t Au, gold recovery was equalto 77.6%. BDA notes that the ore tonnage estimate was based on truck counts and an estimated truck factor;BDA considers that in the longer term it would be advisable to set up a more accurate system for metalaccounting.
Vat 2. Repairs to leaks were also being carried out on Vat 2.
CNMC indicated that it expected leach time to be 15 days on full vats and the vat cycle time to be 21 days. Onthis basis, each vat could be put through approximately 17 cycles per year, the resulting vat capacity therefore being 20,000tpa. At this annual vat capacity the site has the capacity to process about 60,000tpa. CNMC is constructing shelters which will be placed over the vats and the solution ponds to prevent rain from diluting thepregnant solution and potentially causing the vats to overtop.
Performance to date is summarised in Table 10.2.
APPENDIX F – BDA TECHNICAL REPORT
F-46
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 46
BEHRE DOLBEAR
Table 10.2
CNMC Plant Production Summary- July-December 2010 Gold Pour No Date Ore Tonnage
Table 10.2 indicates that the ore treatment rate had reached around 1,800 tonnes per month by December 2010,equivalent to around 35% of the design capacity.
Conclusions
The testwork carried out on Sokor ore has indicated that good gold dissolution can be obtained on oxidesamples. On primary samples, gold dissolution is generally lower. CNMC has opted to construct a vat leaching plant. This plant has processed approximately 6,000t of ore in the period from July to December 2010. CNMCplans to expand the capacity of this plant and to construct a heap leach pad for additional oxide ore processing capacity and a CIL plant to process primary ores. BDA has some concerns regarding the operation of a heapleach in a high rainfall environment such as Sokor.
APPENDIX F – BDA TECHNICAL REPORT
F-47
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 47
BEHRE DOLBEAR
11.0 INFRASTRUCTURE
11.1 Site Access and Climate
The project area lies approximately 75km south of the city of Kota Bharu, in the state of Kelantan, Malaysia andis within about 35km of the Thai border to the northwest. Access from Kota Bharu is via the main highway tothe town of Tanah Merah, about 40km to the south, and thence via local sealed roads for around 32km toKampong Bukit Pauh village, where an 18km four-wheel-drive lightly trafficked logging track provides accessto the site through hilly terrain, with one significant fording of a stream.
Kota Bharu is serviced by regular commercial flights from Kuala Lumpur.
Kelantan has a tropical monsoonal climate, the wettest months being Norainfall is in the range 2,032-that annual rainfall on the site could be up to 4,000mm per annum.
11.2 Power and Water Supply
Power to the operation is provided by three on-site diesel generators. Two generators of 400kW and 240kW capacity provide the bulk of the capacity, with a 160kW unit available as a stand-by. Small portable generators provide power to living quarters.
The project site is in an area of high, consistent rainfall. Water is sourced from local streams for use in mining and processing. Potable water is trucked to the site.
11.3 Mine Site Facilities
CNMC has constructed offices, accommodation camp, assay laboratory and a mobile equipment maintenancefacility on the site. BDA considers that these facilities are adequate for a small-scale operation.
Communications are provided via a satellite phone system. Telephone, fax and data transmission facilities areprovided.
Conclusions
The infrastructure provided is generally adequate and appropriate to support an operation of the style planned for Sokor.
APPENDIX F – BDA TECHNICAL REPORT
F-48
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 48
BEHRE DOLBEAR
12.0 ENVIRONMENTAL AND COMMUNITY ISSUES
BDA has reviewed those environmental aspects and social/community issues which are considered a materialpart of the project and which may have implications for project feasibility, costs and timing. The issues
p nmental Impact Assessment 2008, 2009 and Environmental Management Plan 2010.
12.1 Environmental Issues
Environmental Impact Assessment
Environmental approvals for the project include submission of an Environmental Impact Assessment in January2008 and a supplementary EIA report in March 2009 with approval received in June 2009. An EnvironmentalManagement Plan was submitted in February 2010 and an EMP Additional Information report in March 2010, with approval received in April 2010. The EIA and EMP cover both heap leach and pond (vat) leach processing of gold ore at the Sokor mine site.
The project mining and environmental approvals are granted by the Kelantan State Department of Environmentoval conditions stipulated, whilst the EMP
approval was received in April 2010. The Mining Scheme approval was obtained in January 2010 and is subject to initial mine production not exceeding 300,000tpa of mined ore. This condition will be relaxed on submission to government of a full feasibility study and mine plan directed at expanding the project to include treatment of the primary gold sulphide mineralisation using a carbon in pulp process. CNMC plans to continue exploration inparallel with gold production and aims to complete a feasibility study on an expanded project by the first half of2012.
As part of the environmental investigations undertaken to date, potential project impacts to physical and biological resources have been assessed to identify key environmental risks that may arise from the construction,operation and eventual mine closure of the Sokor gold project. Formal assessment, documentation andcommunication of potential project-related impacts, including the anticipated scope, magnitude, extent andduration, have been completed in conformance with the Kelantan State permitting process, including the DOErequirements, and requirements under the Environmental Quality Act 1974. The information supplied under theSupplementary EIA was in response to further information requests from the DOE and the Kelantan StateMinerals and Geoscience Department.
The EIA reports were prepared by Puncak Moriah Engineering Sdn. Bhd., whilst the EMP document wasprepared by EQM Ventures Sdn. Bhd. The Sokor Mining Schemes Report was prepared by CMNM Mining Consultant Engineer, Ir. Chue Hang Cheong.
Climatic Setting
The nearest meteorological station to the site is the Kuala Krai Station which is approximately 40km east of theproject site and at a lower elevation. The highest 24-hour mean temperature of 28.0ºC was recorded in May and the lowest was 24.6ºC recorded in December. The highest mean maximum is 35.1ºC recorded in April and thelowest is 28.5ºC recorded in December, whilst the highest mean minimum is 24.1ºC recorded in May and thelowest is 20.7ºC in February.
Kelantan has a tropical monsoonal climate, the wettest months occurring from November to January. The- recorded highest annual
indicated that annual rainfall on the site could be up to 4,000mm per annum.
BDA understands that the Sokor gold project will operate throughout the year except for scheduled maintenancework and certain public holidays.
Environmental Protection and Mitigation Measures
CNMC has identified the key potential environmental impacts arising from the passociated mitigation measures which are being implemented. These potential impacts and CNMC mitigationmeasures include:
Site clearing impacting on downstream water quality - mitigation measures include the use of silt traps andrunoff barriers, retention of vegetation, vegetation removal to follow natural contours to maximise effects of silt traps.
APPENDIX F – BDA TECHNICAL REPORT
F-49
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 49
BEHRE DOLBEAR
Soil erosion and dust emissions resulting from earthmoving activities - mitigation measures include re-vegetation to control runoff and soil loss, water spraying of mine roads and trafficked areas to suppress dustemissions, and provision of personal protection equipment to provide protection from dust and noise.
Biomass waste and other waste disposal causing air pollution, fire hazard, unhealthy environment - mitigation measures include no burning of biomass waste allowed on site, spoils and waste materials to be buried on-and biodegradable waste to be left in-situ to decompose naturally.
Wastewater generation and disposal impacting on water quality - mitigation measures include provision ofsuitable sanitation facilities and potable water supply, solid waste to be recycled, and composted or disposedin secure areas designed in accordance with Department of Environment of Malaysia guidelines.
Chemicals and hazardous material use impacting on water quality - mitigation measures include preventionof leakage from tailings vats by installing water proofing materials to inhibit seepage, conducting regular maintenance of vats, engagement of Kualiti Alam (a Federal Govt licensed toxic waste collector) to handleall acids and hazard chemicals resulting from the operations, and provision of proper safe and secure storagefacilities located away from incompatible substances that may generate heat, fire, gas or explosion.
Traffic associated with the project impacting on air quality, noise, and road safety - mitigation measuresinclude provision of sufficient width to access roads, limiting speed of vehicles, restricting entry to activemining areas to project vehicles only.
Mine closure impacting on water quality, employment opportunities, development opportunities, loss ofenvironmental values - mitigation measures include developing an appropriate Mine Closure andRehabilitation Plan which includes appropriate systems for handling site storm water runoff, compacting andsealing potentially acid-generating waste rock, closure and covering tailings dams, site re-vegetation,employee training and multi-skilled experience which is transferable to other mining operations or othersectors of employment.
Air Quality and Noise
Background air quality and noise were measured in and around the Sokor project area in 2007 as part of baselinemonitoring for environmental assessment purposes. In general, ambient air quality and noise levels in areassampled in the project area are within Government of Malaysian ambient standards.
Surface Hydrology
Based on topographical information, there are numerous streams which pass through the Sokor mine site areafrom east to west, flowing through Sg. Tapis, Sg. Amang, Sg. Sejana, Sg. Liang and Sg. Ketabong, which eventually discharge into the Sg. Pergau.
Surface water baseline evaluations have been conducted in the Sokor project area as part of the environmental assessment. Baseline water quality analysis shows that the water quality in the project area is generally good and the parameter levels comply with the limits of Class III of the Interim National River Water Quality Standard forMalaysia and complying with Standard B of the Malaysian Environmental Quality (Sewage & IndustrialEffluents) Regulations, 1979.
Water Management
ant management issue for theproject so as to minimise any potential downstream impacts.
The mine and processing plant are to be operated as a closed-loop circuit where no water from the site operationswill be discharged to nearby surface waters. All process water from the plant area is to be channelled to theproposed tailings storage facility while any excess water from the TSF circuits.
The TSF is designed to operate with a minimum freeboard of 1.5m and will be surrounded by berms. The design capacity is at least twice the actual design capacity of all water from the mineral processing circuit and has alsobeen designed to accommodate the recorded maximum rainfall event.
The berms are designed to prevent overflow from discharging from the TSF and will also preclude rainfall runoff from entering the TSF. Any stormwater and water collected from the mine pits will be channelled to asedimentation pond (i.e. environmental control pond), which is designed to provide a retention time of 48 hours.Discharge from the sedimentation control pond will be via a spillway.
APPENDIX F – BDA TECHNICAL REPORT
F-50
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 50
BEHRE DOLBEAR
The mine is to be developed with minimum disturbance to streams and creeks in the area. Where this is unavoidable, silt traps and sediment control practices are to be used to prevent any inflow of sediment to surfacewater. Surface runoff from the workshop area and other vehicle service areas are to be channelled to anoil/water separator device prior to the water being discharged.
Discharge of waste water from the sewerage system, domestic waste water and rainwater runoff from on-sitefacilities such as workshops will be controlled so as not to impact on surrounding surface waters.
Tailings Management
Originally it was proposed that the project would initially use alluvial and heap leach methods to develop the mine. However at present, crushed ore is currently processed using the vat leaching process rather than a heap leach. CNMC has indicated its intention to expand the capacity of the existing plant, with construction of amulti-lift heap leaching system and development of a carbon-in-leach plant. BDA has not been supplied withany details of the design of these plants, any expansion details on proposed plant process ponds, nor any sitewater balance data. BDA believes it is prudent that any heap leach system, besides provisioning for processponds (barren and pregnant solution ponds), provides a stormwater (safety) pond with sufficient capacity toaccommodate the local maximum rainfall event. Such a pond will need to accommodate runoff from the entireprocess plant area, including the process ponds and heap leach area. A cyanide detoxification system will likelybe necessary to handle increased rainfall on the heap leach area during the monsoon period and to provide fordecommissioning of the heap leach structures and make safe the process solutions once the heap leach system isclosed. The EMP contains limited details on three possible cyanide detoxification methods, however, theinformation provided is considered preliminary, as no particular detoxification method has yet been selected.
The EIA Supplementary report contains design details and environmental protection measures to minimise thepotential for water pollution. It is proposed that no solutions are to be discharged from the stormwater (safety)pond and that the cyanide content of water in the pond will be constantly monitored to ensure it remains below 0.1mg/L. All ponds, channels and impounding bunds are planned to be constructed with the required minimum freeboard and be HDPE-lined for protection against erosion and potential groundwater contamination.
The small TSF will store tailings from the current vat leaching system. It is proposed that future tailings will be placed in existing mine pits and that as additional mined-out pits become available, they will also be utilised to contain tailings. If the project is expanded utilising heap leaching, then tailings storage will not be required if thevat leach method is discontinued.
Environmental Monitoring
The approved Environmental Management Plan contains details concerning the environmental monitoring requirements stipulated under the Government approval. They include requirements for the monitoring andreporting of air quality, noise and water quality.
An Environmental Audit process is set out in the Environmental Management Plan.
Rehabilitation
It is proposed that where possible, any disturbed areas will be progressively rehabilitated. However there are some areas such as the process plant areas which cannot be rehabilitated until such time as the mine is closed and the plant is decommissioned.
An Erosion and Sediment Control Plan is set out in the Environmental Management Plan, together with otherspecific pollution control, and occupational health and safety plans.
12.2 Social Issues
The socioeconomic impact assessment was undertaken by verbally interviewing groups of local persons from thetwo communities within 25km of the project. The activities in which the respondents are generally involved arerubber tapping, farming and fishing.
There is a possibility that the Sokor project may encroach into fishing areas, which may impact on local revenueand livelihoods for the members of the local communities who use the area. Consequently, local dissatisfaction with the project may arise if access to fish resources is restricted.
Surrounding Land Use
The Sokor gold project site is located within a secondary forest area of Mukim Sokor, near the Sokor TakuForest Reserve. The land use within a 3km to 10km radius of the project site is forest. The nearest housing andagricultural land area adjacent to the Sokor project is RPT KESEDAR Peralla 2, which is located to the northeastand approximately 18km from the site. The nearest existing facilities are Klinik Desa Peralla, Sekolah
APPENDIX F – BDA TECHNICAL REPORT
F-51
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 51
BEHRE DOLBEAR
Menengah Kebangsaan Bukit Durian, Sekolah Rendah and a mosque, which is located approximately 25kmnortheast from the project site boundary.
Local Employment
It is expected that the Sokor gold project will create employment opportunities for residents of the area. In thecommunities surveyed, the residents expressed the desire to seek work at the site for both skilled and unskilledwork opportunities.
Sustainable Development
CNMC has already made substantial efforts to integrate its project activities with the local communities and isassisting them in social and economic development programmes. Its is providing the local community with new employment opportunities, training and skills development for those staffactivities and has broadened the economic and commercial base for local businesses, contributing to economicgrowth in the region. In addition it provides opportunities for business investors to invest in Kelantan.
The main negative social impact that can occur at mine closure is the loss of jobs resulting from the cessation of
fully trained with multi-skilled experience that is easily transferable at the time of mine closure, thus enabling potential further employment in other sectors.
Social Responsibility
The CNMC Group has a corporate policy on Social Responsibility and has been participating in community development projects that are aligned with the needs and objectives of local communities identified through engagement and consultation. These projects have included emergency relief during floods in Kelantan, andpoverty alleviation through provision of basic food necessities and basic school supplies. During 2010, CMNM provided 120 education bursaries to school age children who reside in or near the Sokor area, and sponsored 1,000 stationery sets to local school children. These programmes are planned to continue.
Conclusions
The main environmental risk of the project relates to the potential for offsite water contamination via sitecontaminated water run-off from the heap leach area, the TSF, the plant area and mining areas. The inclusionof environmental (settling) ponds and a proposed heap leach plant stormwater (safety) pond will mitigate the risk of offsite water contamination during operations. Water treatment may be necessary for an unspecified time following mine closure to handle residual cyanide within the heap leach structures whilst the heaps are beingdetoxified.
The project has an Environmental Management Plan which is approved by the Government agency and ifimplemented appropriately, should minimise the risk of environmental pollution. CNMC has identified the key potential environmental impacts arising from the pwhich are being implemented.
CNMC has already made substantial efforts to integrate its project activities with the local communities and isassisting them in social and economic development programmes. The CNMC Group has a corporate policy onSocial Responsibility and has been participating in community development projects which include emergency relief, poverty alleviation and education.
APPENDIX F – BDA TECHNICAL REPORT
F-52
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 52
BEHRE DOLBEAR
13.0 LIFE OF MINE PRODUCTION SCHEDULE
The production schedule shown in Table 13.1 is based on the production forecasts in the CNMC report for theperiod 2010 to 2014. The initial production for the period from 2010 to 2012 is based on ore reserves at a cut off grade of 0.5g/t Au while the further two years production is based on primary ore, Inferred resources and
Under the mine plan for the first initial period to 2012, mine production increases from an initial rate of 265,000tpa of material including 84,000tpa of ore in 2011 up to 1.74Mtpa of material including 705,000tpa ofore in 2012. The waste to ore stripping ratio over this period is approximately 1.5:1. BDA notes that under thepresent terms of the mining approval, production is limited to 300,000tpa and further mining approval will be required prior to 2012.
For the extended mine life an additional ore inventory of 2.0Mt has been assumed at a mining rate around3.3Mtpa of total material. Ore productan initial 230,000t of primary ore will be treated in the CIL plant increasing to 490,000t in 2014. The waste to ore stripping ratio over the extended production period is approximately 2.3:1.
Plant throughput at Sokor from July to December 2010 ramped up to about 1,800t per month, 35% of the design capacity of the vat leaching operation. While increased throughput can be expected, achievement of the plannedthroughput of 84,000t for 2011 will require further ramp up and commissioning of additional plant during thatyear. CNMC plans to commence heap leaching operations on oxidised Rixen ore in the fourth quarter of 2011 and to attain full production by first quarter of 2012. BDA has noted earlier its reservations concerning control of the water balance of heap leaching operations in wet climates.
CNMC plans to commission its primary ore CIL plant with an initial capacity of 165,000tpa, based on a throughput of 500t per day, increasing to 230,000tpa during 2013. The total ore treatment rate is projected toincrease to an average of 1.0Mtpa for 2013 and 2014, with gold production projected to be around 50,000ozs in 2013 increasing to 58,000ozs in 2014. Most of the production from 2011 through to 2014 is planned to be fromthe heap leach operation whilst the vat leach capacity remains at around 60,000tpa.
Table 13.1
Sokor Gold Operation - Projected Production Schedule
Note: production to 2012 is based on current reserves; reserves for 2013-2014 are still to be defined
Achievement of projected metallurgical performance will depend to a large extent on the success of the heapleach in a difficult operating environment and on the projected gold recovery from primary ore of 80%. Testwork to confirm that this recovery can be achieved has not yet been carried out.
Conclusions
While the initial mining is based on ore reserves estimated from a mine plan developed by CSU, the extendedproduction schedule is based on a more conceptual mine plan. The overall mine production schedule provides ageneral guide to production but further work is required to better define the parameters used to prepare theplan. Metallurgical performance depends on successful operation of a heap leach in a wet tropical climate andon achievement of good gold recovery from primary ore on which testwork has yet to be carried out. Theproposed ramp-up in tonnage processed may also be difficult to achieve.
APPENDIX F – BDA TECHNICAL REPORT
F-53
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 53
BEHRE DOLBEAR
14.0 CAPITAL COSTS
14.1 Initial Development Capital
CNMC reported an initial project development capital cost to July 2010 of approximately US$1.2M. These costs are shown in Table 14.1.
Table 14.1
Sokor Gold Project Development Capital Expenditure to July 2010 Item Total Capital
US$M
Mining Capital Costs Nil Process Plant Direct Costs 0.92Site Infrastructure Costs 0.26Total 1.18
Note: CNMC reported capital costs in Malaysian Ringgit, conversion to US$ at 0.32 exchange rate
The mine plan is based on the use of contractors to carry out the mining operation, removing the requirement to purchase mine equipment; all other mining costs are considered within the mine operating costs.
No mobilisation costs for the mining contractor have been included; such costs are usually included as a capital cost. In the future additional mobilisation costs are likely to be incurred as production ramps up and there willneed to be some establishment costs in accessing the Rixen mining area.
Process capital costs to date of approximately US$0.9M have established the vat leaching operation, including the crushing plant, the three leaching vats and the process ponds, and the gold room.
14.2 Future Mine Expansion Capital
deposit and construction of the CIL plant at US$8.14M. This forecast is summarised in Table 14.2.
An allowance of US$1.5M has been made for construction of the proposed multi-lift heap leaching facility toprocess oxidised ore. A total of US$3.5M has been allowed for the cost of construction of a CIL plant to processprimary ore types. Testwork has yet to be completed on this material and the plant design is thereforepreliminary and subject to modification. The proposed capital cost is therefore provisional and subject tochange.
Table 14.2
Sokor Gold Project Future Mine Expansion Capital ExpenditureItem Total Capital
US$M
Expanding production capacity of plant 0.20Multi-lift heap leaching system 1.50CIL plant design and construction (500t/d) 3.50Exploration Expenses 2.00
0.20Project Contingency 0.74Total 8.14
BDA notes that it has not seen either a breakdown of the costs incurred during construction of the vat leaching operation or proposed costs for future development of the heap leach and CIL facilities.
Conclusions
CNMC has projected expenditure of US$8.1M to establish heap leaching and CIL processing facilities in 2011and 2012 respectively. No detailed engineering estimates have been reviewed and BDA considers that these costestimates should be regarded as conceptual.
APPENDIX F – BDA TECHNICAL REPORT
F-54
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 54
BEHRE DOLBEAR
15.0 OPERATING COSTS
Site operating costs have been set out in a report from CNMC dated June 2010; the cost estimates were prepared by CSU and are shown in Table 15.1. Total site costs are projected to be US$16.6M over the initial period from2010 to 2012; process plant and mine operating costs comprise 37% and 26% of the total respectively. Othercosts include administration and realisation costs and royalties. Cash cost of gold produced is projected toaverage US$438/oz for the first three years of the mine life and average US$489/oz in the two further years of extended mine life.
Mine operating costs include both ore mining of US$2.65/t of ore mined and waste mining costs of US$1.76/t ofwaste mined. Ore mining includes the mining of the ore and the associated geological control of mining; wastemining includes both the initial extraction of waste and the reclamation cost of the waste.
It is planned to use a contractor to carry out the mining operation but at this stage there are no contract tenders toindicate the likely contract mining rates; generally BDA considers the mining costs to be preliminary.
Processing costs are estimated to be US$30.8M over the period from mid-2010 to 2014, equivalent to US$11/tprocessed. CNMC has proposed operating costs of US$8/t for heap leaching, US$10/t for vat leaching andUS$20/t for CIL processing of ore. BDA considers that these cost estimates are likely to be of a preliminarynature and notes that they assume that costs are variable with tonnage. A proportion of processing costs arelikely to be fixed, implying that unit operating costs will be higher while processes are ramping up to fullproduction. CNMC has not supplied actual operating costs for the period from July to December 2010. BDAconsiders that the processing cost estimates are unlikely to be more accurate than ±50%.
Administration charges are estimated at US$540k per annum for 2011 and 2012 increasing to US$660k for theperiod when the CIL plant will be operating in 2013-2014. A royalty is payable to KSG equal to 5% of gross revenue and an additional tribute equal to 3% of gross revenue is payable to KSEDC.
Until the planned operations are better defined, cost estimations will remain provisional. Overall BDA considersthe operating costs are likely to be accurate to ±50%.
*Note: Unit costs are combined for vat leach, heap leach and CIL; royalty is based on a gold price of US$1,300/oz
Conclusions
Operating costs have been based on preliminary plans and estimates and due to the lack of detail are consideredscoping study estimates at best, accurate to within ±50%. This is likely to remain the case until the development plans are better defined and engineered. scale of operation, although it is recognised that labour costs are likely to be low.
APPENDIX F – BDA TECHNICAL REPORT
F-55
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 55
BEHRE DOLBEAR
16.0 STATEMENT OF CAPABILITY
This report has been prepared by Mr George Brech, Mr Ian White, Mr Peter Ingham and Mr Adrian Brett, Senior Associates of Behre Dolbear Australia Pty Limited, and reviewed by Mr Malcolm Hancock and Mr JohnMcIntyre, Executive Directors of BDA.
Behre Dolbear has offices in Denver, New York, Toronto, Vancouver, Hong Kong, London, Sydney,Guadalajara and Santiago. The parent company, Behre Dolbear & Company Inc., was founded in 1911 and is the oldest continuously operating mineral industry consulting firm in North America. The firm specialises inmineral evaluations, due diligence assessments, independent expert reports and strategic planning as well astechnical geological, mining and process consulting.
BDA confirms that its Directors and Associates listed below who have contributed to the report in accordance with their specific technical qualifications are appropriately qualified and experienced to act as Qualified Personsfor the purposes of this report. Mr Hancock and Mr Brech are qualified geologists and a fellow and memberrespectively of the Australasian Institute of Mining and Metallurgy and have in excess of five years of relevantexperience in gold and precious metal deposits, mineralization and mining; Mr McIntyre is a qualified mining engineer and a fellow of the Australasian Institute of Mining and Metallurgy and has in excess of five years ofrelevant experience in gold and precious metal deposits mineralization and mining. Mr Hancock, Mr Brech andMr McIntyre are professionally qualified and have the experience to act as Competent Persons under JORC, andQualified Persons under the SGX listing rules.
The principal consultants engaged in the review on behalf of BDA are as follows:
Mr Malcolm Hancock (BA. MA. FAusIMM, FGS, MIMM, MGSA, MMICA) is Executive Director of BDAand a geologist with over 30 years experience of exploration and mining projects principally in Australia, Africa and South East Asia. He has extensive experience in the areas of resource/reserve estimation, reconciliation,project feasibility and review, independent expert and due diligence reports, mine geology and mining operations. He has been involved in the feasibility, construction, and commissioning of several mining operations. He has worked on both open pit and underground mines.
Mr John McIntyre (BEng. (Hon. Mining), FAusIMM, MMICA, CPMin) is Managing Director of BDA and amining engineer who has been involved in the mining industry for more than 30 years, with operational andmanagement experience in base metals, gold and coal. He has been involved in numerous mining projects andoperations, feasibility studies and technical and operational reviews in Australia, West Africa, New Zealand, North and South America, PNG and South East Asia.
Mr George Brech (BSc. MSc. (Eng. Geol.), MAusIMM) is a Senior Associate of BDA and a geologist withover 35 years experience in exploration and mining projects in Australia, Southeast Asia and Africa. He hasextensive experience in the areas of resource/reserve estimation, project feasibility and development, exploration and mine geology. For the last 20 years he has been involved with exploration, mining project evaluation andfeasibility studies in Southeast Asia and Australia.
Mr Ian White (BSc. (Hon.), MSc. DIC, MAusIMM) is a Senior Associate of BDA with more than 25 yearsexperience in the Australian mining industry. He has held senior management positions in operating mines, andhas been involved in plant design and optimisation, process design testwork, feasibility studies and plantcommissioning and project valuation. He is experienced in CIP/CIL technology, flotation, gravity separation,heap leaching, SX/EW, comminution, magnetic separation and pelletising. He has worked with a range ofcommodities including gold, copper, iron ore and base metals.
Mr Peter Ingham (BSc. (Mining), MSc. DIC, GDipAppFin (Sec Inst), CEng, FAusIMM, MIMM)) is GeneralManager Mining for BDA and is a graduate mining engineer with more than 25 years in the mining industry inEurope, Africa, Australia and Asia. His experience includes operations management, mining contract management,strategic planning, project assessment and acquisition, cost estimation and operational audits and trouble-shooting. He is experienced in a range of commodities, including copper, nickel, base metals, gold and platinum, in both surface and underground mining. Mr Ingham has undertaken the mining aspects of the review includinggeotechnical, mine design and production issues and capital and operating costs.
Mr Adrian Brett (BSc. (Hon. Geol.), MSc. (Geotech.), M.Envir.Law, MAusIMM) is a Senior Associate ofBDA with more than 25 years experience in environmental and geo-science, including the fields of environmental planning and impact assessment, site contamination assessments, environmental audit,environmental law and policy analysis and the development of environmental guidelines and training manuals. He has worked in an advisory capacity with several United Nations and Australian government agencies. He hascompleted assignments in Australia, Indonesia, Laos, Myanmar, Thailand, the Philippines, Africa and South America.
APPENDIX F – BDA TECHNICAL REPORT
F-56
Independent Technical Review - Sokor Gold Project August 2011 Behre Dolbear Australia Pty Limited Page 56
BEHRE DOLBEAR
17.0 STATEMENT OF INDEPENDENCE
Neither the principals nor associates of BDA have any material interest or entitlement in the securities or assets
18.0 LIMITATIONS AND CONSENT
This assessment has been based on data, reports and other information made available to BDA by CNMC andreferred to in this report. BDA has been advised that the information is complete as to material details and is notmisleading. A draft copy of this report has been provided to CNMC and PPCF for comment as to any errors offact, omissions or incorrect assumptions.
BDA has reviewed the data, reports and information provided and has used consultants with appropriateexperience and expertise relevant to the various technical aspects. The opinions stated herein are given in good faith. BDA believes that the basic assumptions are factual and correct and the interpretations reasonable.
BDA does not accept any liability other than its statutory liability to any individual, organisation or company andtakes no responsibility for any loss or damage arising from the use of this report, or information, data, orassumptions contained therein. With respect to the BDA report and use thereof, CNMC agrees to indemnify andhold harmless BDA, its shareholders, directors, officers, and associates against any and all losses, claims,damages, liabilities or actions to which they or any of them may become subject under any securities act, statuteor common law and will reimburse them on a current basis for any legal or other expenses incurred by them inconnection with investigating any claims or defending any actions.
The report is provided to the Directors of CNMC for the purpose of assisting them in assessing the technicalissues and associated risks of the proposed project development and in relation to the proposed listing on theCatalist Board of the SGX-ST; it should not be used or relied upon for any other purpose. The report does notconstitute a technical or legal audit. Neither the whole nor any part of this report nor any reference thereto may
the form and context in which it appears.
Yours faithfully
BEHRE DOLBEAR AUSTRALIA PTY LTD
Malcolm C HancockExecutive Director - BDA
John S McIntyre Managing Director - BDA
of CNMC or PPCF. BDA will be paid a fee for this report comprising its normal professional rates and reimbursableexpenses. The fee is not contingent on the conclusions of this report.
APPENDIX F – BDA TECHNICAL REPORT
F-57
BEHRE DOLBEAR
APPENDIX 1
AUSTRALASIAN CODE FOR REPORTING EXPLORATION RESULTS,
MINERAL RESOURCES AND ORE RESERVES
APPENDIX F – BDA TECHNICAL REPORT
F-58
BEHRE DOLBEAR
AUSTRALASIAN CODE FOR REPORTING
EXPLORATION RESULTS, MINERAL RESOURCES AND ORE RESERVES
The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared bythe Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia - December 2004 (JORC Code) is a non-prescriptive code, inthat it does not lay out specific limits for resource classification in terms of such things as drill hole spacing.Instead it emphasises the principles of transparency, materiality and the role of the Competent Person. Someguidelines do exist (e.g. the Australian Guidelines for the Estimation of Coal Resources and Reserves) howeverthey are not mandatory and classification is left in the hands of the Competent Person.
The JORC Code incorporates an important distinction between Mineral Resources, which are a measure of in-situ material, and Ore Reserves, which provide an estimate of material which is planned to be mined and which incorporate allowances for estimated mining dilution and mining recovery or mining losses.
The JORC Code uses the following definitions for Mineral Resources and Ore Reserves:
Measured Mineral Resource is that part of Mineral Resource for which tonnage, densities, shape, physicalcharacteristics, grade and mineral content can be estimated with a high level of confidence. It is based ondetailed and reliable exploration, sampling and testing information gathered through appropriate techniques fromlocations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.
Indicated Mineral Resource is that part of Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based ondetailed and reliable exploration, sampling and testing information gathered through appropriate techniques fromlocations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely orinappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough forcontinuity to be assumed.
Inferred Mineral Resource is that part of Mineral Resource for which tonnage, densities, shape, physicalcharacteristics, grade and mineral content can be estimated with a low level of confidence. It is inferred fromgeological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holeswhich may be limited or of uncertain quality and reliability.
Proved Ore Reserve is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments andstudies have been carried out, and include consideration of and modification by realistically assumed mining,metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessmentsdemonstrate at the time of reporting that extraction could reasonably be justified
A Proved Ore Reserve represents the highest confidence category of Ore Reserve estimates.
Probable Ore Reserve is the economically mineable part of an Indicated, and in some circumstances, aMeasured Mineral Resource. It includes diluting materials and allowances for losses which may occur when thematerial is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistic ally assumed mining, metallurgical, economic, marketing, legal, environmental, socialand governmental factors. These assessments demonstrate at the time of reporting that extraction couldreasonably be justified.
A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but has adequate reliabilityto provide the basis of mining studies.
APPENDIX F – BDA TECHNICAL REPORT
F-59
BEHRE DOLBEAR
APPENDIX 2
CHINESE RESOURCES AND RESERVES REPORTING STANDARD 1999
APPENDIX F – BDA TECHNICAL REPORT
F-60
BEHRE DOLBEAR
CHINESE RESOURCES AND RESERVES REPORTING STANDARDS 1999
The Chinese 1999 Classification of Resources/Reserves for Solid Fuels and Mineral Commodities (GB/T 17766-1999) replaced the previous code (GB 13908-1992) which was essentially a geological classification, taking little
attempts to address this deficiency by using a three component system (EFG) that considers the deposit economics (E), the level of mining feasibility studies that have been carried out (F) and the level of geological confidence (G) using a numerical ranking.
The EFG system produces a three digit code for a deposit that reflects the three variables and can be represented in three dimensional form as shown in Figure 1. For example, a deposit classified as 121 is economically viable (1), has had pre-feasibility studies carried out (2) and is well understood geologically (1).
The Chinese Code uses three terms Resource, Basic Reserve and Extractable Reserve. Extractable Reservesinclude mining recovery factors (mining losses and dilution) whereas Basic Reserves do not include these factorsand hence are comparable to resources under the JORC code. Suffix (b), e.g. 121(b), is used to distinguish BasicReserves from Extractable Reserves; suffixes (S) and (M) are used to identify assumed economic viability.Certain categories are not allowed, e.g. pre-feasibility or feasibility study level studies cannot be conducted onInferred Resources, and so 123 and 113 are invalid classifications. Also Extractable Reserves are not estimatedfor marginally economic (or lesser) deposits so the (b) suffix is considered redundant. The term Intrinsically Economic indicates that while the deposit may be economic, insufficient studies have been carried out to clearlydetermine its status.
Unlike the old code, the new 1999 code does not specify drill hole spacing for each category. In the case ofgold, copper and cobalt (and other metals), there is an accompanying Chinese Professional Standard (DZ/T 0214-2002) that lays out rules for determining the level of geological confidence.
Table 1 outlines an approximate conversion guideline of the Chinese Code to the JORC Code based on thecontrolling variables discussed above.
Table 1
Chinese Code to JORC Code Conversion Guidelines
ChineseCategory 111, 121 112, 122
111b, 121b2M11, 2M21,
2S11, 2S21, 331
122b, 2M22, 2S22, 332 333 334
JORC Category Proved Reserve ProbableReserve
MeasuredResource
Indicated Resource
InferredResource
Exploration Potential
Figure 1 Chinese Resource/Reserve Classification Matrix (1999)
APPENDIX F – BDA TECHNICAL REPORT
F-61
BEHRE DOLBEAR
APPENDIX 3
GLOSSARY
APPENDIX F – BDA TECHNICAL REPORT
F-62
BEHRE DOLBEAR
APPENDIX 3 - GLOSSARY
Term/Abbreviation DescriptionAAS Atomic Absorption Spectrometry Ag SilverALS ALS Group (Laboratory) AM Asia Mining Sdn. Bhd.Au GoldBDA Behre Dolbear Australia Pty LimitedCGRI Changchun Gold Research Institute Chinese Code Classification of Resources/Reserves for Solid Fuels and Mineral Commodities 1999CIL Carbon in LeachCMNM CMNM Mining Group Sdn. Bhd.CNMC CNMC Goldmine LimitedCSU Central South University, Changska, China Cu CopperDOE Kelantan State Department of EnvironmentDTM Digital Terrain Model Duff Duff Development Company LimitedEDM Electronic Distance MeasurementEIA Environmental Impact AssessmentEL Exploration Licence EMM Eastern Mining and Metals CompanyEMP Environmental Management Plan EPCM Engineering, Procurement and Construction ManagementG4S G4S Limitedg/t Grams per Tonneha HectareJORC Code Joint Ore Reserve Committee (Australian Mineral Resource and Ore Reserve) Codekm Kilometrekm2 Square KilometreKSEDC Kelantan State Economic Development CorporationKSG Kelantan State Governmentktpa Thousand Tonnes Per AnnumICPAES ICP Atomic Emission SpectrometryIP Induced Polarisation (Geophysical Survey)L LitreLME London Metal ExchangeLOM Life of Minem Metre
m Micron (10-6)M Millionm3 Cubic Metremg Milligramsmg/L Milligrams per LitreMIDA Malaysian Industrial Development Authority mm MillimetreMNG Malaysian National Grid (Survey)NaCN Sodium Cyanide OK Ordinary Krigingoz OunceP80 80% Passing (Screen Size) Pb LeadPPCF Prime Partners Corporate Finance Pte. Limitedppm Parts Per MillionRC Reverse Circulation ROM Run-of-MineSGX-ST Singapore Exchange Securities Trading LimitedSRL Standard and Reference Laboratoriest Tonnetpa Tonnes Per AnnumTRA TRA Mining (Malaysia) Sdn. Bhd.TSF Tailings Storage Facility US$ US DollarZn Zinc
VA
LU
AT
ION
RE
PO
RT
CO
NS
IDE
RIN
G
TH
E F
AIR
MA
RK
ET
VA
LU
E
OF
SO
KO
R G
OL
DP
RO
JE
CT
Cli
ent
:
CN
MC
Gold
min
e L
imit
ed
Ref
. N
o.
:C
ON
00006
8620
Rep
ort
Da
te
: 1 S
epte
mb
er 2
01
1
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
1 S
epte
mber
2011
Th
e B
oar
d o
f D
irec
tors
CN
MC
Gold
min
eL
imit
ed
No.5 S
hen
ton W
ay
#11-0
3 U
IC B
uil
din
g
Sin
gap
ore
06
8808
Dea
r S
irs,
IND
EP
EN
DE
NT
VA
LU
AT
ION
OF
TH
E F
AIR
MA
RK
ET
VA
LU
EO
F S
OK
OR
GO
LD
PR
OJ
EC
T
SU
MM
AR
Y
In a
cco
rdan
ce w
ith y
our
inst
ruct
ions,
Jon
esL
ang
LaS
alle
Sal
lman
ns
Lim
ited
(“JL
LS
”) h
as p
repar
ed a
n i
ndep
end
ent
opin
ion o
n t
he
Fai
r M
ark
et
Val
ue
of
the
Soko
rgold
pro
ject
(th
e “S
ok
or
Gold
Pro
ject
”) a
s at
31 A
ugu
st2
011
(the
“V
aluat
ion D
ate”
). T
he
Pro
ject
is s
ituat
ed i
n K
elan
tan S
tate
in n
ort
her
n P
enin
sula
r M
alay
sia
and i
s cu
rren
tly o
wned
81%
by C
NM
CG
old
min
e L
imit
ed (
“CN
MC
” or
the
“C
om
pan
y”)
thro
ugh
its
sub
sidia
ry
CM
NM
Min
ing G
roup S
dn.
Bh
d.
(“C
MN
M”)
. C
MN
M h
old
s th
e ri
ghts
to m
ine
and p
rodu
cegold
fro
m a
min
ing l
icen
ce c
over
ing
an a
rea
of
appro
xim
atel
y 1
0 s
quar
e kil
om
etre
s (“
km
2”)
ince
ntr
al K
elan
tan.
CN
MC
,th
rou
gh i
ts s
ubsi
dia
ry M
CS
Min
ing G
roup S
dn.
Bhd.,
has
bee
ngra
nte
d
an e
xp
lora
tion l
icen
ce c
over
ing u
p t
o 6
2.8
km
2 s
urr
oun
din
g t
he
Sok
or
Blo
ck.
Th
e re
port
th
at f
oll
ow
s is
dat
ed 1
Sep
tem
ber
2011 (
the
“R
eport
Dat
e”).
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
Th
is v
aluat
ion h
as b
een c
arri
ed o
ut
on
a F
air
Mar
ket
Val
ue
bas
is.
Fai
r M
arket
Val
ue
is d
efin
ed a
s“
the
am
ount
of
money
(or
the
cash
equ
ivale
nt
of
som
e o
ther
consi
dera
tion)
det
erm
ined
by
the
Exp
ert
in a
ccord
an
ce w
ith t
he
pro
visi
on
s of
the
VA
LM
IN C
ode
for
whic
h t
he
Min
eral
or
Pet
role
um
Ass
et o
r Secu
rity
shou
ld c
han
ge
hands
on
the
Valu
ati
on D
ate
in a
n o
pen
and
unre
stri
cted
mark
et b
etw
een
a w
illi
ng b
uye
r and a
wil
ling s
elle
r in
an “
arm
’s l
ength
” t
ransa
ctio
n,
wit
h e
ach
pa
rty
act
ing k
now
led
gea
bly
,pru
den
tly
and w
ith
out
com
pu
lsio
n.”
Th
eC
om
pan
y h
as d
efin
ed f
our
dep
osi
tsin
the
So
kor
Blo
ck:
Man
son
’sL
od
e, N
ew D
isco
ver
y,
Ket
ubo
ng
and
Rix
ens
(coll
ecti
vel
y t
he
“Min
es”)
.
As
at J
une
2010
, C
NM
C h
ad r
epo
rted
gold
reso
urc
es t
ota
llin
g2.1
8 m
illi
on
tonnes
(“M
t”)
at 2
.6 g
ram
s p
erto
nne
go
ld (
“g/t
Au”)
wit
h c
onta
ined
gold
of
18
3,5
00 o
un
ces
(“ozs
”).
The
gold
res
ourc
es e
stim
ate
of
2.1
8 M
t in
clud
esa
tota
l gold
res
erv
es e
stim
ate
of
989,0
00 t
onnes
(“t
”),
of
whic
h
pro
ved
gold
res
erves
are
esti
mat
ed t
o b
e 20
4,0
00t
at a
gra
de
of
3.6
4g/t
Au w
ith
con
tain
ed g
old
of
23,9
00
ozs
and
pro
bab
le g
old
res
erves
are
esti
mat
edto
be
78
5,0
00t
at a
gra
de
of
1.8
4g/t
Au w
ith c
on
tain
ed g
old
of
46,4
00o
zs.
Init
ial
min
e dev
elopm
ent
duri
ng 2
010 c
onsi
sted
of
acr
ush
ing
and s
tock
pil
e fa
cili
ty,
vat
lea
chin
g a
nd g
old
pro
cess
ing p
lan
t w
ith a
cap
acit
y t
o
trea
t ar
ound
60,0
00
ton
nes
per
ann
um
(“t
pa”
) o
f oxid
e ore
at
an e
stim
ated
hea
d g
rade
of
5.0
g/t
Au
fro
m M
anso
n’s
Lo
de
and N
ew D
isco
ver
y
(sep
arat
ely,
in t
he
Indep
enden
t T
echnic
al R
evie
w –
Sokor
Gold
Pro
ject
(the
“IT
R’)
dat
ed 1
2A
ugu
st 2
011
, pre
par
ed b
y B
ehre
Dolb
ear
Aust
rali
a
Pty
Lim
ited
(“B
DA
”),
it i
s st
ated
that
the
aver
age
gra
de
of
go
ld o
re r
eser
ves
at
Man
son’s
Lod
e, R
ixen
’s a
nd
New
Dis
cov
ery i
s 2.2
1g/t
Au).
CN
MC
com
ple
ted
the
firs
t gold
pou
r duri
ng J
uly
2010 a
nd p
roduce
d 5
54o
z go
ld t
o y
ear
end
. T
he
Com
pan
y p
lan
s to
incr
ease
thro
ughput
to
aro
und 8
0,0
00tp
a o
f oxid
e o
res
duri
ng
the
seco
nd
yea
r of
pro
duct
ion,
thro
ugh c
om
mis
sio
nin
g o
f a
hea
p l
each
fac
ilit
y a
nd
by
incr
easi
ng t
he
size
of
the
vat
lea
ch f
acil
ity.T
her
eal
so a
re p
lan
s to
inst
all
a ca
rbon-i
n-l
each
(“C
IL”)
pla
nt
totr
eat
up t
o 1
75
,000tp
a of
pri
mar
y o
res.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
Th
is r
eport
has
bee
n p
rep
ared
in a
ccord
ance
wit
h t
he
guid
elin
es s
et b
y t
he
Co
de
for
the
Tec
hnic
al A
sses
smen
t an
d V
aluat
ion o
f M
iner
al a
nd
Pet
role
um
Ass
ets
and
Sec
uri
ties
for
Indep
enden
t E
xp
ert
Rep
ort
s 2
005 E
dit
ion (
the
“VA
LM
INC
ode”
), p
repar
ed b
yth
e V
AL
MIN
Com
mit
tee,
a
join
t co
mm
itte
e o
f th
e A
ust
rala
sian
Inst
itute
of
Min
ing a
nd
Met
allu
rgy,
the
Aust
rali
anIn
stit
ute
of
Geo
scie
nti
sts
and
the
Min
eral
In
du
stry
Con
sult
ants
Ass
oci
atio
n w
ith t
he
par
tici
pat
ion o
f th
e A
ust
rali
anS
ecuri
ties
and
In
ves
tmen
t C
om
mis
sion,
the
Aust
rali
an S
tock
Exch
ange
Lim
ited
,
the
Min
eral
s C
oun
cil
of
Aust
rali
a, t
he
Pet
role
um
Explo
rati
on S
oci
ety o
f A
ust
rali
a, t
he
Sec
uri
ties
Ass
oci
atio
n o
f A
ust
rali
a an
dre
pre
senta
tives
from
the
Aust
rali
anfi
nan
ce s
ecto
r.
Th
e val
uat
ion c
onta
ins
calc
ula
tions
and
fore
cast
s b
ased o
n d
ata
pro
vid
ed b
y t
he
Com
pan
y,
as
wel
las
those
conta
ined
in t
he
ITR
.
Th
eco
ncl
usi
on o
f val
ue
is b
ased
on
acc
epte
d v
alu
atio
n p
roce
dure
s an
d p
ract
ices
that
rel
ysu
bst
anti
ally
on
the
use
of
num
erous
assu
mpti
ons
and
consi
der
atio
n o
f var
iou
sfa
cto
rs t
hat
are
rel
evan
t to
the
oper
atio
n o
fth
e C
om
pany.
Co
nsi
der
atio
ns
of
var
ious
risk
s an
d u
nce
rtai
nti
es t
hat
hav
e
pote
nti
al i
mpac
t on t
he
busi
nes
s hav
e al
so b
een m
ade.
Giv
en t
hat
CN
MC
pla
ns
top
ubli
sh t
his
val
uat
ion
rep
ort
in
con
jun
ctio
n w
ith t
he
ITR
,th
is v
aluat
ion r
epo
rt m
akes
dir
ect
and f
requen
t re
fere
nce
to
the
ITR
as
the
sourc
e of
mu
ch o
f th
e det
aile
din
form
atio
n o
n w
hic
hth
is v
aluat
ion i
s base
d.
Bas
ed o
n t
he
resu
lts
of
our
inves
tigat
ions
and a
nal
ysi
s o
utl
ined
in t
he
rep
ort
whic
h f
oll
ow
s, a
nd c
on
sider
ing t
he
unce
rtai
nti
es i
n t
he
inputs
as
at t
he
Val
uat
ion D
ate
is a
sfo
llo
ws:
dis
cuss
ed i
n t
his
report
and a
sre
flect
ed i
n t
he
Sen
siti
vit
y A
nal
ysi
s, w
e ar
e of
the
opin
ion t
hat
the
Fai
r M
arket
Val
ue
of
the
Sokor
Gold
Pro
ject
as
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-4
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
Valu
ati
on
Date
Range
Pre
ferr
ed V
alu
e
31 A
ugus
t 2011
70,0
00,0
00 -
95,0
00,0
00
83,0
00,0
00
Valu
ati
on R
esu
lt (
US
D)
Th
e fo
llow
ing p
ages
ou
tlin
e th
e fa
ctors
consi
der
ed,
met
hod
olo
gy a
nd a
ssu
mpti
ons
emplo
yed
in f
orm
ula
tin
g o
ur
opin
ions
and c
on
clusi
ons.
Any o
pin
ions
are
subje
ctto
th
e as
sum
pti
on
s an
d l
imit
ing c
ondit
ions
conta
ined
th
erei
n.
Yours
fai
thfu
lly,
Jon
es L
an
g L
aS
all
e S
all
man
ns
Lim
ited
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-5
Sok
or
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
TA
BL
E O
FC
ON
TE
NT
S
INT
RO
DU
CT
ION
......
..........
........
........
........
........
........
..........
........
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
.......1
RE
SO
UR
CE
S A
ND
RE
SE
RV
ES
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
.......5
VA
LU
AT
ION
ME
TH
OD
OL
OG
Y ..
....
........
........
........
........
..........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
.......7
AS
SU
MP
TIO
NS
......
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
..........
........
........
........
........
........
........
..........
..8
CA
SH
CO
ST
OF
GO
LD
PR
OD
UC
TIO
N..
........
........
..........
........
........
........
........
........
..........
........
........
......
..........
........
........
..........
........
........
.....1
7
RIS
K F
AC
TO
RS
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
.....1
8
OP
INIO
NO
F F
AIR
MA
RK
ET
VA
LU
E ..
....
..........
........
........
........
........
..........
........
........
........
........
..........
........
........
........
........
........
..........
........
21
CO
DE
CO
MP
LIA
NC
E......
..........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
........
..........
........
........
.....2
2
EX
HIB
IT A
–L
IMIT
ING
CO
ND
ITIO
NS
......
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
..........
24
EX
HIB
IT B
– V
AL
UE
RS
’ B
IOG
RA
PH
Y......
........
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
..........
27
EX
HIB
IT C
– V
AL
UE
RS
’ P
RO
FE
SS
ION
AL
DE
CL
AR
AT
ION
......
........
........
........
........
..........
........
........
........
........
..........
........
........
........
.....3
0
AP
PE
ND
IX A
–G
LO
SS
AR
Y......
........
........
........
........
..........
........
........
........
........
........
..........
........
........
........
........
........
........
..........
........
........
.....3
5
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-6
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
1
INT
RO
DU
CT
ION
Th
e S
okor
gold
pro
ject
(th
e “S
okor
Gold
Pro
ject
”) i
n K
elan
tan
Sta
te
in n
ort
her
n P
enin
sula
r M
alaysi
a is
curr
entl
y o
wned
81%
by C
NM
C
Gold
min
e L
imit
ed
(“C
NM
C”
or
the
“Com
pan
y”)
th
rou
gh
its
subsi
dia
ry
CM
NM
M
inin
g
Gro
up
Sdn
. B
hd.
(“C
MN
M”)
. C
MN
M
hold
s th
e ri
ghts
to
m
ine
and
pro
du
cegold
fr
om
an
ar
ea
of
appro
xim
atel
y 1
0 s
qu
are
kil
om
etre
s (“
km
2”)
inth
e U
lu S
okor
area
in
Kel
anta
n (
the
“Sok
or
Blo
ck”)
. C
NM
C,
thro
ugh i
ts s
ubsi
dia
ry M
CS
Min
ing G
rou
p S
dn.
Bhd.,
has
als
o b
een
gra
nte
d a
n e
xp
lora
tion l
icen
ce
cover
ing u
p t
o62.8
km
2 s
urr
ou
ndin
g t
he
Sokor
Blo
ck.
Th
e C
om
pan
y
has
def
ined
fo
ur
dep
osi
ts
inth
e S
ok
or
Blo
ck:
Man
son’s
Lode,
New
Dis
cover
y,
Ket
ubo
ng a
nd R
ixen
s (c
oll
ecti
vel
y
the
“Min
es”)
. T
he
firs
t th
ree
dep
osi
ts l
ie a
tth
e so
uth
ern
par
t of
the
min
ing li
cen
se,
whil
e th
e R
ixen
sdep
osi
t is
lo
cate
d ap
pro
xim
atel
y
3km
app
roxim
atel
y n
ort
h o
f K
etu
bong.
CN
MC
com
men
ced
explo
rati
on i
n 2
007
wit
hin
the
Sok
or
Blo
ck i
nan
area
pre
vio
usl
y su
bje
cted
to
go
ld ex
plo
rati
on
and sm
all-
scal
e gold
min
ing.
CN
MC
h
as co
mp
lete
d geo
logic
al m
appin
g,
soil
sa
mp
ling,
geo
phy
sica
l su
rveys
and s
urf
ace
tren
chin
g a
nd d
iam
ond d
rill
ing.
The
explo
rati
on h
as d
efin
edsu
ffic
ient
reso
urc
es a
nd
min
eab
le r
eser
ves
in
the
four
dep
osi
ts
def
ined
to
dat
e fo
r C
NM
C
to
com
men
ce
gold
pro
duct
ion b
ased
on m
inin
g a
nd t
reat
ing n
ear
surf
ace o
xid
e ore
fro
m
two
of
the
dep
osi
ts, n
amel
y M
anso
ns
Lo
de
and N
ew D
isco
ver
y.
As
at J
une
2010,
CN
MC
had
rep
ort
ed g
old
res
ourc
es t
ota
llin
g 2
.18
mil
lio
n t
on
nes
(“M
t”)
at 2
.6 g
ram
s p
er t
onne
gold
(“g/t
Au”)
wit
h
conta
ined
gold
of
183,5
00
ounce
s (“
ozs
”).
The
gold
reso
urc
es
esti
mat
e of
2.1
8 M
t in
clu
des
a t
ota
l gold
rese
rves
esti
mat
e of
989,0
00
tonnes
(“
t”),
of
whic
h
pro
ved
gold
re
serv
es
are
est
imat
ed
to
be
204
,00
0t
at a
gra
de
of
3.6
4g/t
Au w
ith c
onta
ined
gold
of
23
,90
0ozs
and p
robab
le g
old
res
erves
are
est
imat
ed t
o b
e 78
5,0
00t
at a
gra
de
of
1.8
4g/t
Au w
ith c
onta
ined
go
ld o
f 46,4
00ozs
.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-7
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
2
Init
ial
min
e d
evel
opm
ent
duri
ng
2010
co
nsi
sted
of
a cr
ush
ing an
d
stock
pil
e fa
cili
ty,
vat
le
achin
g
and
gold
pro
cess
ing
pla
nt
wit
h
a
cap
aci
tyto
tre
at a
round 6
0,0
00
tonnes
per
annum
(“tp
a”)
of
oxid
e ore
atan
es
tim
ated
hea
d g
rad
e of
5.0
g/t
A
u f
rom
Man
son
’s L
ode
and
New
Dis
cov
ery
(sep
arat
ely,
in t
he
Indep
enden
t T
echnic
al R
evie
w –
Sokor
Gold
Pro
ject
(th
e “I
TR
’) d
ated
12 A
ugust
2011,
pre
par
ed b
y
Beh
re D
olb
ear
Aust
rali
a P
tyL
imit
ed (
“B
DA
”),
itis
stat
ed t
hat
the
aver
age
gra
de
of
gold
ore
res
erves
at M
anso
n’s
Lo
de,
Rix
en’s
and
New
Dis
cover
y i
s2.2
1g/t
Au).
CN
MC
com
ple
ted
the f
irst
go
ld p
our
duri
ng J
uly
20
10 a
nd p
roduce
d 5
54oz
gold
to y
ear
end.
The
Co
mp
any
pla
ns
to i
ncr
ease
thro
ughput
toar
ound 8
0,0
00tp
a o
f o
xid
eore
sduri
ng
the
seco
nd y
ear
of
pro
duct
ion,
thro
ugh c
om
mis
sionin
g o
f a
hea
ple
ach
faci
lity
an
d b
y i
ncr
easi
ng t
he
size
of
the
vat
leach
fac
ilit
y.
CN
MC
pla
ns
to u
se t
he
reven
ue
from
gold
pro
duct
ion,
supp
lem
ente
d
by
cap
ital
rai
sing,
toco
mp
lete
a f
easi
bil
ity s
tud
y o
n t
he
explo
itat
ion
of
the
pri
mar
ysu
lph
ide
ore
at
dep
th u
sing
a ca
rbon i
n l
each
(“C
IL”)
pro
cess
and t
o c
onti
nu
e ex
plo
rati
on o
ver
the
rem
aind
er o
f th
e S
okor
Blo
ck a
nd w
ithin
the
surr
ou
ndin
g E
L o
f62.8
km
2 in
ord
er t
o i
ncr
ease
gold
res
ourc
es a
nd
min
eable
res
erves.
On 5
Augu
st 2
011
CN
MC
an
noun
ced t
hat
it p
lans
a li
stin
g o
nth
e
Cat
alis
tB
oar
d o
fth
e S
ing
apo
re E
xch
ang
e S
ecu
riti
es T
radin
g L
imit
ed
(“S
GX
-ST
”) b
y w
ay o
f an
Init
ial
Pu
bli
c O
ffer
ing
(“I
PO
”).
CN
MC
is
bei
ng a
dvis
ed b
y P
rim
ePar
tner
s C
orp
ora
te F
inan
ceP
te.
Ltd
.
Beh
re D
olb
ear
Aust
rali
a P
tyL
imit
ed (
“B
DA
”) c
arri
ed o
ut
ate
chn
ical
due
dil
igen
ce
revie
w
of
the
pro
ject
an
d
pre
par
ed
an
indep
enden
t
tech
nic
al r
eport
and r
isk a
ssess
men
t(“
ITR
”) a
s at
12 A
ugust
20
11,
consi
sten
t w
ith
the
requir
emen
ts o
f th
e R
ule
s G
over
nin
g t
he
Lis
ting o
f
Sec
uri
ties
on t
he
Cat
alis
t B
oar
d o
f th
e S
GX
-ST
.
CN
MC
h
as re
quest
ed th
at Jo
nes
Lan
gL
aSal
leS
allm
anns
Lim
ited
(“JL
LS
”) p
repar
e an
indep
enden
t opin
ion o
nth
e F
air
Mar
ket
Val
ue
of
the
Sokor
Gold
Pro
ject
as
at
the
Val
uat
ion D
ate.
This
val
uat
ion
has
bee
n
carr
ied
ou
t by
JLL
S
inas
soci
atio
n
wit
h
indep
enden
t co
mp
eten
tsp
ecia
list
s G
lobal
R
eso
urc
es
and
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-8
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
3
Infr
astr
uct
ure
(M
elbo
urn
e, V
ic)
and
Rober
t G
Adam
son
Consu
ltan
ts
(Sydn
ey,
NS
W).
We
und
erst
and
that
our
val
uat
ion r
eport
wil
l be
publi
shed
toget
her
wit
h t
he
ITR
pre
par
ed b
y B
DA
in a
n I
nit
ial
Pub
lic
Off
erin
g d
ocu
men
t
pre
par
ed b
yC
NM
C f
or
a pla
nned
lis
ting o
n t
he
Cat
alis
t B
oar
d o
fth
e
Sin
gap
ore
Sto
ckE
xch
ange
Sec
uri
ties
Tra
din
g L
imit
ed(“
SG
X-S
T”)
by
way
of
anIn
itia
l P
ub
lic
Off
erin
g (
“IP
O”)
.
We
hav
eco
nduct
ed o
ur
val
uat
ion i
n a
ccord
ance
wit
h t
he
Code
for
the
Tec
hnic
al A
sses
smen
tan
d V
aluat
ion o
f M
iner
alan
d P
etro
leu
m A
sset
s
and
Sec
uri
ties
fo
rIn
dep
enden
t E
xper
t R
eport
s 2
005
Edit
ion
(the
“VA
LM
IN C
ode”
), pre
par
ed by th
e V
AL
MIN
Com
mit
tee,
a
join
t
com
mit
tee
of
the
Aust
rala
sian
Inst
itute
of
Min
ing a
nd M
etal
lurg
y,
the
Aust
rali
an
Inst
itute
of
Geo
scie
nti
sts
and
the
Min
eral
In
dust
ry
Con
sult
ants
Ass
oci
atio
n
wit
hth
epar
tici
pat
ion
of
the
Au
stra
lian
Sec
uri
ties
an
d
Inves
tment
Com
mis
sio
n,
the
Aust
rali
an
Sto
ck
Ex
chan
ge
Lim
ited
, th
e M
iner
als
Counci
l of
Aust
rali
a, t
he
Pet
role
um
Explo
rati
on
Soci
ety
of
Aust
rali
a,
the
Sec
uri
ties
A
sso
ciat
ion
of
Aust
rali
a an
d r
epre
senta
tiv
es f
rom
the
Aust
rali
anfi
nan
cese
ctor.
In o
rder
to f
orm
an o
pin
ion o
nth
e F
air
Mar
ket
Val
ue
of
the
Soko
r
Gold
P
roje
ct,
it is
es
senti
al to
m
ake
assu
mpti
ons
of
cert
ain fu
ture
even
ts,
e.g.
eco
nom
ic an
d m
arket
fa
cto
rs.
JLL
S an
d it
s as
soci
ates
hav
e ta
ken
all
rea
sonab
le c
are
in e
xam
inin
g t
hose
ass
um
pti
on
sm
ade
by t
he
Com
pan
y t
o e
nsu
re t
hat
they
are
appro
pri
ate
toth
e ca
se.
Thes
e
assu
mpti
ons
are
bas
ed o
n t
he
Com
pan
yan
d t
hei
rex
per
ts’
tech
nic
al
kno
wle
dge
and
exp
erie
nce
in
th
e m
inin
g
indust
ry.
Th
e val
uat
ion
pro
cedure
s em
plo
yed
incl
ud
eth
e re
vie
w o
f ph
ysi
cal
and
eco
nom
ic
condit
ions
of
the
Pro
ject
, and a
n a
sses
smen
t of
the
key
assu
mpti
ons,
esti
mat
es,
and r
epre
senta
tions
mad
e by t
he
pro
pri
etor
or
the
op
erat
or
of
the
Pro
ject
. A
ll m
atte
rs e
ssen
tial
to t
he
pro
per
un
der
stan
din
gof
the
val
uat
ion w
ill
be
dis
close
d i
n t
he
val
uat
ion r
eport
.
JLL
S n
ote
s th
at C
NM
C h
ave
appo
inte
d S
kri
ne
to c
ondu
ct a
rep
ort
on
the
val
id l
icen
ces,
per
mit
san
d a
ppro
val
sw
hic
h C
NM
C r
equir
es t
o
carr
yo
n i
ts m
inin
g o
per
atio
ns.
As
stat
ed i
n t
he
legal
opin
ion
from
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-9
Sok
or
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
4
Skri
ne,
to t
he
bes
t of
Sk
rine’
s kno
wle
dge
and b
ased
on t
he
dis
closu
res
by
CN
MC
to
S
kri
ne,
C
MN
M
has
ob
tain
ed
the
rele
van
t m
ater
ial
lice
nce
s,p
erm
its
and
ap
pro
val
sfo
r it
s m
inin
gop
erat
ions
and
has
com
pli
ed w
ith t
he
con
dit
ions
impose
d t
her
eunder
.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
0
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
5
RE
SO
UR
CE
S A
ND
RE
SE
RV
ES
Th
e re
sourc
ean
dre
serv
e es
tim
ates
for
four
ore
bodie
s(M
anso
ns
Lod
e,
New
Dis
cov
ery,
Rix
ens
and
Ket
ub
ang)
wer
e p
repar
ed
by
the
Com
pan
y
in
2010
and
wer
e re
port
ed
under
the
Ch
ines
e 1999
Cla
ssif
icat
ion
of
Res
ourc
es/R
eser
ves
fo
r S
oli
d
Fuel
s an
d
Min
eral
Com
modit
ies
(GB
/T 1
77
66-1
999)
(the
“C
hin
ese
Cod
e”).
BD
A re
vie
wed
th
ere
sou
rce
and re
serv
e es
tim
ates
inte
rms
of
the
com
par
able
res
ourc
e/re
serv
e ca
tegori
es u
nder
the
Aust
rala
sian
Cod
e
for
Rep
ort
ing
of
Explo
rati
on
Res
ult
s,
Min
eral
R
esourc
esan
d
Ore
Rese
rves
(200
4 e
dit
ion)
(the
“JO
RC
Code”)
, an
d h
as
con
ver
ted t
he
Chin
ese
cat
egori
es i
nto
th
e JO
RC
Code-e
quiv
alen
t M
iner
al R
esourc
e
cate
gori
esof
Mea
sure
d,
Indic
ated
an
d I
nfe
rred
. S
imil
arly
fo
r C
hin
ese
Cod
e ca
tego
ries
con
sider
ed
equ
ival
ent
to
Ore
R
eser
ve
cate
gori
es
Pro
bab
le a
nd P
roven
.
BD
A c
onsi
der
s th
e re
sourc
e p
roce
sses
and
pro
ced
ure
s re
ason
able
, in
acco
rdan
ce w
ith
in
dust
ry s
tan
dar
ds
and i
nco
mpli
ance
wit
hth
e JO
RC
Cod
e.
A
cut-
off
gra
de
of
0.5
g/t
of
gold
w
asuse
d
in
esti
mat
ing
reso
urc
es f
or
all
the
dep
osi
ts.
The
Sokor
Gold
Pro
ject
min
eral
res
ourc
esan
d o
re r
ese
rves
that
wer
e
der
ived
by B
DA
usi
ng t
he
Com
pan
y’s
sou
rces
are
show
n i
n T
able
s1
and 2
.
TA
BL
E 1
–C
NM
C M
INE
RA
LR
ES
OU
RC
ES
,JU
NE
20
10
JO
RC
Cod
e C
lass
Ton
nes
Gra
de
g/t
Au
Gold
(oz)
Mea
sure
d6
59,0
00
3.4
71
,700
Indic
ate
d
80
3,0
00
2.0
5
0,9
00
Infe
rred
72
0,0
00
2.6
60
,900
TO
TA
L
2,1
82
,000
2.6
1
83,5
00
TA
BL
E 2
–C
NM
CO
RE
RE
SE
RV
ES
, JU
NE
20
10
JO
RC
Co
de
Cla
ss
To
nn
es
Grad
e g
/t A
uG
old
(o
z)
Pro
ved
20
4,0
00
3.6
23
,900
Pro
bable
78
5,0
00
1.8
46
,400
TO
TA
L
98
9,0
00
2.2
70
,300
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
1
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
6
Insp
ecti
on o
fT
able
s 1 a
nd 2
sh
ow
s th
at a
ppro
xim
atel
y 1
,193,0
00t
of
reso
urc
es (
som
e 55%
of
the
tota
l m
iner
alre
sourc
e)w
ere
no
t,as
at
June
201
0,
clas
sifi
ed a
s re
serv
es.
Foll
ow
ing
furt
her
dri
llin
g,
sam
pli
ng
and m
etal
lurg
ical
tes
ting i
t is
consi
der
ed r
easo
nab
le t
o e
xp
ect
that
a
pro
port
ion o
f th
ese
reso
urc
es m
ay i
n t
ime
be
up
gra
ded
to o
re r
eser
ves
.
All
fo
ur
dep
osi
ts
conta
inin
-sit
u
oxid
em
iner
alis
atio
n
that
ovel
ies
pri
mar
y (s
ulp
hid
ic)
min
eral
isat
ion
. O
xid
e m
iner
aliz
atio
nis
div
ided
into
th
ree
cat
egori
es:
bac
kfi
ll,
allu
via
l an
din
-sit
u
oxid
e.
Bac
kfi
ll
rep
rese
nts
low
-gra
de
mat
eri
al t
hat
was
min
ed a
nd
dis
card
ed d
uri
ng
pre
vio
us
min
ing o
per
atio
ns;
all
uvia
l m
ater
ial
is a
ssoci
ated
wit
hth
e
dra
inag
e ch
annel
of
Su
ngai
L
ian
g
that
fl
ow
s th
rough
th
eN
ew
Dis
cover
y d
epo
sit.
BD
A
note
d
som
e ca
ses
wher
e a
tran
siti
onal
ore
ty
pe
isp
rese
nt
bet
ween
the
oxid
ean
d p
rim
ary t
yp
es.
Such
ore
typ
es a
re k
no
wn t
o
cau
se p
roble
ms
in g
old
rec
over
y p
roce
sses
and m
ay r
equ
ire
sele
ctiv
e
min
ing a
nd p
roce
ssin
g f
or
opti
mum
eco
no
mic
outc
om
es.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
2
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
7
VA
LU
AT
ION
ME
TH
OD
OL
OG
Y
We
hav
ese
lect
ed t
he
Net
Pre
sent
Val
ue
of
Futu
re C
ash
Flo
ws
as t
he
mo
st a
pp
ropri
ate
met
hod
for
val
uin
g t
he
Sokor
Gold
Pro
ject
.
Th
eD
isco
unte
d C
ash F
low
(“D
CF
”) v
aluat
ion m
etho
d i
s bas
ed o
n t
he
pre
mis
e th
atth
e v
alue
of
a b
usi
nes
sis
the
net
pre
sent
val
ue
of
its
futu
re
cash
fl
ow
s.In
th
e m
inin
g
ind
ust
ry,
this
ap
pro
ach
requir
es
asse
ssm
ent
of:
•m
iner
al r
esou
rces,
ore
res
erves
and p
ote
nti
alre
sourc
es,
•th
e ap
pro
pri
ate
min
ing an
d pro
cess
ing
met
hods
toexplo
it an
d
mar
ket
those
res
erv
es,
and
•an
an
alysi
s o
f fu
ture
pro
duct
ion,
pro
duct
ion c
ost
s, m
ark
et p
rice
s,
cash
flo
ws,
cap
ital
requ
irem
ents
an
dca
pit
al c
ost
s fo
r th
eli
fe o
f
the
pote
nti
al r
eser
ves
.
This
tec
hniq
ue
isp
arti
cula
rly a
ppro
pri
ate
for
a m
iner
als
inves
tmen
t
wit
h d
efin
ed r
esourc
es a
nd
is
the
norm
al a
ppro
ach t
ov
aluat
ion i
n t
he
min
eral
s in
du
stry
, par
ticu
larl
y f
or
oper
atin
g m
ines
and
pro
per
ties
wit
h
def
ined
min
eral
res
ourc
es.
Oth
erm
eth
ods
of
val
uat
ion
th
at m
ay b
eap
pli
ed t
o m
iner
al p
rop
erti
es
but
wh
ich a
re n
ot
pre
ferr
ed i
n t
his
inst
ance
, ar
e:
Co
mp
ara
ble
Tra
nsa
ctio
ns
Req
uir
esth
e v
aluer
lo
ok to
tr
ansa
ctio
ns
rece
ntl
yco
mple
ted
on an
arm
’s l
ength
bas
is w
her
e th
e su
bje
ct b
usi
nes
s is
su
ffic
ientl
y s
imil
arto
that
bei
ng val
ued
It
is
how
ever
, oft
en dif
ficu
lt to
fi
nd co
mpar
able
asse
ts a
nd t
o o
bta
in f
ull
det
ails
of
such
tra
nsa
ctio
ns
as a
llre
levan
t
info
rmat
ion m
ay n
ot
be
in t
he
pub
lic
dom
ain.
Ord
erly
Rea
lisa
tion
of
Ass
ets
The
val
ue
achie
vab
le i
n a
n o
rder
ly r
eali
sati
on o
fas
sets
is
bas
ed o
n a
n
asse
ssm
ent
of
the
net
rea
lisa
ble
val
ue o
f a
bu
sines
s or
asse
t,as
sum
ing
its
ord
erly
re
alis
atio
n.
This
m
ethod is
not
appro
pri
ate
inval
uin
g a
min
e as
an o
per
atin
g a
sset
.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
3
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
8
AS
SU
MP
TIO
NS
I.G
EN
ER
AL
Inord
er t
ore
alis
e th
e fu
ll e
cono
mic
pote
nti
al o
fth
e m
inin
g o
per
atio
n
and i
ts p
lanned
exp
ansi
on,
and t
o m
axim
ize
the
likel
y p
ote
nti
al o
f th
e
asso
ciat
ed e
xp
lora
tion p
roper
ty,
addit
ional
man
po
wer
, eq
uip
men
t an
d
faci
liti
es w
ill
requir
e to
be
emplo
yed
.
We
hav
e as
sum
ed
that
al
l p
rese
nt
and
pro
pose
d
faci
liti
es
and
oper
atio
ns
wil
l oper
ate
at p
rodu
ctiv
ity l
evel
s an
d h
ealt
h a
nd s
afet
y
stan
dar
ds
that
are
usu
al i
nth
e m
inin
g i
ndust
ry.
We
assu
me t
hat
a m
anag
emen
t te
am
wit
hap
pro
pri
ate
and a
deq
uat
e
qual
ific
atio
ns
and
exper
ien
ce i
s in
pla
ce
and i
s oper
atin
gdil
igen
tly
and e
ffec
tiv
ely, no
w a
nd i
nth
e fu
ture
.
We
hav
eas
sum
ed a
ll t
he
info
rmat
ion
pro
vid
ed b
y t
he
Com
pan
y t
o b
e
reli
able
an
d l
egit
imat
e. W
e have
reli
edto
a c
on
sid
erab
le e
xte
nt
on
such
info
rmat
ion i
n a
rriv
ing
at o
ur
opin
ion
of
val
ue.
We
hav
e ass
um
ed t
hat
ther
e w
ill
be
no m
ater
ial
chan
ge
inth
e ex
isti
ng
poli
tica
l, le
gal
,te
chno
logic
al,
fisc
alor
econo
mic
con
dit
ions
whic
h
may
ad
ver
sely
affe
ct t
he
busi
nes
s of
the
Com
pan
y.
Oper
atio
nal
an
d
contr
act
ual
te
rms
bou
nd
by
the
contr
acts
an
d
agre
em
ents
ente
red i
nto
by t
he
Co
mp
any w
ill
be
honore
d.
II.
SO
UR
CE
S O
FM
INE
AB
LE
MA
TE
RIA
L
The
pri
nci
pal
ass
et o
f th
e S
oko
r G
old
Pro
ject
is
its
ore
res
erves
and
min
eral
re
sourc
es;
th
e cr
itic
al
asse
ssm
ent
of
thei
rq
uan
tum
an
d
reli
abil
ity i
s th
e fo
undat
ion
of
this
val
uat
ion.
The
pro
ject
min
eral
res
ourc
es a
nd o
re r
eser
ves
as
rep
rese
nte
d b
y t
he
Com
pan
y i
nJu
ne
20
10, ar
e s
et o
ut
inT
able
s 1 a
nd
2,
abo
ve.
For
the
purp
ose
s of
our
val
uat
ion,
we
hav
e d
eem
ed i
t nec
essa
ry t
o
revis
eC
NM
C’s
st
ated
min
eral
reso
urc
esan
do
re re
serv
es so
as
to
pro
vid
e an
in
ven
tory
of
pote
nti
ally
m
inea
ble
m
ater
ial
that
, un
der
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
4
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
9
reaso
nab
le
min
ing
indust
ry
assu
mpti
ons
reg
ard
ing
tech
nic
al
and
oper
atio
nal
par
amet
ers,
mig
ht
be
avai
lable
to t
he
pro
ject
.
Fir
stly
,w
e h
ave
adju
sted
the
com
pan
y’s
conver
sio
n o
f M
easu
red a
nd
Indic
ated
Res
ourc
es t
o O
re R
eser
ves
by
apply
ing s
tan
dar
d i
ndu
stry
pro
cedure
s an
d a
ssum
ing t
hat
th
e m
inin
g o
per
atio
ns
may r
ecover
95%
of
the
in s
itu
reso
urc
e to
nn
age
toget
her
wit
h m
inin
g d
ilu
tion e
stim
ated
to b
e 10%
(of
reco
ver
ed r
esourc
e to
nnes
) at
agra
de
of
0.2
g/t
Au.
Th
e re
sult
ing r
evis
ed J
OR
C C
ode
ore
res
erves
are
sho
wn i
n T
able
3.
TA
BL
E 3
– C
NM
C O
RE
RE
SE
RV
ES
, A
DJU
ST
ED
AU
GU
ST
20
11
JO
RC
Cod
e C
lass
Ton
nes
Grad
e g
/t A
uG
old
(oz)
Pro
ved
202,7
30
3.4
922
,731
Pro
bable
78
0,6
15
1.7
744
,496
TO
TA
L
98
3,3
45
2
.13
67
,226
Sec
ond
ly,
in ord
er to
dev
elop a
pra
ctic
able
m
inin
g a
nd pro
cess
ing
scen
ario
for
the
purp
ose
s o
fth
is v
aluat
ion i
t w
as d
eem
ed r
easo
nab
le
to
carr
y
out
a th
eore
tica
l co
nver
sion
of
the
rem
ainin
g
min
eral
reso
urc
es i
n o
rder
to p
rovid
e a
sourc
eo
fno
tional
lym
inea
ble
mat
eria
l.
Such
m
ater
ial
is,
in th
isre
port
, des
ignat
ed “O
ther
Sou
rces
”. T
his
des
ign
atio
nd
oes
no
t eq
uat
e w
ith
any
JOR
C
Cod
e cl
ass
an
d
its
appli
cati
on i
s li
mit
ed s
ole
ly t
o t
his
val
uat
ion.
Pri
nci
pal
ass
um
pti
ons
in t
his
conver
sio
n i
ncl
ude
the
expect
atio
n t
hat
80%
o
f re
sourc
es
are
upgra
ded
(f
oll
ow
ing
furt
her
def
init
ion
by
dri
llin
g,
met
allu
rgic
al
test
ing,
etc)
an
d
are
then
co
nver
ted
to
ore
rese
rve
equiv
alen
t st
atus
usi
ng
the
fore
goin
g
fact
ors
for
min
ing
reco
ver
y (
80%
) an
d d
iluti
on (
10%
at
0.2
g/t
Au).
The
tota
l quan
tum
of
“Oth
er S
ourc
es”
esti
mat
ed to
resu
lt fr
om
up
gra
din
g of
the
know
n
min
eral
res
ourc
es i
s pre
sente
d i
nT
able
4.
TA
BL
E 4
– C
NM
C -
“O
TH
ER
SO
UR
CE
S”,
ES
TIM
AT
ED
AU
GU
ST
20
11
Cla
ssif
ica
tion
T
on
nes
Grad
e g/t
Au
Gold
(o
z)
TO
TA
L-
Oth
er S
ou
rces
Min
eable
Mat
eria
l1,1
46,3
65
2.6
1
96
,36
2
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
5
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
10
Th
e es
tim
ated
quan
tum
of
noti
onal
ly m
inea
ble
mat
eria
l (t
he
sum
of
Ore
Res
erves
and
“O
ther
S
ourc
es”)
am
ounts
to
appro
xim
atel
y
2,1
29,7
00
tonn
es a
t a
gra
de
of
2.3
9 g
/t A
u a
nd c
onta
inin
g 1
63,6
00
ounce
s o
f gold
. T
able
5 s
ho
ws
tota
l m
inea
ble
mat
eria
l (J
OR
C C
ode
ore
res
erves
plu
s non
JOR
C “
Oth
erS
ourc
es”)
cla
ssif
ied
by t
yp
e of
min
eral
isat
ion a
nd p
ropose
d g
old
rec
over
y p
roce
ss,
asd
escr
ibed
by
the
BD
A i
n t
he
ITR
.
TA
BL
E
5
–C
NM
C
–
MIN
EA
BL
EM
AT
ER
IAL
(O
RE
RE
SE
RV
ES
&
“OT
HE
R S
OU
RC
ES
”),
AU
GU
ST
201
1
Po
ten
tia
l
Ore T
yp
eP
rocess
ing
T
on
nes
Gra
de g
/t
Au
G
old
(oz)
Oxid
e +
Bac
kF
ill
+A
llu
via
l
Vat
Lea
ch
2
84
,00
0
3.3
23
0,2
50
Ox
ide
Hea
pL
each
1
,01
7,0
00
1
.75
30,2
50
Pri
mar
yC
arb
on
In
Lea
ch
830,0
00
2.8
576,0
65
TO
TA
L
2,1
29,7
00
2.3
916
3,6
00
NO
TE
: T
onnes
and O
unce
s are
ro
un
ded.
III.
MIN
ING
CN
MC
st
arte
dd
evel
op
ing t
he
min
e fo
r pro
duct
ion
afte
r th
e in
itia
l
esti
mat
ion p
roce
du
res;
th
edev
elopm
ent
incl
uded
co
nst
ruct
ion o
f a
crush
ing a
nd s
tock
pil
e fa
cili
ty,
vat
lea
chin
gan
d g
old
pro
cess
ing p
lan
wit
h a
cap
aci
ty t
o t
reat
60,0
00
tpa.
It
com
ple
ted
its
firs
t gold
pou
rin
July
20
10 a
nd
anoth
er f
ou
rla
ter
in 2
010;
appro
xim
atel
y6
,00
0t
of
ore
wer
e p
roces
sed f
or
a yie
ld o
f 5
54 o
z of
gold
. T
he
Com
pan
y p
lans
to
buil
d a
hea
p l
each
fac
ilit
yin
2011 a
nd
car
bo
n-i
n-l
each
(C
IL)
faci
lity
in 2
012,
as w
ell
asin
crea
se t
he
size
of
the
exis
ting v
at l
each
faci
lity
in
the
futu
re.
The
pro
ject
h
old
s th
e re
quir
ed
min
ing
and
en
vir
on
men
tal
appro
val
s fr
om
th
e re
levant
auth
ori
ties
subje
ct t
oth
e co
ndit
ion
that
th
e in
itia
l p
rodu
ctio
n
not
excee
din
g
30
0,0
00
tonnes
per
annu
m (
“tpa”
) of
min
ed o
re.
CN
MC
has
advis
edB
DA
th
atth
is
cond
itio
n
wil
l be
rela
xed
on
su
bm
issi
on
to
th
e re
levan
t
auth
ori
ties
of
a fu
llfe
asib
ilit
y
study
and
min
e pla
n
on
the
pla
nned
expan
sio
n
of
pro
duct
ion
usi
ng
the
CIL
pro
cess
. T
he
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
6
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
11
Com
pan
y h
as
rece
ntl
y a
dv
ised
th
at i
t n
ow
expect
s to
gai
n s
uch
appro
val
in l
ate
2011
.
Th
e co
mp
any
pla
ns
toco
mm
issi
on
a
smal
l-sc
ale
con
trac
tor
usi
ng
1.8
m3
hydra
uli
c ex
cavat
ors
an
d
20t
rear
-du
mp
tr
uck
s u
nder
th
e
super
vis
ion o
f it
s o
wn m
inin
gen
gin
eers
and p
rop
ose
s to
en
gag
ea
Chin
ese
min
ing
com
pan
y f
or
expan
ded
pro
duct
ion.
We
hav
e exam
ined
the
pro
ject
ed m
ine
pro
duct
ion a
nd o
re p
roce
ssin
g
sch
edule
spre
par
ed b
y C
NM
C as
set
out
inth
e IT
R.
We
consi
der
tho
se
sched
ule
s m
ay
have
the
po
ssib
ilit
y
of
not
bei
ng
ach
iev
able
hav
ing
regar
d
to
the
pro
ject
’s
appar
ent
stat
e o
f devel
opm
ent,
th
e
min
ing a
rran
gem
ents
and p
roce
ssin
g f
acil
itie
sp
rese
nt
and p
lanned
.
A s
ignif
ican
t li
mit
atio
n i
s co
nsi
der
ed t
o b
e th
epro
ject
ed m
inin
g r
ate
of
pri
mar
y
ore
an
dit
s tr
eatm
ent
by
carb
on-i
n-l
each
(“
CIL
”)
pro
cess
ing.
Ther
e ar
epla
ns
to i
nst
all
a p
lant
of
500 t
onn
es/d
ay (
“tp
d”)
cap
aca
city
i.e
. an
annual
capac
ity
of
175,0
00t
at b
est.
The
pro
ject
ed
capit
al e
xp
end
iture
sas
set
ou
t in
th
eIT
R i
nfe
r th
at n
oin
crea
se i
n C
IL
cap
aci
tyis
p
rese
ntl
ypla
nned
; fo
r our
val
uat
ion
purp
ose
s w
e hav
e
lim
ited
C
IP
trea
tmen
t ra
te
to
175,0
00tp
a w
ith
aco
mm
ensu
rate
exte
nsi
on o
f pro
ject
oper
atin
g l
ife
(bei
ng t
he
full
uti
lisa
tio
n o
f cu
rren
t
ore
res
erves
and m
iner
al r
esou
rces)
to e
nd 2
017
.
The
com
pan
y’s
pro
duct
ion s
ched
ule
tab
ula
ted i
nth
e IT
R a
ssum
es t
hat
furt
her
appro
val
wil
l b
e giv
en p
rior
to 2
012 f
or
ore
min
ing l
evel
s to
exce
ed
300,0
00
tpa.
We
hav
eass
um
ed
that
such
appro
val
occu
rs
duri
ng 2
013
and
in s
uff
icie
nt
tim
e fo
r ore
pro
duct
ion i
nth
at y
ear
to
rise
to 4
40
,000tp
a.
Itis
ass
um
ed t
hat
th
e co
mp
any’s
pla
ns
tob
uil
d a
hea
p l
each
fac
ilit
y i
n
201
1 a
nd c
arbo
n-i
n-l
each
(C
IL)
faci
lity
in 2
01
2,
as w
ell
as i
ncr
ease
the
size
of
the
exis
ting
vat
leac
h f
acil
ity,
are
pro
cee
din
g a
nd a
re i
n
fact
, w
ell
advan
ced.
Hav
ing r
egar
d t
o t
he
abo
ve,
we
have
pre
par
ed a
n a
men
ded
min
ing
and p
roce
ssin
g s
ched
ule
(T
able
6)
that
pro
pose
s m
inin
g a
nd t
reat
men
t
of
the
revis
ed
tota
l fo
reca
st
min
eab
lem
ater
ial
(app
roxim
atel
y
2,1
31,0
00t)
over
the
per
iod b
egin
nin
g 2
010 t
hro
ugh
to e
nd 2
017.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
7
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
12
Th
e ca
sh f
low
model
ing e
mp
loyed
in
our
val
uat
ion i
s bas
ed o
n t
he
pro
duct
ion s
chedule
set
out
inT
able
6.
TA
BL
E 6
– S
OK
OR
GO
LD
PR
OJE
CT
– M
ININ
G&
PR
OC
ES
SIN
G S
CH
ED
UL
E(R
EV
ISE
D A
UG
US
T20
11)
YE
AR
PR
OC
ES
S2
010
ton
nes
20
11
ton
nes
20
12
ton
nes
20
13
ton
nes
201
4to
nn
es2
015
ton
nes
201
6to
nn
es2
01
7to
nn
esT
OT
AL
to
nn
es
Vat
Lea
ch
6,0
00
60
,000
60
,000
60
,000
60,0
00
38,0
00
--
284
,000
Hea
p L
each
62
,000
240,0
00
250,0
00
25
0,0
00
215
,000
1,0
17
,000
Ca
rbo
n i
nL
each
- -
- 1
30,0
00
17
5,0
00
175
,000
17
5,0
00
175
,000
830
,000
TO
TA
L6
,00
01
22,0
00
300,0
00
440,0
00
48
5,0
00
428
,000
17
5,0
00
175
,000
2,1
31
,000
N
OT
E:
Ton
nes
are
round
ed.
Min
ing e
qu
ipm
ent
incl
ud
es e
xca
vat
ors
an
d t
ruck
s th
at a
re l
ease
d b
y C
NM
C.
Min
ing i
s re
lati
vel
y s
trai
ghtf
orw
ard a
nd c
on
sist
s o
f st
rippin
g t
he
nea
rsu
rfac
e o
xid
eore
whic
h r
arel
yex
tend
s b
elow
a d
epth
of
12m
. S
ulp
hid
eore
, w
hic
h i
s not
bei
ng t
reat
ed a
t pre
sent,
is
left
in p
lace
.M
inin
g o
f
pri
mar
yore
and
ass
oci
ated
was
te w
ill
enta
il d
rill
ing a
nd b
last
ing o
f th
em
ater
ial.
BD
A n
ote
that
geo
tech
nic
alin
ves
tig
atio
ns
hav
e n
ot
bee
n c
arri
ed o
ut
in r
egar
d t
o p
it s
lope
stab
ilit
y.
Th
e ca
sh f
low
model
use
d i
n p
repar
ing t
his
val
uat
ion,
assu
mes
min
ing a
nd p
roce
ssin
g c
ost
s as
set
out
inth
e B
DA
rep
ort
wit
han
esc
ala
tio
n f
acto
r
of
20%
.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
8
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
13
IV.
PR
OC
ES
SIN
G
CN
MC
en
gag
ed
Ch
angch
un
Go
ld
Res
earc
h
Inst
itute
(“
CG
RI”
) to
carr
yout
pro
cess
te
stw
ork
in
2
008
and
su
bse
quen
tly
to
des
ign
a
pro
cess
for
reco
ver
y o
f gold
and s
ilver
from
Sok
or
ore
s.
A v
at l
eac
hin
g p
lant
was
con
stru
cted
on
the
site
in e
arly
2010
and
oper
atio
ns
com
men
ced
in
July
2010.
In
the
per
iod
from
Ju
ly
to
Dec
ember
201
0
app
roxim
atel
y
6,0
00t
of
ore
w
as
pro
cess
ed
and
554o
zs
of
gold
w
ere
reco
ver
ed,
equiv
alen
t to
ap
pro
xim
atel
y74%
reco
ver
yfr
om
a h
ead g
rad
e es
tim
ated
at
3.9
g/t
Au.
CN
MC
pla
ns
to a
dd
a h
eap l
each
ing p
lant
in t
he
fourt
h q
uar
ter
of
2011
for
furt
her
pro
cess
ing of
oxid
eore
and
, su
bse
quen
tly,
a C
IL
pla
nt
of
500tp
d (
nom
inal
175,0
00
tpa)
to p
roce
ss p
rim
ary m
ater
ial.
Pro
cess
tes
twork
has
indic
ated
that
oxid
ised
ore
in M
anso
ns
Lod
e an
d
Rix
end
epo
sits
is
amen
able
to h
eap
leach
ing.
BD
A h
ave
expre
ssed
rese
rvat
ions
conce
rnin
g t
he
pro
ject
sit
e w
ater
bal
ance
whic
h w
ill
be
subje
cted
to
m
on
soonal
ra
in
storm
s.
Hea
p
per
mea
bil
ity
can
be
affe
cted
by h
eavy r
ainfa
llo
nto
the
surf
ace
of
aheap
and h
igh i
nfl
ow
s
of
wat
erm
ust
be
conta
ined
and d
etoxif
ied p
rio
r to
dis
char
ge.
CN
MC
has
ad
vis
edth
at t
hey p
lan
to
set
up c
over
ing
s ov
erth
e hea
ple
ach
sim
ilar
toth
ose
that
hav
e pro
ved
su
cces
sful
inth
e oper
atio
n o
f th
e vat
leac
h
pon
ds.
O
ur
cash
fl
ow
m
odel
ling
ass
um
es
the
heap
le
ach
bec
om
es
oper
atio
nal
and t
hat
go
ld r
eco
ver
yav
erag
es 6
5%
over
its
lif
e.
Ther
e is
how
ever
, so
me
risk
the
hea
p l
each
could
be
aban
don
ed i
f
wat
er
man
agem
ent
and
oth
er
issu
es
beco
me
crit
ical
du
ring
its
oper
atio
n.
No
pro
cess
te
stw
ork
has
yet
bee
n
carr
ied
out
on
pri
mar
y
ore
to
inves
tigat
e re
cover
y
per
form
ance
of
the
pro
pose
d
CIL
p
roce
ssin
g
rou
te.
This
val
uat
ion
ass
um
es
a h
ypoth
etic
al g
old
reco
ver
y o
f80%
in
the
firs
t yea
rri
sing
to90
%
in
sub
sequ
ent
year
s as
oper
atin
g
effi
cien
cies
ar
e im
ple
mente
d.I
ssues
of
dim
inis
hed
re
cover
y
and
incr
ease
d c
ost
s co
uld
ari
seif
appre
ciab
le l
evel
s of
copper
occ
ur
in
som
e o
fth
e p
rim
ary
ore
s.
It
is
also
p
oss
ible
th
atso
luble
co
pper
min
eral
s m
ay b
epre
sent
inso
me
oxid
e ore
san
d t
his
wo
uld
likel
y
adver
sely
aff
ect
reco
ver
y r
ate
s an
d c
yan
ide
usa
ge.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-1
9
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
14
Ear
ly r
esult
s re
port
ed b
y C
NM
C f
or
vat
lea
chin
g i
ndic
ate
reco
ver
y o
f
silv
er at
th
e ra
te of
1oz
silv
erper
5 o
zgold
. T
he
Sokor
style
of
min
eral
isat
ion w
her
e gold
is
ass
oci
ated
wit
hsi
lver
-bea
ring b
ase
met
al
min
eral
s is
lik
ely t
o p
rovid
e var
iable
amoun
ts o
fcyan
ide-
reco
ver
able
silv
er i
n t
he
oxid
e o
res.
The
indic
ated
sil
ver
reco
ver
y r
atio
is
assu
med
to a
pp
ly t
o t
he
vat
and h
eap l
each
oper
atio
ns
and a
t a s
imil
ar r
ate
in
the
pri
mar
yore
s w
her
e fi
ne
gri
nd
ing
of
silv
er-b
ear
ing
sulp
hid
e
min
eral
s is
lik
ely t
opro
vid
e m
odes
t si
lver
reco
ver
ies.
V.
RE
CL
AM
AT
ION
CN
MC
have
indic
ated
th
at
open
pit
s ar
eto
b
e re
clai
med
by
bac
kfi
llin
g,
cover
ing w
ith
so
il a
nd
rep
lanti
ng.
It h
as b
een
assu
med
all
min
ed w
aste
and t
reat
edore
fro
m t
he
vat
and
heap
lea
ch o
per
atio
ns
are
retu
rned
to
th
e p
its
and
rehab
ilit
ated
usi
ng
cost
s ad
vis
ed
by
CN
MC
.
Oth
er s
ite
reh
abil
itat
ion c
ost
s su
ch a
s pla
nt
rem
oval
, ta
ilin
gs
stora
ge
reh
abil
itat
ion an
d th
eli
ke
are
not
incl
uded
in
th
isval
uat
ion.
It is
poss
ible
that
expan
sio
n o
f lo
cal
ore
res
erves
could
lea
d t
o e
xte
nd
ed
usa
ge
of
most
su
ch fa
cili
ties
bey
ond th
ep
erio
d co
nsi
der
ed in
th
is
val
uat
ion.
VI.
EX
PL
OR
AT
ION
The
mai
nex
plo
rati
on
req
uir
emen
ts o
f th
epro
ject
are
consi
der
ed t
o b
e:
•upgra
din
g o
f cu
rren
t re
sourc
es
tore
serv
es
-in
fill
dri
llin
g
•ex
plo
rati
on o
f th
e su
rroun
din
g 6
2.8
km
2 e
xp
lora
tion
lice
nce
•co
nti
nued
explo
rati
on
of
the
So
kor
Blo
ck
Dri
llin
g (
both
rev
erse
cir
cula
tion
(“R
C”)
and d
iam
ond c
ore
(“D
DH
”)
dri
llin
g s
hou
ld b
euse
d f
or
rese
rve
and
explo
rati
on
dri
llin
g.
Adeq
uat
e
geo
logic
al
and
tech
nic
al
assi
stan
t per
sonnel
w
ill
be
req
uir
ed
for
pri
mar
y e
xp
lora
tion a
nd t
o c
ontr
ol
and s
upport
res
erve
dri
llin
g.
The
val
uat
ion p
rovid
es f
or
tota
ls o
f 30,0
00m
of
RC
and 1
5,0
00
m o
f D
DH
dri
llin
g t
oget
her
wit
h e
xpen
dit
ure
of
$1
,800,0
00 f
or
per
son
nel
, as
says,
etc.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
0
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
15
VII
.M
ET
AL
PR
ICE
S
Ste
ady
pri
ces
of
$1,8
00/o
z fo
r go
ld a
nd $
40/o
z fo
r si
lver
(no
tim
e
escal
atio
n)
are
ass
um
ed t
hro
ugh
out
the
cash
flo
w m
odel
.T
hese
pri
ces
are
cho
sen i
nre
fere
nce
to t
he
spot
pri
ces
obse
rved
in
the
days
close
to
the
Val
uat
ion D
ate.
VII
I.T
AX
AN
D R
OY
AL
TIE
S
Th
eIT
R re
port
s th
at in
Ju
ne
20
10,
CM
NM
w
as
appro
ved
fo
r th
e
pio
nee
r ta
xst
atu
sb
y M
IDA
that
enti
tles
the
Sok
or
Gold
Pro
ject
to
100%
inco
me
tax e
xem
pti
on o
n s
tatu
tory
inco
me
for
a p
erio
d o
f fi
ve
yea
rs,
sub
ject
to c
erta
in co
ndit
ions,
incl
udin
gth
eap
pli
cati
on f
or
a
pio
nee
r ce
rtif
icat
e w
ithin
a p
erio
d o
f 24 m
onth
sfr
om
the
dat
e of
such
an a
ppro
val
. C
NM
C h
as n
ot
appli
ed f
or
the
pio
nee
rce
rtif
icat
e an
d h
as
not
fulf
ille
dth
e re
levan
t co
ndit
ions;
ther
efore
th
e ta
x e
xem
pti
on u
nder
the
pio
nee
r ta
x s
tatu
s is
not
appli
cab
le t
o C
MN
M.
Roy
alti
es
on
gro
ss
reven
ue
are
pay
able
to
th
e K
elan
tan
Sta
te
Auth
ori
ty
(5%
) an
d
the
Kel
anta
n
Sta
te
Eco
nom
ic
Dev
elopm
ent
Corp
ora
tion
(3%
) an
d
thes
e ra
tes
are
tak
en
into
acco
unt
in
the
val
uat
ion.
IX.
OP
ER
AT
ING
CO
ST
S
The
contr
act
min
ing c
ost
for
oxid
e o
rem
inin
g t
hat
has
bee
n s
up
pli
ed
by C
NM
C h
as b
een i
ncr
ease
d b
yap
pro
xim
atel
y 7
5%
for
min
ing o
f
pri
mar
y o
re o
n t
he
bas
isth
at d
rill
ing
and b
last
ing w
ill
be
requ
ired
and
pro
duct
ion r
ates
wil
l be
low
er.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
1
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
16
X.
CA
PIT
AL
EX
PE
ND
ITU
RE
All
ow
ance
s hav
e b
een
mad
e fo
r cap
ital
ex
pen
dit
ure
s fo
reca
st
by
CN
MC
(se
e IT
R)
but
mo
dif
ied f
or
add
itio
nal
expen
dit
ure
on t
aili
ngs
stora
ge,
contr
acto
r in
dir
ect
cost
s an
d c
onti
ngen
cies
all
due
par
tly t
o
the
exte
nded
pro
duct
ion
per
iod
. T
he
revis
ed
capit
al
exp
end
iture
s
assu
med
in t
he
val
uat
ion a
re s
how
n i
nT
able
7.
TA
BL
E7
– C
AP
ITA
L E
XP
EN
DIT
UR
E S
CH
ED
UL
E (
$U
S)
- R
EV
ISE
D
AU
GU
ST
201
1
CA
PIT
AL
PR
OJE
CT
YE
AR
OF
EX
PE
NS
EE
XP
EN
DIT
UR
E
Exp
ansi
on
of
vat
lea
ch f
acil
ity
20
11
$2
00
,00
0
Con
stru
ctio
n o
f R
ixen
hea
p l
eac
h
faci
liti
es
20
12
$
1,5
00
,00
0
Con
stru
ctio
n o
fca
rbon
-in-l
each
faci
liti
es
20
12-2
01
3$
3,5
00
,00
0
Con
stru
ctio
n o
fad
dit
ion
al
tail
ings
stora
ges
20
12-2
01
3$5
00
,00
0
Con
trac
tor/
min
ing i
ndir
ect
co
sts
20
11-2
01
7$
1,4
00
,00
0
Con
tin
gen
cies
2
01
1-2
01
3$7
50
,00
0
TO
TA
L$
7,8
50
,00
0
XI.
OT
HE
R A
SS
UM
PT
ION
S
The
Co
mp
any c
onfi
rmed
that
work
ing c
apit
al,
inte
rest
exp
ense
and
dep
reci
atio
nan
d a
mort
izat
ion a
re n
ot
mat
eria
lto
the
pre
sent
val
uat
ion
.
Ther
efo
re w
eh
ave
not
consi
der
ed t
hem
in t
he
curr
ent
val
uat
ion.
XII
.D
ISC
OU
NT
RA
TE
In s
elec
ting t
he
app
ropri
ate
dis
cou
nt
rate
to
be
app
lied
,w
e h
ave
taken
into
acco
unt
a n
um
ber
of
fact
ors
in
cludin
g
the
risk
co
nsi
der
ed
inher
ent
inth
eoper
atio
n,
our
kno
wle
dge
of
dis
coun
t ra
tes
com
monly
appli
ed
in
val
uin
g
gold
pro
ject
s usi
ng
the
DC
Fm
etho
d
and
consi
der
atio
ns
of
the
curr
ent
cost
of
finan
ce.
We
have
sele
cted
a d
isco
unt
rate
of
12%
as t
hat
in o
ur
opin
ion
is
appro
pri
ate
for
the
risk
s in
volv
ed
in
under
takin
gth
e fu
rther
dev
elop
men
tof
this
min
ing a
nd e
xp
lora
tion o
per
atio
n.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
2
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
17
XII
I.S
EN
SIT
IVIT
Y A
NA
LY
SIS
We
have
exam
ined
the
sensi
tivit
y o
f th
e S
oko
r P
roje
ct N
et P
rese
nt
Val
ue
(at
con
stan
t dis
coun
t ra
te)
in r
elat
ion t
o c
han
ges
to
som
e o
f th
e
sign
ific
ant
cash
flo
w m
odel
par
amet
ers,
such
as
gold
pri
ce,
min
ing
cost
, pro
cess
ing
cost
and
capit
al e
xp
end
itu
re.
In t
he
min
ing i
ndust
ry,
thes
e p
aram
eter
s ar
eam
on
g t
ho
se m
ost
com
mo
nly
exam
ined
in t
he
anal
ysi
s of
DC
Fm
odel
s.W
e
hav
eal
so
con
sider
ed
the
effe
cts
of
infl
atio
n an
d co
ncl
ud
edth
at th
ey ar
enot
appli
cab
le to
th
e cu
rren
t
val
uat
ion e
xer
cise
.
Eac
hsc
enar
iop
rese
nte
d i
nT
able
8 r
epre
sents
a c
ase
wher
e one
fact
or
is c
han
ged
whil
e th
e o
ther
fact
ors
are
hel
d c
onst
ant.
TA
BL
E 8
– P
RO
JEC
T S
EN
SIT
IVIT
IES
– D
ISC
OU
NT
RA
TE
12%
Pa
ram
eter
Va
riati
on
in
Para
met
er
Res
ult
ing
N
PV
(U
S$)
(US
$)
Res
ult
ing
NP
V
(US
$)
Gold
Pri
ce
-10%
/ +
10
%6
9,8
00
,000
83
,000
,00
09
6,3
00,0
00
Min
ing C
ost
-10%
/ +
25
%8
0,0
00
,000
83
,000
,00
08
4,3
00,0
00
Pro
ces
sing
Cost
-10%
/ +
25
%8
4,8
00
,000
83
,000
,00
07
8,6
00,0
00
Cap
ital
Cost
+
25
% /
+50%
81
,600
,000
83
,000
,00
08
0,2
00,0
00
Min
ing c
ash f
low
mod
els
are
in g
ener
al p
arti
cula
rly s
ensi
tive
to m
etal
pri
ces
and
gra
des
. T
his
eff
ect
is m
agnif
ied i
n t
he
case
of
gold
and
silv
er p
rice
s th
at a
re w
ell
above
his
tori
cal
aver
ages.
Tab
le 8
show
s
that
a 1
0%
chan
ge
in g
old
pri
ce d
ecre
ase
s N
PV
more
mar
ked
ly t
han
a
25%
incr
ease
in e
ither
oper
atin
g o
r p
roce
ssin
gco
sts.
For
chan
ges
in
dis
cou
nt
rate
we
exam
ine
scen
ario
s in
whic
hth
e ra
teis
var
ied +
/- 2
%, i.
e. 1
4%
and 1
0%
resp
ecti
vel
y.
TA
BL
E9
– P
RO
JEC
T S
EN
SIT
IVIT
IES
–
D
ISC
OU
NT
RA
TE
V
AR
IED
+/-
2%
Pa
ram
eter
V
ari
ati
on
in
Para
met
er
Res
ult
ing
NP
V
(US
$)
(US
$)
Res
ult
ing
N
PV
(U
S$)
Dis
count
Rate
-2%
/ +
2%
89,0
00
,00
08
3,0
00
,00
07
7,6
00
,00
0
Over
all,
this
an
alysi
sd
emonst
rate
s th
at th
e S
ok
or
Go
ld P
roje
ct is
consi
der
ably
mo
rese
nsi
tive
to v
aria
tio
ns
in g
old
pri
ce a
nd
dis
count
rate
wh
en c
om
par
ed t
ola
rge
per
centa
ge
chan
ges
in o
per
atin
g c
ost
s.
XIV
.C
AS
H C
OS
T O
F G
OL
D P
RO
DU
CT
ION
The
cash
co
st o
fgold
pro
duct
ion i
s es
tim
ated
to b
e$
US
520 /
oz
for
the
DC
F m
od
el.
NP
V @
12%
NP
V @
12%
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
3
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
18
RIS
K F
AC
TO
RS
A.
Res
ou
rce
s an
d r
eser
ves
Th
epro
ject
ed p
roduct
ion s
ched
ule
use
d i
n t
his
val
uat
ion a
ssum
es t
he
pro
vin
g u
p o
f in
ferr
ed o
xid
e re
sourc
es
and
pote
nti
al o
xid
e re
sourc
es
from
Rix
en a
nd p
rim
ary r
esourc
esbel
ow
oxid
e ore
s at
the
oth
er t
hre
e
dep
osi
ts.
Inad
dit
ion,
the
met
allu
rgic
al r
eco
ver
ies
from
pri
mar
yore
hav
eyet
to b
e es
tab
lish
ed.
Ther
e is
a r
isk t
hat
som
e o
fth
e ex
isti
ng
reso
urc
es m
ay n
ot
con
ver
t to
rese
rves
and t
hat
add
itio
nal
res
ourc
es
may n
ot
be
found
. In
ferr
ed r
eso
urc
es,
the
reso
urc
eca
tegory
wit
h t
he
low
est
confi
den
cele
vel
, m
ay not
carr
yas
mu
chgo
ld as
pre
sentl
y
esti
mat
ed.
Th
e C
om
pan
y
use
da
rela
tivel
y
sim
pli
stic
m
etho
d
to
esti
mat
e
reso
urc
es a
nd
rese
rves
an
d i
t is
po
ssib
le t
he
aver
age
gold
res
ourc
e
gra
des
hav
e been
over
esti
mat
ed,
par
ticu
larl
y i
n K
etub
ong
and
Rix
en
wher
e dri
llin
g i
s re
lati
vel
y w
idel
y-s
pac
ed.
In t
his
cas
e, t
he
pro
duct
ion
level
s co
uld
be
low
er t
han
tho
secu
rren
tly f
ore
cast
.
Itis
poss
ible
that
som
e ex
isti
ng r
esourc
es m
ay n
ot
be
econom
ical
ly
min
eable
, as
th
e pla
nned
hea
p le
ach an
d C
ILpla
nt
could
oper
ate
bel
ow
exp
ect
atio
n.
In th
e ev
ent
that
any of
thes
e sc
enar
ios
dev
elop,
the
val
ue
of
the
pro
ject
may
be
dim
inis
hed
.
B.
Fu
ture
gold
pri
ces
an
d g
lob
al
econ
om
y
Fore
cast
rev
enu
es d
epen
d o
n f
utu
re g
old
pri
ces,
and
DC
Fm
odel
ling
show
s th
e p
roje
ct v
alu
e is
hig
hly
sen
siti
ve
to g
old
pri
ce f
luct
uat
ion,
both
posi
tivel
y a
nd n
egat
ivel
y.
A m
ajo
r an
dpro
longed
fal
l in
gold
pri
ces
wo
uld
sub
stan
tial
ly r
educe
the
val
ue
and c
ould
in t
he
wors
t
case
ren
der
the
pro
ject
unec
onom
ic.
C.
Ap
pro
val
for
hig
her
pro
du
ctio
n l
evel
s
Gover
nm
enta
l ap
pro
val
s ar
ecu
rren
tly
for
a pro
duct
ion
level
of
300
,00
0tp
a. A
lthou
gh t
her
e ap
pea
rs t
o b
e re
aso
nab
le p
robab
ilit
y t
hat
the
pro
ject
ed e
xp
anded
pro
du
ctio
n l
evel
s w
ill
rece
ive
the
appro
pri
ate
appro
val
s, a
ny f
ailu
re t
o o
bta
in s
uch
app
roval
s la
ter
than
2013 w
ill
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
4
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
19
sign
ific
antl
y
reduce
th
e fo
reca
st
pro
duct
ion
level
s an
d
hen
ce
the
val
ue.
D.
Co
mm
issi
on
ing o
f n
ew p
roce
ssin
g f
aci
liti
es
Th
e C
om
pan
y p
lan
s to
com
mis
sio
n a
mult
i-li
ft h
eap l
each
ing
and a
CIL
leac
hin
g s
yst
ems.
Th
e new
pro
cess
ing f
acil
itie
s w
ill
enab
le a
n
expan
sion in
pro
duct
ion,
and al
low
the
pro
cess
ing
of
pri
mar
y ore
.
Any
del
ay or
fail
ure
to
co
mm
issi
on
th
e fa
cili
ties
as p
lanned
w
ill
impac
tn
egat
ivel
y o
nth
e valu
e of
the
pro
ject
.
E.
Pit
des
ign
s
Alt
hough
BD
A
regar
ds
the
des
ign
edsl
ope
angle
s of
the
pit
s as
rela
tivel
yco
nse
rvat
ive,
they h
ave
note
d t
hey a
renot
aw
are
of
any p
it
slop
e st
abil
ity g
eote
chnic
al
inves
tigat
ions
and t
hat
an a
ssess
men
t is
done.
S
ever
e pit
w
all
fail
ure
s co
uld
re
sult
inlo
stpro
duct
ion
and
incr
ease
d c
ost
s to
the
oper
atio
n.
F.
Pro
cess
ing
In
pre
par
ing
the
pro
ject
ed
pro
duct
ion
sched
ule
, w
ehav
e m
ade
assu
mpti
on
s o
n r
ates
of
gold
reco
ver
y i
n t
he
var
ious
ore
pro
cess
ing
faci
liti
es.
Itis
po
ssib
le t
hat
act
ual
gold
rec
over
y m
igh
t b
elo
wer
than
assu
med
, re
sult
ing in
redu
ced gold
pro
duct
ion.
CN
MC
’spla
ns
are
hea
vil
y r
elia
nt
on
the
succe
ss o
f a
sub
stan
tial
hea
ple
ach o
per
atio
n
thro
ugh 2012-2
015.
BD
A h
as re
serv
atio
ns
abou
t th
e via
bil
ity o
f a
hea
p
leac
h
oper
atio
n
in
atr
opic
al
monso
onal
env
iron
men
t.A
ny
fail
ure
in
the
hea
p l
each
oper
atio
n w
ill
hav
ea
neg
ativ
e im
pac
t on t
he
val
ue
of
the
pro
ject
.
G.
Cost
s over
run
s
Cost
est
imat
es
pre
par
ed b
y t
he
Co
mp
any w
ere
tabu
late
d i
n t
he
ITR
.
How
ever
, B
DA
no
tes
that
the
esti
mat
es c
ould
be
subje
ct t
oa
hig
h
unce
rtai
nty
and
th
eac
tual
cost
s co
uld
even
tual
ly d
evia
tesu
bst
anti
ally
from
the
esti
mat
es.
BD
A a
lso n
ote
s th
at t
he
pro
cess
ing
cost
est
imat
es
are
unli
kel
y t
obe
more
acc
ura
te t
han
plu
s or
min
us
50%
. E
xplo
rati
on
expen
ses
may
al
sobe
hig
her
th
an ex
pec
ted b
ecau
seth
e C
om
pan
y
pla
ns
to c
ondu
ctex
plo
rati
on
in a
n a
rea
much
lar
ger
than
th
e ar
ea o
f
the
curr
ent
min
ing o
per
atio
n.
Any co
st over
runs
wil
l neg
ativ
ely
impac
t th
e am
ou
nt
of
free
cash
flo
w a
nd w
ill
reduce
the
valu
atio
n.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
5
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
20
H.
Ten
emen
ts a
nd
lic
ense
exte
nsi
on
Th
e m
inin
g li
cen
se
and explo
rati
on li
cense
fo
rm th
e b
asis
of
the
min
eral
as
sets
and th
e valu
e o
fth
eC
om
pan
y.
An
y d
efec
ts in
th
e
val
idit
yo
rte
nure
of
the
lice
nse
s m
ay h
ave
a si
gnif
ican
tad
ver
se e
ffec
t
on t
he
val
ue
of
the
Com
pan
y.
BD
A n
ote
s th
at i
t has
not
und
erta
ken
any r
evie
w o
f th
e ow
ner
ship
and t
enem
ent
stat
us.
Th
e C
om
pan
y h
as
subm
itte
d a
n a
ppli
cati
on t
o e
xte
nd t
he
term
of
its
exp
lora
tion
lic
ense
and t
her
e is
a r
isk t
his
mig
ht
not
be
exte
nded
.
I.E
nvir
on
men
tal
issu
es
As
mu
ch a
s th
e C
om
pan
y t
akes
all
nec
essa
ry m
eas
ure
s to
min
imiz
e it
s
impac
ton
the
envir
onm
ent
and s
afet
yof
its
emp
loyee
s, t
her
e is
a r
isk
that
wat
er r
un-o
ff f
rom
its
pro
pose
dh
eap l
each
pla
nt
and T
SF
wil
l
lead
to
wat
er
conta
min
atio
n
and
hea
lth
h
azar
ds.
Rem
edia
tio
n
at
CN
MC
’s c
ost
could
be
exp
ensi
ve
and l
ong t
erm
.
J.
Soci
al
issu
es
Th
ere
is a
ris
k t
he
local
co
mm
un
ity m
ight
rese
nt
the
pre
sen
ce o
f a
min
ing o
per
atio
nin
thei
r nei
gh
bourh
ood d
ue
to p
erce
ived
and
act
ual
poll
uti
on,
nois
e, i
ncr
ease
dtr
affi
can
d t
he
pre
sence
of
fore
ign
ers.
Any
com
pla
ints
and
pro
test
by t
he
loca
l co
mm
unit
y m
ight
hav
ean
adv
erse
impac
t on t
he
min
ing o
per
atio
ns.
K.
Rel
ian
ce o
nk
ey e
xec
uti
ves
The
futu
re s
ucc
ess
of
the
Com
pan
y i
s dep
enden
t, t
o a
lar
ge
exte
nt,
upo
n
the
conti
nu
ed
serv
ice
of
its
key
exec
uti
ves
and
tech
nic
al
per
sonn
el.
Ther
e is
inte
nse
com
pet
itio
n t
hro
ughout
the
glo
bal
min
ing
indust
ry f
or
exp
erie
nce
d m
anag
eria
l an
d t
ech
nic
al p
erso
nnel
. T
he
loss
of
the
serv
ices
o
f su
ch
per
sonn
el
wit
hout
mak
ing
imm
edia
te
and
adeq
uat
e re
pla
cem
ents
could
hav
ea
mat
eria
l ad
ver
seef
fect
on
par
to
r
all
of
the
oper
atio
n.
L.
Cou
ntr
y a
nd
po
liti
cal
risk
Alt
hou
gh M
alaysi
a is
gen
era
lly c
on
sider
ed t
oh
ave
a st
able
poli
tica
l
situ
atio
n an
d
a w
elco
min
g at
titu
de
tofo
reig
n in
vest
men
t, th
ere
is
alw
ays
a ri
sk t
hat
the
po
liti
cal
situ
atio
nco
uld
ch
ang
e.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
6
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
21
M.
Rea
lisa
tion
of
fore
cast
an
d f
utu
rep
lan
s
Th
is v
alu
atio
n e
xer
cise
is
pre
mis
ed t
o a
lar
ge e
xte
nt
on t
he
fin
anci
al
info
rmat
ion
and p
roje
cted
min
ing p
lan
s pro
vid
ed b
y t
he
Com
pan
yan
d
rep
ort
ed i
nth
e IT
R.
We
hav
e as
sum
ed t
he
acc
ura
cy o
f th
e in
form
atio
n
pro
vid
ed a
nd r
elie
dto
a c
onsi
der
able
exte
nt
on s
uch
in
form
atio
n i
n
arri
vin
g a
t our
esti
mat
e of
val
ue.
Dif
fere
nce
s bet
ween
pro
ject
ions
of
the
futu
rean
d t
he
actu
al r
esult
s
are
not
unu
sual
and i
n s
om
e ca
ses,
such
var
iance
sm
ay b
e m
ater
ial.
Acc
ord
ingly
, to
th
e ex
tent
that
an
y
of
the
above
men
tion
ed
info
rmat
ion
sh
ould
req
uir
e ad
just
men
t,th
e v
aluat
ion o
utc
om
e co
uld
chan
ge.
OP
INIO
N O
FF
AIR
MA
RK
ET
VA
LU
E
We
hav
e co
nsi
der
ed t
he
Net
Pre
sen
t V
alue
cal
cula
tio
ns
for
the
min
ing
oper
atio
ns
of
the
Soko
rG
old
P
roje
ct an
d i
ts as
soci
ated
se
nsi
tivit
y
anal
yse
s an
d w
eco
ncl
ud
e th
atth
eF
air
Mar
ket
Val
ue
of
the
Soko
r
Gold
Pro
ject
as
at t
he
Val
uat
ion
Dat
e is
as
foll
ow
s:
Valu
ati
on
Date
Range
Pre
ferr
ed V
alu
e
31 A
ugus
t 2011
70,0
00,0
00 -
95,0
00,0
00
83,0
00,0
00
Valu
ati
on R
esu
lt (
US
D)
The
val
uat
ion
do
es
no
t ta
ke
into
co
nsi
der
atio
n
the
lead
an
d
zin
c
reso
urc
es
rep
ort
ed
in
the
ITR
, la
rgel
y
beca
use
C
NM
C
has
not
pro
vid
ed
pla
ns
and
sch
edule
s th
at
pro
pose
p
roduct
ion
from
th
ese
reso
urc
es.
In v
iew
of
the
pre
sentl
yin
dic
ated
tonnage
and gra
de
of
thes
e re
sourc
es,
we
consi
der
thei
r p
ote
nti
al f
or
econ
om
ic p
rodu
ctio
n
is l
imit
ed.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
7
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
22
We
bel
ieve t
he
adja
cent
explo
rati
on li
cence
hel
d b
y C
NM
Cto
be
pro
spec
tive
for
gold
and b
ase
met
alm
iner
alis
atio
n si
mil
ar to
th
at
whic
h o
ccu
rsin
the
Sokor
Blo
ck.
It w
ill
requ
ire
risk
ing s
ubst
anti
al
explo
rati
on
fun
ds
in ord
er to
ev
aluat
e it
s m
iner
al p
ote
nti
al;
init
ial
explo
rati
on e
xpen
dit
ure
of
$U
S 2
mil
lion
is
incl
uded
in t
he
cash
flo
w
mo
del
. A
lth
ough
th
ese
explo
rati
on
rights
undo
ubte
dly
ho
ld
som
e
futu
re
val
ue,
avai
lab
le
info
rmat
ion
is
in
suff
icie
nt
for
val
uat
ion
purp
ose
s.In
an
yca
se,
we
consi
der
its
pre
sent
val
ue
wo
uld
be
unli
kel
y
to b
e m
ater
ial
in r
elat
ion
to t
hat
of
the
Soko
r m
inin
g o
per
atio
n.
CO
DE
CO
MP
LIA
NC
E
This
rep
ort
has
bee
n p
repar
ed i
nac
cord
ance
wit
h t
he
guid
elin
es s
etby
the
Code
for
the
Tec
hnic
al A
ssess
men
tan
d V
alu
atio
n o
f M
iner
al a
nd
Pet
role
um
Ass
ets
and S
ecu
riti
es f
or
Indep
enden
t E
xp
ert
Rep
ort
s 2005
Edit
ion
(t
he
“V
AL
MIN
C
ode”
),
pre
par
ed
by
the
VA
LM
IN
Com
mit
tee,
a j
oin
t co
mm
itte
e o
f th
e A
ust
rala
sian
In
stit
ute
of
Min
ing
and
Met
allu
rgy,
the
Aust
rali
an
Inst
itute
of
Geo
scie
nti
sts
and
the
Min
eral
Ind
ust
ry C
onsu
ltan
tsA
ssoci
atio
n w
ith
the
par
tici
pat
ion o
fth
e
Aust
rali
an
Sec
uri
ties
an
d
Inves
tmen
t C
om
mis
sion,
the
Aust
rali
an
Sto
ck
Exch
ange
Lim
ited
,th
e M
iner
als
Coun
cil
of
Aust
rali
a,th
e
Pet
role
um
Explo
rati
on
So
ciet
y o
f A
ust
rali
a, t
he
Sec
uri
ties
Ass
oci
atio
n
of
Aust
rali
a an
d r
epre
sen
tati
ves
fro
m t
he
Aust
rali
anfi
nan
ce
sect
or.
The
pri
nci
pal
sou
rce
for
this
val
uat
ion
is
the
do
cum
ent
enti
tled
“Indep
enden
t T
echnic
al R
evie
w,
Sokor
Gold
P
roje
ct – K
elan
tan –
Mal
aysi
a – C
NM
C G
old
min
eL
imit
ed”
(the
“IT
R”)
by B
ehre
Dolb
ear
Aust
rali
a (“
BD
A”)
and d
ated
12 A
ugust
20
11.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
8
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
23
Th
e C
om
pan
y h
as
pro
vid
ed u
s w
ith a
n u
ndat
ed i
nte
rnal
rep
ort
enti
tled
“Un
it
Cost
s E
stim
atio
n”
and
fro
m
wh
ich
we
hav
e dra
wn
cert
ain
inp
uts
fo
r o
ur
Cas
h F
low
Mo
del
.
Th
e au
thors
of
this
val
uat
ion r
eport
hav
e not
vis
ited
the
Sokor
min
e
site
or
the
asso
ciat
ed e
xplo
rati
on p
roper
ties
. H
ow
ever
, w
e re
cogn
ise
that
B
DA
is
a
sub
stan
tial
min
eral
indust
ry
consu
ltin
g
firm
th
at
occ
up
ies
a h
igh
sta
ndin
g i
nth
e in
tern
atio
nal
min
eral
in
dust
ry.
The
ITR
is
bas
ed u
pon s
ever
al s
ite
vis
its
by
anum
ber
of
BD
A c
onsu
ltan
ts
in
the
per
iod
up
to
mid
2010
. M
r A
dam
son
has
had
in
form
ativ
e
dis
cuss
ions
wit
h
BD
A
consu
ltan
ts
wh
o
vis
ited
th
e p
roper
ty
and
auth
ore
d t
he
ITR
. JL
LS
issa
tisf
ied t
her
efore
, th
atth
e o
bse
rvat
ion
s
reco
rded
and
the
opin
ions
expre
ssed
by B
DA
in t
he
ITR
are
by a
nd
larg
ead
equat
e fo
r th
e purp
ose
s o
f th
is
val
uat
ion
and
may
be
confi
den
tly r
elie
d u
pon
for
that
purp
ose
.
LIM
ITIN
G C
ON
DIT
ION
S
This
re
po
rt
and
opin
ion
of
val
ue
are
subje
ct
to
ou
r L
imit
ing
Con
dit
ions
as i
ncl
ud
edin
Exh
ibit
A o
f th
is r
eport
.
Yours
fai
thfu
lly,
Jon
es
Lan
g L
aS
all
e S
all
man
ns
Lim
ited
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-2
9
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
24
EX
HIB
IT A
– L
IMIT
ING
CO
ND
ITIO
NS
1.
In
the
pre
par
atio
n
of
our
report
s,
we
reli
ed
on
the
accu
racy,
com
ple
ten
ess
and
reaso
nable
nes
s of
the
fin
anci
al in
form
atio
n,
fore
cast
, as
sum
pti
on
s an
d
oth
er
dat
a,
pro
vid
ed
to
us
by
the
Com
pan
y/e
ngag
emen
t par
ties
and/o
r it
s re
pre
senta
tives
.W
e did
not
carr
y o
ut
any
work
in t
he
nat
ure
of
an a
udit
and n
eith
er a
re
we
requ
ired
to e
xpre
ss a
nau
dit
or
via
bil
ity o
pin
ion
. W
e t
ake n
o
resp
onsi
bil
ity
for
the
accu
racy
of
such
in
form
atio
n.
The
resp
onsi
bil
ity fo
r det
erm
inin
gth
e val
ues
re
sts
sole
lyw
ith th
e
Com
pan
y/e
ngag
emen
t par
ties
an
d o
ur
rep
ort
s w
ere
only
use
d a
s
par
t of
the
Com
pan
y’s
/en
gag
emen
t par
ties
’an
aly
sis
in r
each
ing
thei
r co
ncl
usi
on o
f val
ue.
2.
We
hav
e ex
pla
ined
as
par
t of
our
serv
ice
engag
emen
t pro
ced
ure
s
that
it
is t
he
dir
ecto
r’s
resp
onsi
bil
ity t
oen
sure
pro
per
books
of
acco
unts
are
mai
nta
ined
,an
d
the
fin
anci
al
info
rmat
ion
and
fore
cast
giv
ea
true
and
fair
/rea
son
able
vie
w
and
hav
e been
pre
par
ed
in
acco
rdan
ce
wit
h
the
rele
van
t st
andar
ds
and
com
pan
ies
ord
inan
ce.
3.
Pu
bli
c in
form
atio
n a
nd
ind
ust
ry a
nd
stat
isti
cal
info
rmat
ion h
ave
bee
n o
bta
ined
fro
m s
ourc
es w
e d
eem
to b
e re
puta
ble
;h
ow
ever
we
mak
e no
rep
rese
nta
tion
as
to t
he
accu
racy
or
com
ple
tenes
s of
such
in
form
atio
n,
and h
ave
acce
pte
d t
he
info
rmat
ion w
ithout
any
ver
ific
atio
n.
4.
Th
e m
anag
emen
t of
the
Com
pan
y/e
ngag
emen
t p
arti
es
have
revie
wed
an
d a
gre
ed o
n t
he
repo
rt a
nd c
onfi
rmed
th
at t
he
bas
is,
assu
mpti
ons,
calc
ula
tions
and
re
sult
s ar
e ap
pro
pri
ate
and
reas
on
able
.
5.
Jones
Lan
gL
aSal
le S
allm
anns
Lim
ited
shal
l not
be
requ
ired
to
giv
e te
stim
ony
or
atte
nd
ance
in
co
urt
or
to
any
gover
nm
ent
agen
cy b
y r
easo
n o
fth
is e
xer
cise
, w
ith r
efer
ence
to t
he
pro
ject
des
crib
ed h
erei
n u
nle
ss p
rior
arra
ngem
ents
hav
e b
een m
ade.
6.
No o
pin
ion
is
inte
nded
to b
eex
pre
ssed
fo
r m
atte
rs w
hic
h r
equir
e
legal
or
oth
er s
pec
iali
sed
exper
tise
or
know
ledge,
bey
ond w
hat
is
cust
om
aril
y e
mplo
yed
by
val
uer
s.
7.
Th
e u
se
of
the
repo
rt
is
subje
ct
to
the
term
s of
engag
emen
t
lett
er/p
roposa
l an
d t
he
full
sett
lem
ent
of
the
fees
.
8.
Our
concl
usi
on
sas
sum
eco
nti
nuat
ion
of
pru
den
t m
anag
emen
t
poli
cies
over
what
ever
per
iod of
tim
e th
at is
co
nsi
der
ed to
be
nec
essa
ry i
n o
rder
to m
ainta
in t
he
char
acte
ran
d i
nte
gri
ty o
f th
e
asse
ts v
alued
.
9.
We
assu
me t
hat
ther
ear
e no hid
den
or
un
exp
ecte
dco
ndit
ions
asso
ciat
ed
wit
h
the
sub
ject
m
atte
runder
revie
w
that
m
ight
adver
sely
affe
ct t
he
rep
ort
edre
vie
w r
esu
lt.
Fu
rther
, w
eas
sum
e
no
resp
onsi
bil
ity
for
chan
ges
in
mar
ket
co
ndit
ions
afte
r th
e
Val
uat
ion /
Ref
eren
ceD
ate.
We
can
not
pro
vid
e as
sura
nce
on t
he
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
0
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
25
achie
vab
ilit
y
of
the
resu
lts
fore
cast
ed
by
th
e C
om
pan
y/
eng
agem
ent
par
ties
bec
ause
even
ts a
nd c
ircu
mst
ance
s fr
equen
tly
do n
ot
occ
ur
as e
xp
ecte
d;
dif
fere
nce
bet
wee
n a
ctual
and
exp
ect
ed
resu
lts
may
be
mat
eria
l;an
d a
chie
vem
ent
of
the
fore
cast
ed r
esu
lts
is d
epen
den
t on a
ctio
ns,
pla
ns
and a
ssu
mp
tio
ns
of
man
agem
ent.
10.
This
rep
ort
has
bee
n p
rep
ared
sole
ly f
or
the
inte
rnal
use
purp
ose
.
The
rep
ort
should
not
be
oth
erw
ise
refe
rred
to,
in w
hole
or
in p
art,
or
quote
d i
n a
ny d
ocu
men
t, c
ircu
lar
or
stat
emen
t in
any m
ann
er,
or
dis
trib
ute
d i
n w
hole
or
inp
art
or
copie
dto
any
thei
r par
ty
wit
hout
our
pri
or
wri
tten
co
nse
nt.
W
e sh
all
not
under
an
y
circ
um
stan
ces
wh
atso
ever
be
liab
le t
o a
ny t
hir
dpar
ty.
11.
This
re
port
is
co
nfi
den
tial
to
th
e cl
ien
t an
dth
eca
lcula
tion
of
val
ues
expre
ssed
her
ein i
s v
alid
only
for
the
purp
ose
sta
ted
in t
he
eng
agem
ent
lett
er/o
r pro
posa
las
of
the
val
uat
ion /
ref
eren
ce d
ate.
In a
ccord
ance
wit
h o
ur
stan
dar
d p
ract
ice,
we
mu
st s
tate
that
this
rep
ort
an
d e
xer
cise
is
for
the
use
only
by
the
par
ty t
o w
hom
it
is
add
ress
ed
and
for
speci
fic
purp
ose
an
d
no
resp
onsi
bil
ity
is
acce
pte
d w
ith r
esp
ect
to a
ny t
hir
d p
arty
for
the
whole
or
any p
art
of
its
conte
nts
.
12.
Wh
ere
a dis
tinct
and d
efin
ite
repre
senta
tio
n h
as b
een
mad
e to
us
by p
arty
/par
ties
inte
rest
ed i
n t
he
asse
ts v
alu
ed,
we
are e
nti
tled
to
rely
on
that
rep
rese
nta
tion w
ithou
tfu
rther
inves
tigat
ion i
nto
the
ver
acit
y o
f th
e re
pre
senta
tion.
13.
You a
gre
e to
in
dem
nif
y a
nd h
old
us
har
mle
ss a
gai
nst
and f
rom
any
and
all
loss
es,
clai
ms,
ac
tions,
dam
ages
,expen
ses
or
liab
ilit
ies,
incl
udin
g r
easo
nab
leat
torn
ey’s
fee
s, t
o w
hic
h w
e m
ay
bec
om
e su
bje
cts
in
connec
tion
w
ith
this
en
gagem
ent.
In
th
e
even
t w
ear
e
sub
ject
to
an
y
liab
ilit
yin
co
nn
ecti
on
wit
h
this
engag
emen
t, s
uch
liab
ilit
y w
ill
be
lim
ited
to
the
amo
unt
of
fee
we
rece
ived
for
this
en
gag
emen
t.
14.
We
are
not
envir
onm
enta
l co
nsu
ltan
ts o
r au
dit
ors
,an
d w
e ta
ke
no
resp
onsi
bil
ity f
or
any
actu
al
or
pote
nti
al e
nvir
on
men
tal
liab
ilit
ies
exis
t, a
nd t
he
effe
ct o
nth
e val
ue
of
the
ass
et i
s en
coura
ged
to
obta
in
a pro
fess
ional
en
vir
onm
enta
l as
sess
men
t.W
e do
not
conduct
or
pro
vid
e en
vir
on
men
tal
asse
ssm
ents
an
d
hav
e not
per
form
ed o
ne
for
the
sub
ject
pro
per
ty.
15.
Th
is
exer
cise
is
pre
mis
edin
par
t on
the
his
tori
cal
finan
cial
info
rmat
ion a
nd f
utu
re f
ore
cast
pro
vid
ed b
y t
he
man
agem
ent
of
the
Com
pan
y/e
ngag
emen
t par
ties
. W
e h
ave
assu
med
the
acc
ura
cy
and r
easo
nab
leness
of
the
info
rmat
ion
pro
vid
ed a
nd r
elie
d t
o a
consi
der
able
exte
nt
on
such
in
form
atio
n
in
arri
vin
gat
ou
r
calc
ula
tion
of
val
ue.
Sin
ce p
roje
ctio
ns
rela
te t
oth
e fu
ture
, th
ere
wil
lusu
ally
be
dif
fere
nce
s b
etw
een p
roje
ctio
ns
and a
ctu
al r
esult
s
and
in
som
e ca
ses,
and
those
var
iances
may
b
e m
ater
ial.
Acc
ord
ingly
, to
the
exte
nt
any
of
the
abo
ve
men
tio
ned
info
rmat
ion
requir
es a
dju
stm
ents
, th
e re
sult
ing v
alue
may d
iffe
r
sign
ific
antl
y.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
1
Sok
or
Gold
Pro
ject
Valu
ati
on
Rep
ort
–F
air
Mar
ket
Valu
e
26
16.
Act
ual
tra
nsa
ctio
ns
involv
ing t
he
sub
ject
ass
ets
/ busi
nes
s m
ight
be
con
cluded
at
a
hig
her
or
low
er val
ue,
d
epen
din
g upon
th
e
circ
um
stan
ces
of
the
tran
sact
ion
and
the
busi
nes
s,
and
the
know
led
ge
and
mo
tivat
ion o
f th
e buyer
san
d s
elle
rs a
t th
at t
ime
and
ther
efore
not
nec
essa
ry c
lose
to
the
val
ue
calc
ula
ted i
n t
his
rep
ort
.
17.
This
rep
ort
and t
he
concl
usi
on o
f val
ues
arri
ved
at
her
ein a
re f
or
the
excl
usi
ve
use
of
ou
r cl
ient
for
the
sole
and
spec
ific
purp
ose
s
asnote
d
her
ein.
F
urt
her
more
, th
ere
port
an
d
concl
usi
on
of
val
ues
ar
enot
inte
nded
by
the
auth
or,
an
d
should
not
be
con
stru
ed by th
e re
ader
, to
b
ein
ves
tmen
t ad
vic
e and fo
r an
y
inves
tmen
t pu
rpose
in a
ny m
anner
wh
atso
ever
. T
he
concl
usi
on o
f
val
ues
re
pre
sents
th
e consi
der
atio
n
bas
ed
on
info
rmat
ion
furn
ished
by t
he
Com
pan
y/e
ng
agem
ent
par
ties
and
oth
er s
ourc
es.
18.
The
val
uat
ion c
onta
ins
calc
ula
tion
s an
dfo
reca
sts
bas
ed o
n d
ata
pro
vid
ed
by
the
CN
MC
, as
wel
las
those
co
nta
ined
in
the
Indep
end
ent
Tec
hnic
al R
evie
w –
So
kor
Gold
Pro
ject
(th
e “I
TR
’)
dat
ed 1
2 A
ugust
201
1,
pre
par
edb
y B
ehre
Do
lbear
Aust
rali
a P
ty
Lim
ited
(“B
DA
”).
19.
The
con
clusi
on
of
val
ue
is
bas
ed
on
acce
pte
dval
uat
ion
pro
ced
ure
s an
d pra
ctic
es
that
re
ly su
bst
anti
ally
on
the
use
of
num
erous
assu
mpti
on
s an
dco
nsi
der
atio
n o
f var
ious
fact
ors
th
at
are
rele
van
t to
th
e S
okor
go
ld
op
erat
ion
and
the
Com
pan
y.
Consi
der
atio
ns
of
var
ious
risk
s an
d
unce
rtai
nti
es
that
hav
e
pote
nti
al i
mpac
t on t
he
busi
nes
s hav
e al
so b
een m
ade.
20.
No o
pin
ion h
as b
een e
xpre
ssed
on
mat
ters
that
req
uir
e le
gal
or
oth
ersp
ecia
lise
d
exp
erti
se
or
kn
ow
ledge,
bey
ond
w
hat
is
cust
om
aril
y
emplo
yed
by
val
uer
s.
Th
e co
ncl
usi
ons
assu
me
conti
nuat
ion
of
pru
den
t an
d
com
pet
ent
man
agem
ent
over
what
ever
per
iod
of
tim
e th
at
is
reas
on
able
an
d
nec
essa
ry
to
effi
cien
tly d
evel
op a
nd o
per
ate
the
pro
ject
in o
rder
to m
axim
ise
the
econo
mic
ben
efit
s of
the
asse
tsth
at h
ave
bee
n v
alu
ed.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
2
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
27
EX
HIB
IT B
– V
AL
UE
RS
’ B
IOG
RA
PH
Y
Rob
ert
G.
Ad
am
son
____
____
____
____
____
____
____
____
____
____
________
____
____
____
____
___
_____
____
____
____
_______
_____
____
____
____
__
Pri
nci
pal
Consu
ltan
t
Qu
ali
fica
tion
BS
c, M
Sc
(Hon
s)G
eolo
gy,
Mem
ber
of
AusI
MM
, M
ember
of
MM
ICA
, C
har
tere
dP
rofe
ssio
nal
(G
eolo
gy)
Exp
erie
nce
Rob
ert
has
over
40 y
ears
of
pro
fess
ional
exp
erie
nce
in
the
min
eral
indust
ry a
s a
geo
logic
al c
onsu
ltan
t, a
nd i
n e
xplo
rati
on a
nd c
orp
ora
te
man
agem
ent.
H
e has
work
ed w
ith m
ajo
r m
inin
ghouse
s an
d j
unio
r co
mpan
ies
on n
um
ero
us
explo
rati
on a
nd c
onsu
ltin
g p
roje
cts
for
gold
,
dia
monds,
ura
niu
m a
nd o
ther
min
eral
s, a
nd h
as e
xp
erie
nce
in t
he
und
ergro
und a
nd s
urf
ace
min
ing o
f th
ese
com
modit
ies.
In p
arti
cula
r,
Rob
ert
has
more
than
30 y
ears
of
exp
erie
nce
in g
old
explo
rati
on,
min
ing a
nd p
roje
ct v
aluat
ion.
He
is a
lso
exper
ience
din
the
esti
mat
ion o
f
min
eral
res
ou
rces
and r
ese
rves
and
in e
xplo
rati
on p
roper
tyap
pra
isal
s.R
ober
t has
auth
ore
d a
num
ber
of
Indep
enden
t G
eolo
gic
alan
d E
xper
t
Wit
nes
s R
eport
san
d m
iner
al p
roper
ty v
aluat
ions.
He
has
work
ed t
hro
ugh
out
Au
stra
lia
and i
n N
ew Z
eala
nd,
south
ern
and e
ast
Afr
ica,
Yuk
on
Ter
rito
ry(C
anad
a),
PN
G, th
e P
hil
ippin
es,K
ore
a an
d C
hin
a.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
3
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
28
Sim
on
M.K
.C
han
__
____
____
____
____
________
____
____
____
____
____
____
____
____
____
________
____
____
____
____
___
_____
____
____
____
______
Regio
nal
Dir
ecto
r, J
ones
Lan
gL
aS
alle
Sal
lman
ns
Lim
ited
Qu
ali
fica
tion
B. C
om
mer
ce, C
PA
, F
CP
A(A
ust
.), M
ember
of
CIM
, M
em
ber
of
IAC
VA
Exp
erie
nce
Sim
on i
spre
sen
tly
the
Dir
ecto
r of
the
Busi
nes
s V
aluat
ion a
nd C
orp
ora
te C
onsu
ltan
cy D
ivis
ion
of
Jones
Lan
g L
aSal
le S
allm
ann
s. H
e h
as
exte
nsi
ve
work
exp
erie
nce
in v
aluat
ion a
nd c
orp
ora
tead
vis
ory
ind
ust
ries
. S
imon h
as p
rovid
ed a
wid
e ra
nge
of
val
uat
ion s
ervic
es
to
nu
mer
ou
sli
sted
and l
isti
ng
com
pan
ies
of
dif
fere
nt
indu
stri
es i
n C
hin
a,H
on
g K
ong,
Sin
gap
ore
and t
he
Unit
edS
tate
s. T
he
val
uat
ion
serv
ices
pro
vid
edin
clude
firm
val
uat
ion,
equit
y v
aluat
ion,
min
ing r
ights
and m
iner
al a
sset
s val
uat
ion,
purc
has
e pri
ce a
lloca
tio
n, in
tangib
le
asse
t id
enti
fica
tion
an
d val
uat
ion (e
.g.
trad
emar
k,
cust
om
er bas
e, pat
ent,
et
c.),
bio
logic
al ass
et val
uat
ion,
curr
ent
asse
t an
d li
abil
ity
val
uat
ion
,good
wil
l an
d oth
eras
set
impai
rmen
tev
alu
atio
n,
conver
tible
bond
val
uat
ion
, em
plo
yee
shar
e op
tion val
uat
ion an
d oth
er
finan
cial
inst
rum
ent
val
uat
ion.
Sim
on
has
par
tici
pat
ed i
n c
erta
inla
rge
scal
e IP
Os
of
Sta
te-o
wn
edan
d p
rivat
ely-o
wn
eden
terp
rise
s in
Chin
a.
He
has
su
cces
sfu
lly
ass
iste
d v
ario
us
mult
inat
ional
com
pan
ies
inves
ted i
nC
hin
aan
d h
as p
rovid
ed d
iffe
rent
exte
nt
of
val
uab
le d
ue
dil
igen
ce
serv
ices
fo
rth
ese
com
pan
ies.
B
efore
jo
inin
g Jo
nes
L
ang
LaS
alle
S
allm
anns,
Sim
on h
as ac
cum
ula
ted
a lo
ng
per
iod of
pro
fess
ional
corp
ora
te f
inan
ce a
nd
acc
oun
ting e
xper
ience
in H
ong K
on
g,M
ain
land C
hin
a an
d t
he
Unit
ed S
tate
s.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
4
Sok
or
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
29
Ian
D B
uck
ing
ha
m
____
____
____
____
____
____
____
____
____
____
________
____
____
____
____
___
_____
____
____
____
________
____
____
____
____
___
__
Pri
nci
pal
Consu
ltan
t
Qu
ali
fica
tion
MB
A,
B.A
pp.S
c (A
ppli
ed G
eolo
gy),
Ass
oci
ates
hip
and
Fel
low
ship
Dip
lom
as i
n G
eolo
gy,
wit
h e
xtr
a su
bje
cts
in M
inin
g E
ngin
eeri
ng a
nd
M
etal
lurg
y,
Mem
ber
of
PE
SA
, M
ember
of
AA
PG
Exp
erie
nce
Ian h
as o
ver
40 y
ears
of
exper
ien
ce i
nth
e glo
bal
reso
urc
es i
ndust
ry.
Com
men
cing
his
car
eer
in b
ase
met
als,
gold
and
ura
niu
m e
xplo
rati
on h
em
oved
in
to g
as p
ipel
ine
des
ign
and t
hen
into
pet
role
um
explo
rati
on
an
d o
per
atio
ns.
In 1
987 h
e m
oved
into
sto
ck b
rok
ing
and
in
ves
tmen
tban
kin
g w
ith a
focu
s on t
he
min
ing a
nd e
ner
gy s
ecto
rs.
He
then
ret
urn
ed t
oth
e p
etro
leum
ind
ust
ry w
her
e he
man
aged
an A
SX
lis
ted
ex
plo
rati
on a
nd
pro
du
ctio
n c
om
pan
y a
nd
in 1
99
7,
foun
ded
the
Aust
rali
an o
ffic
e of
an i
nte
rnat
ional
man
agem
ent
consu
ltin
g o
rgan
isat
ion
wher
e he
wo
rked
on a
var
iety
of
assi
gnm
ents
in
volv
ing c
om
modit
ies
dev
elopm
ent
stra
tegie
s,d
ue
dil
igen
ce,
pro
ject
and a
sset
eval
uat
ions
and
val
uat
ions,
com
pan
y r
evie
ws,
cap
ital
rai
sings
and o
ften
act
ed i
nth
e ro
le o
f“S
pec
iali
st”
in s
uppo
rtin
g i
nd
epen
den
t A
dvis
ors
dur
ing c
orp
ora
te
acti
vit
ies.
In20
05,h
e es
tab
lish
ed a
nd l
iste
d a
gold
com
pan
y.
Ian i
s a
mem
ber
of
the
com
mit
tee
that
re-
wro
teth
e V
AL
MIN
Co
de
in 2
00
5.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
5
Sokor
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
30
EX
HIB
IT C
– V
AL
UE
RS
’ P
RO
FE
SS
ION
AL
DE
CL
AR
AT
ION
The
foll
ow
ing
val
uer
s cer
tify
, to
the
bes
t o
f th
eir
kno
wle
dge
and
bel
ief,
th
at:
−In
form
atio
n h
as b
een o
bta
ined
from
sou
rces
that
are
bel
ieved
to b
e re
liab
le.
All
fact
s th
at h
ave
a bear
ing
on t
he
val
ue
concl
uded
hav
e bee
n
con
sider
ed b
y t
he
val
uer
sand n
o i
mport
ant
fact
s h
ave
bee
n i
nte
nti
onal
lydis
regar
ded
.
−T
he
report
ed a
nal
yse
s, o
pin
ions,
and
co
ncl
usi
ons
are
sub
ject
to
the
assu
mpti
ons
asst
ated
in t
he
rep
ort
an
d b
ased
on t
he
val
uer
s' p
erso
nal
,
unbia
sed p
rofe
ssio
nal
anal
yse
s, o
pin
ions,
and c
oncl
usi
ons.
The
val
uat
ion e
xer
cise
is
also
bou
nded
by t
he
lim
itin
g c
ondit
ions.
−T
he
repo
rted
an
alyse
s,o
pin
ion
s, a
nd c
oncl
usi
on
s ar
e in
dep
enden
t an
d o
bje
ctiv
e.
−T
he
val
uer
s h
ave
no
pre
sent
or
pro
spec
tive
inte
rest
in t
he
asse
t th
at i
sth
e su
bje
ct o
f th
isre
port
, an
d h
ave
no p
erso
nal
inte
rest
or
bia
s w
ith
resp
ect
to t
he
par
ties
involv
ed.
−T
he
val
uer
s’ c
om
pen
sati
on
is n
ot
conti
ngen
t up
on t
he
amount
of
the
val
ue
est
imat
e, t
he
atta
inm
ent
of
a st
ipula
ted r
esult
,th
e occ
urr
ence
of
a
subse
quen
tev
ent,
or
the
report
ing o
f a
pre
det
erm
ined
val
ue
or
dir
ecti
on i
nval
ue
that
fav
ours
th
eca
use
of
the
clie
nt.
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
6
Sokor
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
31
−T
he
anal
yse
s, o
pin
ions,
an
d c
oncl
usi
on
sw
ere d
evel
op
ed,
and t
his
rep
ort
has
bee
n p
rep
ared
, in
acco
rdan
ce w
ith
the
Inte
rnat
ional
Val
uat
ion
Sta
ndar
ds
publi
shed
by t
he
Inte
rnat
ion
alV
aluat
ion S
tand
ard
s C
om
mit
tee.
−T
he
under
men
tion
ed p
erso
ns
pro
vid
ed p
rofe
ssio
nal
ass
ista
nce
in t
he
com
pil
atio
n o
f th
is r
eport
.
Rob
ert
G.A
dam
son
Pri
nci
pal
Consu
ltan
t
Ian
D.B
uck
ingh
am
Pri
nci
pal
Co
nsu
ltan
t
Sim
on
M. K
. C
han
Reg
ional
Dir
ecto
r
Kaim
ing C
hia
ng
Sen
ior
Fin
anci
al A
nal
yst
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
7
Sokor
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
32
Val
uer
’s D
ecla
rati
on I
I:
I, R
ob
ert
G. A
dam
son
, her
eby c
erti
fy t
hat
:
1.
I hav
ere
ad t
he
def
init
ion
of
“Exp
ert
and S
pec
iali
st”
set
out
inth
e V
AL
MIN
Code
and c
erti
fy,
by r
easo
n o
f m
y e
duca
tion
, af
fili
atio
nw
ith
a p
rofe
ssio
nal
ass
oci
atio
n a
nd p
ast
rele
van
t w
ork
exper
ience
, th
atI
fulf
ill
the
req
uir
emen
ts t
obe
an “
Exper
t” f
or
the
purp
ose
of
the
VA
LM
IN C
ode.
2.
I am
res
ponsi
ble
for
the
pre
par
atio
n o
f al
l p
ort
ion
sof
this
val
uat
ion r
eport
.
3.
Ihav
e re
ad t
he
VA
LM
INC
ode
and t
he
val
uat
ion r
eport
has
bee
n p
repar
edin
acc
ord
ance
wit
h t
he
VA
LM
INC
od
e.
4.
I am
a m
emb
erof
the
AusI
MM
.I
hav
em
ore
than
40
yea
rs o
f ex
per
ience
in t
he
min
ing i
ndu
stry
.
5.
I am
not
awar
e of
any
mat
eria
l fa
ct o
r m
ater
ial
chan
ge
wit
h r
espec
t to
the
sub
ject
mat
ter
of
the
val
uat
ion r
eport
that
is
not
refl
ecte
d i
nth
e val
uat
ion r
epo
rt, th
at a
fai
lure
to
dis
clo
sew
ould
mak
e th
e val
uat
ion
rep
ort
mis
lead
ing.
6.
Iam
indep
enden
t of
the
Com
pan
y a
nd t
he
Cli
ent,
in c
om
pli
ance
wit
h C
lau
se 2
4 o
f th
e V
AL
MIN
Code.
Rober
t G
.A
dam
son
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
8
Sok
or
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
33
I,S
imo
n M
. K
. C
han
, h
ereb
yce
rtif
y t
hat
:
1.
Ihav
ere
ad t
he
def
init
ion o
f“E
xper
t an
dS
pec
iali
st”
set
out
inth
e V
AL
MIN
Co
de
and c
erti
fy,
by r
easo
n o
fm
y e
duca
tion,
affi
liat
ion
wit
h a
pro
fess
ional
ass
oci
atio
n a
nd p
ast
rele
van
t w
ork
exper
ience
, I
fulf
ill
the
requ
irem
ents
to b
e a
“Spec
iali
st”
for
the
purp
ose
of
the
VA
LM
IN C
ode.
2.
I am
resp
onsi
ble
for
the
revie
w o
f th
isval
uat
ion r
eport
.
3.
I hav
e re
ad t
he
VA
LM
INC
ode
and
the
val
uat
ion
report
has
bee
npre
par
ed i
n a
cco
rdan
ce w
ith t
he
VA
LM
IN C
ode.
4.
I am
a c
erti
fied
pub
lic
acco
unta
nt
in H
ong K
on
g (
HK
ICP
A)
and A
ust
rali
a (A
SC
PA
), a
nd I
am a
lso a
mem
ber
of
the
CIM
and I
AC
VA
.I
hav
eex
ten
sive
work
exp
erie
nce
in v
alu
atio
nan
d c
orp
ora
te a
dvis
ory
indu
stry
.
5.
I am
not
awar
e o
f an
ym
ater
ial
fact
or
mat
eria
l ch
ange
wit
h r
espec
t to
the
sub
ject
mat
ter
of
the
repo
rt t
hat
is
no
t re
flec
ted i
n t
he
report
,th
at a
fai
lure
to d
iscl
ose
wo
uld
mak
e th
e re
port
mis
lead
ing.
6.
I am
indep
enden
t of
the
Com
pan
y a
nd t
he
Cli
ent
in c
om
pli
ance
wit
h C
lause
24 o
f th
e V
AL
MIN
Co
de.
Sim
on M
.K
. C
han
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-3
9
Sok
or
Gold
Pro
ject
Val
uat
ion R
eport
– F
air
Mar
ket
Val
ue
34
I,Ia
n D
. B
uck
ingh
am,her
eby c
erti
fy t
hat
:
1.
Ihav
ere
ad t
he
def
init
ion o
f“E
xper
t an
dS
pec
iali
st”
set
out
inth
e V
AL
MIN
Co
de
and c
erti
fy,
by r
easo
n o
fm
y e
duca
tion,
affi
liat
ion
wit
h a
pro
fess
ional
ass
oci
atio
n a
nd
pas
t re
levan
t w
ork
exp
erie
nce
, I
fulf
ill
the
req
uir
emen
ts t
o b
e a
“Rep
rese
nta
tive
Exp
ert”
for
the
purp
ose
of
the
VA
LM
IN C
ode.
2.
I am
resp
onsi
ble
for
the
revie
w o
f th
isval
uat
ion r
eport
.
3.
I hav
e re
ad t
he
VA
LM
INC
ode
and
the
val
uat
ion
report
has
bee
npre
par
ed i
n a
cco
rdan
ce w
ith t
he
VA
LM
IN C
ode.
4.
I am
a m
emb
erof
the
AA
PG
an
d P
ES
A.I
hav
e m
ore
than
40 y
ears
of
exp
erie
nce
in t
he
min
ing i
ndust
ry.
5.
I am
not
awar
e o
f an
ym
ater
ial
fact
or
mat
eria
l ch
ange
wit
h r
espec
t to
the
sub
ject
mat
ter
of
the
repo
rt t
hat
is
no
t re
flec
ted i
n t
he
report
,th
at a
fai
lure
to d
iscl
ose
wo
uld
mak
e th
e re
po
rt m
isle
adin
g.
6.
I am
indep
enden
t of
the
Com
pan
y a
nd t
he
Cli
ent
in c
om
pli
ance
wit
h C
lause
24 o
f th
e V
AL
MIN
Co
de.
Ian D
.B
uck
ingham
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-4
0
Sok
or
Gold
Pro
ject
Valu
ati
on R
eport
– F
air
Mar
ket
Valu
e
35
AP
PE
ND
IX A
– G
LO
SS
AR
Y
Ter
m/
Abb
revia
tio
nD
escr
ipti
on
Au
G
old
B
DA
Beh
reD
olb
ear
Aust
rali
a P
ty L
imit
ed
CIL
C
arb
on-i
n-l
each
CM
NM
C
MN
M M
inin
g G
roup
Sdn. B
hd
.
Co
mp
any
CN
MC
Go
ldm
ine
Lim
ited
g/t
Gra
ms
per
to
nne
ITR
In
dep
enden
t T
echn
ical
Rev
iew
JLL
S
Jones
Lan
g L
aSal
leS
allm
ann
s
JOR
C C
od
eJo
int
Ore
Res
erv
e C
om
mit
tee
(Aust
rali
a M
iner
alR
eso
urc
e an
dO
re R
eser
ve)
Cod
e
km
K
ilo
met
er
km
2S
qu
are
kil
om
eter
kt
Kil
o-t
onn
e
ko
zs
Kil
o-o
unce
KS
ED
CK
elan
tan S
tate
Eco
no
mic
Dev
elop
men
t C
orp
ora
tio
n
m
Met
er
m3
Cub
ic m
eter
Mt
Meg
a-to
nne
ozs
O
un
ce
t T
onn
e
tpa
Tonn
e p
eran
num
VA
LM
IN C
od
eC
od
e fo
r th
e T
echnic
al A
sses
smen
t an
dV
aluat
ion
of
Min
eral
and P
etro
leum
Ass
ets
and
Sec
uri
ties
for
Ind
epen
den
t
Exp
ert
Rep
ort
s 20
05 E
dit
ion
Val
uat
ion D
ate
31
Au
gu
st 2
01
1
AP
PE
ND
IX G
– IN
DE
PE
ND
EN
T V
AL
UA
TIO
N R
EP
OR
T
G-4
1
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-1
RULES OF THE CNMC PERFORMANCE SHARE PLAN
1. NAME OF THE PERFORMANCE SHARE PLAN
The Performance Share Plan shall be called the “CNMC Performance Share Plan”.
2. DEFINITIONS
2.1 In the CNMC Performance Share Plan, unless the context otherwise requires, the following wordsand expressions shall have the following meanings:
“Adoption Date” : The date on which the CNMC Performance Share Plan isadopted by the Company in general meeting
“Articles” : The articles of association the Company, as may beamended, varied or supplemented from time to time
“Associate” : (a) in relation to any director, chief executive officer,substantial or controlling shareholder of a corporation(being an individual) means:
(i) his immediate family;
(ii) a trustee, acting in his capacity as such trustee,of any trust of which the individual or hisimmediate family is a beneficiary or, in the caseof a discretionary trust, is a discretionaryobject; and
(iii) any corporation in which he and his immediatefamily (directly or indirectly) have interests invoting shares of an aggregate of not less than30% of the total votes attached to all votingshares
(b) in relation to a substantial shareholder or controllingshareholder of a corporation (being a corporation)any other corporation which is its subsidiary orholding company or is a subsidiary of such holdingcompany or one in the equity of which it and/or suchother company or companies taken together (directlyor indirectly) have interests in voting shares of anaggregate of not less than 30% of the total votesattached to all voting shares
“Associated Company” : A company in which at least 20% but not more than 50% ofits shares are held by the Company and over which theCompany has control
“Associated Company Employees” : Any director and/or confirmed employee of an AssociatedCompany selected by the Awards Committee to participatein the CNMC Performance Share Plan in accordance withthe terms and conditions set out herein
“Auditors” : The auditors of the Company for the time being
“Award” : A contingent award of Shares granted under Rule 5
“Award Date” : In relation to an Award, the date on which the Award isgranted pursuant to Rule 5
“Award Letter” : A letter in such form as the Awards Committee shallapprove confirming an Award granted to a Participant by theAwards Committee
“Awards Committee” : A committee comprising directors of the Company, dulyauthorised, appointed and nominated by the Board toadminister the CNMC Performance Share Plan, which shallbe the remuneration committee of the Company from timeto time
“Board” or “Directors” : The board of directors of the Company for the time being
“Catalist” : The sponsor-supervised listing platform of the SGX-ST
“Catalist Rules” : Any or all of the rules in the Section B: Rules of Catalist ofthe Listing Manual of the SGX-ST, as may be amended,varied or supplemented from time to time
“CDP” : The Central Depository (Pte) Limited
“CNMC Performance Share : The CNMC Performance Share Plan, as the same may be Plan” modified or altered from time to time
“Companies Act” : The Companies Act, Chapter 50 of Singapore, as may beamended, varied or supplemented from time to time
“Company” : CNMC Goldmine Holdings Limited
“Control” : The capacity to dominate decision-making, directly orindirectly, in relation to the financial and operating policies ofthe Company
“Controlling Shareholder” : A person who (a) holds directly or indirectly 15% or more ofthe aggregate of the votes attached to all the voting Sharesin the Company (unless determined otherwise by the SGX-ST); or (b) in fact exercises Control over the Company
“Group” : The Company and its subsidiaries
“Group Employee” : Any confirmed employee of the Group (including any GroupExecutive Director) selected by the Awards Committee toparticipate in the CNMC Performance Share Plan inaccordance with Rule 4
“Group Executive Director” : A director of the Company and/or any of its subsidiaries, asthe case may be, who performs an executive function withinthe Company and/or the relevant subsidiaries, as the casemay be
“Group Non-Executive Director” : A director of the Company and/or any of its subsidiaries, asthe case may be, who is not a Group Executive Director,including independent directors
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-2
“New Shares” : The new Shares which may be allotted and issued fromtime to time pursuant to the vesting of the Awards grantedunder the CNMC Performance Share Plan
“Market Day” : A day on which the SGX-ST is open for trading in securities
“Market Value” : In relation to a Share, on any day:
(a) the average price of a Share on the SGX-ST over thefive (5) immediately preceding Trading Days; or
(b) if the Awards Committee is of the opinion that theMarket Value as determined in accordance with (a)above is not representative of the value of a Share,such price as the Awards Committee may determine,such determination to be confirmed in writing by theAuditors (acting only as experts and not asarbitrators) to be in their opinion, fair and reasonable
“Participant” : A person who has been granted an Award pursuant to theCNMC Performance Share Plan
“Performance Condition” : The performance condition prescribed by the AwardsCommittee to be fulfilled by a Participant within the relevantPerformance Period
“Performance Period” : The performance target(s) prescribed by the AwardsCommittee to be fulfilled by a Participant for any particularperiod under the CNMC Performance Share Plan
“Record Date” : In relation to any dividends, right allotment or otherdistributions, the date as at the close of business (or suchother time as may have been notified by the Company) onwhich the Shareholders must be registered with theCompany or with CDP, as the case may be, in order toparticipate in such dividends, rights, allotments or otherdistributions
“Release” : In relation to an Award, the release at the end of thePerformance Period relating to the Award of all or some ofthe Shares to which that Award relates in accordance withRule 7 and, to the extent that any Shares which are thesubject of the Award are not released pursuant to Rule 7,the Award in relation to those Shares shall lapseaccordingly, and “Released” shall be construed accordingly
“Release Schedule” : In relation to an Award, a schedule in such form as theAwards Committee shall approve, setting out the extent towhich Shares which are the subject of that Award shall beReleased on the Performance Condition being satisfied(whether fully or partially) or exceeded or not beingsatisfied, as the case may be, at the end of thePerformance Period
“Released Award” : An award which has been released in accordance with Rule7
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-3
“Retention Period” : In relation to an Award, such period commencing on theVesting Date in relation to that Award as may be determinedby the Awards Committee on the Award Date
“Shareholders” : Registered holders of the Shares in the Register ofMembers of the Company, except that where the registeredholder is CDP, the term “Shareholders” shall, in relation tosuch Shares, mean the Depositors whose SecuritiesAccounts maintained with CDP are credited with Shares
“Shares” : Ordinary shares in the capital of the Company
“Substantial Shareholder” : A person which has an interest (as defined in theCompanies Act) in one or more voting shares of a companyand the total votes attached to that share, or those shares,is not less than 5% of the total votes attached to all thevoting shares in the company
“Trading Day” : A day on which the Shares are traded on the Catalist
“Vesting” : In relation to Shares which are the subject of a ReleasedAward, the absolute entitlement to all or some of the Shareswhich are the subject of a Released Award and “Vest” and“Vested” shall be construed accordingly
“Vesting Date” : In relation to Shares which are the subject of a ReleasedAward, the date (as determined by the Awards Committeeand notified to the relevant Participant) on which thoseShares have Vested pursuant to Rule 7
“S$” and “cents” : Singapore dollars and cents, respectively
“%” or “per cent” : Percentage or per centum
2.2 The terms “Depositor”, “Depository Register” and “Depository Agent” shall have the meaningsascribed to them respectively in Section 130A of the Companies Act. The term “associate” shallhave the meaning ascribed to it in the section headed, Definitions and Interpretation, of the CatalistRules.
2.3 Words importing the singular number shall, where applicable, include the plural and vice versa andwords importing the masculine gender shall, where applicable, include the feminine and neutergenders and vice versa. Words importing persons shall include corporations.
2.4 Any reference to a time of a day in the CNMC Performance Share Plan is a reference to Singaporetime, unless otherwise stated.
2.5 Any reference in the CNMC Performance Share Plan to any enactment is a reference to thatenactment as for the time being amended or re-enacted. Any word defined under the CompaniesAct or any statutory modification thereof and not otherwise defined in the CNMC PerformanceShare Plan and used in the CNMC Performance Share Plan shall, where applicable, have themeaning assigned to it under the Companies Act or any statutory modification thereof, as the casemay be.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-4
3. OBJECTIVES OF THE CNMC PERFORMANCE SHARE PLAN
The purpose of the CNMC Performance Share Plan is to provide an opportunity for GroupEmployees, who have met the Performance Conditions to be remunerated not just through cashbonuses but also by an equity stake in the Company.
The CNMC Performance Share Plan is primarily a share incentive scheme. It recognises the factthat the services of such Group Employee are important to the success and continued well-beingof the Group. Implementation of the CNMC Performance Share Plan will enable the Company togive recognition to the contributions made by such Group Employees. At the same time, it will givesuch Group Employees an opportunity to have a direct interest in the Company and will also helpto achieve the following positive objectives:
(a) to motivate each Participant to optimise his performance standards and efficiency and tomaintain a high level of contribution to the Group;
(b) to retain key employees and Group Executive Directors whose contributions are essential tothe long-term growth and profitability of the Group;
(c) to instill loyalty to and a stronger identification by the Participants with the long-termprosperity of the Company;
(d) to attract potential employees with relevant skills to contribute to the Group and to createvalue for the Shareholders; and
(e) to align the interests of the Participants with the interests of the Shareholders.
The Group believes that with the CNMC Performance Share Plan and any other share-basedincentive scheme which the Group may adopt, the Group is equipped with a set of flexibleremuneration tools, with which the Group would be better able to attract and retain talent.
4. ELIGIBILITY OF PARTICIPANTS
4.1 The following persons shall be eligible to participate in the CNMC Performance Share Plan at theabsolute discretion of the Awards Committee:
(a) Group Employee (including Group Executive Directors) who have attained the age of twenty-one (21) years on or prior to the relevant Award Date and are not undischarged bankruptsand have not entered into a composition with their respective creditors, shall be eligible toparticipate in the CNMC Performance Share Plan at the absolute discretion of the AwardsCommittee.
(b) Associated Company Employees (including the directors of the Associated Company) whohave attained the age of twenty-one (21) years on or prior to the relevant Award Date andare not undischarged bankrupts and have not entered into a composition with theirrespective creditors, shall be eligible to participate in the CNMC Performance Share Plan atthe absolute discretion of the Awards Committee.
(c) Directors and employees of the Company’s parent company and its subsidiaries who haveattained the age of twenty-one (21) years on or prior to the relevant Award Date and are notundischarged bankrupts and have not entered into a composition with their respectivecreditors, shall be eligible to participate in the CNMC Performance Share Plan at theabsolute discretion of the Awards Committee.
4.2 Controlling Shareholders and their Associates shall, if each such person meets the eligibilitycriteria in Rule 4.1, be eligible to participate in the CNMC Performance Share Plan, provided thatseparate approval of independent Shareholders is obtained for each such Participant in respect ofhis participation and the actual number of Shares comprised in the Awards and the terms thereof.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-5
4.3 Save as prescribed by Rules 853 of the Catalist Rules, there shall be no restriction on the eligibilityof any Participant to participate in any other share option or share incentive scheme, whether ornot implemented by any other companies within the Group.
4.4 Subject to the Companies Act and any requirement of the SGX-ST or any other stock exchange onwhich the Shares may be listed or quoted, the terms of eligibility for participation in the CNMCPerformance Share Plan may be amended from time to time at the absolute discretion of theAwards Committee.
4.5 Group Non-Executive Directors are not eligible to participate in the CNMC Performance SharePlan.
5. GRANT OF AWARDS
5.1 Except as provided in Rule 8, the Awards Committee may grant Awards to the Participants, as theAwards Committee may select, in its absolute discretion, at any time during the period when theCNMC Performance Share Plan is in force, except that the Awards Committee shall not grant anyAwards during the period commencing two (2) weeks before the announcement of the Company’sfinancial statements for each of the first three quarters of its financial year, or one (1) month beforethe announcement of the Company’s half-year or full-year financial statement, as the case may be,and ending on the date of announcement of the relevant result. In addition, in the event that anannouncement on any matter of an exceptional nature involving unpublished price sensitiveinformation is made, Awards may only be granted on or after the second Market Day on whichsuch announcement is made.
5.2 The number of Shares which are the subject of each Award to be granted to a Participant inaccordance with the CNMC Performance Share Plan shall be determined at the absolute discretionof the Awards Committee, which shall take into account criteria such as his rank, job performance,year(s) of service, potential for future development, his contribution to the success anddevelopment of the Group, the extent of effort with which the Performance Condition may beachieved within the Performance Period and the maximum entitlement of the Shares that can beawarded to a Participant under the CNMC Performance Share Plan and any other share-basedincentive scheme of the Company.
5.3 The Awards Committee shall decide in relation to an Award:
(a) the Participant;
(b) the Award Date;
(c) the Performance Period;
(d) the number of New Shares which are the subject of the Award;
(e) the Performance Condition;
(f) the Release Schedule; and
(g) any other condition(s) which the Awards Committee may determine in its discretion.
5.4 The Awards Committee may amend or waive the Performance Period and/or the PerformanceCondition in respect of any Award if anything happens which causes the Awards Committee toconclude that a changed Performance Period and/or Performance Condition would be a fairermeasure of performance and would be no less difficult to satisfy or the Performance Period and/orPerformance Conditions should be waived, and shall notify the Participants of such change orwaiver.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-6
5.5 As soon as reasonably practicable after an Award is finalised by the Awards Committee, theAwards Committee shall send to each Participant an Award Letter confirming the Award andspecifying in relation to the Award, inter alia, the following:
(a) the Award Date;
(b) the Performance Period;
(c) the number of Shares which are the subject of the Award;
(d) the Performance Condition;
(e) the Release Schedule; and
(f) any other condition which the Awards Committee may determine in its discretion.
5.6 Participants are not required to pay for the grant of Awards.
5.7 An Award or Released Award shall be personal to the Participant to whom it is granted and, priorto the allotment and/or transfer to the Participant of the Shares to which the Released Awardrelates, shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole orin part, except with the prior approval of the Awards Committee and if a Participant shall do, sufferor permit any such act or thing as a result of which he would or might be deprived of any rightsunder an Award or Released Award without the prior approval of the Awards Committee, thatAward or Released Award shall immediately lapse.
6. EVENTS PRIOR TO THE VESTING DATE
6.1 Notwithstanding that a Participant may have met his Performance Conditions, an Award shall, tothe extent not yet Released, immediately lapse without any claim whatsoever against theCompany:
(a) in the event of misconduct on the part of the Participant as determined by the AwardsCommittee in its discretion;
(b) in the event of the bankruptcy of the Participant or the happening of any other event whichresults in him being deprived of the legal or beneficial ownership of such Award;
(c) subject to Rule 6.2(a), upon the Participant ceasing to be in the employment of the Group orAssociated Company (as the case may be) for any reason whatsoever; or
(d) the completion of a fixed-term contract for a Participant (who is on a fixed-term contract);
(e) in the event of an order being made or a resolution passed for the winding-up of theCompany on the basis, or by reason, of its insolvency.
For the purpose of Rule 6.1(c), the Participant shall be deemed to have ceased to be so employedas of the date the notice of termination of employment is tendered by or is given to him, unlesssuch notice is withdrawn prior to its effective date.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-7
6.2 In any of the following events, namely:
(a) where the Participant ceases to be in the employment of the Group or Associated Company(as the case may be) by reason of:
(i) ill health, injury or disability (in each case, evidenced to the satisfaction of the AwardsCommittee);
(ii) redundancy;
(iii) retirement at or after the legal retirement age;
(iv) retirement before the legal retirement age with the consent of the Awards Committee;
(v) the company by which he is employed or to which he is seconded, as the case maybe, ceasing to be a company within the Group or the undertaking or part of theundertaking of such company being transferred otherwise than to another companywithin the Group; or
(vi) any other event approved by the Awards Committee;
(b) the death of a Participant; or
(c) any other event approved by the Awards Committee,
the Awards Committee may, in its absolute discretion, preserve all or any part of any Award ordeclare that an Award has lapsed and the Participant shall have no claim against the Company. Ifthe Awards Committee preserves all or any part of an Award, it shall decide as soon as reasonablypracticable following such event either to vest some or all of the Shares which are the subject ofany Award or to preserve all or part of any Award until the end of each vesting period subject tothe provisions of the CNMC Performance Share Plan. In exercising its discretion, the AwardsCommittee will have regard to all circumstances on a case-by-case basis including (but not limitedto) the contributions made by that Participant and the extent to which the Performance Conditionhas been satisfied.
7. RELEASE OF AWARDS
7.1 Review of Performance Condition
(a) As soon as reasonably practicable after the end of each Performance Period, the AwardsCommittee shall review the Performance Condition specified in respect of each Award anddetermine at its discretion whether it has been satisfied and, if so, the extent to which it hasbeen satisfied and provided that the relevant Participant continues to be a Group Employeeor Associated Company Employee (as the case may be) from the Award Date up to the endof the Performance Period, shall Release to that Participant all or part (as determined by theAwards Committee at its discretion in the case where the Awards Committee hasdetermined that there has been partial satisfaction of the Performance Condition) of theShares to which his Award relates in accordance with the Release Schedule specified inrespect of his Award on the Vesting Date. If not, the Awards shall lapse and be of no value.
If the Awards Committee determines in its sole discretion that the Performance Conditionhas not been satisfied or (subject to Rule 6) if the relevant Participant does not continue tobe a Group Employee or Associated Company Employee (as the case may be) from theAward Date up to the end of the relevant Performance Period, that Award shall lapse and beof no value and the provisions of Rules 7.2 to 7.4 shall be of no effect.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-8
The Awards Committee shall have the discretion to determine whether the PerformanceCondition has been satisfied (whether fully or partially) or exceeded, and in making any suchdetermination, the Awards Committee shall have the right to make computation adjustmentsto the audited results of the Company or the Group, to take into account such factors as theAwards Committee may determine to be relevant, including changes in accounting methods,taxes and extraordinary events, and further the right to amend the Performance Condition ifthe Awards Committee decides that a changed performance target would be a fairermeasure of performance.
(b) Shares which are the subject of a Released Award shall be vested to a Participant on theVesting Date, which shall be a Trading Day falling as soon as practicable after the review bythe Awards Committee referred to in Rule 7.1(a) and, on the Vesting Date, the AwardsCommittee will procure the allotment or transfer to each Participant of the number of Sharesso determined.
7.2 Release of Award
(a) Subject to the prevailing legislation and rules, guidelines and measures applicable to theCompany and the Catalist Rules, the Awards Committee may determine in its sole discretionto deliver the Shares to Participants upon the release of their Awards by way of:
(i) the issue and allotment to each Participant of the number of New Shares, deemed tobe fully paid or credited upon their issue and allotment;
(ii) delivering existing Shares to the Participant, whether such existing Shares areacquired pursuant to a share purchase mandate or (to the extent permitted by law)held as treasury shares or otherwise; and/or
(iii) payment of the aggregate Market Value of the Shares in cash in lieu of allotmentand/or transfer.
(b) In determining whether to issue New Shares or to purchase existing Shares for delivery toParticipants or the payment of the aggregate Market Value in cash to the Participant uponvesting of their Awards, the Awards Committee will take into account factors such as (but notlimited to) the number of Shares to be delivered, the prevailing market price of the Sharesand the cost to the Company of issuing New Shares or purchasing existing Shares or theamount of cash available to the Group.
(c) Subject to:
(i) such consents or other actions required by any competent authority under anyregulations or enactments for the time being in force as may be necessary (includingany approvals required from the SGX-ST); and
(ii) compliance with these Rules and the Articles, the Company shall, as soon aspracticable after the vesting of an Award but in any event within ten (10) Market Daysafter the vesting of an Award, allot the New Shares (if applicable) and despatch therelevant share certificates to CDP by ordinary post or such other mode of delivery asthe Awards Committee may deem fit.
(d) The Company shall, if necessary, as soon as practicable after such allotment referred to inRule 7.2, apply to the SGX-ST or any other stock exchange on which the Shares are quotedor listed, for permission to deal in and for quotation of the Shares.
(e) Shares which are allotted shall be issued, as the Participant may elect, in the name of CDPto the credit of the securities account of the Participant maintained with CDP, the securitiessub-account with a CDP Depository Agent or the CPF investment account maintained with aCPF agent bank.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-9
7.3 Ranking of Shares
New Shares allotted and issued and existing shares procured by the Company for transfer, uponthe release of an Award shall be subject to all provisions of the Articles and the Memorandum ofAssociation of the Company (including provisions relating to liquidation) and shall be eligible for allentitlements, including dividends or other distributions declared or recommended in respect of thethen existing Shares, the Record Date for which is on or after the relevant Vesting Date of theAward, and shall in all other respects rank pari passu with other existing Shares then in issue.
7.4 Cash Awards
The Awards Committee, in its absolute discretion, may determine to release an Award, wholly orpartly, in the form of cash rather than Shares, in which event the Participant shall receive on theVesting Date, in lieu of all or part of the Shares which would otherwise have been allotted ortransferred to him, the aggregate Market Value of such Shares on the Vesting Date.
7.5 Moratorium
Shares which are allotted and issued or transferred to a Participant pursuant to the Release of anAward shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or inpart, during the Retention Period, except to the extent set out in the Award Letter or with the priorapproval of the Awards Committee. The Company may take steps that it considers necessary orappropriate to enforce or give effect to this disposal restriction including specifying in the AwardLetter the conditions which are to be attached to an Award for the purpose of enforcing thisdisposal restriction.
8. LIMITATION ON THE SIZE OF THE CNMC PERFORMANCE SHARE PLAN
8.1 The aggregate nominal amount of New Shares which may be issued pursuant to the vesting of theAwards on any date, when added to the nominal amount of New Shares issued and issuable inrespect of:
(a) all Awards granted under the CNMC Performance Share Plan; and
(b) any other share-based incentive scheme of the Company,
shall not exceed 15% of the issued and paid-up share capital of the Company on the daypreceding that date.
The number of existing Shares purchased from the market which may be delivered pursuant toAwards granted under the CNMC Performance Share Plan, and the amount of cash which may bepaid upon the release of such Awards in lieu of the Shares, will not be subject to any limit, as suchmethods will not involve the issue of any New Shares.
8.2 In accordance with Rule 844 of the Catalist Rule, the following limits must not be exceeded:
(a) The aggregate number of Shares available to Controlling Shareholders and their Associatesshall not exceed 25% of the total number of Shares which may be granted under the CNMCPerformance Share Plan;
(b) The aggregate number of Shares available to each Controlling Shareholder or hisAssociates shall not exceed 10% of the total number of Shares which may be granted underthe CNMC Performance Share Plan; and
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-10
(c) Directors and employees of the Company’s parent company and subsidiaries are eligible toparticipate in the CNMC Performance Share Plan provided that (i) each grant to suchParticipant, if the number of Awards to be granted together with Awards already granted tosuch person under the CNMC Performance Share Plan, represents 5% or more of the totalnumber of Awards available to the aforesaid category of directors and employees; and (ii)the aggregate number of Awards to be made available for grant to all directors andemployees of the aforesaid category, shall be approved by the independent Shareholders ina separate resolution.
9. ADJUSTMENT EVENTS
9.1 If a variation in the issued ordinary share capital of the Company (whether by way of acapitalisation of profits or reserves or rights issue or reduction (including any reduction arising byreason of the Company purchasing or acquiring its issued Shares), subdivision, consolidation ordistribution, or otherwise howsoever) shall take place, then:
(a) the class and/or number of Shares which is/are the subject of an Award to the extent not yetVested; and/or
(b) the class and/or number of Shares in respect of which future Awards may be granted underthe CNMC Performance Share Plan,
shall be adjusted in such manner as the Awards Committee may determine to be appropriate,provided that no adjustment shall be made if as a result, the Participant receives a benefit that aShareholder does not receive.
9.2 Unless the Awards Committee considers an adjustment to be appropriate, the issue of securitiesas consideration for a private placement of securities or in connection with an acquisition of anyassets or upon the exercise of any options or conversion of any loan stock or any other securitiesconvertible into Shares or subscription rights of any warrants, or the cancellation of issued Sharespurchased or acquired by the Company by way of a market purchase of such Shares undertakenby the Company on the SGX-ST during the period when a share purchase mandate granted byShareholders (including any renewal of such mandate) is in force, shall not normally be regardedas a circumstance requiring adjustment.
9.3 Notwithstanding the provisions of Rule 9.1, no such adjustment shall be made (a) if as a result, theParticipant receives a benefit that a Shareholder does not receive; (b) unless the AwardsCommittee after considering all relevant circumstances considers it equitable to do so; and (c)unless the Auditors confirm in writing (acting as experts and not as arbitrators) that theadjustments (other than adjustments in relation to a capital issue) are fair and reasonable in theiropinion.
9.4 Upon any adjustment required to be made pursuant to this Rule 9, the Company shall notify theParticipant (or his duly appointed personal representatives where applicable) in writing and deliverto him (or his duly appointed personal representatives where applicable) a statement setting forththe nominal amount (if any), class and/or number of Shares thereafter to be issued or transferredon the Vesting of an Award. Any adjustment shall take effect upon such written notification beinggiven.
10. ADMINISTRATION OF THE CNMC PERFORMANCE SHARE PLAN
10.1 The CNMC Performance Share Plan shall be administered by the Awards Committee in itsabsolute discretion with such powers and duties as are conferred on it by the Board provided thatno member of the Awards Committee shall participate in any deliberation or decision in respect ofAwards granted or to be granted to him.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-11
10.2 The Awards Committee shall have the power, from time to time, to make and vary sucharrangements, guidelines and/or regulations (not being inconsistent with the CNMC PerformanceShare Plan) for the implementation and administration of the CNMC Performance Share Plan, togive effect to the provisions of the CNMC Performance Share Plan and/or to enhance the benefit ofthe Awards and the Released Awards to the Participants, as they may, in their absolute discretion,think fit. Any matter pertaining or pursuant to the CNMC Performance Share Plan and any disputeand uncertainty as to the interpretation of the CNMC Performance Share Plan, any rule, regulationor procedure thereunder or any rights under the CNMC Performance Share Plan shall bedetermined by the Awards Committee.
10.3 Neither the CNMC Performance Share Plan nor the grant of Awards under the CNMC PerformanceShare Plan shall impose on the Company or the Awards Committee or any of its members anyliability whatsoever in connection with:
(a) the lapsing of any Awards pursuant to any provision of the CNMC Performance Share Plan;
(b) the failure or refusal by the Awards Committee to exercise, or the exercise by the AwardsCommittee of, any discretion under the CNMC Performance Share Plan; and/or
(c) any decision or determination of the Awards Committee made pursuant to any provision ofthe CNMC Performance Share Plan.
10.4 Any decision or determination of the Awards Committee made pursuant to any provision of theCNMC Performance Share Plan (other than a matter to be certified by the Auditors) shall be final,binding and conclusive (including for the avoidance of doubt, any decisions pertaining to disputesas to the interpretation of the CNMC Performance Share Plan or any rule, regulation or procedurehereunder or as to any rights under the CNMC Performance Share Plan). The Awards Committeeshall not be required to furnish any reasons for any decision or determination made by it.
11. NOTICES AND COMMUNICATIONS
11.1 Any notice required to be given by a Participant to the Company shall be sent or made to theprincipal place of business of the Company or such other addresses (including electronic mailaddresses) or facsimile number, and marked for the attention of the Awards Committee, as may benotified by the Company to him in writing.
11.2 Any notices or documents required to be given to a Participant or any correspondence to be madebetween the Company and the Participant shall be given or made by the Awards Committee (orsuch person(s) as it may from time to time direct) on behalf of the Company and shall be deliveredto him by hand or sent to him at his home address, or facsimile number according to the records ofthe Company or the last known address or facsimile number of the Participant or to theParticipant’s electronic mail address notified by him to the Company for the purpose ofcommunication by electronic means.
11.3 Any notice or other communication from a Participant to the Company shall be irrevocable, andshall not be effective until received by the Company. Any other notice or communication from theCompany to a Participant shall be deemed to be received by that Participant, when left at theaddress specified in Rule 11.2 or, if sent by post, on the day following the date of posting or, if sentby electronic mail or facsimile transmission, on the day of despatch.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-12
12. MODIFICATIONS TO THE CNMC PERFORMANCE SHARE PLAN
12.1 Any or all the provisions of the CNMC Performance Share Plan may be modified and/or altered atany time and from time to time by a resolution of the Awards Committee, except that:
(a) no modification or alteration shall alter adversely the rights attached to any Award grantedprior to such modification or alteration except with the consent in writing of such number ofParticipants who, if their Awards were Released to them upon the Performance Conditionsfor their Awards being satisfied in full, would become entitled to not less than three-quartersof all the Shares which would fall to be Vested upon Release of all outstanding Awards uponthe Performance Conditions for all outstanding Awards being satisfied in full;
(b) any modification or alteration which would be to advantage of Participants shall be subject tothe prior approval of the Shareholders in general meeting; and
(c) no modification or alteration shall be made without compliance with the Catalist Rules andsuch other regulatory authorities as may be necessary.
For the purposes of Rule 12.1(a), the opinion of the Awards Committee as to whether anymodification or alteration would adversely affect the rights attached to any Award shall be final,binding and conclusive. For the avoidance of doubt, nothing in this Rule 12.1 shall affect the rightof the Awards Committee under any other provision of the CNMC Performance Share Plan toamend or adjust any Award.
12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Awards Committee may atany time by resolution (and without other formality, save for the prior approval of the SGX-ST)amend or alter the CNMC Performance Share Plan in any way to the extent necessary ordesirable, in the opinion of the Awards Committee, to cause the CNMC Performance Share Plan tocomply with, or take into account, any statutory provision (or any amendment or modificationthereto, including amendment of or modification to the Companies Act) or the provision or theregulations of any regulatory or other relevant authority or body (including the SGX-ST).
12.3 Written notice of any modification or alteration made in accordance with this Rule 12 shall be givento all Participants.
13. TAKE-OVER AND WINDING UP OF THE COMPANY
13.1 Notwithstanding Rule 6 but subject to Rule 13.5, in the event of a take-over being made for theShares, a Participant shall be entitled to Awards if he has met the Performance Conditions whichfalls within the period commencing on the date on which such offer for a take-over of the Companyis made or, if such offer is conditional, the date on which such offer becomes or is declaredunconditional, as the case may be, and ending on the earlier of:
(a) the expiry of six (6) months thereafter, unless prior to the expiry of such six-month period, atthe recommendation of the offeror and with the approvals of the Awards Committee, suchexpiry date is extended to a later date (in either case, being a date falling not later than theexpiry date of the Performance Period); or
(b) the date of expiry of the Performance Period,
provided that if during such period, the offeror becomes entitled or bound to exercise rights ofcompulsory acquisition under the provisions of the Companies Act and, being entitled to do so,gives notice to the Participants that it intends to exercise such rights on a specified date, theParticipant shall be obliged to fulfil such Performance Conditions until the expiry of such specifieddate or the expiry date of the Performance Period, whichever is earlier, before an Award can bevested.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-13
13.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for thepurposes of, or in connection with, a scheme for the reconstruction of the Company or itsamalgamation with another company or companies, each Participant shall be entitlednotwithstanding Rule 6 but subject to Rule 13.5, to any Awards so determined by the AwardsCommittee to be vested in him during the period commencing on the date upon which thecompromise or arrangement is sanctioned by the court and ending either on the expiry of sixty (60)days thereafter or the date upon which the compromise or arrangement becomes effective,whichever is later.
13.3 If an order is made for the winding-up of the Company on the basis of its insolvency, all Awards,notwithstanding that they may have been so vested shall become null and void.
13.4 Notwithstanding Rule 6 but subject to Rule 13.5, In the event of a members’ voluntary winding-up(other than for amalgamation or reconstruction), the Awards shall so vest in the Participant for solong as, in the absolute determination by the Awards Committee, the Participant has met thePerformance Conditions prior to the date that the members’ voluntary winding-up shall be deemedto have been commenced or effective in law.
13.5 If in connection with the making of a general offer referred to in Rule 13.1 or the scheme referredto in Rule 13.2 or the winding-up referred to in Rule 13.4, arrangements are made (which areconfirmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair andreasonable) for the compensation of Participants whether by the payment of cash or by any otherform of benefit, no Award shall be made in such circumstances.
14. TERMS OF EMPLOYMENT UNAFFECTED
(a) The CNMC Performance Share Plan or any Award Letter shall not form part of any contractof employment between the Company or any subsidiary or any Associated Company (as thecase may be) and any Participant and the rights and obligations of any individual under theterms of the office or employment with such company within the Group or AssociatedCompany (as the case may be) shall not be affected by his participation in the CNMCPerformance Share Plan or any right which he may have to participate in it and the CNMCPerformance Share Plan shall afford such an individual no additional rights to compensationor damages in consequence of the termination of such office or employment for any reasonwhatsoever.
(b) The CNMC Performance Share Plan shall not confer on any person any legal or equitablerights (other than those constituting the CNMC Performance Share Plan themselves) againstthe Company and/or any subsidiary and/or any Associated Company directly or indirectly orgive rise to any cause of action at law or in equity against the Company or any subsidiary orany Associated Company.
15. DURATION OF THE CNMC PERFORMANCE SHARE PLAN
15.1 The CNMC Performance Share Plan shall continue to be in force at the discretion of the AwardsCommittee, subject to a maximum period of 10 years commencing on the Adoption Date, providedalways that the CNMC Performance Share Plan may continue beyond the above stipulated periodwith the approval of the Shareholders by ordinary resolution in general meeting and of any relevantauthorities which may then be required.
15.2 The CNMC Performance Share Plan may be terminated at any time at the discretion of the AwardsCommittee or, by resolution of the Company in general meeting, subject to all relevant approvalswhich may be required and if the CNMC Performance Share Plan is so terminated, no furtherAwards shall be granted by the Awards Committee hereunder.
15.3 The expiry or termination of the CNMC Performance Share Plan shall not affect Awards whichhave been granted prior to such expiry or termination, whether such Awards have been Released(whether fully or partially) or not.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-14
16. TAXES
All taxes (including income tax) arising from the grant or Release of any Award granted to anyParticipant under the CNMC Performance Share Plan shall be borne by that Participant.
17. COSTS AND EXPENSES OF THE CNMC PERFORMANCE SHARE PLAN
17.1 Each Participant shall be responsible for all fees of CDP relating to or in connection with the issueand allotment or transfer of any Shares pursuant to the Release of any Award in CDP’s name, thedeposit of share certificate(s) with CDP, the Participant’s securities account with CDP, or theParticipant’s securities sub-account with a CDP Depository Agent.
17.2 Save for the taxes referred to in Rule 16 and such other costs and expenses expressly provided inthe CNMC Performance Share Plan to be payable by the Participants, all fees, costs and expensesincurred by the Company in relation to the CNMC Performance Share Plan including but not limitedto the fees, costs and expenses relating to the issue and allotment, or transfer, of Shares pursuantto the Release of any Award, shall be borne by the Company.
18. DISCLAIMER OF LIABILITY
Notwithstanding any provisions herein contained, the Awards Committee and the Company shallnot under any circumstances be held liable for any costs, losses, expenses and damageswhatsoever and howsoever arising in any event, including but not limited to the Company’s delay inissuing, or procuring the transfer of, the Shares or applying for or procuring the listing of newShares on Catalist in accordance with Rule 7.2(d).
19. DISCLOSURES IN ANNUAL REPORTS
The following disclosures (as applicable) will be made by the Company in its annual report for solong as the CNMC Performance Share Plan continues in operation:
(a) the names of the members of the Awards Committee administering the CNMC PerformanceShare Plan;
(b) in respect of the following Participants:
(i) Directors;
(ii) Controlling Shareholder and their Associates; and
(iii) the Participants (other than those in paragraphs (i) and (ii) above) who have receivedShares pursuant to the Vesting of Awards granted under the CNMC PerformanceShare Plan which, in aggregate, represent 5% or more of the aggregate of the totalnumber of Shares which may be granted under the CNMC Performance Share Plan;
the following information:
(i) the name of the Participant;
(ii) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan during the financial year under review;
(iii) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan since the commencement of the CNMCPerformance Share Plan to the end of the financial year under review;
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-15
(iv) the aggregate number of Shares comprised in Awards granted to such Participantsunder the CNMC Performance Share Plan which have Vested since thecommencement of the CNMC Performance Share Plan to the end of the financial yearunder review and in respect thereof, the proportion of New Shares issued upon theRelease of the Vested Awards granted under the Performance Share Plan; and
(v) the aggregate number of Shares comprised in Awards granted to such Participantunder the CNMC Performance Share Plan which have not yet Vested, as at the end ofthe financial year under review;
(c) (i) the names and number of terms of Awards granted to each director or employee ofthe Company’s parent company and its subsidiaries who receives 5% or more of thetotal number of Shares comprised in Awards available to all directors and employeesof the Company’s parent company and its subsidiaries under the CNMC PerformanceShare Plan, during the financial year under review; and
(ii) the aggregate number of Shares comprised in Awards to the directors and employeesof the Company’s parent company and its subsidiaries which have Vested for thefinancial year under review, and since the commencement of the CNMC PerformanceShare Plan to the end of the financial year under review; and
(d) such other information as may be required by the Catalist Rules or the Companies Act.
If any of the above is not applicable, an appropriate negative statement shall be included therein.
20. DISPUTES
Any disputes or differences of any nature arising hereunder shall be referred to the AwardsCommittee and its decision shall be final and binding in all respects.
21. GOVERNING LAW
The CNMC Performance Share Plan shall be governed by, and construed in accordance with, thelaws of Singapore. The Participants, by accepting grants of Awards in accordance with the CNMCPerformance Share Plan, and the Company submit to the exclusive jurisdiction of the courts ofSingapore.
22. CONTRACTS (RIGHTS OF THIRD PARTIES) ACT, CHAPTER 53B
No person other than the Company or a Participant shall have any right to enforce any provision ofthe CNMC Performance Share Plan or any Award by the virtue of the Contracts (Rights of ThirdParties) Act, Chapter 53B of Singapore.
23. ELIGIBLE SHAREHOLDERS AND ABSTENTION
23.1 Shareholders who are eligible to participate in the scheme must abstain from voting on anyresolution relating to the CNMC Performance Share Plan (other than a resolution relating to theparticipation of, or grant of Awards to, directors and employees of the company’s parent companyand its subsidiaries).
23.2 The following categories of persons must abstain from voting on any resolution relating to theparticipation of, or grant of Awards to, directors and employees of the Company’s parent companyand its subsidiaries:
(i) the Company’s parent company (and its associates who are also Shareholders); and
(ii) directors and employees of the Company’s parent company and its subsidiaries, who arealso Shareholders and are eligible to participate in the CNMC Performance Share Plan.
APPENDIX H – RULES OF THE CNMC PERFORMANCE SHARE PLAN
H-16
You are invited to apply and subscribe for the Placement Shares at the Placement Price for eachPlacement Share subject to the following terms and conditions:
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 PLACEMENT SHARES ORINTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OFSHARES WILL BE REJECTED.
2. Your application for the Placement Shares may only be made by way of printed Placement SharesApplication Forms.
3. YOU MAY NOT USE CPF FUNDS TO APPLY FOR THE PLACEMENT SHARES.
4. You are allowed to submit only one application in your own name for the Placement Shares.
If you, being other than an approved nominee company, have submitted an application forPlacement Shares in your own name, you should not submit any other application forPlacement Shares for any other person. Such separate applications shall be deemed to bemultiple applications and may be rejected at the discretion of our Company, the Managerand Sponsor and the Joint Placement Agents.
Joint applications for the Placement Shares shall be rejected. If you submit or procuresubmissions of multiple share applications for Placement Shares, you may be deemed tohave committed an offence under the Penal Code (Chapter 224) of Singapore and the SFA,and your applications may be referred to the relevant authorities for investigation. Multipleapplications or those appearing to be or suspected of being multiple applications may berejected at the discretion of our Company, the Sponsor and the Joint Placement Agents.
5. We will not accept applications from any person under the age of 18 years, undischargedbankrupts, sole proprietorships, partnerships, chops or non-corporate bodies, joint SecuritiesAccount holders of CDP and from applicants whose addresses (as furnished in their ApplicationForms) bear post office box numbers. No person acting or purporting to act on behalf of adeceased person is allowed to apply under the Securities Account with CDP in the deceased’sname at the time of application.
6. We will not recognise the existence of a trust. Any application by a trustee or trustees must bemade in his/her/their own name(s) and without qualification or, where the application is made byway of an Application Form by a nominee, in the name(s) of an approved nominee company orcompanies after complying with paragraph 7 below.
7. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BYAPPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined as banks,merchant banks, finance companies, insurance companies, licensed securities dealers inSingapore and nominee companies controlled by them. Applications made by persons acting asnominees other than approved nominee companies shall be rejected.
8. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIESACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you donot have an existing Securities Account with CDP in your own name at the time of your application,your application will be rejected. If you have an existing Securities Account with CDP but fail toprovide your Securities Account number or provide an incorrect Securities Account number inSection B of the Application Form, your application is liable to be rejected. Subject to paragraph 8below, your application shall be rejected if your particulars such as name, NRIC/passport number,nationality and permanent residence status provided in your Application Form differ from thoseparticulars in your Securities Account as maintained with CDP. If you possess more than oneindividual direct Securities Account with CDP, your application shall be rejected.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-1
9. If your address as stated in the Application Form is different from the address registeredwith CDP, you must inform CDP of your updated address promptly, failing which thenotification letter on successful allotment and/or allocation and other correspondence fromCDP will be sent to your address last registered with CDP.
10. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents reservethe right to reject any application which does not conform strictly to the instructions set outin the Application Form and in this Offer Document or with the terms and conditions of thisOffer Document or, in the case of an application by way of an Application Form, which isillegible, incomplete, incorrectly completed or which is accompanied by an improperlydrawn remittance or improper form of remittance or remittances which are not honouredupon first presentation.
11. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents furtherreserve the right to treat as valid any applications not completed or submitted or effected inall respects in accordance with the instructions set out in the Application Forms or theterms and conditions of this Offer Document, and also to present for payment or otherprocesses all remittances at any time after receipt and to have full access to all informationrelating to, or deriving from, such remittances or the processing thereof.
12. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents reserve theright to reject or to accept, in whole or in part, or to scale down or to ballot any application, withoutassigning any reason therefor, and no enquiry and/or correspondence on the decision of ourCompany, the Vendors, the Manager and Sponsor and Joint Placement Agents will be entertained.In deciding the basis of allotment and/or allocation which shall be at the discretion of our Company,the Vendors, the Manager and Sponsor and Joint Placement Agents, due consideration will begiven to the desirability of allotting the Placement Shares to a reasonable number of applicantswith a view to establishing an adequate market for the Shares.
13. Share certificates will be registered in the name of CDP or its nominee and will be forwarded onlyto CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after theclose of the Application List, a statement of account stating that your Securities Account has beencredited with the number of Placement Shares allotted and/or allocated to you, if your applicationis successful. This will be the only acknowledgement of application monies received and is not anacknowledgement by our Company, the Vendors, the Manager and Sponsor and Joint PlacementAgents. You irrevocably authorise CDP to complete and sign on your behalf, as renouncee, anydocuments required for the issue of the Placement Shares allotted to you.
14. In the event that our Company lodges a supplementary or replacement Offer Document (“RelevantDocument”) pursuant to the SFA or any applicable legislation in force from time to time prior to theclose of the Placement, and the Placement Shares have not been issued and/or transferred, wewill (as required by law), at our Company’s sole and absolute discretion and subject to the SFA,either:
(i) within 7 days of the lodgement of the Relevant Document give you a copy of the RelevantDocument and provide you with an option to withdraw; or
(ii) deem your application as withdrawn and cancelled and refund your application monies(without interest or any share of revenue or other benefit arising therefrom) to you within 7days from the lodgement of the Relevant Document.
Where you have notified us within 14 days from the date of lodgement of the Relevant Documentof your wish to exercise your option under paragraphs 14(i) and (ii) above to withdraw yourapplication, we shall pay to you all monies paid by you on account of your application for thePlacement Shares without interest or any share or revenue or other benefit arising therefrom andat your own risk, within 7 days from the receipt of such notification.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-2
In the event that at any time at the time of the lodgement of the Relevant Document, thePlacement Shares have already been issued and/or transferred but trading has not commenced,we will (as required by law), and subject to the SFA, either:
(iii) within 7 days from the lodgement of the Relevant Document give you a copy of the RelevantDocument and provide you with an option to return the Placement Shares; or
(iv) deem the issue and/or transfer as void and refund your payment for the Placement Shares(without interest or any share of revenue or other benefit arising therefrom) to you within 7days from the lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraph 14(iii) above to return thePlacement Shares issued and/or transferred to him shall, within 14 days from the date oflodgement of the Relevant Document, notify us of this and return all documents, if any, purportingto be evidence of title of those Placement Shares, whereupon the Company (and on behalf of theVendors) shall, subject to the SFA, within 7 days from the receipt of such notification anddocuments, pay to him all monies paid by him for the Placement Shares without interest or anyshare of revenue or other benefit arising therefrom and at his own risk, and the Placement Sharesissued and/or transferred to him shall be void.
Additional terms and instructions applicable upon the lodgement of the supplementary orreplacement Offer Document, including instructions on how you can exercise the option towithdraw, may be found in such supplementary or replacement Offer Document.
15. You irrevocably authorise CDP to disclose the outcome of your application, including the number ofPlacement Shares allotted to you pursuant to your application, to us, the Vendors, the Managerand Sponsor and Joint Placement Agents and, any other parties so authorised by the foregoingpersons.
16. Any reference to “you” or the “applicant” in this section shall include a person applying for thePlacement Shares through the Joint Placement Agents or its designated sub-placement agent.
17. By completing and delivering an Application Form in accordance with the provisions of this OfferDocument, you:
(i) irrevocably offer, agree and undertake to subscribe for and/or purchase the number ofPlacement Shares specified in your application (or such smaller number for which theapplication is accepted) at the Placement Price for each Placement Share and agree thatyou will accept such Placement Shares as may be allotted and/or allocated to you, in eachcase on the terms of, and subject to the conditions set out in this Offer Document and theMemorandum and Articles of Association of our Company for application;
(ii) agree that the aggregate Placement Price for the Placement Shares applied for is due andpayable to the Company upon application;
(iii) warrant the truth and accuracy of the information contained, and representations anddeclarations made, in your application, and acknowledge and agree that such information,representations and declarations will be relied on by our Company, the Vendors, theManager and Sponsor and Joint Placement Agents in determining whether to accept yourapplication and/or whether to allot and/or allocate any Placement Shares to you; and
(iv) agree and warrant that, if the laws of any jurisdictions outside Singapore are applicable toyour application, you have complied with all such laws and none of our Company, theVendors, the Manager and Sponsor and the Joint Placement Agents will infringe any suchlaws as a result of the acceptance of your application.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-3
18. Our acceptance of applications will be conditional upon, inter alia, our Company, the Vendors, theManager and Sponsor and Joint Placement Agents being satisfied that:
(i) permission has been granted by the SGX-ST to deal in and for quotation for all our existingShares and the Placement Shares on a “when-issued” basis on Catalist;
(ii) the Management Agreement and the Placement Agreement referred to in the sectionentitled “General and Statutory Information – Management and Placement Arrangements” ofthis Offer Document have become unconditional and have not been terminated or cancelledprior to such date as our Company may determine; and
(iii) the Authority or any other competent authority, has not served a stop order (“Stop Order”)which directs that no or no further shares to which this Offer Document relates be allottedand/or allocated.
19. In the event that a Stop Order in respect of the Placement Shares is served by the SGX-ST, actingas an agent on behalf of the Authority or other competent authority, and:
(i) in the case where the Placement Shares have not been issued and/or transferred, we will(as required by law), and subject to the SFA, deem all applications withdrawn and cancelledand our Company (and on behalf of the Vendors) shall refund (at your own risk) all moniespaid on account of your application for the Placement Shares (without interest or any shareof revenue or other benefit arising therefrom) to you within 14 days of the date of the StopOrder; or
(ii) in the case where the Placement Shares have already been issued and/or transferred buttrading has not commenced, the issue and/or transfer of the Placement Shares shall (asrequired by law) be deemed to be void and our Company (and on behalf of the Vendors)shall, within 14 days from the date of the Stop Order, pay to the applicants all monies paidon account of your application for the Placement Shares (without interest or any share ofrevenue or other benefit arising therefrom).
This shall not apply where only an interim Stop Order has been served.
20. In the event that an interim Stop Order in respect of the Placement Shares is served by the SGX-ST, acting as an agent on behalf of the Authority or other competent authority, no PlacementShares shall be issued and/or transferred during the time when the interim Stop Order is in force.
21. The Authority or any other competent authority is not able to serve a Stop Order in respect of thePlacement Shares if the Placement Shares have been issued and/or transferred and listed forquotation on a securities exchange and trading in the Placement Shares has commenced.
22. In the event of any changes in the closure of the Application List or the time period during whichthe Placement is open, we will publicly announce the same through a SGXNET announcement tobe posted on the Internet at the SGX-ST website http://www.sgx.com and through a paidadvertisement in a local newspaper.
23. We will not hold any application in reserve.
24. We will not allot and/or allocate Shares on the basis of this Offer Document later than six (6)months after the date of registration of this Offer Document by the SGX-ST.
25. Additional terms and conditions for applications by way of Application Forms are set out inAppendix I of this Offer Document.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-4
ADDITIONAL TERMS AND CONDITIONS FOR APPLICATIONS USING APPLICATION FORMS
Applications by way of an Application Form shall be made on, and subject to, the terms and conditions ofthis Offer Document including but not limited to the terms and conditions appearing below as well as theMemorandum and Articles of Association of our Company.
1. Your application for the Placement Shares must be made using the BLUE Application Formsaccompanying and forming part of this Offer Document. ONLY ONE APPLICATION should beenclosed in each envelope.
We draw your attention to the detailed instructions contained in the Application Forms and thisOffer Document for the completion of the Application Forms which must be carefully followed. OurCompany, the Vendors, the Manager and Sponsor and Joint Placement Agents reserve theright to reject applications which do not conform strictly to the instructions set out in theApplication Forms and this Offer Document or to the terms and conditions of this OfferDocument or which are illegible, incomplete, incorrectly completed or which areaccompanied by improperly drawn remittances or improper form of remittances.
2. Your Application Forms must be completed in English. Please type or write clearly in ink usingBLOCK LETTERS.
3. All spaces in the Application Forms, except those under the heading “FOR OFFICIAL USE ONLY”,must be completed and the words “NOT APPLICABLE” or “N.A.” should be written in any spacethat is not applicable.
4. Individuals, corporations, approved nominee companies and trustees must give their names in full.If you are an individual, you must make your application using your full name as it appears in youridentity card (if you have such identification document) or in your passport and, in the case of acorporation, in your full name as registered with a competent authority. If you are a non-individual,you must complete the Application Form under the hand of an official who must state the nameand capacity in which he signs the Application Form. If you are a corporation completing theApplication Form, you are required to affix your Common Seal (if any) in accordance with yourMemorandum and Articles of Association or equivalent constitutive documents of the corporation. Ifyou are a corporate applicant and your application is successful, a copy of your Memorandum andArticles of Association or equivalent constitutive documents must be lodged with the ShareRegistrar. Our Company the Vendors, the Manager and Sponsor and Joint Placement Agentsreserves the right to require you to produce documentary proof of identification for verificationpurposes.
5. (a) You must complete Sections A and B and sign on page 1 of the Application Form.
(b) You are required to delete either paragraph 7(a) or 7(b) on page 1 of the Application Form.Where paragraph 7(a) is deleted, you must also complete Section C of the Application Formwith particulars of the beneficial owner(s).
(c) If you fail to make the required declaration in paragraph 7(a) or 7(b), as the case may be, onpage 1 of the Application Form, your application is liable to be rejected.
6. You (whether you are an individual or corporate applicant, whether incorporated or unincorporatedand wherever incorporated or constituted) will be required to declare whether you are a citizen orpermanent resident of Singapore or a corporation in which citizens or permanent residents ofSingapore or any body corporate constituted under any statute of Singapore having an interest inthe aggregate of more than 50 per cent. of the issued share capital of or interests in suchcorporations. If you are an approved nominee company, you are required to declare whether the
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-5
beneficial owner of the Shares is a citizen or permanent resident of Singapore or a corporation,whether incorporated or unincorporated and wherever incorporated or constituted, in which citizensor permanent residents of Singapore or any body corporate whether incorporated orunincorporated and wherever incorporated or constituted under any statute of Singapore have aninterest in the aggregate of more than 50 per cent. of the issued share capital of or interests insuch corporation.
7. Your application must be accompanied by a remittance in Singapore currency for the full amountpayable, in respect of the number of Placement Shares applied for, in the form of a BANKER’SDRAFT or CASHIER’S ORDER drawn on a bank in Singapore, made out in favour of “CNMCSHARE ISSUE ACCOUNT” crossed “A/C PAYEE ONLY”, with your name, CDP SecuritiesAccount Number and address written clearly on the reverse side. Applications not accompaniedby any payment or accompanied by any other form of payment will not be accepted. We willreject remittances bearing “NOT TRANSFERABLE” or “NON TRANSFERABLE” crossings. Noacknowledgement or receipt will be issued by our Company or the Sponsor for applications andapplication monies received.
The completed and signed BLUE Placement Shares Application Form and the correct remittancein full in respect of the number of Placement Shares applied for (in accordance with the terms andconditions of this Offer Document) with your name and address written clearly on the reverse side,must be enclosed and sealed in an envelope to be provided by you.
8. You must affix adequate postage (if despatching by ordinary post) and thereafter the sealedenvelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your ownrisk to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 SingaporeLand Tower, Singapore 048623 to arrive by 12.00 a.m. on 25 October 2011 or such other timeas our Company and the Vendors may, in consultation with the Manager and Sponsor andthe Joint Placement Agents, decide. Local Urgent Mail or Registered Post must NOT beused. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgment orreceipt will be issued for any application or remittance received.
9. Where your application is rejected or accepted in part only, the full amount or the balance of theapplication monies, as the case may be, will be refunded (without interest or any share of revenueor other benefit arising therefrom) to you by ordinary post at your own risk within 14 Market Daysafter the close of the Application List, provided that the remittance accompanying such applicationwhich has been presented for payment or other processes has been honoured and applicationmonies have been received in the designated share issue account. In the event that the Placementis cancelled by us following the termination of the Management Agreement and/or the PlacementAgreement or the Placement does not proceed for any reason, the application monies received willbe refunded (without interest or any share of revenue or any other benefit arising therefrom) to youby ordinary post or telegraphic transfer at your own risk within 5 Market Days of the termination ofthe Placement. In the event that the Placement is cancelled by us following the issuance of a StopOrder by the Authority or any other competent authority, the application monies received will berefunded (without interest or any share of revenue or other benefit arising therefrom) to you byordinary post at your own risk within 14 Market Days from the date of the Stop Order.
10. Applications that are illegible, incomplete or incorrectly completed or accompanied by improperlydrawn remittance or improper form of remittance or which are not honoured upon their firstpresentation are liable to be rejected.
11. Capitalised terms used in the Application Forms and defined in this Offer Document shall bear themeanings assigned to them in this Offer Document.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-6
12. You irrevocably agree and acknowledge that your application is subject to acts of god and otherevents beyond the control of our Company, the Vendors, the Manager and Sponsor and the JointPlacement Agents and/or any other party involved in the Placement, and if, in any such event, ourCompany and/or the Sponsor does not receive your Application Form, you shall have no claimwhatsoever against our Company the Vendors, the Manager and Sponsor and the Joint PlacementAgents and/or any other party involved in the Placement for the Placement Shares applied for orfor any compensation, loss or damage.
13. By completing and delivering the Application Form, you agree that:
(i) in consideration of our Company having distributed the Application Form to you andagreeing to close the Application List at 12.00 noon on 25 October 2011 or such other timeor date as our Company and the Vendors may, in consultation with the Manager andSponsor and the Joint Placement Agents, decide and by completing and delivering theApplication Form, you agree that:
(a) your application is irrevocable; and
(b) your remittance will be honoured on first presentation and that any application moniesreturnable may be held pending clearance of your payment without interest or anyshare of revenue or other benefit arising therefrom;
(ii) neither our Company, the Vendors, the Manager and Sponsor and Joint Placement Agentsnor any other party involved in the Placement shall be liable for any delays, failures orinaccuracies in the recording, storage or in the transmission or delivery of data relating toyour application to us or CDP due to breakdowns or failure of transmission, delivery orcommunication facilities or any risks referred to in paragraph 12 above or to any causebeyond their respective controls;
(iii) all applications, acceptances and contracts resulting therefrom under the Placement shall begoverned by and construed in accordance with the laws of Singapore and that youirrevocably submit to the non-exclusive jurisdiction of the Singapore courts;
(iv) in respect of the Placement Shares for which your application has been received and notrejected, acceptance of your application shall be constituted by written notification and nototherwise, notwithstanding any remittance being presented for payment by or on behalf ofour Company;
(v) you will not be entitled to exercise any remedy of rescission for misrepresentation at anytime after acceptance of your application;
(vi) in making your application, reliance is placed solely on the information contained in thisOffer Document and that none of our Company, the Vendors, the Manager and Sponsor andJoint Placement Agents or other authorised operators involved in the Placement shall haveany liability for any information not so contained;
(vii) you consent to the disclosure of your name, NRIC/passport number, address, nationality,permanent resident status, CDP Securities Account number, and share application amountto our Share Registrar, CDP, SCCS, SGX-ST, our Company, the Manager and Sponsor, theJoint Placement Agents or other authorised operators; and
(viii) you irrevocably agree and undertake to subscribe for the number of Placement Sharesapplied for as stated in the Application Form or any smaller number of such PlacementShares that may be allotted and/or allocated to you in respect of your application. In theevent that our Company decides to allot and/or allocate any smaller number of PlacementShares or not to allot any Placement Shares to you, you agree to accept such decision asfinal.
APPENDIX I – TERMS, CONDITIONS AND PROCEDURES FOR APPLICATION AND ACCEPTANCE
I-7
Competitive StrengthsΟ Availability of high grade gold-bearing ore in
Sokor Block Based on the BDA Technical Report, supergene
enrichment of gold is widespread at Sokor Block Near-surface high grade gold
Ο Exploration upside potential Considerable exploration upside potential within
Sokor Block to locate additional gold resources where to date only limited reconnaissance exploration has taken place
Ο Close proximity to urban facilities Proximity to land and air transport Availability of existing infrastructure and
communication access helps to minimize investment costs
Ο Strong working relationships with Chinese contractors and/or consultants
Consultants such as CSU, Sinomine and CGRI are leading players in the PRC in their respective niche markets, their expertise in mining operations helps to ensure greater cost efficiencies and economic benefits
Services and technical support provided at competitive prices
Ο Strong relationships with stakeholders and local communities
Good working relationship with Kelantan State Government and KSEDC
Professor Lin Xiang Xiong (Executive Chairman) is Kelantan’s Chief Advisor on Kelantan-China International Trade for the Kelantan State Government
Participation in community development projects
Use of ProceedsΟ Further resource definition and continuing
exploration activitiesΟ Construction of a heap leach facilityΟ Working CapitalΟ Expenses incurred in connection with the
Placement
ProspectsΟ World demand for Gold Gold as a hedge against currency risks and
remains a sought-after asset especially in light of sovereign debt crisis in Europe
Gold as an alternative investment and a hedge against inflationary pressures
Ο Price Outlook Analysts at BNP Paribas forecasted the
average price of gold to be US$1,500/oz for 2011 and US$1,600/oz in 2012
Investment product for portfolio diversification and risk management strategies
Supportive environment for gold investment in 2011, revived demand in jewellery and industrial sector provide further scope for growth
Business Strategies and Future PlansΟ Expansion of gold extraction facilitiesΟ Further resource definition and continuing
exploration activitiesΟ Feasibility study to construct a gold
carbon-in-leach plantΟ Exploration and possible mining for other
minerals such as silver, lead and zincΟ Expansion through acquisitions, joint ventures
and strategic alliances
Price of gold
Comp tetititiive StStrengthths Us
TABLE 1 – CNMC MINERAL RESOURCES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Measured 659,000 3.4 71,700
Indicated 803,000 2.0 50,900
Inferred 720,000 2.6 60,900
TOTAL 2,182,000 2.6 183,500
Note: The total gold resources of 2,182,000 tonnes includes gold ore reserves of 989,000 tonnes
TABLE 2 – CNMC ORE RESERVES, JUNE 2010
JORC Code
Class
Tonnes Grade g/t
Au
Gold (oz)
Proved 204,000 3.6 23,900
Probable 785,000 1.8 46,400
TOTAL 989,000 2.2 70,300
g
The above chart sets forth monthly average London Fix gold price from January 2008 to August 2011.
Source: World Gold Council
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Janu
ary
2008
Feb
ruar
y 20
08M
arch
200
8A
pril
2008
May
200
8Ju
ne 2
008
July
200
8A
ugus
t 200
8S
epte
mbe
r 20
08O
ctob
er 2
008
Nov
embe
r 20
08D
ecem
ber
2008
Janu
ary
2009
Feb
ruar
y 20
09M
arch
200
9A
pril
2009
May
200
9Ju
ne 2
009
July
200
9A
ugus
t 200
9S
epte
mbe
r 20
09O
ctob
er 2
009
Nov
embe
r 20
09D
ecem
ber
2009
Janu
ary
2010
Feb
ruar
y 20
10M
arch
201
0A
pril
2010
May
201
0Ju
ne 2
010
July
201
0A
ugus
t 201
0S
epte
mbe
r 20
10O
ctob
er 2
010
Nov
embe
r 20
10D
ecem
ber
2010
Janu
ary
2011
Feb
ruar
y 20
11M
arch
201
1A
pril
2011
May
201
1Ju
ne 2
011
July
201
1A
ugus
t 201
1
Pri
ce o
f G
old
US
$ p
er o
z
OFFER DOCUMENT DATED 18 OCTOBER 2011(Registered by the Singapore Exchange Securities Trading Limited (the “SGX-ST”), acting as agent on behalf of the Monetary Authority of Singapore (the “Authority”) on 18 October 2011)
This offer is made in or accompanied by an Offer Document (the “Offer Document”) that has been registered by the SGX-ST, acting as agent on behalf of the Authority on 18 October 2011. The registration of this Offer Document by the SGX-ST, acting as agent on behalf of the Authority does not imply that the Securities and Futures Act (Chapter 289) of Singapore, or any other legal or regulatory requirements, or requirements under the SGX-ST’s listing rules, have been complied with.
This document is important. If you are in any doubt as to the action you should take, you should consult your legal, financial, tax or other professional adviser(s).
PrimePartners Corporate Finance Pte. Ltd. (the “Sponsor”) has made an application to the SGX-ST for permission to deal in, and for quotation of, all the ordinary shares (the “Shares”) in the capital of CNMC Goldmine Holdings Limited (the “Company”) already issued (including the Vendor Shares (as defined herein), the new Shares which are the subject of this Placement (the New Shares (as defined herein) and together with the Vendor Shares, collectively the “Placement Shares”), the new Shares to be issued to PPCF (the “PPCF Shares”) pursuant to the Management Agreement (as defined herein), the Employee Shares (as defined herein) and the new Shares which may be issued pursuant to the CNMC Performance Share Plan (the “Award Shares”) to be listed for quotation on Catalist. The Sponsor has submitted this Offer Document to the SGX-ST. Acceptance of applications will be conditional upon, inter alia, issue of the New Shares and permission being granted by the SGX-ST for the listing and quotation of all our existing issued Shares, the New Shares, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Monies paid in respect of any application accepted will be returned if the admission and listing do not proceed. The dealing in and quotation of the Shares will be in Singapore dollars.
Companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the SGX-ST Main Board. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. You should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with your professional adviser(s).
Neither the Authority nor the SGX-ST has examined or approved the contents of this Offer Document. Neither the Authority nor the SGX-ST assumes any responsibility for the contents of this Offer Document, including the correctness of any of the statements or opinions made or reports contained in this Offer Document. The SGX-ST does not normally review the application for admission but relies on the Sponsor confirming that the Company is suitable to be listed and complies with the Catalist Rules (as defined herein). Neither the Authority nor the SGX-ST has in any way considered the merits of the Shares or units of Shares being offered for investment.
We have not lodged this Offer Document in any other jurisdiction.
INVESTING IN OUR SHARES INVOLVES RISKS WHICH ARE DESCRIBED IN THE SECTION ENTITLED “RISK FACTORS” OF THIS OFFER DOCUMENT. IN PARTICULAR, YOU SHOULD NOTE THAT BASED ON THE PLANNED PRODUCTION SCHEDULE FOR OUR MINING OPERATIONS, IT IS EXPECTED THAT THE MINING OF OUR CURRENT GOLD ORE RESERVES (AS DEFINED HEREIN) WILL BE COMPLETED IN 2012. PLEASE REFER TO THE FOLLOWING RISKS FURTHER DESCRIBED IN THIS OFFER DOCUMENT: (1) OUR GROUP (AS DEFINED HEREIN) MAY NOT BE ABLE TO DISCOVER NEW GOLD RESERVES TO MAINTAIN A COMMERCIALLY VIABLE MINING OPERATION; (2) OUR GROUP HAS A LIMITED OPERATING HISTORY; AND (3) OUR GROUP’S BUSINESS, REVENUES AND PROFITS ARE AFFECTED BY THE VOLATILITY OF PRICES FOR GOLD AND THE GLOBAL ECONOMY.
After the expiration of six (6) months from the date of registration of this Offer Document, no person shall make an offer of securities, or allot, issue or sell any securities, on the basis of this Offer Document; and no officer or equivalent person or promoter of the Company will authorise or permit the offer of any securities or the allotment, issue or sale of any securities, on the basis of this Offer Document.
(Company Registration Number: 201119104K)(Incorporated in Singapore on 11 August 2011)
Placement of 41,000,000 Placement Shares comprising 23,900,000 New Shares and 17,200,000 Vendor Sharesat S$0.40 for each Placement Share, payable in full on application
PRIMEPARTNERS CORPORATE FINANCE PTE. LTD.(Company Registration No.: 200207389D)(Incorporated in the Republic of Singapore)
Manager and Sponsor and Joint Placement Agent Joint Placement Agent
ASIASONS WFG SECURITIES PTE LTD(Company Registration No.: 200300646M)(Incorporated in the Republic of Singapore)
* The above newspaper articles have been extracted from Nanyang Business Daily, Sin Chew Daily and China Press. Nanyang Business Daily, Sin Chew Daily and China Press have not consented to the inclusion of the newspaper articles in this Offer Document for the purpose of Section 249 of the Securities and Futures Act (Chapter 289) of Singapore (“SFA”) and are therefore not liable for the relevant information of the newspaper articles under Sections 253 and 254 of the SFA and while the directors of the Company have taken reasonable action to ensure that the information of the newspaper articles is extracted accurately and fairly, and has been included in this Offer Document in its proper form and context, they have not independently verified the accuracy of the relevant information in the newspaper articles.
![[TechCrunch] Facebook IPO Prospectus](https://static.documents.pub/doc/80x56/540b701bdab5caf35f8b46ae/techcrunch-facebook-ipo-prospectus.jpg)
