CNMC IPO Prospectus

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-STs 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 GROUPS 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)
* 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.
18 October 2011)
adviser(s).
Competitive Strengths
Availability of high grade gold-bearing ore in
Sokor Block
z Based on the BDA Technical Report, supergene
enrichment of gold is widespread at Sokor Block
z Near-surface high grade gold
Exploration upside potential
z Considerable exploration upside potential within
Sokor Block to locate additional gold resources
where to date only limited reconnaissance
exploration has taken place
Close proximity to urban facilities
z Proximity to land and air transport
z Availability of existing infrastructure and
communication access helps to minimize
investment costs
Strong working relationships with Chinese
contractors and/or consultants
z 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
z Services and technical support provided at
competitive prices
Strong relationships with stakeholders and local
communities
z Good working relationship with Kelantan State
Government and KSEDC
z Professor Lin Xiang Xiong (Executive Chairman)
is Kelantans Chief Advisor on Kelantan-China
International Trade for the Kelantan State
Government
z Participation in community development projects
Use of Proceeds
Further resource definition and continuing
exploration activities
Construction of a heap leach facility
Working Capital
Expenses incurred in connection with the
Placement
Prospects
World demand for Gold
z Gold as a hedge against currency risks and
remains a sought-after asset especially in light
of sovereign debt crisis in Europe
z Gold as an alternative investment and a
hedge against inflationary pressures
Price Outlook
z 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
z Investment product for portfolio diversification
and risk management strategies
z Supportive environment for gold investment in
2011, revived demand in jewellery and
industrial sector provide further scope for
growth
Business Strategies and Future Plans
Expansion of gold extraction facilities
Feasibility study to construct a gold
carbon-in-leach plant
Exploration and possible mining for other
minerals such as silver, lead and zinc
Expansion through acquisitions, joint ventures
and strategic alliances
Price of gold

Comp t etit itiive St Strength ths 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
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Sokor Block
investment costs
competitive prices
communities
Government
Use of Proceeds
Working Capital
Placement
Prospects
Price Outlook
2011 and US$1,600/oz in 2012
growth
Price of gold

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
989,000 tonnes
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
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TABLE OF CONTENTS
1
CORPORATE INFORMATION .......................................................................................................... 4
DEFINITIONS .................................................................................................................................... 6
GLOSSARY OF TECHNICAL TERMS .............................................................................................. 15
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS.................................................... 20
SELLING RESTRICTIONS................................................................................................................ 22
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 .................................................................................................................................... 29
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT ................................ 29
OFFER DOCUMENT SUMMARY...................................................................................................... 30
OUR COMPANY ...................................................................................................................... 30
OUR BUSINESS...................................................................................................................... 30
SUMMARY OF OUR FINANCIAL INFORMATION.................................................................. 30
OUR COMPETITIVE STRENGTHS ........................................................................................ 31
OUR PROSPECTS.................................................................................................................. 31
OUR BUSINESS STRATEGIES AND FUTURE PLANS ........................................................ 32
OUR CONTACT DETAILS........................................................................................................ 32
THE PLACEMENT ............................................................................................................................ 33
EXCHANGE RATES .......................................................................................................................... 34
RISK FACTORS ................................................................................................................................ 35
RISKS RELATING TO OUR BUSINESS OR THE INDUSTRY................................................ 35
RISKS RELATING TO OUR OPERATIONS IN MALAYSIA .................................................... 44
RISKS RELATING TO AN INVESTMENT IN OUR SHARES.................................................. 46
ISSUE STATISTICS .......................................................................................................................... 48
USE OF PROCEEDS AND LISTING EXPENSES............................................................................ 50
DIVIDEND POLICY............................................................................................................................ 52
SHARE CAPITAL .............................................................................................................................. 53
SHAREHOLDERS ............................................................................................................................ 57
SHAREHOLDING AND OWNERSHIP STRUCTURE.............................................................. 57
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP ............................................ 59
VENDORS................................................................................................................................ 60
MORATORIUM ........................................................................................................................ 60
CAPITALISATION AND INDEBTEDNESS........................................................................................ 62
WORKING CAPITAL.......................................................................................................................... 64
DILUTION .......................................................................................................................................... 66
RESTRUCTURING EXERCISE ........................................................................................................ 68
GROUP STRUCTURE ...................................................................................................................... 71
SELECTED COMBINED FINANCIAL INFORMATION .................................................................... 72
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL POSITION...................................................................................................................... 75
OVERVIEW.............................................................................................................................. 75
PRINCIPAL COMPONENTS OF OUR INCOME STATEMENT .............................................. 75
REVIEW OF RESULTS OF OPERATIONS ............................................................................ 79
REVIEW OF PAST OPERATING PERFORMANCE................................................................ 79
REVIEW OF PAST FINANCIAL POSITION OF OUR GROUP .............................................. 82
LIQUIDITY AND CAPITAL RESOURCES................................................................................ 85
MATERIAL CAPITAL EXPENDITURES AND DIVESTMENTS................................................ 86
FOREIGN EXCHANGE MANAGEMENT ................................................................................ 87
SEASONALITY ........................................................................................................................ 88
INFLATION .............................................................................................................................. 88
SIGNIFICANT CHANGES IN ACCOUNTING POLICIES........................................................ 88
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP ............................................ 89
HISTORY.................................................................................................................................. 89
OUR SUBSIDIARIES .............................................................................................................. 92
INDEPENDENT VALUATION .................................................................................................. 92
BUSINESS OVERVIEW .......................................................................................................... 93
BUSINESS ACTIVITIES .......................................................................................................... 96
QUALITY ASSURANCE .......................................................................................................... 103
OUR MAJOR CUSTOMERS.................................................................................................... 103
OUR MAJOR SUPPLIERS ...................................................................................................... 104
CREDIT POLICY...................................................................................................................... 104
INVENTORY MANAGEMENT.................................................................................................. 105
SALES AND MARKETING ...................................................................................................... 105
INSURANCE............................................................................................................................ 105
INTELLECTUAL PROPERTY .................................................................................................. 105
LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS........................ 106
KEY CONTRACTORS AND CONSULTANTS.......................................................................... 109
STAFF TRAINING.................................................................................................................... 110
ENVIRONMENTAL PROTECTION AND COMMUNITY DEVELOPMENT.............................. 110
INFRASTRUCTURE ................................................................................................................ 114
SAFETY POLICY .................................................................................................................... 114
RESEARCH AND DEVELOPMENT ........................................................................................ 115
COMPETITION ........................................................................................................................ 115
COMPETITIVE STRENGTHS.................................................................................................. 115
PROPERTIES AND FIXED ASSETS ...................................................................................... 117
INDUSTRY OVERVIEW .......................................................................................................... 118
PROSPECTS .......................................................................................................................... 121
BUSINESS STRATEGIES AND FUTURE PLANS .................................................................. 123
ORDER BOOK ........................................................................................................................ 124
TREND INFORMATION .......................................................................................................... 124
DIRECTORS, MANAGEMENT AND STAFF .................................................................................... 125
DIRECTORS ............................................................................................................................ 125
KEY EXECUTIVE OFFICERS ................................................................................................ 128
MANAGEMENT REPORTING STRUCTURE.......................................................................... 130
EMPLOYEES .......................................................................................................................... 131
TABLE OF CONTENTS
2
REMUNERATION OF DIRECTORS, EXECUTIVE OFFICERS AND RELATED
EMPLOYEES .......................................................................................................................... 132
SERVICE AGREEMENTS........................................................................................................ 132
CNMC PERFORMANCE SHARE PLAN .......................................................................................... 134
CORPORATE GOVERNANCE.......................................................................................................... 143
INTERESTED PERSON TRANSACTIONS ...................................................................................... 148
PAST INTERESTED PERSON TRANSACTIONS .................................................................. 148
PRESENT AND ON-GOING INTERESTED PERSON TRANSACTIONS .............................. 150
GUIDELINES AND REVIEW PROCEDURES FOR ON-GOING AND FUTURE
INTERESTED PERSON TRANSACTIONS ............................................................................ 153
POTENTIAL CONFLICTS OF INTEREST .............................................................................. 155
INTERESTS OF EXPERTS .................................................................................................... 155
INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT
AGENT .................................................................................................................................... 155
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT ................................ 156
DESCRIPTION OF ORDINARY SHARES ........................................................................................ 157
EXCHANGE CONTROLS.................................................................................................................. 162
TAXATION.......................................................................................................................................... 163
CLEARANCE AND SETTLEMENT .................................................................................................. 169
GENERAL AND STATUTORY INFORMATION ................................................................................ 170
APPENDIX A INDEPENDENT AUDITORS REPORT ON THE COMBINED FINANCIAL
STATEMENTS 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 COMBINED
FINANCIAL INFORMATION FOR THE THREE MONTHS ENDED
31 MARCH 2011 .................................................................................................. B-1
UNAUDITED CONDENSED INTERIM COMBINED FINANCIAL INFORMATION
FOR 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)
REGISTERED OFFICE : 5 Shenton Way
#11-03 UIC Building
Singapore 068808
MANAGER AND SPONSOR : PrimePartners Corporate Finance Pte. Ltd.
AND JOINT PLACEMENT 20 Cecil Street
AGENT #21-02 Equity Plaza
Singapore 049705
JOINT PLACEMENT AGENT : Asiasons WFG Securities Pte Ltd
5 Shenton Way
#28-01 UIC Building
Singapore 068808
INDEPENDENT AUDITORS : KPMG LLP
AND REPORTING 16 Raffles Quay
ACCOUNTANTS #22-00 Hong Leong Building
Singapore 048581
Partner-in-charge: Tan Huay Lim
(a practising member of the Institute of Certified Public Accountants
of Singapore)
SOLICITORS TO THE : Shook Lin & Bok LLP
PLACEMENT AND LEGAL 1 Robinson Road
ADVISER TO OUR COMPANY #18-00 AIA Tower
ON SINGAPORE LAW Singapore 048542
LEGAL ADVISER TO OUR : Skrine
COMPANY ON MALAYSIA 8th Floor, Wisma UOA Damansara
LAW No. 50 Jalan Dungun, Damansara Heights
50490 Kuala Lumpur
Malaysia
LEGAL ADVISER TO OUR : Ha and Ho Solicitors
COMPANY ON HONG KONG Rooms 1109-10A
LAW Wing Tuck Commercial Centre
177-183 Wing Lok Street
Sheung Wan
Hong Kong
INDEPENDENT GEOLOGIST : Behre Dolbear Australia Pty Limited
Level 9, 80 Mount Street
North Sydney, NSW 2060
Australia
CORPORATE INFORMATION
4
INDEPENDENT VALUER : Jones Lang LaSalle Sallmanns Limited
6/F Three Pacific Place
1 Queens Road East
Hong Kong
SHARE REGISTRAR : Boardroom Corporate & Advisory Services Pte. Ltd.
50 Raffles Place
#32-01 Singapore Land Tower
Singapore 048623
PRINCIPAL BANKERS : The Bank of East Asia, Limited
60 Robinson Road
Bank of East Asia Building
Singapore 068892
CIMB Bank Berhad
Lot 522, Jalan Dato Nik Mustapha
17500 Tanah Merah, Kelantan
Malaysia
Standard Chartered Bank
Marina Bay Financial Centre (Tower 1)
8 Marina Boulevard, Level 24
Singapore 018981
RECEIVING BANKER : The Bank of East Asia, Limited
60 Robinson Road
Bank of East Asia Building
Singapore 068892
VENDORS : Messiah Limited
P.O. Box 957
Offshore Incorporations Centre
Road Town Tortola
British Virgin Islands
EP Capital Inc.
P.O. Box 957
Offshore Incorporations Centre
Road Town Tortola
Caravel Holdings Group Ltd
Portcullis TrustNet Chambers
P.O. Box 3444
Road Town Tortola
Ng Eng Tiong
1 Shenton Way
#16-11
Singapore 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 in
Singapore on 11 August 2011
CNMC : CNMC Goldmine Limited, a company incorporated in Hong Kong
on 28 October 2006 and a wholly-owned subsidiary of our
Company
CMNM : CMNM Mining Group Sdn. Bhd., a company incorporated in
Malaysia on 27 December 2006 and a 81% owned subsidiary of
CNMC
Group or Group Companies : Our Company and our subsidiaries as at the date of this Offer
Document
MCS : MCS Mining Group Sdn. Bhd., a company incorporated in
Malaysia on 4 October 2004 and a 80%
(1)
owned subsidiary of
CNMC
CNMC-Nalata : CNMC-Nalata Mining Sdn. Bhd., a company incorporated in
Malaysia on 24 January 2008 and a 80% owned subsidiary of
CNMC
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 company
incorporated in Malaysia on 13 March 2011 pursuant to the Joint
Venture Agreement which is proposed to be 51% owned by
CMNM and 49% owned by Xiamen Shenkun
CPF : Central Provident Fund
CSU : Central South Universitys School of Geo-science and
Environmental 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 to
hold 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
SCCS : Securities Clearing & Computer Services (Pte) Ltd
SGX-ST : Singapore Exchange Securities Trading Limited
Share Registrar : Boardroom Corporate & Advisory Services Pte. Ltd.
SIC : Securities Industry Council of Singapore
Sinomine : Sinomine Resource Exploration and Sinomine Resource
(Malaysia)
Sinomine Resource Exploration : Sinomine Resource Exploration Co., Ltd
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 the
Placement and which form part of this Offer Document
Application List : The list of applications for the subscription and/or purchase of the
Placement 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, substantial
shareholder 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 a
beneficiary or, in the case of a discretionary trust, is a
discretionary object; or
(iii) any company in which he and his immediate family
together (directly or indirectly) have an interest of
30% or more of the total votes attached to all the
voting shares;
DEFINITIONS
7
(b) in relation to a substantial shareholder or a controlling
shareholder (being a company) means any other company
which is its subsidiary or holding company or is a fellow
subsidiary of any such holding company or one in the equity
of which it and/or such other company or companies taken
together (directly or indirectly) have an interest of 30% or
more 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 subsidiary
has, or the corporation and its subsidiary together have, a
direct interest of not less than 20% but not more than 50%
of the aggregate of the total votes attached to all the voting
shares; or
(b) any corporation, other than a subsidiary of the corporation
or a corporation which is an associated company by virtue
of paragraph (a), the policies of which the corporation or its
subsidiary, or the corporation together with its subsidiary, is
able to control or influence materially
Audit Committee : The audit committee of our Company as at the date of this Offer
Document, unless otherwise stated
Awards : The contingent awards of Shares granted or which may be
granted pursuant to the CNMC Performance Share Plan
Award Shares : The Shares which are the subject of the Awards under the CNMC
Performance Share Plan
BDA Technical Report : The technical report dated 12 August 2011 prepared by BDA
relating to the Sokor Gold Project and Sokor Gold Zone set out in
Appendix F of this Offer Document
Board or Board of Directors : The board of Directors of our Company as at the date of this Offer
Document, 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 Performance
Plan Share Plan which was approved on 14 October 2011, particulars
of which are set out in the section entitled CNMC Performance
Share 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 a
corporation and who exercises control over the corporation;
or
DEFINITIONS
8
(b) a person who has an interest of 15% or more of the total
votes 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 approximately
US$3.10 million issued by CNMC to Lim Chee Hoong, Lim Peng
Liang David Llewellyn and Grande Pacific which were converted
into 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 Chief
Financial Officer of our Company
Entity at Risk : (a) The Company; (b) a subsidiary of the Company that is not
listed on the SGX-ST or an approved exchange; or (c) an
Associated Company that is not listed on the SGX-ST or an
approved exchange, provided that our Group or our Group and
our Interested Person(s), has control over the Associated
Company
EPS : Earnings per Share
Executive Directors : The executive Directors of our Company as at the date of this
Offer Document, unless otherwise stated
Executive Officers : The executive officers of our Company as at the date of this Offer
Document, who are also key executives as defined under the
Securities and Futures (Offers of Investments) (Shares and
Debentures) Regulations 2005, unless otherwise stated
FY : Financial year ended or, as the case may be, ending 31
December
Hong Kong : The Hong Kong Special Administrative Region of the PRC
Independent Directors : The independent Directors of our Company as at the date of this
Independent Valuation Report : The valuation report dated 1 September 2011 prepared by JLLS
relating to the independent valuation of the fair market value of the
Sokor Gold Project as set out in Appendix G of this Offer
Document
Interested Person : (a) a director, chief executive officer or Controlling Shareholder
of the Company; or
(b) an Associate of any such director, chief executive officer or
Controlling Shareholder
Interested Person Transaction : Means a transaction between an Entity at Risk and an Interested
Person
Joint Venture Agreement : A joint venture agreement dated 28 January 2011 entered into
between CMNM and Xiamen Shenkun to incorporate a joint
venture company to be 51% owned by CMNM and 49% owned by
Xiamen Shenkun
DEFINITIONS
9
JORC Code : Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves promulgated by the Joint Ore
Reserves Committee of the Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals
Council 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 the
lodgement 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 into
between our Company, the Vendors and PPCF pursuant to which
PPCF shall sponsor and manage the Listing, details as described
in the sections entitled Plan of Distribution and General and
Statutory Information Management and Placement
Arrangements 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 invites
applications to subscribe for pursuant to the Placement, subject to
and on the terms and conditions set out in this Offer Document
Nominating Committee : The nominating committee of our Company as at the date of this
Non-Executive Directors : The non-executive Directors of our Company (including the
Independent 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 our
Company in respect of the Placement
PER : Price earnings ratio
period under review : The period which comprises FY2008, FY2009, FY2010 and
1Q2011
Placement : The placement of the Placement Shares by the Joint Placement
Agents on behalf of our Company and the Vendors for
subscription and/or purchase at the Placement Price, subject to
and on the terms and conditions as set out in this Offer Document
DEFINITIONS
10
Placement Agreement : The placement agreement entered into between our Company, the
Vendors and the Joint Placement Agents pursuant to which the
Joint Placement Agents agreed to procure subscriptions and/or
purchases for the Placement Shares at the Placement Price as
described in the sections entitled Plan of Distribution and
General and Statutory Information Management and Placement
Arrangements 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 Vendor
Shares
PPCF Shares : The 3,771,000 new Shares to be issued and allotted to PPCF by
our Company as part of PPCFs management fee as the Manager
and Sponsor
PRC : The Peoples Republic of China
Pre-Placement Investors : Lim Chee Hoong, Lim Peng Liang David Llewellyn, Grande Pacific
Limited and Yu Long Fei
Refining Agreement : Refining agreement dated 7 April 2009 entered into between
CMNM and AGR Matthey pursuant to which CMNM engages AGR
Matthey to refine gold and silver produced by CMNM and as
varied by a novation deed dated 29 March 2010
Remuneration Committee : The remuneration committee of our Company as at the date of
this Offer Document, unless otherwise stated
Restructuring Exercise : The corporate restructuring exercise implemented in connection
with 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 but
does 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 and
our Executive Directors, as described in the section entitled
Directors, Management and Staff Service Agreements of this
Offer Document
SFR : The Securities and Futures (Offers of Investments) (Shares and
Debentures) Regulations 2005 of Singapore, as amended,
supplemented or modified from time to time
SGXNET : Singapore Exchange Network, a system network used by listed
companies in sending information and announcements to the
SGX-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 holder
is CDP, the term Shareholder shall, in relation to such Shares
mean the Depositors whose Securities Accounts are credited with
Shares
Share Swap Agreement : The share swap agreement dated 9 October 2011 entered into
between our Company and the shareholders of CNMC to acquire
the entire issued share capital of CNMC pursuant to the
Restructuring Exercise
Singapore : The Republic of Singapore
Sokor Block : Mining area covering approximately 10 sq km within Sungai
Amang and Sungai Sejana, Mukim Sokor, Sokor, Tanah Merah,
Kelantan, Malaysia
Sokor Gold Project : The exploration and mining of gold at the Sokor Block pursuant to
the contractual rights granted to CMNM by KSEDC as the holder
of the mining lease for the Sokor Block via an agreement dated 16
May 2007 entered into between CNMC and KSEDC and
supplemented by a tripartite agreement dated 21 April 2011
entered into between CNMC, CMNM and KSEDC
Sokor Gold Zone : An area covering approximately 62.8 sq km within the Districts of
Kuala Krai, Jeli and Tanah Merah, Kelantan, Malaysia
Substantial Shareholder(s) : Persons who have an interest in one or more voting shares, and
the total votes attaching to that share or those shares, represent
not less than 5% of the total votes attaching to all the voting
shares in our Company
USA : United States of America
VALMIN Code : Code for the Technical Assessment and Valuation of Mineral and
Petroleum Assets and Securities for Independent Expert Reports
2005 Edition, prepared by the VALMIN Committee, a joint
committee of the Australasian Institute of Mining and Metallurgy,
the Australian Institute of Geoscientists and the Mineral Industry
Consultants Association with the participation of the Australian
Securities and Investment Commission, the Australian Stock
Exchange Limited, the Minerals Council of Australia, the
Petroleum Exploration Society of Australia, the Securities
Association of Australia and representatives from the Australian
finance sector
Vendors : Messiah Limited, EP Capital Inc., Caravel Holdings Group Ltd and
Ng Eng Tiong
Vendor Shares : The 17,200,000 issued and fully paid-up Shares for which the
Vendors invite applications to purchase pursuant to the
Placement, subject to and on the terms and conditions of this
Offer 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
m
3
: 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 section
of this Offer Document shall have the meanings ascribed to them as stated in Appendix H of this Offer
Document.
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 Trusts
Act (Chapter 31A) of Singapore.
The expression Entity includes a corporation, an unincorporated association, a partnership and the
government of any state, but does not include a trust.
The expressions Depositor, Depository Agent and Depository Register shall have the meanings
ascribed 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 or
appendices respectively in this Offer Document.
Any discrepancies in tables included herein between the total sum of amounts listed and the totals shown
thereof are due to rounding. Accordingly, figures shown as totals in certain tables may not be an
arithmetic aggregation of the figures which precede them.
Words importing the singular shall, where applicable, include the plural and vice versa and words
importing the masculine gender shall, where applicable, include the feminine and neuter genders and
vice versa. References to persons shall include corporations.
Certain names with Chinese characters have been translated into English names for the convenience of
Shareholders. Such translations may not be recognised with the relevant PRC authorities and should not
be construed as representing the Chinese characters. In the event of any inconsistency between the
official 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 a
reference 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 used
in this Offer Document and the Application Forms shall, where applicable, have the meaning ascribed to
it 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 applicant
includes 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 to
Singapore time unless otherwise stated.
Any reference in this Offer Document to the Group, we, our, us or their other grammatical variations
is 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 Xiang
Xiong @ Lin Ye.
DEFINITIONS
14
To facilitate a better understanding of the business of our Group, the following glossary provides a
description of some of the technical terms and abbreviations commonly used in our industry. The terms
and their assigned meanings may not correspond to standard industry or common meanings or usage of
these 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 determination
being made by inductively coupled plasma atomic emission
spectrometry or flame atomic absorption mass spectrometry. This
procedure may be used for the analysis of sulfide ores and is
particularly suited for the analysis of skarn deposits and ores
containing chrysacolla and willemite. It is also useful when
knowledge of the major gangue elements is required
assay sample preparation : Method by which drill core or other soil/rock samples are reduced in
size in order to enable a small sample to be tested in a laboratory
to determine the grade of the mineral of interest; preparation
methods ensure that the small sample that is ultimately tested is
representative of the original whole sample
atomic absorption mass : A spectroanalytical technique for the qualitative and quantitative
spectrometry chemical elements analysis of ore material
Au : The chemical symbol for gold
backhoe : A piece of excavating equipment consisting of a digging bucket on
the end of a two-part articulated arm
carbon-in-leach : A method of recovering gold and silver from ore by simultaneous
dissolution and absorption of the precious metals onto fine carbon
in an agitated tank of ore solids/solution slurry
carbon re-generation : Regeneration of spent activated carbon in an enclosed thermal
treatment device
Central Belt : The Central Belt of Peninsular Malaysia which extends from
Malaysias borders to Thailand to Johore in the south of the
peninsula and contains base metal and gold mineralisation
channel samples : A sample composed of pieces of vein or mineral deposit that have
been cut out of a small trench or channel, usually about 10
centimetres wide and 2 centimetres deep
concentrate : A powdery product containing an upgraded mineral content
resulting from initial processing of mined ore to remove some waste
materials. A concentrate is an intermediary product, which would
still be subject to further processing, such as smelting, to effect
recovery 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 recover
mining costs; the cut-off grade which determines the workable
tonnage of an ore
deposit or mineral deposit : A body of mineralisation containing a sufficient average grade of
metal or metals to warrant further exploration and/or development
expenditure
diamond core drilling : A drilling method where the rock is cut with a diamond bit to extract
a core of the rock
drill anomaly targets : An indication of concentrations of magnetic minerals for further
exploration drilling
eluvial gold : Gold freed up from the gold source by erosion/weathering and
moved by gravity down slope
enhanced thematic mapper : An eight-band multispectral scanning radiometer onboard the
satellite that is capable of providing high-resolution imaging
information of the earths 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 furnace
and a fluxing agent to fuse a sample to collect any precious metals
(such as gold) in the sample. The collected material is then
analysed for gold or other precious metals by weight or
spectroscopic methods
geochemical : Pertaining to the chemical composition of the Earth
geological : Pertaining to the materials of the Earth and structure of those
materials
geological mapping : A tool to communicate or decode information relating to the surface
of the earth. It is mainly used for the interpretation of the structure,
mineralogy, stratigraphy, and paleontology of the earth crust. It is
also used in locating energy resources like petroleum, coal, natural
gas, and geothermal resources and is used for the exploration of
mineral deposits like gold, copper, iron, and construction aggregate
geological surveying : It is a modern technology that utilizes the technological
advancement of several disciplines of engineering. The geology
survey techniques include geological and topographic mapping with
the employment of robotic lasers, GPS, laser beams, and other
modern 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 satellites
and computers that can determine the latitude and longitude of a
receiver on earth by computing the time difference for signals from
different satellites to reach the receiver
gold bullion : Refined gold in the form of bars
16
gold dor : A crude gold, silver bullion, usually produced at the mine site and
sent to a refiner where the silver and gold are parted and the gold
is refined to commercial-grade gold bullion
gold-bearing ore dressing : The cleaning of gold-bearing ore by the removal of certain
valueless portions
heap leaching : A method of extracting precious metals from ore. The mined ore is
usually crushed into small chunks and heaped on an impermeable
plastic and/or clay lined leach pad where it can be irrigated with a
leach solution to dissolve the valuable metals. The solution then
percolates through the heap and reaches both the target and other
minerals. The leach solution containing the dissolved minerals is
then collected, treated in a process plant to recover the target
mineral and in some cases precipitate other minerals, and then
recycled to the heap after reagent levels are adjusted
indicated resources : According to the JORC Code, is such 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 on exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. The
locations are too widely or inappropriately spaced to confirm
geological and/or grade continuity but are spaced closely enough
for continuity to be assumed
induced polarisation : A method of geophysical prospecting carried out by passing an
electrical current through the ground and measuring the effect of
rocks and minerals in its path
inductively coupled plasma : An analytical technique that uses the inductively coupled plasma to
atomic 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 for
which tonnage, grade and mineral content can be estimated with a
low level of confidence. It is inferred from geological 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 holes
which may be limited or of uncertain quality and reliability
ISO : International Organisation for Standardisation, a worldwide
federation of national standard bodies
ISO 9000 : A series of international standards primarily concerned with quality
management and quality assurance
ISO 9001 : A constituent part of the ISO 9000 series which specifies the
requirements for a quality management system for any organisation
that needs to demonstrate its ability to consistently provide
products that meet customer and applicable requirements and aim
to enhance customer satisfaction
17
ISO/IEC 17025 : A main standard used by testing and calibration laboratories. It
specifies the general requirements for the competence to carry out
tests and/or calibrations, including sampling and covers testing and
calibration performed using standard methods, non-standard
methods, and laboratory-developed methods. Laboratories use
ISO/IEC 17025 to implement a quality system aimed at improving
their ability to consistently produce valid results. It is also the basis
for accreditation from an accreditation body and is a formal
recognition of a demonstration of competence in accuracy and
reliability of the tests and calibrations performed in laboratory
leaching vat : A vat containing gold extraction solution used for separating the
desired metals from the ore
measured resources : According to the JORC Code, is such part of mineral resource for
which tonnage, densities, shape, physical characteristics, grade and
mineral content can be estimated with a high level of confidence. It
is based on detailed and reliable exploration, sampling and testing
information gathered through appropriate techniques from locations
such as outcrops, trenches, pits, workings and drill holes. The
locations are spaced closely enough to confirm geological and
grade continuity
metallurgy studies : The science and technology of metals; usually pertaining to the
processing and extraction of metals and minerals from ores in
mining
mineral processing : The treatment of mineral products into concentrate
mineral resource : A concentration or occurrence of material of intrinsic economic
interest in and on the earths crust in such form, quality and
quantity that there are reasonable prospects for economic
extraction. The location, quantity, grade, geological characteristics
and continuity of a resource are known, estimated or interpreted
from 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 which
mineralisation might occur, whether by class of deposit, mode of
occurrence, genesis or composition
mining dilution : The reduction of grade for mined ore due to the inclusion of waste
material 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 features
of a region, usually preliminary to a more detailed survey
18
reverse circulation drilling : A drilling method that produces rock chips instead of core. The rock
chips are forced by air to surface through a double-walled drill pipe
and 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 or
matte is separated in fused form from nonmetallic materials or other
undesired metals with which it is associated
trenches : A long, narrow excavation dug through overburden, or blasted out
of rock, to expose a vein or ore structure
vat leaching : A method of extracting precious metals from ore. Vat leaching
involves contacting ore which has usually undergone size reduction
and classification, with leach solution in large tanks or vats
Zn : The chemical symbol for zinc
19
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
20
All statements contained in this Offer Document, statements made in press releases and oral statements
that may be made by the Vendors, us or our Directors, Executive Officers or employees acting on our
behalf, that are not statements of historical fact, constitute forward-looking statements. You can identify
some 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 note
that these words are not the exclusive means of identifying forward-looking statements. All statements
regarding our expected financial position, business strategies, plans and prospects are forward-looking
statements.
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, uncertainties
and other factors that may cause our actual results, performance or achievements to be materially
different from any future results, performance or achievements expected, expressed or implied by these
forward-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 we
conduct 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 of
our 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 this
Offer 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 achievements
to be materially different from that expected, expressed or implied by the forward-looking statements in
this Offer Document, undue reliance must not be placed on these statements which apply only as at the
date of this Offer Document. Neither our Company, the Vendors, the Manager and Sponsor, the Joint
Placement Agents, nor any other person represents or warrants that our Groups 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 a
result of the risks faced by us. We, the Vendors, the Manager and Sponsor and the Joint Placement
Agents, disclaim any responsibility to update any of those forward-looking statements or publicly
announce any revisions to those forward-looking statements to reflect future developments, events or
circumstances. We are, however, subject to the provisions of the SFA and the Catalist Rules regarding
corporate disclosure. In particular, pursuant to Section 241 of the SFA, if after the registration of the Offer
Document but before the close of the Placement, our Company becomes 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 under Section 243 of the SFA; or (c) a new circumstance
that has arisen since the Offer Document was lodged with the SGX-ST and would have been required by
Section 243 of the SFA to be included in the Offer Document if it had arisen before the Offer Document
was lodged and that is materially adverse from the point of view of an investor, our Company may lodge
a supplementary or replacement offer document with the SGX-ST, acting as agent on behalf of the
Authority.
21
SELLING RESTRICTIONS
This Offer Document does not constitute an offer, solicitation or invitation to subscribe for and/or
purchase our Placement Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful
or 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 the
legal or regulatory requirements of any jurisdiction, except for the filing and/or registration of this Offer
Document in Singapore in order to permit a public offering of our Placement Shares and the public
distribution of this Offer Document in Singapore. The distribution of this Offer Document and the offering
of our Placement Shares in certain jurisdictions may be restricted by the relevant laws in such
jurisdictions. Persons who may come into possession of this Offer Document are required by our
Company, the Vendors, the Manager and Sponsor and the Joint Placement Agents to inform themselves
about, and to observe and comply with, any such restrictions at their own expense and without liability to
us, 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 the
Authority. The registration of this Offer Document by the SGX-ST, acting on behalf of the Authority does
not imply that the SFA, the Catalist Rules or any other legal or regulatory requirements, have been
complied 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 our
Shares already issued (including the Vendor Shares), the New Shares which are the subject of the
Placement, the PPCF Shares, the Employee Shares and the Award Shares on Catalist. Such permission
will be granted when we have been admitted to Catalist. Acceptance of applications will be conditional
upon, inter alia, the issue of the New Shares and permission being granted by the SGX-ST for the listing
and quotation of all our existing issued Shares (including the Vendor Shares), the New Shares, the PPCF
Shares, the Employee Shares and the Award Shares on Catalist. If the admission, listing and trading of
our Shares already issued (including the Vendor Shares) and the New Shares do not proceed or the said
permission is not granted for any reason, monies paid in respect of any application accepted will be
returned, without interest or any share of revenue or other benefit arising therefrom and at the applicants
own risk, and the applicant will not have any claim against us, the Vendors, the Manager and Sponsor
and the Joint Placement Agents. No Shares will be allotted 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, acting as agent on
behalf of the Authority.
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 to Catalist but relies on
the 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 of
Shares 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 PPCF
Shares, the Employee Shares or the Award Shares.
We are subject to the provisions of the SFA and the Catalist Rules regarding corporate disclosure. In
particular, if after the registration of this Offer Document but before the close of the Placement, we
become 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 under
Section 243 of the SFA; or
(c) a new circumstance that has arisen since the Offer Document was lodged with the SGX-ST, acting
as agent on behalf of the Authority and would have been required by Section 243 of the SFA to be
included 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 or
replacement offer document with the SGX-ST, acting as agent on behalf of the Authority.
In the event that a supplementary or replacement offer document is lodged with the SGX-ST, the
Placement shall be kept open for at least 14 days after the lodgement of such supplementary or
replacement offer document.
Where prior to the lodgement of the supplementary or replacement offer document, applications have
been 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, our
Company and the Vendors shall:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants notice
in writing of how to obtain, or arrange to receive, a copy of the supplementary or
replacement offer document, and provide the applicants with an option to withdraw their
applications and take all reasonable steps to make available within a reasonable period the
supplementary or replacement offer document to the applicants who have indicated that they
wish to obtain, or have arranged to receive, a copy of the supplementary or replacement
offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement offer
document, give the applicants the supplementary or replacement offer document, as the
case 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 be
deemed to have been withdrawn and cancelled, and our Company (and on behalf of the
Vendors) shall return all monies paid in respect of any application, without interest or any
share 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 Company
and the Vendors shall:
(i) within two (2) days (excluding any Saturday, Sunday or public holiday) from the date of
lodgement of the supplementary or replacement offer document, give the applicants notice
in writing of how to obtain, or arrange to receive, a copy of the supplementary or
replacement offer document, and provide the applicants with an option to withdraw their
applications, and take all reasonable steps to make available within a reasonable period the
supplementary or replacement offer document to the applicants who have indicated that they
wish to obtain, or have arranged to receive, a copy of the supplementary or replacement
offer document;
(ii) within seven (7) days from the date of lodgement of the supplementary or replacement offer
document, give the applicants the supplementary or replacement offer document, as the
case may be, and provide the applicants with an option to return to our Company and/or the
Vendors, 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/or
sale shall be deemed void and our Company (and on behalf of the Vendors) shall return all
monies paid in respect of any application, without interest or any share of revenue or other
benefit 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 his
application shall, within 14 days from the date of lodgement of the supplementary or replacement offer
document, 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 interest
or any share of revenue or other benefit arising therefrom and at his own risk, and he will not have any
claim against our Company, the Vendors, the Manager and Sponsor or the Joint Placement Agents.
24
25
An applicant who wishes to exercise his option under paragraph (b)(i) or (b)(ii) to return the Placement
Shares allocated and/or issued to him shall, within 14 days from the date of lodgement of the
supplementary or replacement offer document, notify our Company of this and return all documents, if
any, purporting to be evidence of title to those Placement Shares to our Company, whereupon our
Company (and on behalf of the Vendors) shall, within seven (7) days from the receipt of such notification
and documents, if any, pay to him all monies paid by him for those Placement Shares, without interest or
any share of revenue or other benefit arising therefrom and at his own risk, and the allocation and/or
issue of those Placement Shares shall be deemed to be void, and he will not have any claim against our
Company, 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 Offer
Document relates, be allotted or issued. Such circumstances will include a situation where this Offer
Document (i) contains any statement or matter which, in the Authoritys opinion, is false or misleading, (ii)
omits any information that should have been included in it under the SFA, or (iii) does not, in the
Authoritys 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 the
Placement 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, the
applications for the Placement Shares shall be deemed to have been withdrawn and cancelled 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 the applicants have paid on account of their applications for the
Placement Shares; or
(b) where the Placement Shares have been issued and/or transferred to the applicants, the issue of
the Placement Shares shall 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
paid by them for the Placement Shares.
Such monies paid in respect of an application will be returned to the applicants at their own risk, without
interest or any share of revenue or other benefit arising therefrom, and they will not have any claims
against 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 Placement
Shares and repay application monies to applicants (including instances where a stop order under the
SFA is issued), subject to compliance with the Companies Act, our Company will purchase the
Placement Shares at the Placement Price.
This Offer Document has been seen and approved by our Directors and the Vendors and they individually
and collectively accept full responsibility for the accuracy of the 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 true disclosure of all material facts about the Placement, our
Company and its subsidiaries, and the Directors and the Vendors are not aware of any facts the omission
of which would make any statement in this Offer Document misleading. Where information in this Offer
Document has been extracted from published or otherwise publicly available sources or obtained from a
named source, the sole responsibility of the Directors and the Vendors has been to ensure that such
information has been accurately and correctly extracted from those sources and/or reproduced in the
Offer Document in its proper form and context.
Neither our Company, the Vendors, the Manager and Sponsor, the Joint Placement Agents nor any other
parties involved in the Placement is making any representation to any person regarding the legality of an
investment by such person under any investment or other laws or regulations. No information in this Offer
Document should be considered as being business, legal or tax advice regarding an investment in our
Shares. Each prospective investor should consult his own professional or other advisers for business,
legal or tax advice regarding an investment in our Shares.
No person has been or is authorised to give any information or to make any representation not contained
in this Offer Document in connection with the Placement and, if given or made, such information or
representation must not be relied upon as having been authorised by us, the Vendors, the Manager and
Sponsor and the Joint Placement Agents. Neither the delivery of this Offer Document and the Application
Forms 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 no
change in our affairs or in the statements of fact or information contained in this Offer Document since
the date of this Offer Document. Where such changes occur and are material or are required to be
disclosed by law, the SGX-ST and/or any other regulatory or supervisory body or agency, we may make
an announcement of the same to the SGX-ST and/or the Authority and/or the public and if required, we
may lodge a supplementary or replacement offer document with the SGX-ST and will comply with the
requirements of the SFA and/or any other requirements of the SGX-ST and/or Authority. All applicants
should take note of any such announcements and, upon the release of such an announcement, shall be
deemed to have notice of such changes.
Save as expressly stated in this Offer Document, nothing herein is, or may be relied upon as, a promise
or representation as to our future performance or policies. The Placement Shares are offered for
subscription and/or purchase solely on the basis of the information contained and representations made
in this Offer Document.
This Offer Document has been prepared solely for the purpose of the Placement and may not be relied
upon by any other persons other than the applicants in connection with their application for the
Placement Shares or for any other purpose.
This Offer Document does not constitute an offer, solicitation or invitation of the Placement
Shares in any jurisdiction in which such offer, solicitation or invitation is unlawful or unauthorised
nor does it constitute an offer, solicitation or invitation to any person to whom it is unlawful to
make such offer, solicitation or invitation.
Copies of this Offer Document and the Application Forms may be obtained on request, subject to
availability during office hours, from:
PrimePartners Corporate Finance Pte. Ltd. Asiasons WFG Securities Pte Ltd
20 Cecil Street 5 Shenton Way
#21-02 Equity Plaza #28-01 UIC Building
Singapore 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 Offer
Document by the SGX-ST, acting as agent on behalf of the Authority (the Registration)) to 25
October 2011.
The Application List will open immediately upon the Registration and will remain open until 12.00
noon on 25 October 2011 or for such further period or periods as our Directors and the Vendors
may, in consultation with the Manager and Sponsor and the Joint Placement Agents, in their
absolute discretion decide, subject to any limitation under all applicable laws and regulations. In
the event a supplementary offer document or replacement offer document is lodged with the
SGX-ST, acting as agent on behalf of the Authority, the Application List will remain open for at
least 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 this
Offer 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 basis
on 28 October 2011
The above timetable is only indicative as it assumes that the date of closing of the Application List will be
on 25 October 2011, the date of admission of our Shares to Catalist will be 28 October 2011, the
shareholding spread requirement of the SGX-ST will be complied with and the New Shares will be issued
and 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 its
absolute discretion, decide, including the commencement of trading on a ready basis and the
commencement date of such trading.
In the event of any changes in the closure of the Application List or the time period during which the
Placement is open, we will publicly announce the same:
(i) through a SGXNET announcement to be posted on the Internet at the SGX-ST website
http://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 the
Placement Shares pursuant to the Placement, as soon as it is practicable after the close of the
Application List through channels in (i) and (ii) above.
You should consult the SGX-STs announcement on the ready trading date released on the
Internet (at the SGX-ST website http://www.sgx.com) or the newspapers, or check with your
brokers 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 and
sponsored by PPCF.
Prior to the Placement, there has been no public market for our Shares. The Placement Price is
determined by us and the Vendors in consultation with the Manager and Sponsor and the Joint
Placement Agents, taking into account, inter alia, prevailing market conditions and the estimated market
demand for the Placement Shares, determined through a book-building process. The Placement Price is
the 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 in
the section entitled General and Statutory Information Management and Placement Arrangements of
this Offer Document, we and the Vendors have appointed PPCF and PPCF has agreed to manage and to
act as the full sponsor for the Listing. PPCF will receive a management fee from our Company for its
services rendered in connection with the Listing.
The Placement Shares are made available to retail and institutional investors in Singapore who may
apply through their brokers or financial institutions by way of the Application Forms. Application for the
Placement Shares may only be made by way of the Application Forms. The terms, conditions and
procedures 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 Placement
Agents, we have appointed PPCF and Asiasons WFG as the Joint Placement Agents and PPCF and
Asiasons WFG have agreed to procure subscribers and/or purchasers for the Placement Shares for a
placement commission of 3.0% of the aggregate Placement Price for each Placement Share, payable by
our Company and the Vendors in the proportion in which the Placement Shares are offered by the
Vendors 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 or
more sub-placement agents under the Placement Agreement upon such terms and conditions as PPCF
and 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 be
decided by the Joint Placement Agents), each of the Joint Placement Agents shall have the right
to terminate the Placement Agreement (by notice in writing to the Company and the Vendors). In
that 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 without
interest or any share of revenue or other benefit arising therefrom and at their own risk, and
subscribers and/or purchasers will not have any claim against our Company, the Vendors, the
Manager and Sponsor and the Joint Placement Agents.
Subscribers and/or purchasers of the Placement Shares may be required to pay brokerage or selling
commission of 1.0% of the Placement Price (and the prevailing goods and services tax thereon, if
applicable) to the Joint Placement Agents or any sub-placement agent that may be appointed by the
Joint Placement Agents.
None of our Directors or Substantial Shareholders intends to subscribe for and/or purchase the
Placement Shares. As far as we are aware, none of our Independent Directors, the members of our
Companys management or employees intends to subscribe for and/or purchase more than 5.0% of the
Placement 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 any
person 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) who
may indicate an interest to subscribe for and/or purchase Shares amounting to more than 5.0% of the
Placement 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 of
Shares, we will make the necessary announcements at an appropriate time. The final allotment and
allocation of Shares will be in accordance with the shareholding spread and distribution guidelines as set
out 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 General
and Statutory Information Management and Placement Arrangements of this Offer Document, our
Company does not have any material relationship with the Manager and Sponsor and Joint Placement
Agent, 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 date
our Company is admitted and listed on Catalist; and
(c) Pursuant to the Management Agreement and as part of PPCFs fees as the Manager and Sponsor,
our Company issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of the
issued and paid-up share capital of our Company prior to the Placement, at the Placement Price
for 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 interest
in our Company at its discretion.
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT
Company 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 WFGs parent company, Asiasons WFG Financial Ltd, a company listed on the Main
Board of the SGX-ST, is the sole shareholder of Raintree Strategic Consultancy Limited which
holds 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 in
this Offer Document have the same meaning when used herein. You should carefully consider all the
information presented in this Offer Document, particularly the matters set out in the section entitled Risk
Factors 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 private
company limited by shares under the name of CNMC Goldmine Holdings Pte. Ltd.. Our Company
registration number is 201119104K.
Pursuant to the Restructuring Exercise as described in the section entitled Restructuring Exercise in this
Offer 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 of
mined ore into gold dor for subsequent sale.
A detailed discussion of our business and the products and services we provide is set out in the section
entitled General Information on our Company and our Group - Business Overview of this Offer
Document.
SUMMARY OF OUR FINANCIAL INFORMATION
The following summary financial data should be read in conjunction with the full text of this Offer
Document, including the section entitled Managements Discussion and Analysis of Results of
Operations and Financial Position of this Offer Document and the Combined Financial Statements for
the years ended 31 December 2008, 2009 and 2010 as set out in Appendix A of this Offer Document
and the Unaudited Condensed Interim Combined Financial Information for the three months ended 31
March 2011 as set out in Appendix B of this Offer Document.
Audited Unaudited
(US$) FY2008 FY2009 FY2010 1Q2010 1Q2011
Revenue 530,169 537,320
Loss before income tax (991,053) (1,080,874) (2,289,475) (705,056) (683,189)
Loss for the year/period (991,233) (1,080,880) (1,930,630) (705,056) (668,655)
Loss attributable to:
Owners of the Company (990,166) (1,079,681) (1,737,550) (637,428) (632,835)
Non-controlling interests (1,067) (1,199) (193,080) (67,628) (35,820)
(Loss) per Share (US cents)
(1)
(0.26) (0.28) (0.46) (0.17) (0.17)
Adjusted (loss) per Share (US cents)
(2)
(0.24) (0.27) (0.43) (0.16) (0.16)
Notes:
(i) For comparative purposes, loss per share for the period under review have been calculated based on loss attributable to
owners of the Company and the pre-Placement share capital of 380,793,000 Shares.
(ii) For comparative purposes, loss per share for the period under review have been calculated based on loss attributable to
owners of the Company and the post-Placement share capital of 404,693,000 Shares.
31
Audited Unaudited
(US$) 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 380,793,000
Shares.
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 to
locate additional gold resources
Our Sokor Gold Project and the ore processing facility of our Group are both located close to
urban facilities enabling our Group to save in both hiring and transportation costs as well as
minimise 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 Information
on 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
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 gold
mineralisation
Increasing our ore processing capacity by undertaking a feasibility study to construct a gold
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 section
entitled General Information on our Company and our Group Prospects and General Information of
our Company and our Group - Business Strategies and Future Plans of this Offer Document.
OUR CONTACT DETAILS
Our Companys registered office is located at 5 Shenton Way, #11-03 UIC Building, Singapore 068808
and our principal place of business is located at 5 Shenton Way, #11-03 UIC Building, Singapore 068808.
Our Companys 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$0.40 for each Placement Share, payable in full on application.
Placement Size : 41,100,000 Placement Shares comprising 23,900,000 New Shares and
17,200,000 Vendor Shares.
The New Shares, upon issue and allotment, will rank pari passu in all
respects with the existing issued Shares.
The Placement : The Placement comprises a placement of 41,100,000 Placement
Shares at the Placement Price, subject to and on the terms and
conditions of this Offer Document.
Purpose of the : The purpose of the Placement is to secure the admission of our
Placement Company to Catalist. Our Directors consider that the listing and
quotation of our Shares on Catalist will enhance our public image locally
and overseas and enable us to tap the capital markets for the expansion
of our business operations.
The Placement will also provide the members of the public, our
management, employees and business associates who have
contributed to our success with an opportunity to participate in the
equity of our Company. In addition, the proceeds of the issue of the New
Shares will also provide us with, inter alia, additional working capital to
finance our business expansion.
Listing Status : Prior to the Listing, there had been no public market for our Shares. Our
Shares will be quoted on Catalist, subject to admission of our Company
to Catalist and permission for dealing in, and for quotation of, our
Shares being granted by the SGX-ST.
Risk Factors : Investing in our Shares involves risks which are described in the section
entitled Risk Factors of this Offer Document.
Use of Proceeds : Please refer to the section entitled Use of Proceeds and Listing
Expenses of this Offer Document for more details.
33
EXCHANGE RATES
The following table sets out, for each of the financial years or periods indicated, the average and closing
exchange rates for US$/S$. Where applicable, the exchange rates in the below table are used for the
translation of our Groups financial statements disclosed elsewhere in this Offer Document.
US$ / 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 the
past six (6) months prior to the Latest Practicable Date and for the period from 1 September 2011 up to
the 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$1.00.
Notes:
(1) The above exchange rates have been calculated with reference to exchange rates quoted from www.oanda.com and should
not be construed as representation that the US$ 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 of
Section 249 of the SFA and is therefore not liable for the relevant information under Sections 253 and 254 of the SFA. While
our Directors have taken reasonable action to ensure that the information 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.
34
RISK FACTORS
You should evaluate carefully each of the following risk factors and all of the other information set forth in
this Offer Document before deciding to invest in our Shares. Some of the following considerations relate
principally to the industry in which we operate and our business in general. Other considerations relate
principally to general social, economic, political and regulatory conditions, the securities market and
ownership 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-looking
statements that involve risks and uncertainties. If any of the following risk factors and uncertainties
develops into actual events, our business, financial condition or results of operations or cash flows could
be materially and adversely affected. In such circumstances, the trading price of our Shares could decline
due to any of these risk factors, and you may lose all or part of your investment. To the best of our
Directors belief and knowledge, all the risk factors that are material to investors in making an informed
judgement 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 mining
operation
As indicated in the BDA Technical Report, our current total gold reserves estimate is 989,000t, of which
proved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900
oz and probable gold reserves are 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 (Current Gold Ore Reserves). Based on the planned production
schedule for our mining operations, it is expected that the mining of these Current Gold Ore Reserves will
be completed by us in 2012. While we are continuously conducting exploration activities, however there is
no assurance that these exploration activities will result in the discovery of new mineable reserves. In
addition, even if a viable deposit is discovered, it may require substantial capital expenditure and time
from the initial phases of exploration until production commences during which the capital cost and
economic feasibility may change. Furthermore, actual results upon production may differ from those
anticipated at the time of the discovery. In order to maintain gold production beyond the life of our Current
Gold Ore Reserves, other than through acquisitions, additional gold reserves must be identified either to
extend the life of the existing mines or justify the development of new projects. In the event that our
exploration programmes do not result in the replacement of such gold reserves or result in new
commercially viable mining operation beyond the Current Gold Ore Reserves identified, this could have
an 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 future
expected performance. Although our management and technical staff possess the relevant experience
and expertise in gold mining development and production where the Executive Director and Chief
Executive Officer, Lim Kuoh Yang, has 11 years of experience in the mining industry and the Chief
Geologist, Professor Yang Mu, has a Doctorate Degree in Geosciences and Environment School as well
as a post-doctoral research in Guangzhou Institute of Geochemistry and has been involved in some gold
mining projects since 1994, there is no assurance that the growth and future performance of our Group
will be successful. The failure of our Group to generate revenue and profits from its gold mining activities
could have an adverse impact on the development of and future production from our Groups concession
areas, which in turn could have an adverse effect on the financial condition and results of operations of
our Group.
Our business, revenues and profits are affected by the volatility of prices for gold and the global
economy
Our results will be highly sensitive to changes in the prices of gold. Gold prices fluctuate and are affected
by numerous factors, including expectations with respect to the rate of inflation, exchange rates, interest
rates, global and regional political and economic crises and governmental policies with respect to gold
holdings by central banks. The demand for and supply of gold affect gold prices but not necessarily in the
same manner as demand and supply affect the prices of other commodities. The supply of gold consists
of a combination of mine production and existing stocks of bullion and fabricated gold held by
governments, public and private financial institutions, industrial organisations and private individuals. The
demand 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 affect
our business, revenues and profits. Our profitability is, and will largely be determined by the difference
between the prices received for gold that our Group produces and the costs of developing, producing and
selling the gold produced. Historically, international prices for gold have fluctuated widely in response to
changes in many factors. Our Group does not and will not have control over the factors affecting
international 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 the
future, and accordingly, our revenue and profit in any financial reporting period may be subject to
significant 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 the
method and timing of mining activities. By their nature, these estimates and assumptions are subject to
significant 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 be
realised in practice and in the event that our Group has underestimated our operating costs, our financial
condition and results of operations will be adversely affected.
Our actual ore processing capacity may differ significantly from managements expectations of
the 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 processing
capacity of each heap leach pad and the time taken for each ore processing cycle. These estimates and
assumptions are subject to significant uncertainties and the actual ore processing capacity may differ
materially from managements expectations and assumptions. Accordingly, no assurance can be given
that the expected ore processing capacity and the underlying assumptions will be realised in practice and
in the event that our Group has overestimated our ore processing capacity, we will not be able to achieve
the managements anticipated level of production and profitability.
We may not be able to obtain or renew governmental permits necessary for exploration, mining or
production at our gold mines
In the ordinary course of business, mining companies are required to seek governmental permits and
approvals for prospecting, exploration and mining and expansion of existing operations or for the
commencement of new operations. Obtaining or renewing the necessary governmental permits and
approvals can be a complex and time-consuming process involving several layers of approvals from
government and regulatory bodies and often involving costly undertakings on our part. The duration and
success of obtaining such approvals are contingent upon many variables and are dependent on the
decisions of the regulatory authorities. Environmental protection and rehabilitation requirements, including
RISK FACTORS
37
the submission of environmental assessment reports, environmental management plans, rehabilitation
plans and compliance with the environmental monitoring requirements, which may increase our costs and
cause delays depending on the nature of the activity to be permitted and the interpretation of applicable
requirements implemented by the permitting authority. There can be no assurance that all necessary
permits and approvals for our activities will be obtained and, if obtained, that the costs involved will not
exceed those estimated by us. It is possible that the costs and delays associated with the compliance
with such standards and regulations could affect our ability to proceed with the development or operation
of a mine or mines. Accordingly, our operations, financial condition and future growth will be adversely
affected.
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 our
gold mining project. We may also require additional funding for our growth plans. We have estimated our
funding requirements in order to implement our growth plans as set out in the section entitled General
Information on our Company and our Group - Business Strategies and Future Plans of this Offer
Document.
In the event that the costs of implementing our growth plans should exceed our funding estimates
significantly or that we come across opportunities to grow through expansion plans which cannot be
predicted at this juncture, and our funds generated from our operations prove insufficient for such
purposes, we may need to raise additional funds to meet these funding requirements. We will consider
obtaining 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 business
opportunities that our Group deems favourable to our future growth and prospects. Funding through the
new issuance of equity will lead to a dilution in the interests of the Shareholders. An increase in debt
financing may be accompanied by conditions that restrict our ability to pay dividends or require us to
seek lenders consent for payment of dividends, or restrict our freedom to operate our business by
requiring lenders consent for certain corporate actions. In addition, there is no assurance that we will be
able to obtain additional financing on terms that are favourable and acceptable. If we are not able to
secure adequate financing, our business and growth may be negatively affected.
Our resources and reserves estimates are based on assumptions and exposed to technical
uncertainties which may lead to inaccuracy
The gold resources and reserves estimates of our gold mine are based on certain estimation
methodology and procedures, various assumptions and professional engineering judgment. There is no
assurance on the accuracy of the resource and reserve estimates. If the data on which the resource and
reserve 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 a
result 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 any
unreliability of the data or estimation methodology and procedures in respect of which the resources and
reserves estimates are calculated, it could have an adverse effect on the valuation, financial conditions
and 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 of
the four deposits and do not take into account factors such as the economic viability of the extraction of
such resources, the incorporation of mining dilution and allowing for mining losses. In addition, the
resources estimates are presented on an unrisked basis and before adjusting for the likelihood of
commercial production. In the event that resources cannot be converted successfully to reserves or that
the actual production costs and actual sale prices render a portion or all of our reserves to be
uneconomical 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 to
achieve our production estimates
Estimates of future production for the mining operations of our Group are subject to change and based
on 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 and
presence or absence of certain metallurgical characteristics) and estimated rates and costs of
production. The production schedule for the extended life of the mine is considered preliminary and
several assumptions are made by our Group including conversion of inferred resources to ore reserves,
definition of additional resources at Rixens and metallurgical recovery of the primary ore which require
better definition. In addition, testwork has yet to be completed on primary ore and there is a possibility
that 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 proportion
of gold production projected based on a heap leaching operation is likely to be challenging as the need to
control the water balance in such a plant in a tropical monsoonal environment that our Group is operating
in may affect the viability of the heap leach operation. In addition, the production schedule is based on a
mining dilution rate of 5% at zero grade and mining recovery at 100% which BDA considers to be
somewhat optimistic. Due to the above reasons, there is no assurance that we will be able to achieve our
production estimates and in such event, the future cash flow, results of operations and financial condition
of our Group could be adversely affected. Actual production may also vary from the estimates for a
variety of other reasons as set out below:
(a) actual ore mined varying from estimates in grade, tonnage, and metallurgical and other
characteristics;
(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 slides
and 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 and
lubricating 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 in
production, injury or death to persons, damage to the properties of our Group or others, monetary losses
and legal liabilities. These factors may cause a mineral deposit that has been mined profitably in the past
to become unprofitable. Mining operations frequently experience unexpected problems during the initial
development phase. Delays or interruptions can often occur in the initial stage of production. As our
Group is in the preliminary stage of production, it is possible that actual cash operating costs and
economic returns will differ significantly from those that are estimated. There is no assurance that we will
be able to realise the estimated recovery rate at the Sokor Gold Project or any other mines operated by
us in the future and in such event, the future growth prospects and results of operations of our Group
may be adversely affected.
Our business and results of operations will be affected if we fail to maintain or enhance existing
mining operations
Mining exploration is unpredictable in nature. The success of any mining exploration programme depends
on various factors including, among other things, (i) whether ore bodies can be located; (ii) whether the
location of ore bodies are economically viable to mine; (iii) whether appropriate metallurgical processes
can 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 to
maintain gold production beyond the life of our current proved and probable reserves, we must identify
further reserves and resources capable of economical exploitation. However, due to the unpredictable
and speculative nature of the mining industry, there is no assurance that any exploration programme will
result in the discovery of valuable resources. There is also no assurance that reported resources can be
converted into reserves. Furthermore, actual results upon production may differ from those anticipated at
the time of discovery.
To access additional reserves and resources, we will need to successfully complete development
projects, including extending existing mines and developing new mines. We typically conduct feasibility
studies to determine whether to undertake significant development projects. Actual results may differ
significantly from those anticipated by the feasibility studies. In addition, there are a number of
uncertainties 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 to
construct mining and processing facilities, and the availability and cost of smelting and refining
arrangements; (iii) the availability and cost of labour, utilities, auxiliary materials and other supplies and
the accessibility of transportation and other infrastructure; and (iv) the availability of funds to finance
construction and production activities. Accordingly, there is no assurance that any future exploration
activities or development projects will extend the life of our existing mining operations or result in any new
economical 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 CGRI
to carry out our exploration activities. Such Chinese contractors and/or consultants have offered their
services and provided their support to our Group at prices which are more favourable than those offered
by other contractors and/or consultants. The mining operations of our Group rely on the services provided
by the Chinese contractors and/or consultants and our ability to maintain our relationships with the
Chinese 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 the
current favourable terms, or obtain replacements on favourable terms or at all may affect our Groups
business and results of operations. Details of the Chinese contractors and/or consultants of our Group
are set out in the section entitled General Information on Our Company and Our Group - Key
Contractors 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 with
third party contractors. As a result, our operations will be affected by the performance of such third party
contractors. Although we monitor the work of such third party contractors to ensure that the work is
carried out on time, on budget and to specification, we may not be able to control the quality, safety and
environmental standards of the work done by the third party contractors to the same extent as when the
work is performed by our own employees. Any failure by the third party contractors to meet our Groups
quality, safety and environmental standards could affect our Groups compliance with government rules
and regulations relating to exploration, mining and workers safety and may also result in liabilities to third
parties, which in turn could have a material adverse effect on our Groups business, reputation, financial
condition and results of operations. Moreover, since we do not enter into any long term contract with any
of the third party contractors, any failure by us to retain the services of such third party contractors on
favourable terms, or obtain replacements on favourable terms or at all may have a material adverse effect
on our Groups 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 Business
Strategies 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 further
resource definition and continuing exploration activities; (iii) undertaking a feasibility study to construct a
gold 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 that
the implementation and execution of such business strategies and future plans will be successful as this
involves a number of risks and uncertainties and it is dependent on approvals from the governmental and
regulatory 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 effectively
or the commencement of these planned expansions is delayed or aborted, our future financial
performance and position will be adversely affected. In addition, our mining scheme approved by the
Kelantan State Government is subject to initial mine production not exceeding 300,000t per annum of
mined ore. Failure to obtain the approval of the Kelantan State Government to relax such condition to
cater for our Groups expansion in the future will have a material adverse effect on our Groups growth
potential.
Our operations are exposed to regulations and risks in relation to production safety and the
occurrence of accidents
As a gold mining company, we are subject to extensive laws, rules and regulations imposed by the
Malaysian government regarding occupational safety and health. In particular, our mining operations
involve the handling and storage of hazardous chemicals and other dangerous articles and the usage of
various heavy machineries. We may experience in the future increased costs of production arising from
compliance with occupational safety and health laws and regulations. There can be no assurance that
more stringent laws, regulations or policies regarding occupational safety and health will not be
implemented or that the existing laws, regulations and policies will not be more stringently enforced. We
may not be able to comply with all existing or future laws, regulations and policies in relation to
occupational safety and health issues economically or at all. Should we fail to comply with any
occupational safety and health laws or regulations, we would be required to rectify the occupational
safety and health problems within a period prescribed under the laws and regulations or as prescribed by
the regulatory authorities. Failure to rectify any problem could lead to suspension of our operations and
offences committed against the laws and regulations could lead to penalties involving mandatory fines
and/or imprisonment. In addition, there can be no assurance that accidents arising from the mishandling
of 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 we
may 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 or
breakdown 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, there
was a fatal industrial accident which occurred in the mining area of our Group. Please refer to the section
entitled General Information on Our Company and Our Group - Safety Policy of this Offer Document for
further 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 Groups 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 our
mining rights. In any of such events, our business and financial performance will be adversely affected. In
the event of accidents which are not covered by the insurance or workmens compensation policies taken
by our Group, or if claims arising from such accidents are in excess of our insurance coverage, and/or
any of our insurance claims are contested by the insurance companies, we will be required to pay such
compensation. Under such circumstances, the business and financial performance of our Group will be
adversely 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 operations
are subject to environmental laws, rules and regulations of Malaysia, such as prevention of pollution of
the air, earth and water, the treatment and discharge of hazardous wastes and materials and
environmental 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 our
Group relates to the potential for exposure to offsite water contamination via contaminated water run-off
from the proposed heap leach area, the tailings storage facility, the plant area and mining areas. The
occurrence of any environmental hazards may delay production, increase production costs, cause
personal injuries or property damage, result in liabilities incurred by our Group and/or damage our
Groups reputation. Such incidents may also result in a breach of the conditions of our Groups
environmental approvals and/or mining rights or other consents, approvals or authorisations, which may
result in fines, penalties, or even possible revocation of our mining rights. In any of such events, our
business and financial performance will be adversely affected.
In the future, we may experience increased costs of production arising from compliance with
environmental laws and regulations. In particular, we will incur additional costs for payments to be made
into 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 to
the mining lease. Moreover, the development of the Malaysian economy and the improvements in the
living standards of the population may lead to a heightened awareness of environmental protection. As a
result, it is possible that more stringent environmental laws, regulations and policies may be implemented
in 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 to
environmental protection and rehabilitation economically or at all. Should we fail to comply with any such
existing or future laws, regulations or policies, we may be subject to penalties and liabilities under
Malaysian laws and regulations, including but not limited to warnings, fines, prosecution, suspension of
production and closure of the facility that fails to comply with the relevant environmental standards. In
addition, we may also be subject to actions by environment protection groups or other interested persons
who object to the actual or perceived environmental impact of our mining operation or other actual or
perceived condition at our mine. These actions may delay or halt production or may create negative
publicity 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 revenue
and livelihoods of the members of the local communities who use the area. Consequently, local
dissatisfaction with our Group may arise if access to fish resources is restricted. In addition, the local
communities may become disenchanted from in-migration and disturbance from traffic from mine
operations as well as loss of jobs which occurs at mine closure. If we are not able to deal with such
social issues properly, it will cause damage to our reputation which could adversely affect our business
operations and in turn, our financial performance.
Our mining operations have a finite life and eventual closure of these operations will entail costs
and risks regarding ongoing monitoring, rehabilitation and compliance with environmental
standards
Our mining operations have a finite life and will eventually be closed. The key costs and risks for mine
closures 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 development
infrastructure and programmes to new owners.
The successful completion of these tasks is dependent on our ability to successfully implement
negotiated 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 to
ongoing environmental rehabilitation costs and damage to the reputation of our Group if desired
outcomes cannot be achieved, which could materially and adversely affect our business and results of
operations.
We may not be able to maintain the provision of adequate and uninterrupted supplies of
electricity, 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 no
assurance that supplies of electricity, water, diesel, auxiliary materials, equipment or spare parts will not
be interrupted or that their prices will not increase in the future. In the event that our existing suppliers
cease to supply us with electricity generators, water, diesel, auxiliary materials, equipment or spare parts
at 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 we
currently generate electricity in-house, an interruption in electricity supply due to a breakdown of our
generators or for any other reasons will materially and adversely affect our Groups production by
disrupting operations such as water pumping.
Severe weather conditions, natural disasters and other events beyond our control could materially
and 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 or
curtail operations and may result in damage to our mines, equipment or facilities, which could result in
the temporary suspension of operations or a reduction in our productivity. During periods of curtailed
activity due to adverse weather conditions, natural disasters or other events beyond our control, we may
continue to incur operating expenses while production has slowed down or ceased altogether. Any
damages to our projects or delays in our operations caused by severe weather conditions, natural
disasters or other events beyond our control could materially and adversely affect our business and
results 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 and
Executive Officers of our Group who have built the business of our Group under the guidance and
leadership of the Executive Chairman, Professor Lin Xiang Xiong, and the other Executive Directors,
Choo Chee Kong and Lim Kuoh Yang. Our Groups continued success and growth will depend, to a large
extent, on our ability to retain the services of the Executive Directors and the Executive Officers. The loss
of services of the Executive Chairman and or any of the other Executive Directors and the Executive
Officers without suitable and timely replacement, or the inability to attract and retain other qualified
personnel 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 roles
in the Company in the event that they are required to defend themselves against potential legal
actions
The Company understands from our Directors, Choo Chee Kong and Kuan Cheng Tuck, who were the
directors of Falmac Limited but have both since resigned as the directors of Falmac Limited on 29 August
2011, 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 and
Kuan Cheng Tuck that the first hearing was conducted between 14 July 2011 and 16 July 2011, and it is
expected 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/or
its directors and former directors, whether in relation to such dispute or otherwise (Potential Legal
Actions), our Directors, Choo Chee Kong and Kuan Cheng Tuck may have to expend considerable time
and effort to defend themselves against such Potential Legal Actions. In such event, there may be
instances where they may not be able to fully devote their necessary time to perform their respective
roles 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 and
professional staff
The business of our Group requires skilled personnel and professional staff in the areas of mining and
production of gold, operations, engineering, finance and accounting. Competition for such skilled
personnel and professional staff is intense and comes primarily from similar businesses active in the
industry, many of which possess greater resources. Limitations on our ability to hire, train and retain the
required number of skilled personnel and professional staff would reduce our capacity to undertake
further 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 the
government authorities in Malaysia
There are certain past non-compliances with the conditions and regulations imposed on CMNM in
relation to the various governmental approvals, licences and permits relating to our mining operations in
Malaysia, which include, inter alia, non-compliance with certain conditions in the approved operational
mining scheme and environment impact assessment relating to effective drainage, control of water quality
and earth works, proper waste handling, emergency and security control, submission of various reports
to DOE and other relevant state and federal regulatory authorities relating to the progress of the Sokor
Gold Project and compliance of the Sokor Gold Project with certain rules and regulations and the
preparation 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 by
CMNM in the past. Please refer to the Abridged Due Diligence Report as set out in Appendix D for
further details of the past breaches. As at the Latest Practicable Date, we have applied for the requisite
licences, permits and approvals and rectified these past non-compliances. These rectification actions do
not exonerate us, our employees and/or our Directors from such non-compliances. Consequently, we may
still 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 or
cancellation of any licences or rights previously granted to CMNM. In the event that fines, penalties or
enforcement actions are imposed on or taken against us, the results of operations and financial
conditions of our Group will be adversely affected. In the future, our Directors will ensure that we will take
the necessary actions and precautions are taken to prevent our Group from contravening any conditions
and regulations imposed by the government authorities.
We may be exposed to risk of loss and potential liabilities that may not be covered or adequately
covered by insurance
Certain liabilities and risks in respect of the business, operations and assets of our Group may not be
covered or adequately covered by insurance for a variety of reasons such as acts of god, theft and
robbery. In the event that we are not insured or are inadequately insured against losses, damage or
liabilities, the financial performance our Group will be adversely affected. Please refer to the section
entitled General Information on Our Company and Our Group - Insurance of this Offer Document for
further 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 expenditure
and/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/or
purchases are not entirely matched in the same currency and to the extent that there are timing
differences between invoicing and collection or payment, as the case may be, we are exposed to any
adverse fluctuations of US$ against S$, MYR and RMB or vice versa. Any significant fluctuations in the
exchange rates of US$ against S$, MYR and RMB could adversely affect the financial position and
results 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 capital
was due mainly to the use of short term financing to fund our capital expenditure. As such, we are
subject to the risk that our current assets will be insufficient to meet our obligations under the current
liabilities. In such event, additional capital, debt or other forms of financing may be required for our
working capital. If any of the aforesaid events occur and we do not have sufficient internal resources and
are unable for any reason, to raise additional capital, debt or other financing for our working capital
requirements, our business, operating results, liquidity and financial position will be adversely affected.
Please refer to the sections entitled Working Capital and Managements Discussion and Analysis of
Results of Operations and Financial Position Liquidity and Capital Resources of this Offer Document
for 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, standards
and requirements in relation to, among other things, mine exploration, development, production, taxation,
labour standards, occupational health and safety, waste treatment and environmental protection and
operation management. In addition, the existing contractual mining right of CMNM for the mining area at
the Sokor Block is granted by KSEDC pursuant to the mining lease issued by the Kelantan State
Authority to KSEDC, and such mining right is dependent on the validity and existence of the mining lease
granted 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 the
aforesaid matters (including any change to the policy regarding the grant of the mining lease or mining
rights in Malaysia that is unfavourable to our Group) or to the interpretation or enforcement thereof may
increase our operating costs and/or may affect our Group adversely. Our right to mine is derived from the
contractual 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 that
we will be able to comply with any new Malaysian laws, regulations, policies, standards and requirements
applicable to the gold mining industry or any changes in existing laws, regulations, policies, standards
and 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 and
requirements may also constrain our future expansion plans and adversely affect the profitability of our
Group.
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 dependent
on the political, economic, regulatory and social conditions in Malaysia. Any changes in the policies
implemented 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 duties
detrimental 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 not
be able to enforce any mining or exploration rights we had obtained or receive any compensation for the
loss of such mining or exploration rights. Unfavourable changes in the social, economic and political
conditions of Malaysia or in the Malaysian government policies in the future may have a negative impact
on the operations and business in Malaysia, which will in turn adversely affect the overall financial
performance of our Group. In addition, Malaysian foreign exchange control may limit our ability to utilise
our cash effectively and affect our ability to receive dividends and other payments from our Malaysian
subsidiaries.
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. The
legislation in Malaysia governing exchange control is the Exchange Control Act 1953, pursuant to which
Bank Negara Malaysia, which is the central bank of Malaysia (Bank Negara) has issued Exchange
Control 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 Controller
of Foreign Exchange within Bank Negara must be obtained by residents and non-residents to remit funds
to and from Malaysia. These ECM Notices are reviewed regularly by Bank Negara in line with the
changing 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 distribute
dividends 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 currency
from non-resident, non-bank related companies. Related companies, as defined under the ECM Notice
10 (Foreign Currency Credit Facilities and Ringgit Credit Facilities from Non-Residents) (ECM10) (read
together 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 parent
company to finance activities in the real sector. Real sector is defined under the ECM 10 (read together
with the circular issued by Bank Negara on 28 May 2008) as a sector where there is production of goods
and services which include all industries except for financial services. Resident companies may also
borrow up to MYR1 million in aggregate from other non-resident non-bank companies and individuals for
use in Malaysia. Any amount in excess of this will require the prior approval of Bank Negara under ECM
10 (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 in
Malaysia will not change. In the event that there is any adverse change in the foreign exchange rules and
regulations relating to the borrowing or repatriation of foreign currency, our business and results of
operation 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 liquid
than 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 platform
designed primarily for fast-growing and emerging or smaller companies to which a higher investment risk
tends to be attached as compared to larger or more established companies listed on the Main Board of
the SGX-ST. An investment in shares quoted on Catalist may carry a higher risk than an investment in
shares quoted on the Main Board of the SGX-ST. Catalist was newly formed in December 2007 and the
future 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 liquid
market for our Shares
Prior to this Placement, there has been no public market for our Shares. Although we have made an
application to the SGX-ST to list our Shares on Catalist, there is no assurance that an active trading
market for our Shares will develop or if developed, be sustained after the Placement. There is also no
assurance that the market price for our Shares will not decline below the Placement Price. The market
price of our Shares could be subject to significant fluctuations as investors sentiments may be affected
by 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 and
analysts, the general market conditions and broad market fluctuations may also result in significant
fluctuations in the market price of our Shares.
Our Share price may be volatile in future which could result in substantial losses for investors
subscribing 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 financial
performance;
(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 pressure
on 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 our
Shares. These factors also affect our ability to sell additional equity securities. Except as otherwise
described in the section entitled Shareholders Moratorium of this Offer Document, there will be no
restriction 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 Shares
upon the expiry of their moratorium periods.
RISK FACTORS
Negative publicity which includes those relating to any of our Directors, Executive Officers or
Substantial Shareholders may adversely affect our Share price
Negative publicity or announcements relating to our Group and any of our Directors, Executive Officers or
Substantial Shareholders may adversely affect the market perception or the Share performance of our
Share, 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, investors
may find it difficult to enforce a Singapore judgment against our Group or management
A significant portion of our Groups operations and assets are located outside Singapore. Accordingly,
Shareholders may encounter difficulties in effecting service of process in Singapore if they wish to make
a claim against our Group, or the enforcement of a Singapore judgement against the assets of our
Group.
Investors in our Shares would face immediate and substantial dilution in the NAV per Share and
may experience future dilution
Our Placement Price of S$0.40 is higher than our Groups 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 net
proceeds 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 of
our Shares incurred by new investors.
In addition, we may issue share awards under the CNMC Performance Share Plan. To the extent that
such share awards are ultimately granted and Award Shares are issued pursuant to such grant, there
may be further dilution to investors participating in the Placement. Further details of the CNMC
Performance Share Plan are described in the section entitled CNMC Performance Share Plan of this
Offer Document.
Control by our Controlling Shareholders, Innovation (China) Limited and Messiah Limited who will
collectively hold 49.79% of our enlarged share capital after the Placement, may limit your ability to
influence the outcome of decisions requiring the approval of Shareholders.
After the completion of the Placement, our Controlling Shareholders, Innovation (China) Limited and
Messiah Limited will collectively hold approximately 49.79% of our enlarged share capital after the
Placement. As a result, Innovation (China) Limited and Messiah Limited will be able to exercise
significant influence over all matters requiring Shareholders approval (other than the approval of
transactions for which they and their Associates may be prohibited from voting), including the election of
directors and the approval of significant corporate transactions. Such concentration of ownership may
also have the effect of delaying, preventing or deterring a change in control of the Company, which may
otherwise 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 and
distributable reserves of our Company. Our Companys future financial performance and distributable
reserves depend on several factors, such as the successful implementation of our strategies, the general
economic conditions, demand for and selling prices of our products and services. Many of these factors
may be beyond our control. As such, there is no assurance that our Company will be able to pay
dividends to our Shareholders after the completion of the Placement. In the event that any company in
our Group enters into any loan agreements in the future, covenants therein may also limit when and how
much 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 our
Group as at 31 March 2011 adjusted for the Restructuring Exercise (NAV):
(a) before adjusting for the estimated net proceeds from the issue of New
Shares and based on the pre-Placement share capital of 380,793,000
Shares
(b) after adjusting for the estimated net proceeds from the issue of New Shares
and 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 adjusted
for the Restructuring Exercise:
(a) before adjusting for the estimated net proceeds from the issue of New
Shares and based on the pre-Placement share capital of 380,793,000
Shares
(b) after adjusting for the estimated net proceeds from the issue of New Shares
and 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 Companys
pre-Placement share capital of 380,793,000 Shares
Historical net loss per Share of our Group for FY2010 based on our Companys
pre-Placement share capital of 380,793,000 Shares, assuming that the Service
Agreements 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 Group
for FY2010
Audited PER based on the Placement Price and the audited net EPS of our Group
for FY2010, assuming that the Service Agreements had been in place from the
beginning of FY2010
Net Operating Cash Flow
(2)
Historical net operating cash flow per Share of our Group for FY2010 based on the
pre-Placement share capital of 380,793,000 Shares
Historical net operating cash flow per Share of our Group for FY2010 based on the
pre-Placement share capital of 380,793,000 Shares, assuming that the Service
Agreements 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 our
Group for FY2010 based on the pre-Placement share capital of 380,793,000
Shares
Ratio of Placement Price to historical net operating cash flow per Share of our
Group for FY2010 based on the pre-Placement share capital of 380,793,000
Shares, assuming that the Service Agreements had been in place from the
beginning 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 share
capital of 404,693,000 Shares
Notes:
(1) Assuming that the Service Agreements have been in place from the beginning of FY2010, there
are no changes to the audited net loss per Share of our Group for FY2010 and audited net
operating cash flow per Share of our Group for FY2010 based on the pre-Placement share capital
of 380,793,000 Shares as the Executive Directors are receiving the same compensation prior to
and 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 (comprising
the New Shares and the Vendor Shares), after deducting the aggregate estimated cash expenses in
relation to the Placement of approximately S$1.41 million, is estimated to amount to approximately
S$15.03 million. We will not receive any of the proceeds from the Vendor Shares sold by the Vendors in
the Placement. The net proceeds attributable to the Vendors from the sale of the Vendor Shares, after
deducting 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 our
share of the estimated cash expenses to be borne by us of approximately S$1.19 million, will be
approximately 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 proceeds
to 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) (%)
exploration activities 2,490 26.0
Construction of a heap leach facility 2,110 22.1
Working capital 3,770 39.4
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 the
JORC Code as at June 2010 amounted to approximately 2,182,000t at a grade of 2.62 g/t Au with
contained gold of 183,500 oz which includes a total gold reserves estimate of 989,000t, of which proved
gold reserves are estimated to be 204,000t at a grade of 3.64 g/t Au with contained gold of 23,900 oz
and probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au with contained gold of
46,400 oz. We intend to utilise approximately S$2.49 million (the approximate equivalent of US$2.00
million, based on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) from the
net proceeds raised from the Placement to undertake further resource definition and continuing
exploration activities in order to identify new gold mineralisation and to increase the identified gold
resources and reserves in the Sokor Block.
In addition, as the mining operations of our Group expand and our mining activities increase, we expect
to process more gold-bearing ore with the aim to increase our gold production. Our Group intends to
increase its ore processing capacity from the current processing capacity of 60,000t per annum to
730,000t per annum in FY2012 by commissioning a heap leach facility to treat oxide ore from Rixens
deposit commencing in the fourth quarter of 2011. We intend to utilise approximately S$2.11 million (the
approximate equivalent of US$1.70 million, based on the exchange rate of S$1.00 to US$0.8039 as at
the Latest Practicable Date) from the net proceeds raised from the Placement to fund the construction of
the heap leach facility.
Further details of our use of proceeds may be found in the section entitled General Information on our
Company and our Group Business Strategies and Future Plans of this Offer Document.
USE OF PROCEEDS AND LISTING EXPENSES
51
The foregoing discussion represents our Companys best estimate of its allocation of the net proceeds of
the Placement based on our current plans and estimates regarding our anticipated expenditures. Actual
expenditures may vary from these estimates and our Company may find it necessary or advisable to
reallocate the net proceeds within the categories described above or to use portions of the net proceeds
for other purposes. In the event that our Company decides to reallocate the net proceeds of the
Placement for other purposes, our Company will publicly announce its intention to do so through a
SGXNET announcement on the internet at the SGX-ST website, http://www.sgx.com. In addition, our
Company will make periodic announcements on the use of the proceeds from the Placement as and
when the proceeds from the Placement are materially disbursed, and provide a status report on the use
of 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 funds
may be placed as deposits with financial institutions or added to the working capital or used to reduce
bank borrowings or used for investment in short-term money market instruments as our Directors may, in
their 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 of
our 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. Save
for the placement commission, which will be borne by the Vendors and our Company in the proportion in
which the Placement Shares are offered by the Vendors and our Company, the rest of the listing
expenses 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 the
Management Agreement which has been satisfied in full by the issuance and allotment of 3,771,000 PPCF Shares to PPCF
representing approximately 0.99% of the issued share capital of our Company prior to the Placement at the Placement Price
for 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 our
Company is 3.0% of the Placement Price payable for each Placement Share. Please refer to the section entitled General and
Statutory 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 have
not 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 on
our Shares will depend on our earnings, general financial condition, results of operations, capital
requirements, cash flow, general business condition, our development plans and other factors as our
Directors may, in their absolute discretion, deem appropriate. Therefore, there can be no assurance that
dividends will be paid in the future or of the amount or timing of any dividends that will be paid in the
future.
All dividends are paid pro-rata among the Shareholders in proportion to the amount paid up on each
Shareholders 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 a
Shareholder whose name is entered in the Depository Register shall, to the extent of payment made to
CDP, 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 but
the amount of such dividend shall not exceed the amount recommended by our Directors. Our Directors
may also declare an interim dividend without the approval of our Shareholders. Our Company may pay all
dividends out of our profits.
We expect to declare dividends in US$ and make payment of the dividends in S$. Shareholders should
note that there will be exchange rate exposure in respect of dividends declared in US$ and subsequently
paid to them in S$ equivalent amounts. Shareholders whose Shares are held through CDP will receive
their dividends in S$. CDP will make the necessary arrangement to convert these dividends received
from our Company in US$ into S$ equivalent amounts at such foreign exchange rate as CDP may
determine for onward distribution to such Shareholder entitled thereto. Neither our Company nor CDP will
be liable for any loss howsoever arising from the conversion of the dividend entitlement of Shareholders
holding 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 of
this Offer Document.
52
SHARE CAPITAL
53
Our Company (registration number 201119104K) was incorporated in Singapore on 11 August 2011
under the Companies Act as a private company limited by shares under the name of CNMC Goldmine
Holdings Pte Ltd. On 17 October 2011, our Company changed its name to CNMC Goldmine Holdings
Limited 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 to
the shareholders of CNMC in consideration for the transfer by the shareholders of CNMC of the entire
issued share capital of CNMC, comprising 14,004,524 shares to our Company. Pursuant to the
completion of the Restructuring Exercise on 14 October 2011, our issued and paid-up share capital is
S$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 consequential
change 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 their
management fee as Manager and Sponsor;
(d) the allotment and issue of 2,022,000 Employee Shares to Chen Yan, the Chief Financial Officer of
the 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 basis
that the New Shares, when allotted, issued and fully paid, will rank pari passu in all respects with
the existing issued Shares;
(f) the approval of the listing and quotation of all the issued Shares (including the New Shares to be
issued 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 of
Awards granted under the CNMC Performance Share Plan;
(h) that authority be and is hereby given to our Directors, pursuant to Section 161 of the Companies
Act 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 or
would require Shares to be issued during the continuance of this authority or
thereafter, including but not limited to the creation and issue of (as well as
adjustments to) warrants, debentures, convertible securities or other instruments
convertible into Shares; and/or
(iii) notwithstanding that such authority may have ceased to be in force at the time that
Instruments are to be issued, issue additional Instruments arising from adjustments
made to the number of Instruments previously issued in the event of rights, bonus or
other capitalisation issues,
at any time and upon such terms and conditions and for such purposes and to such persons
as 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 issue
of Shares pursuant to the Instruments may occur after the expiration of the authority
contained in this resolution),
provided that:
(1) the aggregate number of Shares to be issued pursuant to such authority (including the
Shares to be issued in pursuance of Instruments made or granted pursuant to this authority
but excluding Shares which may be issued pursuant to any adjustments (Adjustments)
effected under any relevant Instrument, which Adjustments shall be made in compliance with
the provisions of the Catalist Rules 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), does not exceed 100% of the post-Placement issued share capital excluding
treasury shares, and provided further that the aggregate number of Shares to be issued
other than on a pro rata basis to Shareholders (including Shares to be issued in pursuance
of Instruments made or granted pursuant to such authority but excluding Shares which may
be issued pursuant to Adjustments effected under any relevant Instrument) shall not exceed
50% of the post-Placement issued share capital excluding treasury shares;
(2) in exercising such authority, our Company shall comply with the provisions of the Catalist
Rules 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, the
authority so conferred shall continue in force until the conclusion of the next annual general
meeting of our Company or the date by which the next annual general meeting of our
Company 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 arising
from the conversion or exercise of any convertible securities; (ii) new Shares arising from exercising
share 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) any
subsequent 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 Articles
of Association of this Offer Document.
As at the date of this Offer Document, the issued and paid-up share capital of our Company is
S$8,109,398 comprising 380,793,000 Shares. Upon the issue and allotment of the New Shares which are
the subject of the Placement, the resultant issued and paid-up share capital of our Company will be
increased to S$17,669,398 comprising 404,693,000 Shares.
There are no founder, management, deferred or unissued Shares reserved for issuance for any purpose.
No person has, or has the right to be given, an option to subscribe for or purchase any securities of our
Company or our subsidiaries. As at the Latest Practicable Date, no option to subscribe for Shares in our
Company has been granted to, or was exercised by, any of our Directors or Executive Officers.
SHARE CAPITAL
55
Details of the changes in the issued and paid-up share capital of our Company since the date of
incorporation and immediately after the Placement are set out below:
Issued and paid-up
Number of Issued share capital
Shares (S$)
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 after
adjustments to reflect the Restructuring Exercise, the Issue of New Shares to Employee, the issue of
3,771,000 PPCF Shares to PPCF and the issue and allotment of the Placement Shares pursuant to the
Placement, are set forth below.
After the Restructuring
Exercise, the Issue
of New Shares to
Employee and the
issue 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 since
the 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 Resultant
Share 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$12,187,000
capital increased and to fund
by HK$487,000 listing expenses
9 July 2010 162,467 / Share S$6.16 Conversion of HK$12,349,467
capital increased convertible loans /
by HK$162,467 bonds
by HK$567,951 bonds
by HK$169,204 bonds
by HK$126,903 bonds
by HK$60,913 bonds
14 October 2011 110,619 / Share S$4.52 Conversion of HK$13,385,057
by HK$110,619 bonds
by HK$176,990 bonds
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 capital
and 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 of
CMNM, 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 been
issued, or is proposed to be issued, as fully or partly paid-up for cash, or for a consideration other than
cash, since the date of incorporation of our Company and subsidiaries up to the date of lodgement of this
Offer Document.
SHAREHOLDERS
SHAREHOLDING AND OWNERSHIP STRUCTURE
Our Directors and Substantial Shareholders and their respective shareholdings immediately before and
after 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 of
Shares % Shares % Shares % Shares %
Directors
Professor Lin Xiang Xiong
(1)
138,862,500 36.47 138,862,500 34.31
Choo Chee Kong
(3)
67,162,500 17.64 62,662,500 15.48
Lim Kuoh Yang
(1)
138,862,500 36.47 138,862,500 34.31
Kuan Cheng Tuck
Tan Poh Chye Allan
Lim Yeok Hua
Substantial Shareholders
(other than Directors)
Innovation (China)
Limited
(1)(2)(4)
138,862,500 36.47 138,862,500 34.31
Messiah Limited
(3)(4)
66,300,000 17.41 62,662,500 15.48
Ng Eng Tiong
(4)
72,075,000 18.93 60,575,000 14.97
Other Shareholders
Tertius CNMC Limited
(5)
13,050,000 3.43 13,050,000 3.22
Raintree Strategic
Consultancy Limited
(6)
6,262,500 1.64 6,262,500 1.55
Sim Yap Kheng 5,475,000 1.44 5,475,000 1.35
Caravel Holdings Group
Ltd
(7)
3,262,500 0.86 2,062,500 0.51
Brilliant Elite Holdings
Limited
(8)
4,537,500 1.19 4,537,500 1.12
Future Gain Enterprises
Limited
(9)
1,612,500 0.42 1,612,500 0.40
EP Capital Inc.
(10)
862,500 0.23
Seow Seng Wei 3,412,500 0.89 3,412,500 0.84
Ma Kwan Chun 712,500 0.19 712,500 0.18
Wong Chock Puan Albert 637,500 0.17 637,500 0.16
Chan Lie Leng 450,000 0.12 450,000 0.11
Lim Chee Hoong 2,962,500 0.78 13,050,000 3.43 2,962,500 0.73 13,050,000 3.22
Phuah Bee Lee 1,687,500 0.44 1,687,500 0.42
Lim Peng Liang David
Llewellyn 4,725,000 1.24 4,725,000 1.17
Grande Pacific Limited
(11)
11,850,000 3.11 11,850,000 2.93
China Lawyee Holdings
Limited
(12)
6,525,000 1.71 6,525,000 1.61
Ng Han Meng 8,700,000 2.28 8,700,000 2.15
Bellarine Enterprise
Ltd
(13)
3,262,500 0.86 3,262,500 0.81
Yu Long Fei 17,775,000 4.67 17,775,000 4.39
Chen Yan
(14)
2,022,000 0.53 2,022,000 0.50
PPCF
(15)
3,771,000 0.99 3,771,000 0.93
Public 41,100,000 10.16
TOTAL 380,793,000 100.00 404,693,000 100.00
Notes:
57
SHAREHOLDERS
58
(1) Innovation (China) Limited is a private investment holding company incorporated in Hong Kong whose shareholders are
Professor Lin Xiang Xiong (65%) and his wife, Tan Swee Ngin (35%). Lim Kuoh Yang is the son of Professor Lin Xiang Xiong
and Tan Swee Ngin. As such, Professor Lin Xiang Xiong and Tan Swee Ngin are deemed interested in all the Shares held by
Innovation (China) Limited by virtue of their respective interests in Innovation (China) Limited and Lim Kuoh Yang is deemed
interested in all the Shares deemed to be held by Professor Lin Xiang Xiong and Tan Swee Ngin 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 and
Yeo Hung Hee Benjamin, respectively, as soon as practicable after the expiry of the moratorium period in consideration of
their 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 are
Choo Chee Kong (51%) and his wife, Lim Sok Cheng Julie (49%). As such, Choo Chee Kong and Lim Sok Cheng Julie are
deemed 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 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 that Messiah Limited and Ng Eng Tiong should be issued pursuant to the Share Swap
Agreement 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 shareholders
are Tertius Financial Group Pte. Ltd. (51%) and Lim Chee Hoong (49%). As such, Tertius Financial Group Pte. Ltd. and Lim
Chee Hoong are deemed to be interested in all the Shares held by Tertius CNMC Limited under Section 7 of the Companies
Act.
(6) Raintree Strategic Consultancy Limited is a private investment holding company incorporated in the British Virgin Islands
whose 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 Limited
under Section 7 of the Companies Act.
(7) Caravel Holdings Group Ltd is a private investment holding company incorporated in the British Virgin Islands whose sole
shareholder is Lee Kong Hian. As such, Lee Kong Hian is deemed to be interested in all the Shares held by Caravel Holdings
Group 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 sole
shareholder is Chen Cheng Zong. As such, Chen Cheng Zong is deemed to be interested in all the Shares held by Brilliant
Elite 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 sole
shareholder is Ruan Wenkai. As such, Ruan Wenkai is deemed to be interested in all the Shares held by Future Gain
Enterprises 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 are
Choo Chee Kong (51%) and high net worth individuals. As such, Choo Chee Kong is deemed to be interested in all the
Shares 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 sole
shareholder is Ting Hong Lean. As such, Ting Hong Lean is deemed to be interested in all the Shares held by Grande Pacific
Limited under Section 7 of the Companies Act.
(12) China Lawyee Holdings Limited is a private investment holding company incorporated in the Cayman Islands whose sole
shareholder is Zheng Shun Yan. As such, Zheng Shun Yan is deemed to be interested in all the Shares held by China
Lawyee 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 sole
shareholder is Lin Pei Li. As such, Lin Pei Li is deemed to be interested in all the Shares held by Bellarine Enterprise Ltd
under 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 is
included 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 PPCFs fees as the Manager and Sponsor, our Company issued and
allotted 3,771,000 PPCF Shares to PPCF, representing 0.99% of the issued share capital of our Company prior to the
Placement at the Placement Price for each Share. After the completion of the relevant moratorium periods as set out in the
section entitled Shareholders Moratorium of this Offer Document, PPCF will dispose of its shareholding interests in our
Company at its discretion.
SHAREHOLDERS
59
Save as disclosed above and in the section entitled Directors, Management and Staff of this Offer
Document, there are no other relationships among our Directors, Substantial Shareholders and Executive
Officers.
Save as disclosed in the section entitled Restructuring Exercise of this Offer Document, there has been
no change in the percentage ownership of Shares of our Directors and Substantial Shareholders from the
incorporation of our Company until the Latest Practicable Date.
The Shares held by our Directors and Substantial Shareholders do not carry voting rights that are
different from the New Shares. Our Directors are not aware of any arrangement, the operation of which
may, 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 which
are in registered form. There is no restriction on the transfer of fully paid ordinary shares in scripless form
except 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 our
Company in respect of the shares of another corporation or units of business trust which has occurred
between 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 severally
or jointly by any other corporation, any government or person.
Save as disclosed above and in the sections entitled Restructuring Exercise and Share Capital of this
Offer Document, no shares or debentures were issued or agreed to be issued by our Company for cash
or for a consideration other than cash during the last three (3) years preceding the date of lodgement of
There are no Shares in our Company that are held by or on behalf of our Company or by the subsidiaries
of our Company.
SIGNIFICANT CHANGES IN PERCENTAGE OF OWNERSHIP
Save as disclosed above and in the sections entitled Share Capital and Restructuring Exercise of this
Offer Document, there were no significant changes in the percentage of ownership of our Directors and
Substantial Shareholders in our Company between the date of incorporation on 11 August 2011 and the
Latest Practicable Date.
SHAREHOLDERS
60
VENDORS
The names of the Vendors and the number of Vendor Shares which they will offer pursuant to the
Placement are set out below:
Shares held immediately Vendor Shares offered pursuant Shares held after
before 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
Messiah Limited 66,300,000 17.41 3,637,500 0.96 0.90 62,662,500 15.48
EP Capital Inc. 862,500 0.23 862,500 0.23 0.21 0.00
Caravel Holdings Group
Ltd 3,262,500 0.86 1,200,000 0.32 0.30 2,062,500 0.51
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 Eng
Tiong, which will collectively hold 262,100,000 Shares representing approximately 64.76% of our
Companys issued share capital immediately after the Placement, have each undertaken to the Manager
and Sponsor not to, amongst others, sell, transfer, assign, dispose of, realise or enter into any agreement
that will directly or indirectly constitute or will be deemed as a disposal of any part of their respective
shareholding interests in our Company immediately after the Listing for a period of 12 months
commencing from our Companys 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 will
directly or indirectly constitute or will be deemed as a disposal of any part of its shareholding interests in
our Company to below 50.0% of their respective original shareholdings (adjusted for any bonus issue or
subdivision) 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 Swee
Ngin, who own 65% and 35% of Innovation (China) Limited respectively, has undertaken to maintain their
effective interests in the issued share capital of Innovation (China) Limited and not to sell, realise, transfer
or otherwise dispose of or enter into any agreement that will directly or indirectly constitute or will be
deemed as a disposal of any part of his or her respective interests in the issued share capital of
Innovation (China) Limited for a period of 18 months commencing from our Companys date of admission
to Catalist.
Each of the shareholders of Messiah Limited, namely Choo Chee Kong and Lim Sok Cheng Julie, who
own 51% and 49% of Messiah Limited respectively, has undertaken to maintain their effective interests in
the issued share capital of Messiah Limited and not to sell, realise, transfer or otherwise dispose of or
enter into any agreement that will directly or indirectly constitute or will be deemed as a disposal of any
part of his or her respective interests in the issued share capital of Messiah Limited for a period of 18
months commencing from our Companys 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 a
disposal of any portion of their respective shareholding interests in the Company being the profit portion
of their investments as at the date of our Companys admission to Catalist for a period of 12 months
commencing from the date of our Companys admission to Catalist. The total number of Shares which will
be 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 deemed
interest 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 Director
and 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 Keng
Hock, 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 who
will hold 17,775,000 Shares representing approximately 4.39% of our Companys issued share capital
immediately after the Placement has undertaken not to sell, realise, transfer, or otherwise dispose of or
part of his shareholding interests in the issued share capital of the Company for the Initial Period and for
a period of six (6) months thereafter, not to sell, realise, transfer or otherwise dispose of or enter into any
agreement that will directly or indirectly constitute or will be deemed as a disposal of any part of its
shareholding interests in the issued share capital of the Company to below 50.0% of his original
shareholdings in (adjusted for any bonus issue or subdivision) our Company.
Others
Pursuant to the Management Agreement and as part of PPCFs fees as the Manager and Sponsor, our
Company issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of the issued share
capital 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 will
directly or indirectly constitute or will be deemed as a disposal of any part of its shareholding interests in
our Company for a period of six (6) months commencing from our Companys date of admission to the
Catalist and for a period of six (6) months thereafter not to sell, transfer, assign, dispose of, realise, or
part of its shareholding interests in our Company to below 50.0% of its original shareholdings (adjusted
for any bonus issue or subdivision) in our Company. Upon completion of the aforesaid relevant
moratorium periods, PPCF will dispose of its relevant shareholding interests in our Company at its
discretion.
61
CAPITALISATION AND INDEBTEDNESS
62
The following table, which should be read in conjunction with the the Combined Financial Statements for
the years ended 31 December 2008, 2009 and 2010 as set out in Appendix A of this Offer Document
and the Unaudited Condensed Interim Combined Financial Information for the three months ended 31
March 2011 as set out in Appendix B of this Offer Document and the section entitled Managements
Discussion and Analysis of Results of Operations and Financial Position of this Offer Document, shows
our cash and cash equivalents, capitalisation and indebtedness:
(i) as at 31 August 2011 based on our unaudited consolidated management accounts as adjusted to
give effect to the Restructuring Exercise; and
(ii) as adjusted to give effect to the application of the net proceeds from the Placement, after
deducting estimated listing expenses related to the Placement.
As adjusted for the
As at 31 net proceeds from
(US$000) August 2011 the Placement
Cash and bank balances
Cash and bank balances 108 6,837
Short term debt
Bank overdraft, unsecured
Bank borrowings, secured
Convertible loan
Finance lease liabilities 8 8
Long term debt
Convertible 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 Loans
of approximately US$3.10 million were converted into shares of CNMC pursuant to the Restructuring
Exercise.
To the best of our Directors knowledge, our Group is not in breach of any of the terms and conditions or
covenants associated with any of our financing arrangements which could materially affect our Groups
financial 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 or
indebtedness.
Save as disclosed above and changes in our Groups retained earnings arising from our day-to-day
operations in the ordinary course of business, there were no material changes to our total capitalisation
and 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 2011
and the Latest Practicable Date, the future minimum lease payable under the operating leases contracted
for, 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 91 156
After 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 31
December 2010, 31 March 2011 and the Latest Practicable Date, our Group has the following capital
commitments:
As at 31 As at 31 As at the Latest
(US$000) December 2010 March 2011 Practicable Date
Procurement of plant and equipment 628 248
Commitments 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 aware
of any contingent liabilities which may have a material effect on the financial position and profitability of
our Group.
CAPITALISATION AND INDEBTEDNESS
63
Our Group financed our operations through both internal and external sources of funds. Internal sources
of funds refer to loans from Shareholders and our Directors. External sources of funds comprise mainly
loans from convertible loan holders and credit granted by suppliers. The principal uses of these funds are
to finance capital expenditure and operating expenses such as rental, employees compensation and
administrative expenses.
Our Group recognised negative operating cash flows in FY2008, FY2009, FY2010 and 1Q2011 of
US$0.70 million, US$1.06 million, US$2.04 million and US$0.43 million respectively, as our Group only
commenced gold production in the second half of FY2010 and no revenue was generated in FY2008 and
FY2009 while our Group was actively engaged in exploration and evaluation activities. As at 31
December 2010 and 31 March 2011, our Group had cash and cash equivalents of approximately
US$1.11 million and US$0.45 million respectively. As at the Latest Practicable Date, our Group has cash
and 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 December
2010 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 31
March 2011, our Directors are of the opinion that our Group has sufficient resources to meet our working
capital needs and service our debt obligations as and when they fall due without foregoing any necessary
future 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 Group
intends to increase our mining and processing activities in the concession area to increase our
production of gold. The current capacity of the ore processing facility of our Group is approximately
60,000t per annum, based on the total number of leaching vats available as at the Latest
Practicable Date. Our Group intends to increase our ore processing capacity to 730,000t per
annum in FY2012 by commissioning a heap leach facility to treat oxide ore from Rixens deposit
commencing in the fourth quarter of 2011 to expand the existing ore processing facility. It is
expected that with the increase in ore processing capacity, our Group will continue to grow our
revenue and operating cash flows and improve our working capital position. Average monthly gold
production has increased significantly from 92.298 oz for the July 2010 to December 2010 period
to 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 bank
borrowings as at the Latest Practicable Date. Our Directors believe that our Group will be able to
obtain 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 short
term operational needs;
(c) The increase in negative working capital of our Group from approximately US$0.59 million as at 31
December 2010 to approximately US$4.04 million as at 31 March 2011 was mainly due to the
reclassification of approximately US$1.98 million of outstanding convertible loans issued by CNMC
from non-current liabilities to current liabilities. The aggregate amount of outstanding convertible
loans of approximately US$3.10 million will be converted to shares of CNMC prior to the
Restructuring Exercise and the Listing which will increase the shareholders equity and reduce the
current liabilities of our Group accordingly. Without taking into account US$1.98 million of the
outstanding convertible loans issued by CNMC, the negative working capital of our Group as at 31
March 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 outstanding
Directors 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. These
Directors agree that they will not demand the repayment of such loans until such a time when such
repayments would not adversely affect our Groups working capital. In addition, Professor Lin Xiang
Xiong, Choo Chee Kong and Lim Kuoh Yang have given an irrevocable undertaking dated 18
August 2011 to continue to provide or procure financial support where necessary to our Group for
the next three (3) years after the Listing. Any loans advanced by the said Directors personally
pursuant to the undertaking would be interest-free and will be due and payable on such date as
may be agreed between the said Directors and the Company, subject to review by the Audit
Committee taking into account the financial position of our Group (including the cash flow position
and balance sheet of our Group) and/or any other factors that may potentially affect the financial
position of our Group and the consent of the continuing sponsor of our Group after the listing of
our Company on Catalist.
The Audit Committee may, with the consent of the continuing sponsor, after a review of on-going
liquidity requirements of our Group, release such Directors from the said undertaking before the
expiry of the three (3) years period.
Our Board is of the reasonable opinion that, after having made due and careful enquiry and after taking
into account the cash flows to be generated from our Groups operations and the existing cash and cash
equivalents, the working capital available to our Group is sufficient for present requirements and for at
least 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 after
taking into account the cash flows to be generated from our Groups operations and the existing cash and
cash equivalents, the working capital available to our Group is sufficient for present requirements and for
at 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 this
Placement exceeds our NAV per Share of our Group immediately after the Placement. Our NAV per
Share as at 31 March 2011, after adjusting for the Restructuring Exercise but before adjusting for the
estimated net proceeds due to our Company from the Placement and based on our Companys pre-
Placement issued and paid-up share capital of 380,793,000 Shares, was approximately 1.64 cents per
Share.
Pursuant to the Placement in respect of 23,900,000 New Shares at the Placement Price, our NAV per
Share as at 31 March 2011 after adjusting for the Restructuring Exercise and the estimated net proceeds
due to our Company from the Placement and based on our Companys post-Placement issued and paid-
up share capital of 404,693,000 Shares would have been approximately 3.61 cents. This represents an
immediate increase in NAV per Share of approximately 1.97 cents to our existing Shareholders and an
immediate dilution in NAV per Share of approximately 36.39 cents or approximately 90.98% to our new
public 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 1.64
on 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 total
number of Shares (as adjusted for the Restructuring Exercise) acquired by our Substantial Shareholders
since our incorporation, the total consideration paid by them and the effective cash cost per Share to our
Substantial Shareholders of Shares acquired by them from the date of incorporation, and the public
Shareholders who subscribe for and/or purchase the Placement Shares at the Placement Price pursuant
to the Placement:
Total Effective cash
Number of consideration cost per Share
Shares (S$) (S$)
Innovation (China) Limited
(1)(2)(4)
138,862,500 2,144,850 0.02
Messiah Limited
(3)(4)
66,300,000 1,024,060 0.02
Ng Eng Tiong
(4)
72,075,000 1,113,260 0.02
New public investors 23,900,000 9,560,000 0.40
Notes:
(1) Innovation (China) Limited is a private investment holding company incorporated in Hong Kong whose shareholders are
Professor Lin Xiang Xiong (65%) and his wife, Tan Swee Ngin (35%). As such, Professor Lin Xiang Xiong and Tan Swee Ngin
are 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 and
Yeo Hung Hee Benjamin, respectively, as soon as practicable after the expiry of the moratorium period in consideration of
their 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 are
Choo Chee Kong (51%) and his wife, Lim Sok Cheng Julie (49%). As such, Choo Chee Kong and Lim Sok Cheng Julie are
deemed 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 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 that Messiah Limited and Ng Eng Tiong should be issued pursuant to the Share Swap
Agreement 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 the
rationalisation of our corporate and shareholding structure for the purposes of the Listing. Pursuant to the
Restructuring 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 initial
paid-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 to
4,680,000 shares at the issue price of HK$1 each and Choo Chee Kong as well as Ng Eng Tiong
each 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 Raintree
Strategic Consultancy Limited, Messiah Limited and Sim Yap Kheng such that the resultant
shareholding of CNMC was as follow:
Name of Shareholder No. of shares in CNMC % Shareholding
Innovation (China) Limited 4,680,000 40.00%
Ng Eng Tiong 3,276,000 28.00%
Messiah Limited 3,305,250 28.25%
Raintree Strategic Consultancy Limited 234,000 2.00%
Sim Yap Kheng 204,750 1.75%
Total 11,700,000 100.00%
On 20 June 2009, Tertius CNMC Limited subscribed for 487,000 shares in CNMC at the issue
price of S$1.64 each.
Pursuant to convertible bond/loan agreements entered between CNMC and several investors set
out in the section entitled General and Statutory Information - Material Contracts, outstanding
convertible loans/bonds were converted into equity in CNMC as follows:
No. of Shares Issue price
Date 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 September
2011), Caravel Holdings Group Ltd agreed to transfer 121,704 and 324,543 shares in CNMC to Bellarine Enterprise
Ltd 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 the
Companies Act as a private company limited by shares with an initial paid-up capital of S$1.00
comprising 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 Company
and 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 of
approximately S$5.8 million (the approximate equivalent of US$4.5 million based on the exchange
rate of S$1.00 to US$0.7780 as at 31 December 2010) (Purchase Consideration). The
Purchase Consideration was arrived at based on the audited NAV of CNMC as at 31 December
2010.
Pursuant to a deed of agreement dated 27 December 2007 (as amended by a supplemental
agreement 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 that
Messiah Limited and Ng Eng Tiong should be issued pursuant to the Share Swap Agreement, in
consideration for the efforts of Innovation (China) Limited in achieving a successful Listing.
In consideration for services rendered in introducing investors to CNMC, Messiah Limited
nominated China Lawyee Holdings Limited to receive 6,525,000 Shares, of such Shares that
Messiah Limited should be issued pursuant to the Share Swap Agreement.
Pursuant to a sale and purchase agreement dated 25 February 2011 (as amended by a
supplemental agreement dated 22 September 2011), Innovation (China) Limited nominated Yu
Long Fei to receive 17,775,000 Shares of such Shares that Innovation (China) Limited should be
issued pursuant to the Share Swap Agreement.
69
The Purchase Consideration was satisfied by the issuance of 374,999,999 Shares, credited as fully
paid, to the following shareholders of CNMC on 14 October 2011:
Percentage of Issued
Share Capital after
Name of Shareholder Number of Shares Restructuring Exercise
Innovation (China) Limited 138,862,499 37.03%
Messiah Limited 66,300,000 17.68%
Ng Eng Tiong 72,075,000 19.22%
Tertius CNMC Limited 13,050,000 3.48%
Raintree Strategic Consultancy Limited 6,262,500 1.67%
Sim Yap Kheng 5,475,000 1.46%
Caravel Holdings Group Ltd 3,262,500 0.87%
Brilliant Elite Holdings Limited 4,537,500 1.21%
Future Gain Enterprises Limited 1,612,500 0.43%
EP Capital Inc. 862,500 0.23%
Seow Seng Wei 3,412,500 0.91%
Ma Kwan Chun 712,500 0.19%
Wong Chock Puan Albert 637,500 0.17%
Chan Lie Leng 450,000 0.12%
Lim Chee Hoong 2,962,500 0.79%
Phuah Bee Lee 1,687,500 0.45%
Lim Peng Liang David Llewellyn 4,725,000 1.26%
Grande Pacific Limited 11,850,000 3.16%
China Lawyee Holdings Limited 6,525,000 1.74%
Ng Han Meng 8,700,000 2.32%
Bellarine Enterprise Ltd 3,262,500 0.87%
Yu Long Fei 17,775,000 4.74%
Total 374,999,999 100.00%
70
Our Group structure after the Restructuring Exercise and as at the date of this Offer Document is as
follows:
Notes:
hold 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.
(2) CMNMs mining rights are granted by KSEDC by way of a contract pursuant to the mining lease granted to it by Kelantan
State 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% of
the total issued share capital of CNMC-Nalata), for the contractual rights over an expired mining certificate over the relevant
mining area (the Transfer Agreement). In consideration of Nalata Enterprise Sdn. Bhd. granting CNMC-Nalata the right to
mine over the relevant area, CNMC will pay the renewal fees for the mining certificate. 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 the renewal fees. Notwithstanding this, the Transfer Agreement is still subsisting and
remains in effect based on mutual verbal understanding between CNMC and Nalata Enterprise Sdn. Bhd.
100%
80%
(1)
% 0 8 % 1 8
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 Offer
Document, including the sections entitled Managements Discussion and Analysis of Results of
Operations and Financial Position and the Combined Financial Statements for the years ended 31
December 2008, 2009 and 2010 as set out in Appendix A of this Offer Document and the Unaudited
Condensed Interim Combined Financial Information for the three months ended 31 March 2011 as set
out in Appendix B of this Offer Document.
A summary of the financial information of our Group in respect of FY2008, FY2009, FY2010, 1Q2010
and 1Q2011 is set out below:
Results of operations of our Group
Audited Unaudited
(US$) FY2008 FY2009 FY2010 1Q2010 1Q2011
Revenue 530,169 537,320
Other operating income 63,576 33,392 267,440 22,297 97,083
Royalty fee expenses (44,160) (46,130)
Site and factory expenses (31,719) (39,912) (265,576) (21,197) (164,161)
Amortisation and depreciation (73,777) (102,742) (228,012) (26,094) (123,057)
Rental expense on operating lease (71,867) (86,624) (200,814) (22,001) (73,771)
Changes in inventories of finished goods 78,563 (12,808)
Employees compensation (175,523) (190,700) (377,114) (43,299) (200,792)
Key Management remuneration (4,859) (41,605) (827,290) (209,278) (177,646)
Marketing and publicity expenses (40,757) (28,196) (68,198) (9,583) (37,165)
Office and administration expenses (39,284) (18,594) (73,730) (12,924) (30,175)
Travelling and transportation expenses (45,515) (41,077) (99,930) (9,792) (42,740)
Professional fees (135,049) (241,041) (295,634) (64,185) (126,194)
Contractor expenses (105,256) (121,401) (144,042) (30,355)
Other operating expenses (274,925) (31,711) (319,250) (204,714) (181,841)
Results from operating activities (934,955) (910,211) (2,067,578) (631,125) (582,077)
Finance income 420 22
Finance expenses (56,518) (170,685) (221,897) (73,931) (101,112)
Net finance costs (56,098) (170,663) (221,897) (73,931) (101,112)
Loss before income tax (991,053) (1,080,874) (2,289,475) (705,056) (683,189)
Income tax credit/(expense) (180) (6) 358,845 14,534
Other comprehensive income/(loss)
Exchange differences arising on
consolidation of foreign subsidiaries (26,919) 4,267 38,441 23,548 (1,471)
Total comprehensive loss for the
year/period (1,018,152) (1,076,613) (1,892,189) (681,508) (670,126)
SELECTED COMBINED FINANCIAL INFORMATION
72
Audited Unaudited
(US$) FY2008 FY2009 FY2010 1Q2010 1Q2011
Owners of the Company (990,166) (1,079,681) (1,737,550) (637,428) (632,835)
Non-controlling interests (1,067) (1,199) (193,080) (67,628) (35,820)
Total comprehensive loss
attributable to:
Owners of the Company (1,014,530) (1,075,852) (1,705,762) (617,719) (633,693)
Non-controlling interests (3,622) (761) (186,427) (63,789) (36,433)
Total comprehensive loss for the
year/period (1,018,152) (1,076,613) (1,892,189) (681,508) (670,126)
(Loss) per Share (US cents)
(1)
(0.26) (0.28) (0.46) (0.17) (0.17)
Adjusted (loss) per Share (cents)
(2)
(0.24) (0.27) (0.43) (0.16) (0.16)
Notes:
(1) For comparative purposes, loss per Share for the period under review have been calculated based on loss attributable to
owners of the Company and the pre-Placement share capital of 380,793,000 Shares.
(2) For comparative purposes, loss per Share for the period under review have been calculated based on loss attributable to
owners of the Company and the post-Placement share capital of 404,693,000 Shares.
73
Financial Position of our Group
Audited Unaudited
As at As at
(US$) 31 December 2010 31 March 2011
Assets
Exploration and evaluation assets 18,475 203,208
Mine properties 4,401,346 4,400,338
Property, plant and equipment 1,536,383 2,168,040
Deferred tax assets 358,845 373,379
Inventories 120,714 123,385
Other receivables, prepayments and deposits 542,197 517,182
Cash 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 Company
Share capital 7,291,308 7,291,308
Accumulated losses (4,577,383) (5,210,218)
Translation reserves 11,089 10,231
2,725,014 2,091,321
Non-controlling interests (159,750) (196,183)
Total equity 2,565,264 1,895,138
Liabilities
Interest-bearing borrowings 3,081,446 1,161,748
Derivative financial instrument 40,309 9,071
Rehabilitation provision 41,797 42,776
Interest-bearing borrowings 8,046 1,985,921
Derivative financial instrument 115,440 109,171
Trade and other payables 2,239,215 3,030,523
Current tax liabilities 114 109
Total equity and liabilities 8,091,631 8,234,457
74
The following discussion of our results of operations and financial position should be read in conjunction
with the Combined Financial Statements for the years ended 31 December 2008, 2009 and 2010 as set
out in Appendix A of this Offer Document and the Unaudited Condensed Interim Combined Financial
Information 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 actual
results may differ significantly from those projected in the forward-looking statements. Factors that might
cause 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 the
section entitled Risk Factors of this Offer Document. Under no circumstances should the inclusion of
such forward-looking statements herein be regarded as a representation, warranty or prediction with
respect to the accuracy of the underlying assumptions by our Company, the Vendors, the Manager and
Sponsor, the Joint Placement Agents or any other person. Investors are cautioned not to place undue
reliance on these forward-looking statements that speak only as of the date hereof. Please refer to the
section 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 of
mined ore into gold dor for subsequent sale.
Please refer to the section entitled General Information on our Company and our Group - Business
Overview 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 dor bars produced. Our Group holds the right to mine
and produce gold from gold deposits at the Sokor Block. Our Group commenced its first gold pour in July
2010 with the subsequent off-take of the refined gold by The Perth Mint. Prior to this, our Group was
mainly engaged in exploration and evaluation activities.
Gold dor bars produced by our Group are transported to The Perth Mint for refining to a minimum
standard of 99.95% purity. According to the Refining Agreement signed with The Perth Mint, CMNM has
the discretion to sell the refined gold to The Perth Mint or require The Perth Mint to credit the refined gold
into CMNMs London metal account which CMNM could subsequently sell to third parties in the future.
Revenue from the sale of gold dor bars is recognised when (i) ownership is passed to customers; (ii) no
further processing is required from our Group; (iii) the quantity of gold is determined; and (iv) selling price
is fixed. Our Group generally recognises revenue from the sales of gold dor bars upon confirmation of
the sale of the gold dor bars from our Group to The Perth Mint or any customers that our Group may
sell the gold dor bars to. In cases of the sale of gold dre bars to The Perth Mint, the sale price of gold
dor bars is quoted by The Perth Mint and agreed by our Group, with reference to the Reuters Inter Bank
quoted price. Any sales of the silver by-product are used to offset our operating expenses and do not
form our main revenue stream.
MANAGEMENTS DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL POSITION
75
Our revenue is mainly dependent on the following factors:
(a) Price of gold
Our principal product is gold dor bar. The sale prices of gold dor bars are mainly determined
based on the prevailing gold price in the international market. Gold prices have fluctuated
significantly during FY2008, FY2009, FY2010 and 1Q2011. The following table sets forth monthly
average London Fix gold price for FY2008, FY2009, FY2010 and up to August 2011, the month
preceding 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
76
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
The price of gold is affected by many factors, such as supply and demand in the international
market, selling and purchasing activities by central banks, alternative investment avenues,
fluctuations in exchange rates among major currencies, expectation of inflation rates, interest rates
and global economic and political trends.
(b) Production volume
Production volume is determined by the amount of gold resources and reserves at our concession
area, processing capacity, the efficiency of our gold recovery process which is in turn dependent
on the grade of ore placed in the leaching vats and the weather condition. Gold production
commenced in July 2010. Refined gold output was 553.787 oz in the July 2010 to December 2010
period 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 capacity
of 60,000t per annum. Approximately 6,000t of ore were leached and processed in the July 2010 to
December 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 may
affect our revenue.
Other operating income
Other operating income comprises mainly of foreign exchange gains and unwinding of the discount on
the derivative financial instrument relating to the conversion rights arising from convertible loans issued
by CNMC. Other operating income was approximately US$0.06 million, US$0.03 million, US$0.27 million
and 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, amortisation
costs for mining rights, depreciation expenses for property, plant and equipment, rental expenses on
operating lease, royalty fees paid to the Kelantan State Authority, remuneration for employees and
directors 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 production
process, security expenses to safeguard the production and processing facilities, expenses in relation to
exploration and production plant and processing facilities, and food and accommodation expenses paid
for the workers at the mining site. Proceeds from the sale of silver as a by-product (if any) are used to
offset the site and factory expenses.
Site and factory expenses accounted for approximately 3.2%, 4.2%, 9.3% and 13.5% of total operating
expenses 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 April
2018. Expenditures incurred to conduct drilling, geological and related exploration and evaluation studies
are capitalised subsequent to the establishment of economic recoverability and are transferred to mine
properties. Such capitalised expenditures are amortised using unit-of-production method based on the
estimated total ounces of recoverable gold deposits contained in proven and probable reserves. No
amortisation is charged during the exploration and evaluation phase. Other plant and equipment are
depreciated 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% of
total operating expenses in FY2008, FY2009, FY2010 and 1Q2011 respectively.
Rental expenses on operating leases
Rental expenses are mainly incurred for our Groups leased offices in Singapore and Malaysia, and
machine 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 on
Malaysia local market gold prices on the day of gold pour and paid to the Kelantan State Authority and
KSEDC 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% of
revenue in FY2010 and 1Q2010 respectively.
Remuneration for employees and directors
Remuneration for employees includes monthly salaries and wages and compulsory contributions made
for full-time employees as well as temporary workers.
Remuneration for directors includes directors fees, salaries and relevant CPF contributions made for the
directors.
Remuneration for employees and directors accounted for 18.1%, 24.6%, 42.1% and 31.1% of total
operating expenses in FY2008, FY2009, FY2010 and 1Q2011 respectively.
Others
Other expenses include, inter alia, marketing and publicity expenses, utilities expenses, office and
administrative expenses, travelling and transportation expenses and professional fees for accounting,
legal and compliance work performed by relevant professional parties and changes in inventories of
finished goods.
78
Other operating expenses
Other operating expense is mainly due to foreign exchange losses. We incurred expenses denominated
in MYR, S$ and RMB. Therefore any depreciation of our reporting currency, US$ against MYR, S$, and
RMB 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 related
borrowings 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 payable
on the taxable income. Deferred tax is a result of temporary differences between carrying amounts of
assets 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 profits
to utilise our unutilised tax losses and capital allowances. Going forward, before we obtain the pioneer tax
certificate which entitles us to tax exemption, our Group may be subject to the Malaysian corporate tax
rate of 25% if our unutilised tax losses and capital allowances are not sufficient to offset our taxable
profits.
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 in
Australia for FY2010 and 1Q2011. All of our operations are based in Malaysia. Therefore, a segmentation
of 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.
In FY2008, other operating income of US$0.06 million was mainly a result of foreign exchange gain due
to appreciation of US$ against S$ and MYR as most of our payments for operating expenses were
denominated in S$ and MYR.
In FY2009, other operating income of US$0.03 million was a result of unwinding of the discount on the
derivative financial instrument relating to the conversion rights arising from convertible loans issued by
CNMC.
Operating expenses
Total operating expenses decreased by US$0.06 million or 6.0% from US$1.00 million in FY2008 to
US$0.94 million in FY2009.
79
The decrease was mainly due to a decrease in office and administrative expenses and marketing and
publicity expenses of approximately US$0.02 million and US$0.01 million respectively. In addition, there
was a one-time write-off of pre-feasibility cost and bad debts written off of approximately US$0.27 million
recorded 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 depreciation
expenses of approximately US$0.03 million, an increase in rental of operating lease of approximately
US$0.01 million, an increase in employees compensation of approximately US$0.02 million, an increase
in key managements remuneration of approximately US$0.04 million, an increase in sub-contractor
expenses of approximately US$0.02 million, an increase in professional fees of approximately US$0.11
million and foreign exchange loss of approximately US$0.03 million in FY2009.
The increase in amortisation expense of mining rights in FY2009 was due to full-year amortisation in
FY2009 as compared to eight-month amortisation in FY2008 as the mining rights was acquired in April
2008. The increase in depreciation expenses, rental of operating leases and employees compensation
were a result of an increase in operating activities. In FY2009, we increased our exploration and
evaluation activities and commenced constructing our production and processing facilities in our
concession area, resulting in more equipment being purchased or leased and more labour being hired.
Higher professional expenses such as accounting and legal fees were incurred in FY2009 in preparation
for the listing exercise of our Group. In FY2009, US$ weakened against other currencies due to the global
economic crisis which resulted in a net foreign exchange loss recognised by our Group as compared to a
foreign 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-feasibility
and 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 to
US$0.17 million in FY2009 mainly due to higher borrowing costs incurred for raising more funds to meet
our operational funding requirements in FY2009, increase in interest expenses for new convertible loans
issued in FY2009 as well as existing convertible loans which incurred interest expenses for the full year in
FY2009 as compared to a partial year in FY2008 as the convertible loans were issued between June to
October 2008.
Loss before income tax
Loss before income tax increased by approximately US$0.09 million or 9.1% from US$0.99 million in
FY2008 to US$1.08 million in FY2009 which was mainly as a result of an increase in operating
expenses, 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 approximately
US$0.53 million for FY2010. No revenue was recorded in FY2009 as we had not yet commenced
production of gold.
80
Operating expenses
Total operating expenses increased by approximately US$1.93 million or 204.3% from US$0.94 million in
FY2009 to US$2.87 million in FY2010. The increase was mainly due to royalty fees and tribute paid to
the Kelantan State Authority and KSEDC of approximately US$0.04 million, an increase in site and
factory expenses of approximately US$0.23 million, increase in amortisation and depreciation expenses
of approximately US$0.13 million, increase in rental of operating leases of approximately US$0.11
million, increase in employees and directors compensation of approximately US$0.97 million, increase in
contractor expenses of approximately US$0.02 million, increase of net foreign exchange loss of
approximately US$0.28 million and increase in expenses including marketing and publicity expenses,
office and administration expenses, travelling and transportation expenses and professional fees of
approximately US$0.21 million. This is offset by changes in inventories of finished goods of approximately
US$0.08 million.
Royalty fees and tribute which are attributable to the production of gold were only incurred with the
commencement of gold production in FY2010. Increase in depreciation expenses was a result of the
commencement of depreciation of our property, plant and equipment which were acquired or constructed
in conjunction with the commencement of gold production in FY2010. Increases in site and factory
expenses, rental of operating leases, employee compensation, marketing and publicity expenses, office
and administrative expenses and travelling and transportation expenses were a result of an increase in
our operating activities. In particular, the commencement of production resulted in more equipment being
purchased or leased and more labour being hired. Remuneration to the directors of CNMC was first paid
out in FY2010. Increase in contractor expenses was a result of more contractors and consultants our
Group engaged to provide advisory services in relation to construction of production and processing
facilities and in preparation of the commencement of gold production. In addition, higher professional
expenses were incurred for the preparation of our Groups listing exercise. In FY2010, we incurred higher
expenses denominated in S$, MYR and RMB, all of which appreciated against US$ at a faster pace than
in 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 to
US$0.22 million in FY2010 was mainly due to the increase in interest payments as CNMC raised
additional funds by issuing more convertible loans in FY2010.
Loss before income tax increased by approximately US$1.21 million or 112.0% from US$1.08 million in
FY2009 to US$2.29 million in FY2010 as a result of increases in operating expenses and in finance
costs, 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 and
processing facilities in 1Q2010.
Revenue amounted to US$0.54 million in 1Q2011 arising from production of gold of 239.337oz.
In 1Q2010 and 1Q2011, other operating income of US$0.02 million and US$0.04 million was both a
result of unwinding of the discount on the derivative financial instrument relating to the conversion rights
arising from convertible loans issued by CNMC.
81
Operating expenses
Total operating expenses increased by approximately US$0.57 million or 87.7% from US$0.65 million in
1Q2010 to US$1.22 million in 1Q2011.
The increase was in line with our increased business activities, especially the production of gold dor
bars which commenced in July 2010. This resulted in increases in most of our operating expenses
including site and factory expenses, amortization and depreciation expenses and rental expense on
operating lease of approximately US$0.29 million. Royalty fees increased by US$0.05 million, as there
was no royalty fees paid in 1Q2010 which was before the commencement of our gold production. More
employees were hired to support the production, resulting in increases in employees compensation of
US$0.16 million, office and administration expenses of US$0.02 million, and travelling and transportation
expenses of US$0.03 million. Marketing and publicity expenses increased by US$0.03 million as we
engaged in more charitable and community activities to benefit residents of the villages near our
production site. In addition, higher professional expenses of approximately US$0.06 million were incurred
for the preparation of our Groups listing exercise.
Increases in our operating expenses was mainly offset by decrease in contractor expenses of US$0.03
million, which was incurred and paid to consultants in relation to the design and construction of our
production facilities. There were no contractor expenses in 1Q2011 as construction of our production
facilities was completed in FY2010. There were also decreases in foreign exchange loss and key
managements 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 to
US$0.10 million in 1Q2011, mainly as a result of interests paid on additional convertible loans issued
after 1Q2010.
Loss before income tax decreased by approximately US$0.03 million or 4.2% from US$0.71 million in
1Q2010 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 for
approximately 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 in
progress and the value of producing mines transferred from exploration and evaluation assets
(1)
amounted
to 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 or
24.4% of total non-current assets.
As at 31 December 2010, deferred income tax assets of approximately US$0.36 million accounted for
approximately 5.68% of total non-current assets.
82
Current assets
As at 31 December 2010, total current assets of approximately US$1.78 million accounted for
approximately 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 dor bars and
consumables used in our Groups production and accounted for approximately 6.7% of total current
assets. Other receivables, prepayments and deposits of US$0.54 million accounted for approximately
30.3% 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 for
approximately 57.2% of total liabilities and comprised the non-current portion of convertible loans of
approximately US$3.04 million, finance lease liabilities of US$0.04 million, rehabilitation provision of
approximately US$0.04 million and non-current portion of conversion rights of approximately US$0.04
million. Provision for the future cost of rehabilitating mine sites and related production facilities are made
on 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 total
liabilities. Current liabilities mainly consisted of current portion of conversion rights of US$0.12 milion and
trade and other payables of approximately US$2.24 million which included trade payables of US$0.10
million, accrued operating expenses of US$1.48 million, remuneration and fees due to key management
of 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 comprising
mainly US$7.29 million of share capital which was offset by a total of US$4.57 million of accumulated
loss and translation reserves and non-controlling interest of US$0.16 million. Accumulated loss was
mainly 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 approximately
86.8% 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 in
progress and the value of producing mines transferred from exploration and evaluation assets
(1)
amounted
to 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 or
30.3% of total non-current assets.
As at 31 March 2011, deferred income tax assets of approximately US$0.37 million accounted for
approximately 5.2% of total non-current assets.
83
Current assets
As at 31 March 2011, total current assets of approximately US$1.09 million accounted for approximately
13.2% of total assets. Current assets consist of inventories, other receivables, prepayments and deposits
and cash and cash equivalents.
As at 31 March 2011, inventories of approximately US$0.12 million comprise of gold dor bars and
consumables used in our Groups production and accounted for approximately 11.3% of total current
assets. Other receivables, prepayments and deposits of US$0.52 million accounted for approximately
47.5% of total current assets.
Cash and cash equivalents of US$0.45 million accounted for 41.2% of total current assets.
As at 31 March 2011, total non-current liabilities of approximately US$1.21 million accounted for
approximately 19.1% of total liabilities and comprised the non-current portion of convertible loans of
US$1.12 million, finance lease liabilities of approximately US$0.04 million, rehabilitation provision of
approximately US$0.04 million and non-current portion of conversion rights of approximately US$0.01
million. Provision for the future cost of rehabilitating mine sites and related production facilities are made
on a discounted to a present value and accounted for at the time of developing the mines and installing
and using those facilities.
Current liabilities
As at 31 March 2011, current liabilities of approximately US$5.13 million accounted for 80.9% of total
liabilities. 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, and
trade and other payables of approximately US$3.03 million. Trade and other payables included trade
payables of US$0.23 million, accrued operating expenses of US$1.78 million, amount due to contractors
of US$0.51 million, remuneration and fees due to key management of US$0.31 million and loans from
directors of US$0.20 million.
Shareholders equity
As at 31 March 2011, shareholders equity amounted to approximately US$1.90 million comprising mainly
US$7.29 million of share capital, and reduced by accumulated losses of US$5.21 million and US$0.20
million of non-controlling interest.
Note:
(1) Expenditures incurred to conduct drilling, geological and related exploration and evaluation studies are capitalised
subsequent to the establishment of economic recoverability and are transferred to mine properties.
84
LIQUIDITY AND CAPITAL RESOURCES
The following table sets out a summary of our Groups cash flow for FY2008, FY2009, FY2010 and
1Q2011.
(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 financial
institutions of approximately US$1,000.
FY2008
In FY2008, our Group recorded a net cash outflow from operating activities of approximately US$0.70
million, which was mainly a result of operating loss before changes in working capital of US$ 0.81 million,
adjusted for working capital inflows of US$0.17 million. The working capital inflows was mainly due to an
increase 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 was
further 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 mainly
attributable to payments made for exploration and evaluation expenditures.
Net cash inflow from financing activities amounted to approximately US$1.07 million, which were mainly
from 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
million, 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 and
other payables. Cash flow from operating activities was further reduced by interest payments of US$0.15
million.
Net cash outflow from investing activities amounted to approximately US$0.89 million, comprising
US$0.08 million for payments for exploration and evaluation expenditures and US$0.81 million for
acquisition of property, plant and equipment.
from proceeds from issuance of convertible loans.
85
FY2010
million, 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 an
increase in trade and other payables of US$0.84 million which were offset by an increase in inventories of
US$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 approximately
US$0.18 million.
Net cash outflow from investing activities amounted to approximately US$0.84 million, which were
attributable to US$0.08 million of payments made for exploration and evaluation expenditures and
US$0.76 million for property, plant and equipment.
from proceeds from issuance of convertible loans.
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 for
working capital inflows of US$0.17 million. The net working capital inflows were due to a decrease in
other receivables, prepayments and deposits of US$0.02 million and an increase in trade and other
payables of US$0.15 million. Cash flow from operating activities was further reduced by interest
payments made of approximately US$0.08 million.
Net cash outflow from investing activities amounted to approximately US$0.26 million for payments made
for 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 the
period from 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
Buildings 297 490 0
Plant and equipment 12 498 246 590 212
Fixture and Fittings 2 13 52
Motor Vehicle 21 10 68 25 18
Construction 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 of
funds mainly from convertible bonds issued by CNMC.
86
Capital Divestments
The capital divestments made by our Group in FY2008, FY2009, FY2010 and 1Q2011 and for the period
from 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 CNMCs presentation and
functional currency. Foreign currency transactions are translated into US$ at rates of exchange
approximating those prevailing at transaction dates. Foreign currency monetary assets and liabilities are
translated at rates as at the balance sheet date. Non-monetary items in a foreign currency that are
measured 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 Groups revenue and expenses denominated in US$ and foreign currencies are as
follows:
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
S$ 7.1 10.7 31.9 42.4
MYR 17.9 20.5 41.5 57.0
RMB 11.5 10.0 7.6
US$ 63.5 58.8 19.0 0.6
100.0 100.0 100.0 100.0
Note:
(1) Purchases include capital expenditures and capitalised exploration and evaluation assets.
To the extent that our Groups revenue, purchases and expenses are not naturally matched in the same
currency 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 will
adversely affect our Groups earnings.
87
Our Groups 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 22.8
As 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 foreign
exchange exposure in the future and will consider hedging any material foreign exchange exposure
should the need arise. Prior to entering into any such hedging transactions, our Group will (i) seek the
Boards approval on the policy for entering into any such hedging transactions; (ii) put in place adequate
procedures which must be reviewed and approved by its Audit Committee; and (iii) the Audit Committee
will monitor the implementation of the policy, including reviewing the instruments for hedging, processes
and 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-east
monsoon 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 areas
to 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.
88
The following discussion on our Groups gold exploration and mining activities should be read in
conjunction 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 preparation
for 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 the
section entitled Restructuring Exercise of this Offer Document for further details.
Our business originated with the incorporation and establishment of CNMC in Hong Kong in October
2006. CNMC has shareholding interests of 81%, 80% and 80%
(1)
in three Malaysian subsidiaries, namely
CMNM (being its principal operating subsidiary), CNMC-Nalata and MCS respectively. The remaining
issued 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 appointed
the Kelantans 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. He
incorporated CNMC in Hong Kong in October 2006 as an investment holding company of the Sokor Gold
Project and invited Choo Chee Kong and Ng Eng Tiong to participate in the initial equity of CNMC as
angel investors.
Pursuant to an agreement dated 16 May 2007 entered into between CNMC and KSEDC and
supplemented by a tripartite agreement dated 21 April 2011 entered into between CNMC, CMNM and
KSEDC, CNMCs main operating subsidiary, CMNM which was set up in December 2006, was granted
the rights by KSEDC as holder of the mining lease to carry out all exploration works and mining
operations 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 Sokor
Block to gather relevant geological data and mineral geology data, through interpreting enhanced
thematic mapper remote sensing images on surveyed area, as well as geological field work which include
geological, geophysical and geochemical work, trenching, and drilling. The phase 1 exploration
programme was managed by Sino Metal Resource Limited which sub-contracted the works to CSU. CSU
was subsequently appointed directly by CNMC in 2008 to provide technical support to our Group in
evaluating the potentiality of gold resources in the Sokor Block.
In August 2007, CNMC acquired 375,000 ordinary shares representing 75% of the issued share capital
of MCS which previously held an exploration licence to explore mineral resources found within the Sokor
Gold 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 drilling
programme 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 and
analysis 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 survey
method. Based on the recommendation of BDA, CMNM also appointed ALS Group as its primary
laboratory to provide assay sample preparation and analytical services.
GENERAL INFORMATION ON OUR COMPANY AND OUR GROUP
89
Note:
hold 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 Groups mining concession
to 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. CNMC
entered into the Transfer Agreement dated 14 November 2007 with Nalata Enterprise Sdn. Bhd. granting
CNMC-Nalata the right to mine over the relevant area when the mining certificate is renewed and CNMC
will pay the renewal fees for the mining certificate. The Transfer Agreement shall terminate if the mining
certificate is not renewed within six (6) months from the date of the Transfer Agreement. As at the Latest
Practicable Date, CNMC has not paid the renewal fees. Notwithstanding this, the Transfer Agreement is
still subsisting and remains in effect based on mutual verbal understanding between CNMC and Nalata
Enterprise Sdn. Bhd.
In March 2008, CMNM completed and received the report on the phase 1 exploration programme issued
by CSU with positive results for the Sokor Block. Through field work and integrated studies, four gold
mineralisation occurrences in the surveyed area were identified. There was also a preliminary analysis on
how the ore or deposit was formed and a summary of the gold mineralisation distribution regularity and
exploration direction in the area.
In May 2008, CMNM commissioned CGRI (a subsidiary of China National Gold Corporation) to conduct
gold-bearing ore dressing and metallurgy studies.
In October 2008, CMNM commenced the phase II exploration programme and commissioned Sinomine
Resource Exploration to conduct a further 10,000m drilling programme.
In March 2009, CMNM finalised the mining scheme for assessing the technical feasibility of conducting
mining operations for primary gold in the Sokor Block.
In April 2009, CMNM entered into the Refining Agreement with AGR Matthey, an Australian-based
partnership 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 Commodities
Centre. Pursuant to the terms of the Refining Agreement, CMNM has the option to sell the refined gold to
AGR Matthey or request AGR Matthey to credit the refined gold to CMNMs London metal account. In
addition, AGR Matthey must purchase the refined silver from CMNM. Since March 2010, The Perth Mint
has taken over the role from AGR Matthey as the service provider under the Refining Agreement due to
a corporate reorganisation exercise.
In June 2009, the DOE approved the environmental impact assessment (EIA) report which was
submitted by an independent EIA study consultant on behalf of CMNM, who provided an independent
assessment of the conditions of the environmental features and their consequent impacts in connection
with the development and operation of CMNM.
In September 2009, CMNM commissioned the phase I mine design and construction programme to
construct a gold-bearing ore crushing and conveying system, a vat leaching facility and a gold extraction
and carbon re-generation system at the Sokor Block.
In April 2010, CMNMs environmental management plan, which described the processes and policies that
CMNM will follow in order to comply with environmental regulations, maximise its compliance and
minimise any harm to the environment, was approved by the DOE.
In June 2010, MIDA approved CMNMs application for the pioneer tax status which would entitle the
Sokor 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 24
months from the date of such approval. Our Group has not yet applied for the pioneer certificate and has
not fulfilled the relevant conditions and tax exemption under the pioneer tax status is therefore not
applicable to our Group as at the Latest Practicable Date.
90
In July 2010, CMNM obtained the approval for its operational mining scheme from the Department of
Minerals and Geosciences, Kelantan. The approved operational mining scheme was subsequently
renewed until 29 June 2012. CMNM achieved its maiden gold pour from the Sokor Gold Project on 21
July 2010, producing approximately 93.018oz of gold dor, which contained approximately 76.252oz of
refined gold. As at the Latest Practicable Date, the quantity of refined gold and silver produced from the
Sokor 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 technical
adjustments 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 a
proposed joint venture company, CMNM-JY to jointly manage the mining and production of silver, lead
and zinc at the Sokor Block. On completion of the Joint Venture Agreement, CMNM-JY is proposed to be
51% owned by CMNM and 49% owned by Xiamen Shenkun. As at the Latest Practicable Date, CMNM
and Xiamen Shenkun do not hold shares in CMNM-JY.
91
OUR SUBSIDIARIES
The details of our subsidiaries are as follow:
% Ownership
Date 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)
100
Hong 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%).
(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 their
respective Associates has any interest, whether direct or indirect, in our Group or any of our subsidiaries
and 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 the
Sokor Gold Project. The Independent Valuation Report has been prepared in accordance with the
VALMIN Code. The valuation was carried out on a Fair Market Value basis. Fair Market Value is defined
as the amount of money (or the cash equivalent of some other consideration) determined by the expert
in accordance with the provisions of the VALMIN Code.
Based on the results of JLLSs 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 is
reasonably stated as being in the range of US$70 million to US$95 million (the approximate equivalent of
S$87.1 million to S$118.2 million based on the exchange rate of S$1.00 to US$0.8039 as at the Latest
Practicable Date) with a preferred value of US$83 million (the approximate equivalent of S$103.2 million
based on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date), not taking into
account the value of the other measured and inferred resources such as silver, lead and zinc as indicated
in the BDA Technical Report, which is expected to contribute positively to the future earnings of our
Group 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.
92
BUSINESS OVERVIEW
Our Group is principally engaged in the business of exploration and mining of gold and the processing of
mined ore into gold dor for subsequent sale. Currently, we are focusing on the mining and production of
gold at the Sokor Block that is undertaken by our subsidiary, CMNM. CMNM has completed the
construction of its ore processing facility with a processing capacity of up to 60,000t per annum and
commenced its first gold pour in July 2010 with the subsequent off-take of the refined gold by The Perth
Mint. In the future, our Group also intends to carry out exploration and mining activities for other minerals
such as silver, lead and zinc at the Sokor Block. On 28 January 2011, CMNM had entered into the Joint
Venture Agreement with Xiamen Shenkun for a proposed joint venture company, CMNM-JY, to jointly
manage the mining and production of silver, lead and zinc at the Sokor Block. On completion of the Joint
Venture Agreement, CMNM-JY is proposed to be 51% owned by CMNM and 49% owned by Xiamen
Shenkun.
Our Group works with various third party contractors to carry out its mining operations. Currently, our
Group subcontracts the geology and metallurgical studies, exploration programme, drilling work, sampling
and assaying and environmental monitoring work to third party contractors while our Group carries out its
own mining and extraction of gold. Going forward, our Group intends to sub-contract substantially its
mining and extraction of gold to CMNM-JY as Xiamen Shenkun possesses the requisite qualifications
and experience to undertake exploration, mining, extraction works and other related work. Xiamen
Shenkun is 75% owned by Yu Long Fei, an existing Shareholder. The mining and extraction of gold
undertaken 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 exploration
activities at Sokor Gold Zone, covering a separate area of up to 62.8 sq km in the Ulu Sokor region of
Kelantan 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 presently
in the process of renewing the exploration licence for the Sokor Gold Zone and applying for prospecting
licences 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 dated
14 November 2007 with Nalata Enterprise Sdn. Bhd. for the transfer of the mining rights granted to
Nalata Enterprise Sdn. Bhd. (a shareholder of 5% of the issued share capital in CNMC-Nalata) pursuant
to a mining certificate issued for approximately 3.5 sq km mining concession in a single mining tenement
located in the District of Kuala Krai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia, from Nalata
Enterprise Sdn. Bhd. to CNMC-Nalata. The mining certificate had expired at the time the Transfer
Agreement was entered into. CNMC-Nalata is currently assessing the commercial feasibility of renewing
the mining certificate issued to Nalata Enterprise Sdn. Bhd. and currently does not hold any mining rights
over the area stated in the mining certificate.
Note:
93
The map below illustrates the location of our Groups exploration and mining areas:
94
Sokor Gold Project
The Sokor Gold Project is located at the Sokor Block. The project is approximately 80km southwest of
Kota Bharu, the state capital of Kelantan. Access is by sealed road to Kampong Bukit Pauh and thence
by an all-weather gravel logging track, with the closest village 18km from site. The nearest town is the
district centre of Tanah Merah which is approximately 40km from site. Tanah Merah is approximately
40km from the state capital, Kota Bharu, which is serviced daily by jet aircraft from Kuala Lumpur
entailing a 55 minute flight.
Pursuant to an agreement dated 16 May 2007 entered into between CNMC and KSEDC and
supplemented by a tripartite agreement dated 21 April 2011 entered into between CNMC, CMNM and
KSEDC, KSEDC (holder of the mining lease) has in turn granted to CMNM the contractual rights to mine
and produce gold and other minerals found within Sokor Block for a period of ten (10) years expiring on 7
April 2018. The mining area covers the upper catchments of the Sungai Sokor River. The topography
consists of moderately steep hill ridges and narrow valleys. Elevation ranges from 200m to 900m above
sea level. The area has a hot, tropical monsoonal climate with rain falling mainly in the November to
January 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 on
the spot price of gold in MYR on the day of gold pour and the payment of royalty is to be effected
as 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 spot
price of gold in MYR on the day of gold pour; and a 10% tribute on the gross proceeds of the sales
value 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 executed
from Sokor Block.
In July 2010, CMNM achieved its maiden gold pour from the Sokor Gold Project, producing
approximately 93.018oz of gold dor, which contained approximately 76.252oz of refined gold. As at the
Latest Practicable Date, CMNM has completed 37 gold pours and produced 2,434.005 oz of refined gold
and 820.685oz of refined silver. Please refer to the section entitled General Information on Our Company
and Our Group History of this Offer Document for more information on the amount of refined gold and
silver produced from the Sokor Gold Project.
Sokor Gold Zone
MCS held an exploration licence to explore mineral resources found within Sokor Gold Zone, covering an
area of up to 62.8 sq km, which surrounds the Sokor Block. As at the Latest Practicable Date, MCS is in
the process of renewing the exploration licence.
Sokor Gold Zone covers a prospective section of the Central Belt. Structural interpretation of satellite
imagery indicates a number of major north-south and northeast-southwest trending 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 mining licence contains
evidence from satellite imagery of three circular structures that could indicate buried intrusive bodies and
also one exposed intrusion. This geological setting is regarded as prospective for gold and base metal
mineralisation.
Known gold occurrences in the area include the presence of alluvial gold in a number of the rivers and
hard 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 Group
is unable to provide any reserve or resource estimate.
95
Nalata Project
In the last quarter of 2007, CNMC had entered into the Transfer Agreement dated 14 November 2007
with Nalata Enterprise Sdn. Bhd. for the contractual rights over an expired mining certificate held by
Nalata Enterprise Sdn. Bhd. for approximately 3.5 sq km mining concession in a single mining tenement
located in the District of Kuala Krai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia (the Nalata
Project). In consideration of Nalata Enterprise Sdn. Bhd. granting CNMC-Nalata the right to mine over
the relevant area when the mining certificate is renewed, CNMC will pay the renewal fees for the mining
certificate. 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 the
renewal fees. Notwithstanding this, the agreement is still subsisting and remains in effect based on
mutual verbal understanding between CNMC and Nalata Enterprise Sdn. Bhd.
As at the Latest Practicable Date, CNMC-Nalata is currently assessing the commercial feasibility of
renewing the mining rights and does not have any mining rights over the Nalata Project.
BUSINESS ACTIVITIES
Exploration Activities
Our Groups 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, extending
a further 4km to the Sungai Liang region, subject to reconnaissance mapping. The exploration has
defined sufficient resources and mineable reserves contained in four (4) separate deposits, namely,
Mansons Lode, New Discovery, Ketubong and Rixens. The resources consist of shallow oxide gold
mineralisation and deeper primary gold mineralisation associated with sulphide mineralisation, including
pyrite and chalcopyrite. The presence of copper will change the concentration of the leaching solution
used for the Groups mining process. In addition, currently for the production of gold dors by our Group,
the gold dors will contain small quantities of base metals as by-products.
Mansons Lode deposit extends over a strike length of 450m and has been defined by 120 drill holes
totalling 4,904m. The deposit has been closely drilled on a 20m x 20m grid. Drill hole gold grades in
mineralisation range from 1-8g/t Au averaging 3.5g/t Au; the silver grade averages around 92g/t Ag. Base
metal 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 Mansons Lode. Gold is
associated with the Ketubong-Rixen fault zone and has been defined over a strike length of 200m by 51
drill holes totalling 3,238m. The deposit has been drilled on a 20m x 20m grid in the oxide zone and on a
20m x 40m grid in the primary zone to a depth of 200m and remains open at depth. Drill hole gold grades
range 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 Mansons Lode and is a
continuation northwards of the New Discovery deposit along the Ketubong-Rixen fault. The deposit has
been defined by trenching and ten (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/t Au in the primary zone, averaging 2.6g/t Au; silver and base
metal grades are low.
Rixens deposit is located 3km north of Ketubong and 5km from the process plant. Gold mineralisation is
contained in silicified volcanic rocks to the west of the Ketubong-Rixen fault. The deposit has been
delineated by soil sampling over a strike length of 800m and defined by drilling on a 100m x 100m grid
over a strike length of 300m with nine (9) drill holes totalling 904m. The deposit requires additional drilling
to confirm continuity of grade and thickness in the area already drilled and step-out drilling along strike
and down dip to test for extensions to the mineralisation. Drill hole gold grades average around 1.9g/t Au.
96
Gold, silver and base metal grades were determined by ALS Group by analysing the trench and diamond
core 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 with
potential for gold mineralisation within acid volcanic tuff extends over a strike length of around 2,000m
which includes an extension north of the current drilled area of around 800m and an extension south of
700m.
Our Groups second phase exploration programme consists of additional exploration of the discovered
prospects 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. All
potentially mineralised core is diamond sawn, with half core despatched for analysis and half retained in
the core box as a permanent record. Core is stored on the mining site close to the processing plant and
administrative office. Sample lengths of drill core take into account geological boundaries but are a
minimum length of 0.5m and a maximum length of 1.5m.
Sample preparation is undertaken at ALS Groups laboratory in Perth, Australia. Samples are placed in
calico 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 pulp
sample 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 fire
assay 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 emission
spectrometry using the ALS method ME-OG62.
Pulp samples prepared by ALS Group will be sent to Standard and Reference Laboratories in Perth for
analyses using the same fire assay method as ALS Group to confirm the general reliability of the data
produced by ALS Group and to provide an appropriate base for resource and reserve estimation.
ALS Groups laboratories operate quality systems based on the international standards ISO/IEC 17025,
ISO 9001 and the National Association of Testing Authorities, Australia (NATA) accreditation.
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 dor
Smelting
Gold extraction solution (PH=11.5)
Gold-bearing
activated
carbon
Gold slurry
Carbon
regenerated
Tailing
area
To decompose gold
extraction solution
Pregnant
solution
Barren
solution pond
Crushing
Dumptruck
Shovel/excavator
Mining of pit rocks
Sale of gold dor
Refining
Mining Leaching
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-bearing
ores are excavated from the earth using excavator and transported by dump trucks to the ore processing
facility.
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 the
ore is partially or fully exposed. The ore will be crushed to less than 10mm in size before sending to the
leaching vat to effect the leaching process.
Leaching
Gold-bearing ore is immersed in a leaching vat of gold extraction solution (comprising a mixture of
chemicals), 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 activated
carbon, 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 end
product 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 dor (which is a bar that
contains 40% to 90% of pure gold). The gold dor will be delivered to The Perth Mint (the third party
refiner 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 also
adjacent to the service buildings, including an office, plant workshop, laboratory and living quarters for
the employees of our Group. The mining area is approximately 2.5 hours driving distance from the Sultan
Ismail Petra Airport of Kelantan or 1.5 hours drive from Tanah Merah railway station. It has access to
telecommunication, water, roads and is equipped with its own power generator.
The following table shows our Groups 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 can
contain up to 1,500t of gold-bearing ore, while the other two (2) can contain up to 1,000t of gold-bearing ore each. The
throughput capacity of the vat leaching system is approximately 3,500t of ore per cycle with each cycle taking approximately
21 days to complete and this is equivalent to a processing capacity of gold-bearing ore for gold of approximately 60,000t per
annum.
(2) Our Group commenced ore processing in July 2010 and the ore processed of 6,000t in FY2010 was for the period from July
2010 to December 2010 only.
99
On an annualised basis, the utilisation rate would have been 20% for FY2010. The low utilisation rate in
FY2010 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 processing
capacity of approximately 34,000t;
(c) Our Group is still in the midst of training our mining workers in preparation for future increases in
processing capacity; and
(d) Our Group intends to sub-contract substantially the mining and extraction of gold to a third party
contractor in the future. Hence, we have been focusing on sourcing, negotiating and selecting the
suitable contractors during this period.
The utilisation rate for 1Q2011 was low as there was no gold pour in February 2011 due to the closure of
production facilities during the Chinese New Year period.
As at the Latest Practicable Date, our Group is conducting pilot test run for an alluvial gold production
facility 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 Mansons Lode. As at the Latest Practicable Date, CMNM has
completed 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 of
this Offer Document for more information on the amount of refined gold and silver produced from the
Sokor Gold Project.
The table below is a summary and extract of the forecasted mined ore and the gold production for the
Sokor Gold Project for FY2011 to FY2014 which has been reviewed by BDA. A detailed production
schedule is set out in the BDA Technical Report set out in Appendix F of this Offer Document:
FY2011 FY2012 FY2013 FY2014
Mined Ore
Tonnage (kt) 84.0 705.0 913.0 1,090.0
Average Au Grade (g/t Au) 3.5 2.2 2.4 2.3
Ore Dilution (%) 5.0 5.0 5.0 5.0
Recovery
Au (%) 70.0 70.0 73.0 74.0
Final Product
Au (oz) 6,000 31,500 50,000 58,100
The above production schedule is based on various assumptions made by our Group and there is
no assurance that our Group will be able to achieve the above production estimates due to a
variety of reasons including but not limited to, delays in the implementation of certain operational
processes, lower than estimated recovery rate and higher than estimated mining dilution. Please
refer to the section entitled Risk Factors Our future cash flow, results of operations and
financial condition will be affected if we fail to achieve our production estimates of this Offer
Document for details.
The initial production for the period from FY2010 to FY2012 is based on ore reserves at a cut off grade
of 0.5g/t Au while a further two (2) years production is based on primary ore, inferred resources and
possible extensions at Rixens pit.
100
As indicated in the BDA Technical Report, our Groups current total gold reserves estimate is 989,000t, of
which proved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of
23,900 oz and probable gold reserves are 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. Based on the planned production schedule for our Groups
mining operations, it is expected that the mining of these Current Gold Ore Reserves will be completed
by our Group in 2012. While our Group is continuously conducting exploration activities, however there is
no assurance that these exploration activities will result in the discovery of new mineable reserves. In
addition, even if a viable deposit is discovered, it may require substantial capital expenditure and time
from the initial phases of exploration until production commences during which the capital cost and
economic feasibility may change. Furthermore, actual results upon production may differ from those
anticipated at the time of the discovery. In order to maintain gold production beyond the life of our Groups
Current Gold Ore Reserves, other than through acquisitions, additional gold reserves must be identified
either to extend the life of our existing mine or justify the development of new projects. In the event that
our Groups exploration programmes do not result in the replacement of such gold reserves or result in
new commercially viable mining operation beyond the Current Gold Ore Reserves identified, this could
have an adverse impact on the future operations, results and growth of our Group.
Resource Definition and Continuing Exploration Activities
The four (4) deposits, Mansons Lode, New Discovery, Ketubong and Rixens have been evaluated by a
total of 27 surface trenches and a total of 10,791m of diamond core drilling. Trenches were excavated by
a backhoe to a depth of 3m to 4m at spacing varying from 50m to 100m. Diamond core drilling was
completed on all four (4) deposits with a mix of inclined and vertical drill holes with drill sections
orientated normal to the strike of the mineralisation. The initial drilling programme in 2007 experienced
low core recovery and consequently the first six (6) holes drilled by CNMC were excluded from the
resource estimation. Core recovery in subsequent programmes was satisfactory with most holes in
excess of 90% core recovery.
In 2011, our Group undertook the phase III exploration programme which is expected to be a whole year
programme 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 drilling
programme is still on-going and currently there are four (4) diamond drill rigs operating at the mining site
of our Group. As at the Latest Practicable Date, our Group has completed drilling of a total of 86 drill
holes for an aggregate of approximately 9,000m under the phase III exploration programme. Following
the drilling, 2,666 samples have been despatched to ALS Group in Perth for assay and our Group has
received assay results for 2,495 samples. Our Groups geologist is currently conducting a core logging
programme 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 later
part of 2011, barring unforeseen circumstances. These programmes are designed to infill and extend
resource drilling on New Discovery, Ketubong and Rixens together with drill testing of other targets within
the mining concession area.
101
According to the BDA Technical Report, the resource and reserve estimates in Sokor Block based on the
JORC 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 Mansons Lode,
New Discovery and Rixens 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 gold
reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900 oz and probable gold reserves
are 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 Groups gold resources amounted to approximately 2,182,000t at a grade of 2.62g/t
Au with contained gold of 183,500 oz which includes a total gold reserves estimate of 989,000t, of which
proved gold reserves are estimated to be 204,000t at a grade of 3.64g/t Au with contained gold of 23,900
oz and probable gold reserves are estimated to be 785,000t at a grade of 1.84 g/t Au with contained gold
of 46,400 oz.
102
According to the BDA Technical Report, based on the projected mining rate, the defined ore reserve will
support a two (2) year mine life from FY2011 to FY2012, with a waste to ore stripping ratio of
approximately 1.6. Our Group 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 through
additional drilling, mainly in the Rixens deposit. Our Group also plans to treat primary resources which is
planned to be converted to ore reserves on successful completion of metallurgical test work
demonstrating that the primary material is suitable for processing though a carbon-in-leach plant.
BDA considers that there is considerable exploration potential within CMNMs 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 Sokor Block where to date only limited reconnaissance
exploration has taken place.
Please refer to the BDA Technical Report set out in Appendix F of this Offer Document for further details
of 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. All
potentially mineralised core is diamond sawn, with half core despatched 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 preparation is undertaken at the laboratory of ALS Group in Perth, Australia. Samples are placed
in 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 rate
of approximately one (1) duplicate per batch of 20 samples and one (1) blank sample in every 40
samples before they are despatched to ALS Group. Our Group will monitor the results of the duplicate
and blanks samples to ensure that they return acceptable results. If there is any significant bias or long
term drift from the standard or expected results, our Group will investigate and carry out additional assay
checks.
ALS Groups laboratories operate quality systems based on the international standards ISO/IEC 17025,
ISO 9001 and NATA accreditation.
Refining
Pursuant to the Refining Agreement, gold dor produced by CMNM will be sent to The Perth Mint for the
purpose of carrying out the refining process in order to attain a gold purity of at least 99.95%. The quality
control 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 Group
as it is more effective for us to work with selected customers in light that we are at the initial stage of
production.
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 and
assayer with the London Bullion Market Association, the New York Commodity Exchange, the Tokyo
Commodity Exchange and Dubai Multi Commodities Centre. The Perth Mint refines the gold dor bars
provided by our Group to a minimum standard of 99.95% purity and disposes of the non-precious metal
extracted from the gold dor. 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 CMNM
has the discretion to sell the refined gold to The Perth Mint or require The Perth Mint to credit the refined
gold into CMNMs London metal account which CMNM could subsequently sell to third parties in the
future.
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As gold is a recognisable commodity and is easily traded, our Directors believe that they will be able to
readily dispose of the refined gold credited into CMNMs London metal account to third parties. In
addition to The Perth Mint and T.C.S. Trading, our Group may source for other viable alternative
customers to sell our gold dor 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 Perth
Mint and T.C.S. Trading.
OUR MAJOR SUPPLIERS
The major suppliers accounting for 5.0% or more of our Groups total operating costs and exploration and
evaluation 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 are
able to provide good and timely services at competitive prices.
The percentage increase in the operating costs or expenditures for CGRI, CSU and Sinomine in FY2009
was mainly due to the increase in exploratory and evaluation works that were undertaken by CMNM in
FY2009 in preparation for gold production in FY2010.
As CMNM focused on gold production in FY2010, less drilling works and technical support were
conducted by Sinomine and CGRI respectively leading to a decrease in exploration and evaluation
expenditure and consequently, the percentage decrease in the operating costs or expenditures for CGRI
and 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 to
breaks in exploration activities during the Chinese New Year period.
Following the completion of Sino Metal Resource Limiteds contract work in FY2008, CNMC did not
renew the services of Sino Metal Resource Limited. Sinomine replaced Sino Metal Resource Limited for
the 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 the
above 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 dor on the day
following delivery or collection, whichever is applicable, and the balance payment of 10% upon
confirmation of the gold purity which is usually within five (5) business days from the date of delivery, or
collection, whichever is applicable.
104
We will review the credit terms offered to our customers on a periodic basis and such credit terms offered
will take into account, amongst others, the creditworthiness of the customer as well as the size of the
customers 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 agreement
with the suppliers. Due to the nature of our Groups business, it is not meaningful to calculate the trade
payables turnover days as the exploration expenditure of our Group is not of a trading nature and is
capitalised by our Group.
INVENTORY MANAGEMENT
Due to the nature of our business, our Group holds a minimum level of inventories as the gold dor are
usually shipped out shortly after production. Any gold dor which is awaiting shipment are kept under
stringent security measures on site. Gold dor produced by CMNM will be shipped to Australia for
refining after production and G4S International, the security firm appointed by our Group, is fully
responsible for the shipment to Australia. Please refer to the section entitled General Information on Our
Company and Our Group - Key Contractors and Consultants of this Offer Document for further details of
G4S International.
SALES AND MARKETING
As gold is a commodity which has a ready market and can be traded through the gold bullion market in
London, our Group does not undertake any significant sales and marketing activities. As at the Latest
Practicable Date, under the terms of the Refining Agreement, The Perth Mint must purchase all the
refined silver and CMNM has the discretion to sell the refined gold or require The Perth Mint to credit the
refined gold into CMNMs London metal account. CMNM may then sell the refined gold at the prevailing
spot market price.
INSURANCE
We insure our business for, inter alia, the following:
(a) workmens 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 are
adequate for our Groups current operations. Our Directors will review the insurance coverage of our
Group 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 any
application relating thereto or any other intellectual property rights.
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LICENCES, PERMITS, APPROVALS AND GOVERNMENT REGULATIONS
Licences, Permits and Approvals
Our Group is required to comply with local regulatory and governmental licensing requirements during
the 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:
CNMCs
Asset name / interest Development Type of
Country (%) status Expiry date Licence area mineral
Mining rights for gold 81% Mining and 7 April 2018 Sokor Block Gold
mining at Sokor production covering an area of
Block, Malaysia approximately 10 sq km
Manufacturing licence Lot 2014, Mukim Sokor, Gold
to manufacture gold Kelantan Darul Naim
dor bars
Operational Mining 29 June 2012
Scheme as operator
In addition to the contractual mining rights and manufacturing licence, CMNM has also obtained approval
for its environmental impact assessment and environmental management plan for its mining operations in
June 2009 and April 2010 respectively.
To the best of our Directors knowledge, our Group has obtained all necessary licences, permits and
approvals 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 section
entitled Risk Factors of this Offer Document, to the best of our Directors knowledge and belief, we are
not aware of any facts or circumstances which would cause such licences, permits and approvals to be
suspended, revoked or cancelled as the case may be, or for any applications for, or renewal of, any of
these 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 or
validity and enforceability of rights to our Groups assets.
Government Regulations
Singapore and Hong Kong
As at the Latest Practicable Date, our Groups business operations in Singapore and Hong Kong are not
subject to any special legislation, regulatory controls or environmental issues other than those generally
applicable to companies (including foreign investment companies) and business operating in Singapore
and Hong Kong. Our Group has not experienced any adverse effect on its business in complying with
these regulations. Our Directors believe that our Group has complied with all relevant laws and
regulations.
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Malaysia
Our Groups mining operations in Malaysia are governed by various laws and regulations and subject to
various licenses, permits and governmental approvals. Below is a summary of laws and regulations
which have a material effect on our Groups 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. The
mining lease is issued subject to conditions as well as statutory conditions under the Mineral Enactment
to be complied with. A breach of any of the terms and conditions of the mining lease may result in
forfeiture of the mining lease or a fine or imprisonment or both. The Mineral Enactment also provides for
compounding of offences for compoundable offences of such amount not exceeding 50% of the
maximum amount of fine for that offence. CMNM has a contractual right to mine granted by the mining
lease holder, KSEDC.
Where the offence is committed by a body corporate, the Mineral Enactment provides that its managing
director, manager or officer shall be deemed guilty of the offence unless he proves that the offence was
done 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 an
operational mining scheme before the commencement of any development work or mining. The
operational mining scheme may be approved subject to certain terms and conditions. Failure to submit an
operational mining scheme is an offence under the MDA and the holder of the mining lease shall be
liable 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 having
shareholders funds of MYR2.5 million or more or having 75 full time employees or more to carry on
manufacturing activities without a manufacturing licence issued by the Ministry of International Trade and
Industry. Such manufacturing licences may be subject to conditions to be complied with. Failure to hold a
valid manufacturing licence would subject such manufacturing companies to a fine or to imprisonment or
both and failure to comply with the conditions may result in the revocation of the manufacturing licence.
Environmental Laws and Regulations
Our Groups mining activities are subject to the Environmental Quality Act 1974 (EQA) of Malaysia and
its regulations and guidelines and directives issued by the Director General of Environment from the
DOE.
An EIA report is required under the EQA to be submitted to the Director General of Environment before
carrying out the mining activities. The EIA report may be approved subject to terms and conditions
deemed suitable by the Director General of Environment. These terms and conditions relate to the
operations 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 and
will 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 offence
was a director, chief executive officer, manager or any other similar officer or a partner of the company or
was purporting to act in such capacity shall be deemed to be guilty of the offence unless he may prove
that 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 when
acting in the course of employment, the principal shall also be held liable unless he proves to the
satisfaction of the court that the offence was done without his knowledge or that he took reasonable
precautions to prevent it.
107
Workplace Safety and Health Measures
Under the Occupational Safety and Health Act 1994 (OSHA) of Malaysia, all employers with 40 or more
employees 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 enable
him and his employees to cooperate effectively to promote and develop safety and health measures for
employees at the place of work; and check the effectiveness of such measures. More specific duties of
the employers are laid out in the Occupational Safety and Health (Safety and Health Officer) Regulation
1997. For example, the employer must invite persons at the place of work to nominate their
representatives to the safety and health committee and the employee representatives in the committee
must 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 to
possess such qualifications or have received such training as prescribed under the Occupational Safety
and Health (Safety and Health Officer) Regulations 1997. The safety and health officer is required to
submit a monthly report pertaining to the safety and health activities carried out by the company to the
Department of Occupational Safety and Health.
The OSHA also requires a company to notify the nearest Occupational Safety and Health office of any
accident, dangerous occurrence, occupational poisoning or occupational disease which has occurred or
is 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 of
chemicals hazardous to health in accordance to the Occupational Safety and Health (Use and Standards
of 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 in
liability 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 required
unless a valid certificate of fitness is in force or install any machinery or machinery in which a certificate
of 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 prescribed
form to the Chief Inspector of Factories and Machineries one (1) month before commencing use of the
premises as a factory. Every factory is also required to keep a factory general register in accordance to
Section 38 of the FMA.
Failure to comply with the requirements under the FMA and its regulations is an offence which may result
in 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 to
store diesel fuel at its premises without approval. Failure to comply with such requirement would result in
a fine. Where a person charged with an offence is a body corporate every person who, at the time of the
commission of such offence is a director or officer of that body corporate may be charged jointly in the
same proceedings with the body corporate, and where the body corporate is convicted of the offence
charged, every such director or officer shall be deemed to be guilty of the offence unless he proves that
the offence was committed without his knowledge or that he took reasonable precautions to prevent its
commission.
Registration Certificate for Diesel Generators
It is an offence under the Electricity Supply Act 1990 of Malaysia for a person to possess or operate an
installation of diesel generators unless the installation is registered on a valid Certificate of Registration
issued by the Energy Commission of Malaysia. Failure to comply with the said provision would result in a
fine.
108
KEY CONTRACTORS AND CONSULTANTS
Our Group selects third party contractors based on our internal selection procedures which include
assessing the skills, experience and track record of the contractors. Agreements with the third party
contractors are based on a fixed tenure of a specified term, or on a per assignment basis, which are
renewable subsequently if the quality of the works carried out by them is satisfactory. Our Group enjoys a
stable relationship with our contractors as we have been working with the same contractors since the
commencement 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 PRCs gold mines have raised large
amounts of funding to finance their production and gold mining companies in PRC have accumulated
significant levels of experience and expertise in mineral extraction. They have designed and developed
their own extraction technologies and equipment. Given their proven techniques and cheaper and more
efficient manpower, our Group expects to increasingly outsource its future exploration and extraction work
to 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 which
engages in scientific research specialising in the research and development of gold engineering
technology at a national level and provides various technical support in the areas of mining, mineral
processing, metallurgy and environment protection.
CGRI has provided our Group with technical support such as on-site administration, sampling
supervision, ore studies, heap leaching studies, product evaluation and setting up processing facility for
the Sokor Gold Project. CGRI has carried out its work for the Sokor Gold Project with the support from its
research technical facilities in the PRC.
CSU
CSU is a national university established in the PRC through the amalgamation of three (3) former
individual universities, namely Central South University of Technology, Hunan Medical University and
Changsha Railway University.
CSU has provided technical support to our Group to evaluate the potential of the gold resources in Sokor
Block 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 in
the concession and surrounding area, lay out exploration and exploitation work, and design, plan
and conduct feasibility studies for the mining operation.
Sinomine
Sinomine specialises in the business of mineral exploration and exploration drilling programmes, which
includes 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 and
related 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 exploration
companies. It specialises in the analysis of a variety of sample types, such as soil, sediment, rock
cuttings and core.
109
G4S plc
G4S plc is an international security solutions group with its head office based in United Kingdom. G4S plc
secures all aspects of the supply chain to protect and account for the assets of clients operating in
different industries.
Safeguards Securicor Sdn Bhd, one of the subsidiaries of G4S plc, provides 24 hours on site security
services to the mining site of our Group.
G4S International, another subsidiary of G4S plc, provides security services for the transport of gold dor
onsite to The Perth Mint.
The Perth Mint
The Perth Mint is an international gold refiner, which enjoys accreditation as a refiner, weight master and
assayer with the London Bullion Market Association, the New York Commodity Exchange, the Tokyo
Commodity Exchange and Dubai Multi Commodities Centre.
The Perth Mint refines the gold dor bars provided by our Group to a minimum standard of 99.95% purity
and disposes the non-precious metal extracted from the gold dor.
Subject to the discretion of CMNM, the refined gold may be sold to The Perth Mint or credited to CMNMs
London metal account which can be sold to third parties in the future. However, The Perth Mint must
purchase 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 monitoring
work in Malaysia.
I.Z. Environmind Sdn. Bhd. has been engaged by CMNM to conduct monthly environmental monitoring
exercise at the Sokor Block to ensure CMNM complies with the relevant environmental laws and
regulations of Malaysia.
Our Directors are of the opinion that our Group is not materially dependent on the above third party
contractors and consultants and the risk associated with these third party contractors and consultants is
low as there are many other alternative third party contractors and consultants whom our Group can
source 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 employees
were trained in safety measures by our Safety and Health Officer as well as the mining specialists from
the PRC. However, moving forward, we will put in place a training framework when our Group increases
its 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
CMNMs policy in respect of environmental protection and community development is to develop and
manage its mining operations with an aim to maximise its compliance with the environmental regulations
and minimise any harm to the environment while maintaining sensitivity to local cultural and community
expectations.
110
Environmental Protection
In compliance with the environmental regulations, an EIA report was prepared by CMNM and approved
by the DOE in June 2009. An environmental management plan, which sets out the processes that CMNM
will follow to maximise its compliance with the environmental regulations and minimise any harm to the
environment, was subsequently approved by the DOE in April 2010.
CMNM recognises that environmental monitoring is an on-going obligation. To demonstrate its
commitment 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, in
December 2010 to conduct regular environmental monitoring exercise to ensure that CMNM complies
with the environmental regulations in relation to its operations and to constantly provide feedback to
CMNM 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 - Key
Contractors 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 CMNMs mining
operations 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 to
out earthworks such as movement, noise control runoff and soil loss loss of vegetation
site preparation, tailings generation, workers covers and
vat, drainage works, road safety implication Spraying water on earth earthworks activities
construction and base during works and roads and tracks to suppress
camp siltation of watercourse dust generation Local temperature
increases due to loss
Personal 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 buried
environment on-site in the designated
fill area
Fire hazard during
dry season, cause Properly designed spoil
localised floods and piles surrounded by soil
breeding grounds for containment berm
disease vectors
Unusable waste materials
will be left in-situ to
decompose naturally
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Nature of
Wastewater generation Potential to contaminate Provide adequate sanitation None
and 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 designed
Create 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 controlled
used 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 Federal
Government licenced toxic
waste collector, to handle all
acids produced during the
mining operations
Tailings will be treated to
neutralise any contaminating
chemicals before shifting to
the tailings area for storage
Movement of Generate air and Provide sufficient width to Can be controlled
land-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 an
impervious surface and to
locate such storage area
away 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
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Nature of
Closure of the mine Generate disequilibrium Provide rehabilitation plan None
of watercourse flow which includes, inter alia,
regime activities such as handling
site storm water, compacting
Generate water borne and sealing potentially
disease acid-generating waste rock,
covering tailing dams with
Provide ideal habitat for clay and rock after allowing
vector-borne disease them to evaporate and
re-vegetation
Create localised fired
hazard
Soil erosion
Fauna affected
Result in unpleasant and
unhealthy environment
Community Development
Our Group has made substantial efforts to integrate with the local population in the vicinity where our
mine is located and assisted them in social and economic development. We have provided the local
community with new employment opportunities, training and skills development for our staff of the mining
operations and broadened economic and commercial base for local businesses, contributing to the
economic growth of the region. We are also developing a corporate social responsibility policy which will
address our Groups impact on the local community. In addition, our Group provides opportunities for
business 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 closure
of the mining operations. A mitigation measure is that the workforce that has been employed will have
been 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 development
projects that align with the needs and objectives of the local communities identified through engagement
and consultation. In December 2007, our Group provided and distributed basic food necessities and
basic school supplies to the affected families and their children during the flood in Kelantan. During the
Hari Raya Aidilfitri festive season in September 2009, gift packs comprising rice, sugar and other basic
necessities were distributed by our Group to the less fortunate individuals and families. In 2010, our
Group supported Cheng Ho Expo (international trade exhibition organised by Kelantan State Government
in Kota Bharu) by engaging and sponsoring a team of Shaolin Kung Fu performers to perform during the
trade exhibition period. Our Group had also in 2010, handed out 120 bursaries to school children with
outstanding academic performance residing in or near Sokor area and sponsored 1,000 stationary sets
to school children residing in Sokor and Tanah Merah areas. In August 2011, 999 gift packs comprising
rice, sugar and other basic necessities were distributed by our Group to the less fortunate individuals and
families residing in Sokor and Tanah Merah areas.
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INFRASTRUCTURE
Power to the plant is provided by diesel generators with a total capacity of 950 kilowatts. 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 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-hour
drive 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 the
availability of existing infrastructure and communication access enable our Group to receive supplies of
diesel, potable water and other equipment or materials required in our mining operations from our
suppliers readily.
SAFETY POLICY
Due to the nature of our business, incidents that may have detrimental effects on the health and safety of
its workers and the environment may occur from time to time. Our Group aims to conduct its business in
such a manner that all reasonable and practicable measures have been taken to protect its workers and
the environment from the detrimental effects. In order for our Group to achieve its aim, our Group has
established a set of environment, health and safety policies as follows:
(a) Risk assessment shall be conducted before works are allowed to commence so that any
foreseeable risks arising from such works can be identified and eliminated accordingly. Where it is
not reasonably practicable to eliminate the risks, measures and safe work procedures shall be
developed to minimise and control the risks;
(b) All staff and workers shall be briefed on the hazards and risks associated with the works and
trained to carry out works in accordance with the established safe work procedures before they
commence the works;
(c) Regular inspections and checks shall be conducted to ensure that the established safe work
procedures are adhered with;
(d) All staff and workers shall be provided with the necessary safety and health training so as to
enable them to carry out their work safely;
(e) All machineries and equipment deployed to the worksite shall be in good working condition. Only
workers 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 carried
out to maintain and raise awareness of safety; and
(g) Only sub-contractors and suppliers who are able to meet the environment, health and safety
requirements of our Group shall be selected as our business partners. Our Group shall monitor
their 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 at
the mining site operated by our Group due to the failure to follow safety measures by a worker. In July
2010, a mechanic employed by CMNM was repairing a machine which was still running when he suffered
a fatal accident. CMNM has since, through its insurer paid the compensation amount of MYR18,000 to
the family of the deceased as full, final and complete settlement of all claims relating to this mishap.
114
After the occurrence of the abovementioned fatal accident, our Group has implemented the following
additional 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 and
development of safety and health measures for employees at the mining sites and to review the
effectiveness of such measures. This committee comprises representatives from both the
management 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 safety
meeting; (ii) conduct in-house safety training for staff; (iii) conduct investigation and handle all
incident reports; (iv) liaise with all external safety authorities; and (v) review and improve the safety
management system.
(c) Implementation of preventive measures that include (i) daily site checking by the project team
member to ensure safety measures are in place; (ii) monitoring the safety performance of
contractors; (iii) enforcing every employee to wear safety gear while they are at mine site; and (iv)
cultivating a safety is everybodys 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 the
objective of identifying gold mineralisation in Sokor Block and such resource definitions are essential for
the continued growth of a mining company. Please refer to the section entitled General Information on
Our Company and Our Group Business Activities of this Offer Document for more information on our
exploration as well as resource and reserve definition activities.
COMPETITION
Given the clear geographical demarcation of gold, exploration and mining rights and licences, mining
companies 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 licences
outside 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 this
Offer Document.
To the best of our Directors knowledge, there are no published statistics that can be used to accurately
measure 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 with
development of a typical surface mushroom-shaped dispersion pattern for the near-surface high grade
gold values. Typically the near-surface gold grade can be between two (2) and five (5) times higher than
the grade at depth, with enrichment normally restricted to the top 2m to 10m.
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 locate
additional gold resources. Potential exists for extensions to the known deposits and in areas within the
Sokor Block where to date only limited reconnaissance exploration has taken place. The area south of
Mansons Lode is considered to have potential for replacement style base metal-gold mineralisation
similar to Mansons Lode deposit. The northern area east of the Ketubong-Rixen fault is considered to
have 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-hour
drive 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 the
availability of existing infrastructure and communication access enable our Group to save in both hiring
and transportation costs as well as minimise investment costs in building supporting infrastructure (such
as 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 cost
average in the production of the gold dor for sale due largely from our strong working relationships with
our Chinese contractors and/or consultants such as CSU, Sinomine and CGRI, which are some of the
leading players in the PRC in their respective niche markets. Such Chinese contractors and/or
consultants 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 and
economic benefits for our operations.
Strong relationships with stakeholders and local communities
We have considerable experience in dealing with, and have developed good working relationships with
our stakeholders, being Kelantan State Government and KSEDC over the years. The Executive Chairman
of our Group, Professor Lin Xiang Xiong is Kelantans Chief Advisor on Kelantan-China International
Trade for the Kelantan State Government. We believe that we are an integral part of the communities in
which we operate and believe that support from these communities will help in our success. We also
value social responsibility and has been participating in community development projects that align with
the needs and objectives of the local communities identified through engagement and consultation. Some
of such projects include the provision and distribution of basic food necessities and basic school supplies
to the affected families and their children during the flood in Kelantan in December 2007. During the Hari
Raya Aidilfitri festive season in September 2009, gift packs comprising rice, sugar and other basic
necessities were distributed by our Group to the less fortunate individuals and families. We had also in
2010, handed out 120 bursaries to school children with outstanding academic performance residing in or
near Sokor area and sponsored 1,000 stationary sets to school children residing in Sokor and Tanah
Merah areas. In August 2011, 999 gift packs comprising rice, sugar and other basic necessities were
distributed by our Group to the less fortunate individuals and families residing in Sokor and Tanah Merah
areas. 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 of
the community works undertaken by 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:
Approximate
Tenant/ Land Area Annual Description
Lessee 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 2010
to 31 October
2011
CMNM B-878, 3,000 Two (2) years MYR9,600 Workers Yeap Boon
Taman Tanah Merah, commencing dormitory Yang
17500 Tanah Merah, 1 July 2010 to Construction
Kelantan 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 commencing
Kelantan 1 April 2011
to 1 April 2014
Next two (2) MYR20,400
years
commencing
1 April 2014
to 1 April 2016
(By way of option
to renew)
CMNM B-881, 3,000 Two (2) years MYR9,600 Workers Yeap Boon
Taman Tanah Merah, commencing dormitory Yang
17500 Tanah Merah, 1 July 2011
Kelantan to 30 June 2013
Company 745 Toa Payoh, 4,392 Two (2) years S$120,000 Office See Hoy Chan
Lorong 5 commencing Industrial
#04-01 15 October 2011 Pte Ltd
Singapore 319455 to 14 October 2013
Our fixed assets consisting of property, plant and equipment had a net book value of approximately
US$2.17 million as at 31 March 2011.
To the best of our Directors knowledge and belief, there are no regulatory requirements that may
materially affect our Groups utilisation of tangible fixed assets.
117
INDUSTRY OVERVIEW
Supply of Gold
The principal sources of gold supply include production of gold from mining activities, recycling of gold
and official sector sales.
Total world gold supply in 2010 was 4,108.2t, an increase of 1.8% from 2009, which saw a total world
gold supply of 4,034t. This rise was attributed to an increase in mine production, largely due to production
growth in Australia, PRC and USA.
Mine production was the largest source of gold, accounting for 57.8% and 60.6% of the total world supply
in 2009 and 2010 respectively. On the whole, total mine supply (i.e. aggregate of mine production and net
producer 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 the
total world gold supply in 2009 and 2010 respectively. Generally, recycled gold supply has been
increasing 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 purchasers
of gold for the first time in 21 years due to the recent sluggish global economic recovery and uncertain
financial markets.
Please see table below for world gold supply and demand statistics.
World Gold Supply and Demand (tonnes)
2007 2008 2009 2010
(1)
Supply
Mine Production ............................................ 2,476.0 2,409.0 2,584.3 2,658.8
Net Producer Hedging .................................. -444.0 -349.0 -252.2 -116.1
Total Mine Supply .......................................... 2,031.0 2,060.0 2,332.1 2,542.7
Official Sector Sales
(2)
.................................... 484.0 236.0 29.8 -87.2
Recycled Gold ................................................ 956.0 1,217.0 1,672.2 1,652.7
Total Supply.................................................... 3,471.0 3,513.0 4,034.0 4,108.2
Demand
Jewellery ........................................................ 2,404.8 2,191.6 1,760.3 2,059.6
Technology .................................................... 461.7 439.1 373.2 419.6
Electronics .................................................... 310.6 292.9 246.4 287.0
Other industrial .............................................. 93.2 90.5 74.2 82.8
Dentistry ........................................................ 57.8 55.7 52.7 49.8
Investment ...................................................... 685.9 1,181.0 1,359.9 1,333.1
Total bar and coin demand ............................ 432.5 860.1 742.8 995.0
Physical bar demand .................................. 222.9 603.1 4,571.0 713.2
Official coin.................................................. 137.0 187.3 228.8 204.6
Medals/imitation coin .................................. 72.6 69.6 56.9 77.2
Exchange-traded funds and similar
products .................................................... 253.3 320.9 617.1 338.0
Gold demand
(3)
................................................ 3,551.9 3,811.6 3,493.4 3,812.2
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.
118
Demand for Gold
World gold demand stems mainly from jewellery, technology and investment demands. Total world gold
demand reached a 10-year high of 3,812.2t in 2010, representing a 9.1% increase from 2009 which saw
a total world gold demand of 3,493,4t. The demand in 2010 was worth approximately US$150 billion. This
notable performance was mainly due to strong growth in jewellery demand, robust growth in emerging
markets especially PRC and India which contributed to increased consumer demand for gold and the
strategic shifts made by central banks around the world to diversify their foreign exchange reserves by
increasing their gold reserves, which has resulted in them becoming net purchasers of gold after 21
years of net sales.
The jewellery sector was the largest consumer of gold, taking up 50.4% and 54% of total world gold
demand in 2009 and 2010 respectively. Overall, jewellery consumption had been declining over the last
few years, except in 2010 where it experienced a 17% increase from 2009. Indian jewellery demand rose
69% during 2010 to 746t, while the PRCs 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 demand
and 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 bar
investment 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 and
other industrial demand. Technology demand has been declining over the last few years, except in 2010
where it experienced a recovery of 12% from 2009. This increase was spurred by a recovery in the
electronics segment, which was driven by enhanced demand in consumer electronics with gold
components, 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.
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 in
2010 on 7 December 2010 on the London PM fix. The average gold prices were US$1,224.52/oz and
US$972.32/oz in 2010 and 2009 respectively, representing an increase of 25.9% year-on-year. Since the
start of 2011 up to the Latest Practicable Date, the price of gold has remained strong and reached a high
of US$1,895/oz on 6 September 2011
(1)
.
The recent strong performance of gold prices can be attributed to recovery in the jewellery and
technology sectors and increased investment demand. Apart from golds long-term supply and demand
dynamics, 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 and
inflationary pressures in many countries, including India and PRC, have driven up demand for gold due to
its relatively low volatility and appeal as a safe haven investment, which in turn, boosted gold prices.
Malaysian Gold Industry
To spearhead the countrys mineral resource industry, the Malaysian Government has launched a revised
National Mineral Policy in January 2009, which aims to provide the foundation for the development of an
effective, efficient and competitive regulatory environment for the mineral sector
(2)
. Such conducive
regulatory and business climate has attracted many foreign players to carry out exploration and mining of
various mineral resources in Malaysia.
For gold, the country has attracted the likes of foreign companies such as Avocet Mining PLC, Monument
Mining Limited and Olympus Pacific Minerals Inc. Gold mining in Malaysia occurs mainly in the Central
Belt 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 is
listed on the AIM market of the London Stock Exchange. According to the latest annual report of Avocet
Mining PLC, gold output from the Penjom Mine was recorded at 51,084oz in 2010, and it held 397,600oz
of 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 of
the 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 upon
which certain statement(s) in this section entitled Industry Overview of this Offer Document are based has not consented to the
inclusion of the relevant information in this Offer Document for the purpose of Section 249 of the SFA and is therefore not liable for
the relevant information under Sections 253 and 254 of the SFA. While the Directors have taken reasonable action to ensure that
the information 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.
120
PROSPECTS
The following discussion about gold mining industrys prospects includes forward-looking statements that
involve risks and uncertainties. Actual results could differ from those that may be projected or implied in
these 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, investment
demand for gold continues to be sustained as it remains a sought-after asset. Firstly, there is continued
investor concern over the health of economic growth in the developed nations, especially in light of the
sovereign debt crisis in Europe along with the prospect of contagions to other regions. This has prompted
investors to turn to gold as a hedge against currency risks. Secondly, quantitative easing measures
undertaken by central banks in the USA, United Kingdom and Japan and the consequent weakening of
the USD and associated global currency tensions as countries compete to maintain their competitiveness
by suppressing the value of their currencies also contributed to the attractiveness of gold as an
alternative investment. With the worlds economic outlook looking fragile, interest rates are unlikely to rise,
further quantitative easing measures may be used and global fiscal deficits reduction may face
resistance, investors will continue to regard gold as a hedge against inflationary pressures and as a safe
haven asset in the face of volatile currency markets.
In order to diversify their foreign exchange reserves, central banks around the world has made strategic
shifts towards increasing their gold reserves. On 21 December 2010, the International Monetary Fund
announced the conclusion of its limited gold sales programme of 403.3t of gold. The majority of its sales
in off-market transactions are conducted with other central banks, with sales of 200t to the Reserve Bank
of India, 10t to Central Bank of Sri Lanka, 10t to Central Bank of Bangladesh and 2t to Central Bank of
Mauritius. The Central Bank of the Russian Federation bought 135.3t of gold during 2010 while
Venezuela reported an increase of 5t to its gold reserves in 2010
(2)
.
The above-mentioned macro-economic factors, together with increasing awareness of golds investment
qualities among retail investors and enhanced access to gold investment products will continue to
support the investment demand for gold. Economic factors aside, recent political and military tensions in
the 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 to
robust demand for many commodities. Rising income levels, high savings rates and strong economic
growth in these emerging markets have pushed up consumption of gold. Gold jewellery demand
amounted to US$55.5 billion during the first three (3) quarters of 2010, equal to the US$55.5 billion spent
globally on gold jewellery during the whole of 2009. This shows that despite the escalation in gold prices
in 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 PRC
has also driven up demand for consumer electronics. The metals unique properties of high reliability,
conductivity, malleability and resistance to corrosion make it an ideal material for many industrial uses. As
electronics manufacturing industries in Asia continue to grow, coupled with increasing demand for new
consumer electronic products in these regions, industrial demand for gold looks set to benefit from this
trend. The World Gold Council also believes that given golds distinctive chemical and physical properties,
it will be the focus of many research and development activities to discover new industrial applications in
the coming years. These new breakthroughs also represent potential new industrial markets for gold.
121
Price Outlook
According to the World Gold Council, the price of gold rose for the tenth consecutive year in 2010, trading
as high as US$1420/oz on 7 December 2010 on the London PM fix. Average prices during the year rose
to US$1,224/oz from US$972/oz in 2009 (see Chart 1 below). Since the start of 2011 up to the Latest
Practicable Date, the price of gold has remained strong and reached a high of US$1,895/oz on 6
September 2011
(3)
.
In times of economic uncertainty, golds relatively low volatility and independence of many assets boost
its appeal as an investment product for portfolio diversification and risk management strategies. Analysts
believe that prospects for gold will remain good in 2011 as prices are expected to reach about
S$2,049/oz by the end of 2011
(2)
. 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
(4)
. As the environment for gold investment remain to look
supportive in 2011 and revived demand in the jewellery and industrial sector will provide further scope for
growth, golds appeal will continue to drive demand. Consequently, gold price levels are expected to
continue 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 Gold
Council (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 publications
containing information upon which certain statement(s) in this section entitled Prospects of this Offer Document are based has not
consented to the inclusion of the relevant information in this Offer Document for the purpose of Section 249 of the SFA and is
therefore not liable for the relevant information under Sections 253 and 254 of the SFA. While the Directors have taken reasonable
action to ensure that the information 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.
122
BUSINESS STRATEGIES AND FUTURE PLANS
Our Group intends to implement the following growth strategies and future plans in the next 24 months to
drive our future growth and increase shareholder value:
The current processing capacity of the ore processing facility of our Group is approximately 60,000t per
annum, based on the total number of leaching vats available as at the Latest Practicable Date. Our Group
intends to increase its ore processing capacity to 730,000t per annum in FY2012 by commissioning a
heap leach facility to treat oxide ore from Rixens deposit commencing in the fourth quarter of 2011. This
is in anticipation of the need to process more gold-bearing ore as our Group increases its mining
activities in the concession area.
We have earmarked approximately S$2.11 million (the approximate equivalent of US$1.70 million, based
on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) of the proceeds of the
Placement 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 been
subjected to reconnaissance mapping and rock chip sampling. Our Group intends to carry out more
exploration work, such as geological mapping, soil sampling, drilling activities, collection and analysis of
exploration data to identify new gold mineralisation in the concession area. This will help to add more
gold resources into the proven reserve status and enable our Group to plan our mining operations
efficiently. 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, based
on the exchange rate of S$1.00 to US$0.8039 as at the Latest Practicable Date) of the proceeds of the
Placement 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 to
favourable results of the feasibility study, we intend in the longer term within 24 months to construct the
gold carbon-in-leach plant with a starting capacity that can process about 500t of gold-bearing ore per
day and increasing to about 2,000t to 3,000t of gold-bearing ore per day on a continuous basis. Upon the
construction 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 capacity
to process about 500t of gold-bearing ore per day is estimated to be approximately S$4.35 million (the
approximate equivalent of US$3.50 million, based on the exchange rate of S$1.00 to US$0.8039 as at
the 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, lead
and zinc found in Sokor Block. Our Group has since commenced a feasibility study to conduct mining
operations for silver, lead and zinc and to consider the best approach to extract and produce such
minerals 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 a
proposed joint venture company, CMNM-JY, to jointly manage the mining and production of silver, lead
and zinc at the Sokor Block. On completion of the Joint Venture Agreement, CMNM-JY is proposed to be
51% owned by CMNM and 49% owned by Xiamen Shenkun. The completion of the Joint Venture
Agreement is subject to approval of the board of directors of CNMC.
123
Our Group may also expand through acquisitions, joint ventures and strategic alliance as part of its long
term growth strategy. It may also enter into acquisitions, other joint ventures or strategic alliances with
parties who create synergistic values with its existing business. Currently, save for the Joint Venture
Agreement, it is not engaged in discussion with any party for acquisitions, joint ventures or strategic
alliances. Should such opportunity arise, it will seek approval, where necessary, from Shareholders and
the 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 Group
does not maintain an order book.
TREND INFORMATION
Our Directors have observed the following trends based on the revenue and operations of our Group as
at the Latest Practicable Date:
Strong gold price
Our Group expects gold price to remain strong in the remaining part of FY2011. Analysts believe that
prospects for gold will remain good in 2011 as prices are expected to reach about S$2,049/oz by the end
of 2011
(1)
. Various factors support high gold prices including new financial investment products such as
exchange traded gold funds, currency volatilities, financial markets instability, a hedge against rising oil
price and inflation, resilient demand for gold from the PRC and Indias increasingly wealthy consumers,
and a structural shift in central banks policy towards holding gold with the result that in 2010, central
banks 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 lead
due to economic growth in the PRC and India. Our Group believes that it may potentially have significant
amounts 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 its
mining expenses is made up of diesel costs. As disclosed in the section entitled Risk Factors of this
Offer Document, rising energy costs will affect its cost of production.
Save as discussed above and in the sections entitled Risk Factors, Managements Discussion and
Analysis of Results of Operations and Financial Position, Prospects and Business Strategies and
Future Plans of this Offer Document and barring any unforeseen circumstances, our Directors are not
aware of any significant recent trends or any other known trends, uncertainties, demands, commitments
or events that are reasonably likely to have a material effect on our Groups revenue, profitability, liquidity
or capital resources, or that would cause the financial information disclosed in this Offer Document to be
not necessarily indicative of the future operating results or financial condition of our Group. Please also
refer 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 section
entitled Trend Information of this Offer Document are based has not consented to the inclusion of the above information in
this Offer Document for the purpose of Section 249 of the SFA and is therefore not liable for the relevant information under
Sections 253 and 254 of the SFA. While the Directors have taken reasonable action to ensure that the information 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.
124
DIRECTORS, MANAGEMENT AND STAFF
125
DIRECTORS
Our Board of Directors is entrusted with the responsibility for the overall management of our Group. The
particulars 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 Chairman
Xiong
(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 and
Singapore 468848 Chief Executive Officer
Kuan Cheng Tuck 39 33 Mangis Road Singapore Independent Director
#03-09
Singapore 424968
Tan Poh Chye Allan 46 39B West Coast Park Singapore Independent Director
#03-04
Singapore 127713
Lim Yeok Hua 62 712A Upper Changi Road East Singapore Independent Director
#03-06 Singapore 486843
Note:
(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 of
responsibility of our Directors are set out below:
Professor Lin Xiang Xiong was appointed as the Executive Chairman of our Company on 20
September 2011. He was seconded to our Group from Innovation Worldwide Group Pte Ltd since
December 2006 and joined our Group since January 2010. He is responsible for formulating our Groups
strategic 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 trading
of building materials and mining, processing, marketing, distribution and sale of dimension stone. From
2004 to 2009, he was the chief consultant of Innovation Worldwide Group Pte Ltd where he provided
consulting 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 in
1995 and a visiting professor of Beijing Language and Culture University in 2011. He is currently the
president of the Global Chinese Arts & Culture Society and a research fellow of the Chinese National
Academy of Arts. In addition, he is the Chief Advisor on Kelantan-China International Trade for the
Kelantan State Government, Malaysia, Executive Advisor for Bureau of Commerce, Henan Province of
PRC, International Consultant for the New District in the Eastern Part of Zhengzhou, Henan and Chief
Advisor for Culture Exchange and Promotion Worldwide of Henan, PRC.
Choo Chee Kong was appointed as the Executive Vice Chairman of our Company on 20 September
2011 and joined our Group since December 2006. He is responsible for the formulation of the strategic
direction and expansion plans as well as the corporate governance of our Group. He has been involved in
the 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 Second
Chance Properties Ltd and FDS Networks Group Ltd, both companies listed on the Main Board of the
SGX-ST. He is also a senior advisor to CMIA Capital Partners Pte. Ltd., a Singapore home grown private
equity firm focused on growth capital investment opportunities in the PRC and Southeast Asia. Choo
Chee Kong started his career in 1981 as a project engineer with Esso Singapore Pte Ltd and left in 1984
to pursue masters level studies in United Kingdom. He joined DBS Bank Ltd in 1986 and held the
position of assistant vice president of corporate planning from 1986 to 1991 and vice president of
investment 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 and
maintaining relationships with the members of the stock broking and investment community. From 2006 to
2008, he was the deputy chairman of Westcomb Financial Group Limited. Choo Chee Kong holds a
Bachelor 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 Company
on 11 August 2011. He was seconded to our Group from Innovation Worldwide Group Pte Ltd since
December 2006 and joined our Group since January 2010. He is responsible for implementing the
strategic plans and policies as well as managing the mining operations of our Group. He started his
career in 2000 as the chief operation officer of Innovation World-Wide Trader Pte Ltd and its group of
companies, 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 a
consultant with Innovation Worldwide Group Pte Ltd where he provided consulting and project
management services in association with sub-contracted mining projects. Lim Kuoh Yang had attained a
GCE 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 Committee
of our Company on 20 September 2011. He also currently serves as an independent director of FDS
Networks Group Ltd which is listed on the Main Board of the SGX-ST. He has more than 16 years of
experience in the fields of accounting, auditing as well as business and financial advisory. Kuan Cheng
Tuck worked with various international accounting firms in Singapore and Malaysia between 1994 and
early 2004. He set up and managed his own business and financial consulting firms in 2004 and his own
accounting practice in 2005. Kuan Cheng Tuck holds a Bachelor of Accountancy degree from the
Nanyang Technological University of Singapore and a Bachelor of Laws (Honours) degree from the
University 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 the
Singapore Institute of Directors. He is also an associate member of the Singapore Association of Institute
of Chartered Secretaries and Administrators.
Tan Poh Chye Allan was appointed as an Independent Director and Chairman of the Remuneration
Committee of our Company on 20 September 2011. He is currently a partner at Colin Ng & Partners LLP
and practises in the field of corporate finance. He was admitted to the Singapore Bar in 1994. He is also
presently an independent director of Adventus Holdings Limited, a company listed on Catalist of the
SGX-ST, and Avexa Limited, a company listed on the Australian Stock Exchange. Tan Poh Chye Allan
started practice as a commercial and banking litigation lawyer in 1995 at Shook Lin & Bok LLP and left in
1998. He joined Singapore Press Holdings Ltd from 1999 to 2000 and Strategic Intelligence Pte Ltd from
2000 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 of
Yeo-Leong & Peh LLC from 2004 to 2006, practising in the field of corporate finance. Tan Poh Chye Allan
holds a Bachelor of Laws (Honours) degree from the University of Buckingham (United Kingdom) and a
Masters degree in Law from London-Guild University. He is also a Barrister-at-law of Grays Inn.
Lim Yeok Hua was appointed as an Independent Director and the Chairman of the Nominating
Committee of our Company on 20 September 2011. He is also presently an independent director and the
Chairman of the Nominating Committee of Manufacturing Integration Technology Limited. He is also
serving as an independent director of Tritech Group Limited and JK Tech Holdings Limited. Lim Yeok Hua
has been a fellow member of the Association of Chartered Certified Accountants since 1985. He has
more than 20 years of experience in the fields of accounting, auditing as well as business and financial
advisory. 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 runs
his own management consultancy firm. He is also a member of the Institute of Certified Public
Accountants of Singapore and the Singapore Institute of Directors as well as an accredited tax advisor
with the Singapore Institute of Accredited Tax Professionals.
126
Our Directors will be briefed by the Legal Adviser to the Company, Shook Lin & Bok LLP on their roles
and responsibilities as directors of a listed company. Choo Chee Kong, Kuan Cheng Teck, Tan Poh Chye
Allan 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 Singapore
Institute of Directors on 8 June 2011 to update and familiarise themselves with the roles and
responsibilities of a director of a public listed company in Singapore.
Save as disclosed in this section and in the section entitled Shareholders Shareholding and Ownership
Structure of this Offer Document, none of our Directors are related to each other, our Executive Officers
or our Substantial Shareholders.
Our Independent Directors do not have any existing business or professional relationship of a material
nature with our Group, our Directors or Substantial Shareholders. None of our Independent Directors are
appointed 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 date
of 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 Nil
CNMC
CMNM-JY
MCS
CNMC-Nalata
Other Companies Other Companies
Innovation Biotechnology Limited Nil
Innovation (China) Limited
Innovation Fund Limited
Innovation International Consultants
Alliance Pte. Ltd.
Innovation Worldwide Group Pte Ltd
Choo Chee Kong Group Companies Group Companies
CMNM Nil
CNMC
MCS
CNMC-Nalata
CK Agrifeed Sdn Bhd Falmac Limited
CK 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 Limited
Messiah Ltd Right Venture Holdings Limited
MyKampung Suria Sdn Bhd Westcomb Capital Sdn Bhd
Second Chance Properties Ltd Westcomb Financial Group (HK)
Limited
Westcomb Profits Limited
Yujie Environmental Biotechnology
Pte. Ltd.
127
Lim Kuoh Yang Group Companies Group Companies
CNMC Nil
Nil Inno-Sino Investments Pte Ltd
Kuan Cheng Tuck Group Companies Group Companies
Nil Nil
FDS Networks Group Ltd Falmac Limited
KCT Consulting Pte. Ltd. ASA Group Holdings Ltd
Konifer Realty Sdn. Bhd. China Oilfield Technology Services
Kreston Consulting Pte. Ltd. Group Ltd
SG Tech Holdings Limited FAST Wah Lei International Holdings
Tahua Realty Sdn. Bhd. Limited
Tan Poh Chye Allan Group Companies Group Companies
Nil Nil
Adventus Holdings Limited Cardsmith.Com Asia Pacific Pte Ltd
Avexa Limited Censtar Holdings Pte. Ltd
Jlu Global Ltd. Tianrong Investment Holdings Pte. Ltd.
Knowledge Economy.Com Pte Ltd
Tell Business Pte Ltd
Lim Yeok Hua Group Companies Group Companies
Nil Nil
Manufacturing Integration Technology Ltd Nil
Radiant 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 experienced
and qualified team of Executive Officers. The particulars of our Executive Officers are set out below:
Country of
Principal
Name Age Residential Address Residence Principal Occupation
Chen Yan 37 54 Hume Avenue Singapore Chief Financial Officer
#09-05 Summerhill
Singapore 596231
Cheam Chee Chian 40 Blk 128D Punggol Field Walk Singapore Group Finance Manager
#02-323
Singapore 824128
Chia Chee Ching 27 177 Tanjong Rhu Road Singapore Group Administration,
#11-17 Singapore 436607 Human Resource and
Information Technology
Manager
128
The business and working experience, education and professional qualifications, if any, and areas of
responsibility of our Executive Officers are set out below:
Chen Yan joined our Group as the Chief Financial Officer since November 2008. She is responsible for
matters relating to accounting, finance, compliance and reporting requirements of our Group. She started
her career in 2001 as an executive with KPMG Singapores corporate restructuring services department
where she was in employment until 2003. From 2003 to 2006, she was with the corporate finance
department of Westcomb Capital Pte Ltd where she last held the position of senior associate, providing
capital markets advisory services to local and overseas corporations in various industries for their listings
on the SGX-ST. Chen Yan received a Bachelor of Science in Accounting (First Class Honours) degree
from The University of North Carolina at Greensboro, USA in 1998 and a Master in Professional
Accounting degree from The University of Texas at Austin, USA in 1999. She is a Certified Public
Accountant and member of the Texas State Board of Public Accountancy, a Certified Internal Auditor and
member of the Institute of Internal Auditors, and a Certified Gold Investment Analyst from the Department
of Labor of PRC. She is also a member of the Institute of Certified Public Accountants of Singapore and
the Singapore Institute of Directors. Chen Yan is currently an independent director of Foreland Fabrictech
Holdings 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 is
responsible 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 to
2008, 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 UMW
Oil & Gas from 2005 to 2006. He worked with various audit firms between 1993 to 2005 including
PricewaterhouseCoopers, Malaysia, KPMG, Singapore and Deloitte Touche Tohmatsu, Papua New
Guinea. Cheam Chee Chian holds a Diploma in Accoutancy from Ungku Omar Polytechnic, Malaysia. He
is a member of The Malaysian Association of Certified Public Accountants and a chartered accountant
and a member of the Malaysian Institute of Accountants.
Chia Chee Ching joined our Group as the accounts and administration manager since February 2009
and was appointed the Group Administration, Human Resource and Information Technology Manager
since January 2010. She was seconded to our Group from Financial Frontiers Pte Ltd from September
2007 and from Innovation Worldwide Group Pte Ltd from June 2008. She is responsible for the full
spectrum of our Groups administration, human resouce and information technology functions. Prior to
joining our Group, she was an audit junior with Robert Tan & Co. From 2006 to 2007, she was a tax
assistant with William C.H. Tan Consultancy Sdn. Bhd. Chia Chee Ching holds a Bachelor of Arts in
Accounting 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 Ownership
Structure of this Offer Document, there is no family relationship between any of our Directors, Executive
Officers and Substantial Shareholders.
To the best of our knowledge, there is no arrangement or understanding with any of our Substantial
Shareholders, customers, suppliers or any other person, pursuant to which any of our Directors or
Executive 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 preceding
the date of this Offer Document, excluding those held in our Company, is set out below:
Chen Yan Group Companies Group Companies
NIL NIL
Foreland Fabrictech Holdings Limited NIL
129
Cheam Chee Chian Group Companies Group Companies
NIL NIL
NIL NIL
Chia Chee Ching Group Companies Group Companies
NIL NIL
NIL NIL
MANAGEMENT REPORTING STRUCTURE
Our management reporting structure is as follows:
Group Administration, Human
Resource and Information
Technology Manager
Chia Chee Ching

Executive Chairman
Professor Lin Xiang Xiong
Board of Directors
Executive Director and Chief
Executive Officer
Lim Kuoh Yang
Chief Financial Officer
Chen Yan
Group Finance Manager
Cheam Chee Chian
Executive Vice Chairman
Choo Chee Kong
130
EMPLOYEES
All the full-time employees of our Group for FY2008, FY2009, FY2010 and 1Q2010 are based in
Singapore and Malaysia. The functional distribution of our Groups full-time employees of the Group as at
31 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
2008 2009 2010 2011
Management
(1)
8 8 8 8
Finance, accounts and administration 2 4 8 11
Human resources 1 2
Other full-time staff 4 8 7
(2)
14
(2)
Total 14 20 24 35
Notes:
(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 whom
are involved in the mining and extraction process.
The geographical distribution of our Groups full-time employees as at 31 December 2008, 2009 and
2010 and as at 31 March 2011 are as follows:
Geographical As at As at As at As at
31 December 31 December 31 December 31 March
2008 2009 2010 2011
Singapore 6 9 11 12
Malaysia 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 whom
are involved in the mining and extraction process.
The number of employees increased from 31 December 2008 to 31 March 2011 in line with the
expansion of the business plans and scope of our Group. From time to time and depending on
requirements, our Group will employ workers on a temporary basis. As at 31 March 2011, our Group had
approximately 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 are
instrumental to its success. The relationship between the management of our Group and its employees is
good and is expected to continue and remain as such in the future. The employees of our Group are not
unionised and there have been no industrial disputes with the employees or any work stoppage which
affected our Groups operations since it commenced operations.
Other than amounts set aside or accrued in respect of mandatory employee funds, we have not set aside
or accrued any amount of money to provide for pension, retirement or similar benefits to our employees.
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 to
our Directors and our Executive Officers for FY2011 by our Group (on an aggregate basis and in
remuneration bands
(1)(2)
) are as follows:
FY2009 FY2010 FY2011
(Estimated)
Directors
Professor Lin Xiang Xiong Band A
(2)(3)
Band B Band B
Choo Chee Kong Band A Band A
Lim Kuoh Yang Band A
(2)(3)
Band A Band A
Kuan Cheng Tuck Band A
Tan Poh Chye Allan Band A
Lim Yeok Hua Band A
Executive Officers
Chen Yan Band A Band A Band A
Cheam Chee Chian Band A
Chia 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 and
Substantial 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, Choo
Chee 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 such
period, the employment of each Executive shall be automatically renewed on a year-to-year basis on
such terms and conditions as the parties may agree. During the initial period of three (3) years, either
party 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 on
the Executives last drawn monthly salary.
Notwithstanding the other provisions of the Service Agreement, our Company shall be entitled to
terminate the appointment, but without prejudice to the rights and remedies of our Company for any
breach of the Service Agreement and to the Executives continuing obligations under the Service
Agreement, in any of the following cases:
(a) if the Executive is guilty of any gross default or grave misconduct in connection with or affecting the
business of our Group;
132
(b) in the event of any serious or repeated breach or non-observance by the Executive of any of the
stipulations contained in the Service Agreement;
(c) if the Executive becomes bankrupt or has a receiving order made against him or makes any
general composition with his creditors; or
(d) if the Executive suffers any physical or mental ailment or incapacity which prevents him from
performing 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 or
suspended 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 respective
Executives will be as follows:
Monthly salary S$
Professor Lin Xiang Xiong 25,000
Choo Chee Kong 12,500
Lim Kuoh Yang 20,000
Under the Service Agreements, the remuneration of the Executives is subject to review by the
Remuneration Committee on the day falling one (1) week from the Boards approval of the audited
financial statements for the immediate preceding financial year. The relevant Executive shall abstain from
voting in respect of any resolution or decision to be made by the Board in relation to the terms and
renewal of his Service Agreement.
The Service Agreements provide that during the continuance of their employment with our Group, the
Executives 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 similar
nature 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 after
the cessation of, their employment with our Group. During such period, the Executives shall not, amongst
other things, engage in any other business to be concerned or interested, whether for reward or
gratuitously, in any capacity in any trade or business or occupation of a similar nature to or competitive
with 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 Executives
pursuant to the Service Agreements, there will be no changes to the profit before tax, the net profit
attributable 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 arrangements
between 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 be
entered into by the Company or any of the subsidiaries of our Group with any of the Directors or
Executive Officers which provides for compensation in the form of stock options, or pension, retirement or
other 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 regulatory
authorities, where necessary, the Executives shall be eligible to participate in any other employee
scheme or plan implemented by our Company on such terms as may be determined by our
Remuneration Committee at its sole and absolute discretion.
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 our
Shareholders held on 14 October 2011. A summary of the rules of the CNMC Performance Share Plan is
set out below. Capitalised terms as used throughout this section, unless otherwise defined, shall bear the
meanings as defined in Rule 2 of Appendix H Rules of the CNMC Performance Share Plan of this
Offer Document. The detailed rules of the CNMC Performance Share Plan are set out in Appendix H of
1. Objectives of the CNMC Performance Share Plan
The purpose of the CNMC Performance Share Plan is to provide an opportunity for Group
Employees, who have met the CNMC Performance Conditions to be remunerated not just through
cash bonuses but also by an equity stake in the Company.
The CNMC Performance Share Plan is primarily a share incentive scheme that recognises the
importance of Group Employee to the success and continued well-being of our Group. The
objectives of the CNMC Performance Share Plan are to:
(a) to motivate each Participant to optimise his performance standards and efficiency and to
maintain a high level of contribution to our Group;
(b) to retain key employees and Group Executive Directors whose contributions are essential to
the long-term growth and profitability of our Group;
(c) to instill loyalty to and a stronger identification by the Participants with the long-term
prosperity of the Company;
(d) to attract potential employees with relevant skills to contribute to our Group and to create
value 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-based
incentive scheme which our Group may adopt, our Group is equipped with a set of flexible
remuneration 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 the
relevant Award Date and are not undischarged bankrupts and have not entered into a composition
with their respective creditors, shall be eligible to participate in the CNMC Performance Share Plan
at 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 Companys parent company and its subsidiaries; and
(d) Controlling Shareholders and their Associates (subject to Rule 4.2 and Rule 8 of Appendix H
of 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 that
certain Performance Conditions are met upon expiry of the Performance Period.
The Awards Committee may amend or waive the Performance Period and/or the Performance
Conditions in respect of any Award and Awards may be granted at any time in the course of a
financial year. The CNMC Performance Share Plan provides specific provisions in relation to the
vesting and lapsing of Awards. These provisions include, inter alia, the termination of the
employment or bankruptcy of a Participant.
Shares which are issued and allotted or transferred to a Participant pursuant to the grant of an
Award shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or in
part, 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 or
partly, in the form of cash rather than Shares.
2.3 Participants
Participation by a Group Employee, the quantum of Shares awarded and the prescribed
performance targets is subject to the absolute discretion of the Awards Committee but shall have
regard to factors such as the rank, job performance, year(s) of service and potential for future
development, his contribution to the success and development of the Group and the extent of effort
required 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 grant
Awards to the Participants at any time during the period when the CNMC Performance Share Plan
is in force, except that the Awards Committee shall not grant any Awards during the period
commencing two (2) weeks before the announcement of the Companys financial statements for
each of the first three (3) quarters of its financial year, or one (1) month before the announcement
of the Companys 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 an announcement on any
matter of an exceptional nature involving unpublished price sensitive information is made, Awards
may 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 Performance
Conditions, the Performance Period and the Release Schedule, will be sent to each Participant as
soon as is reasonably practicable after the granting of an Award.
135
2.6 Events Prior to Vesting
Special provisions for the vesting, lapsing and/or cancellation of Awards apply in certain
circumstances including the following:
(a) in the event of misconduct on the part of a Participant as determined by the Awards
Committee in its discretion;
(b) in the event of the bankruptcy of the Participant or the happening of any other event which
results 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 or
Associated 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 the
Company 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 Awards
Committee);
(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 may
be, ceasing to be a company within our Group or the undertaking or part of the
undertaking of such company being transferred otherwise than to another company
within 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 the
CNMC Performance Share Plan, when added to (i) the number of new Shares issued and issuable
in respect of all Awards granted thereunder; and (ii) any other share incentive schemes adopted by
the Company for the time being in force, shall not exceed 15% of the issued share capital of our
Company on the day preceding the relevant Award Date. The aggregate number of Shares
available under the CNMC Performance Share Plan shall not exceed 15% of the total issued Share
capital of our Company post-Placement and from time to time.
136
In addition, 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 Associates
shall not exceed 25% of the aggregate number of Shares which may be granted under the
CNMC Performance Share Plan;
(b) the aggregate number of Shares available to each Controlling Shareholder or his Associate
shall not exceed 10% of the Shares available under the CNMC Performance Share Plan;
and
(c) directors and employees of the Companys parent company and subsidiaries are eligible to
participate in the CNMC Performance Share Plan provided that (i) each grant to such
Participant, if the number of Awards to be granted together with Awards already granted to
such person under the CNMC Performance Share Plan, represents 5% or more of the total
number 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 and
employees of the aforesaid category, shall be approved by the Independent Shareholders in
a separate resolution.
The CNMC Performance Share Plan shall continue in force at the discretion of the Awards
Committee, subject to a maximum period of 10 years commencing on the Adoption Date, provided
always that the CNMC Performance Share Plan may continue beyond the above stipulated period
with the approval of Shareholders in general meeting and of any relevant authorities which may
then be required.
The expiry or termination of the CNMC Performance Share Plan shall not affect Awards which
have been granted prior to such expiry or termination, whether such Awards have been Released
or not.
2.8 Operation of the CNMC Performance Share Plan
In determining whether to issue New Shares to Participants or to purchase existing Shares for
delivery to particants or the payment of the aggregate Market Value in cash to Participants upon
vesting of their Awards, the Awards Committee will take into account factors such as (but not
limited to) the number of Shares to be delivered, the prevailing market price of the Shares and the
cost to our Company of either issuing new Shares or purchasing existing Shares or the amount of
cash available to the Group.
The Company shall apply to the SGX-ST for permission to deal in and for quotation of the New
Shares which may be issued upon the grant of Awards under the CNMC Performance Share Plan
as soon as practicable. The approval of the SGX-ST is not to be taken as an indication of the
merits 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, upon
the release of an Award shall be eligible for all entitlements, including dividends or other
distributions declared or recommended in respect of the then existing Shares, the Record Date for
which is on or after the relevant Vesting Date of the Award, and shall in all other respects rank pari
passu with other existing Shares then in issue.
The Awards Committee shall have the discretion to determine whether the Performance Condition
has 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 results
of the Company or the Group to take into account such factors as the Awards Committee may
determine 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 a
changed performance target would be a fairer measure of performance.
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3. Adjustments And Alterations Under The CNMC Performance Share Plan
The following describes the adjustment events under, and provisions relating to alterations of, the
CNMC Performance Share Plan.
3.1 Adjustment Events
If a variation in the issued ordinary share capital of our Company (whether by way of a
capitalisation 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 yet
vested; and/or
(b) the class and/or number of Shares over which future Awards may be granted under the
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 a
Shareholder does not receive.
Unless the Awards Committee considers an adjustment to be appropriate, the issue of securities
as consideration for a private placement of securities or in connection with an acquisition of any
assets or upon the exercise of any options or conversion of any loan stock or any other securities
convertible into Shares or subscription rights of any warrants, or the cancellation of issued Shares
purchased or acquired by the Company by way of a market purchase of such Shares undertaken
by the Company on the SGX-ST during the period when a share purchase mandate granted by
Shareholders (including any renewal of such mandate) is in force, shall not normally be regarded
as a circumstance requiring adjustment.
Any adjustment (except in relation to a capitalisation issue) must be confirmed in writing by the
Auditors (acting only as experts and not as arbitrators) that the adjustments are fair and
reasonable 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 a
resolution of the Awards Committee subject to the prior approval of our Shareholders and
compliance 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 granted
prior to such modification or alteration except with the written consent of such number of
Participants under the CNMC Performance Share Plan who, if their Awards were Released to them
upon the Performance Conditions for their Awards being satisfied in full, would become entitled to
not less than three-quarters of all the Shares which would be fall to be Vested upon Release of all
outstanding 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 the
CNMC Performance Share Plan continues in operation:
(a) the names of the members of the Awards Committee administering the CNMC Performance
Share Plan;
(b) in respect of the following Participants:
(i) Directors of our Company;
(ii) Controlling Shareholders and their Associates; and
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(iii) Participants (other than those in paragraphs (i) and (ii) above) who have received
Shares pursuant to the Release of Awards granted under the CNMC Performance
Share Plan which, in aggregate, represent 5% or more of the aggregate number of
new 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 Participant
under the CNMC Performance Share Plan during the financial year under review;
(cc) the aggregate number of Shares comprised in Awards granted to such Participant
under the CNMC Performance Share Plan since the commencement of the CNMC
Performance Share Plan to the end of the financial year under review;
(dd) the aggregate number of Shares comprised in Awards granted to such Participants
under the CNMC Performance Share Plan which have Vested since the
commencement of the CNMC Performance Share Plan to the end of the financial year
under review and in respect thereof, the proportion of New Shares issued upon the
Release of the Vested Awards granted under the CNMC Performance Share Plan; and
(ee) the aggregate number of Shares comprised in Awards granted to such Participant
under the CNMC Performance Share Plan which have not yet Vested, as at the end of
the financial year under review;
(c) (i) the names and number of terms of Awards granted to each director or employee of
the Companys parent company and its subsidiaries who receives 5% or more of the
total number of Shares comprised in Awards available to all directors and employees
of the Companys parent company and its subsidiaries under the CNMC Performance
Share Plan, during the financial year under review; and
(ii) the aggregate number of Shares comprised in Awards to the directors and employees
of the Companys parent company and its subsidiaries which have Vested for the
financial year under review, and since the commencement of the CNMC Performance
Share 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 the
administration of the CNMC Performance Share Plan, and will comprise such Directors to
administer the CNMC Performance Share Plan, provided that no member of the Committee shall
participate 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-based
payment takes effect for all listed companies beginning 1 January 2005. Participants will receive
Shares and the Awards would be accounted for as equity-settled share-based transactions, as
described in the following paragraphs.
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The fair value of employee services received in exchange for the grant of the Awards will be
recognised as a charge to the income statement over the period between the grant date and the
vesting date of an Award. The total amount of the charge over the vesting period is determined by
reference to the fair value of each Award granted at the grant date and the number of Shares
vested at the vesting date, with a corresponding credit to reserve account. Before the end of the
vesting period, at each accounting year end, the estimate of the number of Awards that are
expected to vest by the vesting date is subject to revision, and the impact of the revised estimate
will be recognised in the income statement with a corresponding adjustment to the reserve
account. 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 the
number of Shares included in the determination of the expense relating to employee services is
adjusted to reflect the actual number of Shares that eventually vest but no adjustment is made to
changes 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 Company
settles the Awards by issuing new Shares or by purchasing existing Shares. The amount of the
charge to the income statement also depends on whether or not the performance target attached
to an Award is measured by reference to the market price of the Shares. This is known as a market
condition. If the performance target is a market condition, the probability of the performance target
being 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 market
condition is not met. However, if the performance target is not a market condition, the fair value per
Share of the Awards granted at the grant date is used to compute the amount to be charged to the
income statement at each accounting date, based on an assessment at that date of whether the
non-market conditions would be met to enable the Awards to vest. Thus, where the vesting
conditions do not include a market condition, there would be no charge to the income statement if
the Awards do not ultimately vest.
In the event that the Participants receive cash, our Company shall measure the fair value of the
liability at grant date. Until the liability is settled, our Company shall re-measure the fair value of the
liability at each accounting date and at the date of settlement, with changes in the fair value
recognised 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 Companys issued Shares
where 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 any
case, the CNMC Performance Share Plan provides that the number of new Shares to be issued
under the said CNMC Performance Share Plan will be subject to the maximum limit of 15% of our
total issued Shares. The aggregate number of Shares available under the CNMC Performance
Share Plan shall not exceed 15% of the total issued Share capital of our Company from time to
time.
If instead of issuing new Shares to Participants, treasury shares are transferred to Participants our
our Company pays the equivalent cash value, the CNMC Performance Share Plan would have no
impact on our Companys total number of issued Shares.
6.2 NTA
The CNMC Performance Share Plan will result in a charge to our Groups profit and loss account
equal to the market value at which the new Shares are issued or the existing Shares are
purchased to meet delivery under the Awards. Accordingly, the consolidated NTA per share of our
Group would decrease by the amount charged (after any adjustment for tax). Nonetheless, it
should be noted that the delivery of Shares to participants of the Performance Share Plan is
contingent upon the participants meeting prescribed Performance Conditions.
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Accordingly, any Award under the CNMC Performance Share Plan would have been premised
upon significant value having been added to our Groups consolidated NTA before Shares are
delivered.
6.3 EPS
The CNMC Performance Share Plan will result in a charge to earnings over the period from the
grant date to the vesting date, equivalent to the market value at which existing Shares are
purchased 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 Groups
consolidated EPS, it should be noted that the delivery of Shares to participants of the CNMC
Performance Share Plan is contingent upon the participants meeting prescribed conditions,
resulting in, inter alia, added value to Shareholders. Accordingly, the earnings of our Group should
have 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 Share
and 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 to
reward Group Executive Directors and Group Employees who have made and who continue to
make contributions to the long-term growth of our Group. The success of our Groups business is
dependent on our Groups ability to attract and retain good personnel and our Directors believe
that the CNMC Performance Share Plan will be an essential part of our Groups strategy for the
recruitment and retention of capable personnel.
Our Directors recognise that it is important to the well-being and stability of our Group that our
Group acknowledges the services and contributions made by our Group Executive Directors and
Group Employees and that our Group continues to receive their support and contributions. Our
Directors believe that the CNMC Performance Share Plan will also enable us to attract, retain and
provide incentives to Group Executive Directors and Group Employees to optimise their standards
of performance as well as encourage greater dedication and loyalty by enabling our Company to
give recognition to past contributions and services as well as motivating them generally to
contribute towards the long-term growth of our Group.
8. Non-Executive Directors (including Independent Directors)
Group Non-Executive Directors are not eligible to participate in the CNMC Performance Share
Plan.
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 equitable
system that recognises and benefits not only persons who are in the direct employment of our
Company but also persons who are not employed but nevertheless work closely with our Company
and/or are in the position to contribute their experience, knowledge and expertise to the
development and success of our Company through participation in the equity of our Group. Such
other persons include the directors and employees of the Associated Companies.
Our Directors believe that the CNMC Performance Share Plan will also strengthen our Groups
working relationships with the directors and employees of the Associated Companies by inculcating
in them a stronger and more lasting sense of identification with our Group.
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10. Participation of Controlling Shareholders or Associates of Controlling Shareholders
The purpose of the participation of Controlling Shareholders and Associates of Controlling
Shareholders in the CNMC Performance Share Plan is to provide an opportunity for eligible Group
Employees (including Group Executive Directors) who are Controlling Shareholders or Associates
of Controlling Shareholders who have contributed or continue to contribute significantly to the
growth 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 Controlling
Shareholders or Associates of our Controlling Shareholders are important to the development and
success of our Group. The extension of the CNMC Performance Share Plan to the eligible Group
Employees (including Group Executive Directors) who are Controlling Shareholders or Associates
of our Controlling Shareholders allows our Company to have a fair and equitable system for
rewarding the eligible Group Employees (including Group Executive Directors) who have made and
continue to make important contributions to the long-term growth of our Group notwithstanding that
they are Controlling Shareholders or Associates of our Controlling Shareholders.
Although the Controlling Shareholders and/or their Associates may already have shareholding
interests in the Company, including them in the CNMC Performance Share Plan will ensure that
they 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 and
benefit from this system of remuneration. We are of the view that a person who would otherwise
be eligible should not be excluded from participating in the CNMC Performance Share Plan solely
by 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 the
grant of Awards to such persons as well as the actual number of and terms of such Awards. A
separate resolution must be passed for each such participant. In seeking such approval from our
independent Shareholders, clear justification as to the participation of our Controlling Shareholders
and/or Associates of our Controlling Shareholders, the number of Shares and terms of the Awards
to be granted to them shall be provided. Accordingly, we are of the view that there are sufficient
safeguards against any abuse of the CNMC Performance Share Plan resulting from the
participation 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 Controlling
Shareholder, Messiah Limited; and (ii) Professor Lin Xiang Xiong and Lim Kuoh Yang are
Associates of the other Controlling Shareholder, Innovation (China) Limited.
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CORPORATE GOVERNANCE
143
Corporate governance refers to the processes and structure by which the business and affairs of a
company are directed and managed, in order to enhance long-term shareholder value through enhancing
corporate performance and accountability. Good corporate governance therefore embodies both
enterprise (performance) and accountability (conformance).
Our Directors recognise the importance of corporate governance and the offering of high standards of
accountability to our Shareholders, and will exert best efforts to implement the good practices
recommended in the Code of Corporate Governance 2005 and outlined in the Code of Corporate
Governance issued by SGX-ST. As a result, our Company has implemented the corporate governance
model as set out below:
Based on the above, our Directors are of the view that there are sufficient safeguards and checks to
ensure that the process of decision-making by our Board is independent and based on collective
decision-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 once
every 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 and
enhance long-term shareholder value. It will set the overall strategy for our Group and supervise
executive management and monitor their performance. Apart from its statutory responsibilities, the Board
will be responsible for:
(i) reviewing the financial performance and condition of our Group;
(ii) approving our Groups strategic plans, key operational initiatives, major investment and funding
decisions; and
(iii) identifying principal risks of our Groups business and ensuring the implementation of appropriate
systems to manage the risks.
The Board will hold quarterly meetings every year, with additional meetings for particular matters
convened when necessary. Our Directors shall also periodically review the internal control and risk
management systems of our Group to ensure that there are sufficient guidelines and procedures in place
to monitor its operations.

Board of Directors
Audit Committee
Remuneration
Committee
Nominating
Committee
Chairman
Kuan Cheng Tuck
Members
Lim Yeok Hua
Tan Poh Chye Allan
Chairman
Members
Kuan Cheng Tuck
Lim Yeok Hua
Chairman
Lim Yeok Hua
Members
Kuan Cheng Tuck
Tan Poh Chye Allan
Tan Poh Chye Allan
144
Audit Committee
Our Audit 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 Audit Committee is Kuan Cheng Tuck.
Our business and operations are presently under the management and close supervision of our
Executive Directors who are assisted by our Executive Officers.
After our listing on Catalist, the Audit Committee will assist our Board of Directors with regards to
discharging its responsibility to safeguard our Companys assets, maintain adequate accounting records,
and develop and maintain effective systems of internal controls with an overall objective to ensure that
our management has created and maintained an effective control environment in our Group, and that our
management demonstrates and stimulates the necessary aspects of our Groups internal control
structure among all parties. The Audit Committee will provide a channel of communication between the
Board, 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 of
accountability to the Shareholders. Our Audit Committee will meet at least quarterly to discuss and review
the 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 managements response;
(b) review with the internal auditors the internal audit plan and their evaluation of the adequacy of our
internal control and accounting system before submission of the results of such review to our
Board 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 resulting
from the audit, the going concern statement, compliance with accounting standards as well as
compliance with any stock exchange and statutory/regulatory requirements;
(d) review the internal control and procedures and ensure co-ordination between the external auditors
and our management, reviewing the assistance given by our management to the auditors, and
discuss problems and concerns, if any, arising from the interim and final audits, and any matters
which 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 suspected
infringement of any relevant laws, rules or regulations, which has or is likely to have a material
impact on our Groups operating results or financial position, and our managements 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 any
potential conflicts of interest;
(i) conduct periodic review of foreign exchange transactions and hedging policies (if any) undertaken
by our Group;
(j) consider the appointment or re-appointment of the external auditors and matters relating to
resignation or dismissal of the auditors;
(k) review our Groups compliance with such functions and duties as may be required under the
relevant statutes or the Catalist Rules, including such amendments made thereto from time to time;
145
(l) undertake such other reviews and projects as may be requested by our Board of Directors and
report to our Board its findings from time to time on matters arising and requiring the attention of
our Audit Committee; and
(m) generally to undertake such other functions and duties as may be required by statute or the
Catalist 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 our
Group are adequate to address the financial, operational and compliance risks.
Notwithstanding the above, our Audit Committee shall also commission an annual internal controls audit
until such time as our Audit Committee is satisfied that our Groups internal controls are robust and
effective enough to mitigate our Groups internal control weaknesses that may arise (if any). Prior to the
decommissioning of such annual internal controls audit, our Board is required to report to the SGX-ST
and the Sponsor on how the key internal control weaknesses have been rectified, and the basis for the
Audit Committees decision to decommission the annual internal controls audit. Thereafter, such audits
may be initiated by our Audit Committee as and when it deems fit to satisfy itself that our Groups internal
controls remain robust and effective. Upon completion of the internal controls audit, appropriate
disclosure must be made via SGXNET on any material, price-sensitive internal controls weaknesses and
any 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 of
internal investigations into matters where there is any suspected fraud or irregularity, or failure of internal
controls, or infringement of any Singapore law, rule or regulation which has or is likely to have a material
impact on our Companys operating results or financial position. In the event that a member of our Audit
Committee is interested in any matter being considered by our Audit Committee, he will abstain from
reviewing that particular transaction or voting on that particular transaction.
In addition, all future transactions with related parties shall comply with the requirements of the Catalist
Rules. As required by paragraph 9(e) of Appendix 4C of the Catalist Rules, our Directors shall also
abstain from voting in any contract/arrangement or proposed contract/arrangement in which he has
directly 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 (as
described in the section entitled Directors, Management and Staff Executive Officers of this Offer
Document); (iii) observed their abilities, familiarity and diligence in relation to the financial matters and
information of our Group; and (iv) discussed with our auditors and executive management team of our
Group, is of the view that Chen Yan and Cheam Chee Chian are suitable for the position of the Chief
Financial Officer and Group Finance Manager, respectively.
After making all reasonable enquiries, and to the best of their knowledge and belief, nothing has come to
the attention of our Audit Committee members to cause them to believe that Chen Yan, the Chief
Financial Officer, does not have the competence, character and integrity expected of a Chief Financial
Officer 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 Remuneration
Committee 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 Chief
Executive Officer (or executive of equivalent rank), if a Chief Executive Officer is not an Executive
Director, such recommendations to be submitted for endorsement by our entire Board and should
cover all aspects of remuneration, including but not limited to directors fees, salaries, allowances,
bonuses, options, benefits in kind;
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(b) in the case of service contracts (if any) for any Director or Executive Officer, to consider what
compensation commitments the Directors or Executive Officers contracts of service, if any, would
entail 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 incentive
schemes.
Each member of our Remuneration Committee shall abstain from voting on any resolution and making
any recommendations and/or participating in any deliberations of our Remuneration Committee in respect
of matters in which he is interested.
The recommendations of our Remuneration Committee on the remuneration of Directors should be
submitted for endorsement by our entire Board. All aspects of remuneration, including but not limited to
Directors fees, salaries, allowances, bonuses, and benefits in kind shall be covered by our Remuneration
Committee.
The total remuneration of the employees who are related to our Directors will be reviewed annually by the
Remuneration Committee to ensure that their remuneration packages are in line the staff remuneration
guidelines and commensurate with their respective job scopes and level of responsibilities. In the event
that a member of the Remuneration Committee is related to the employee under review, he will abstain
from such review.
The remuneration paid to employees who are immediate family members of our Directors will be
disclosed 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, Kuan
Cheng Tuck, Lim Yeok Hua and Tan Poh Chye Allan. The Chairman of our Nominating Committee is Lim
Yeok 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 directors 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 regular
intervals 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 decide
whether or not such Director is able to and has been adequately carrying out his/her duties as
director, having regard to the competing time commitments that are faced when serving on multiple
boards;
(d) reviewing and approving any new employment of related persons and the proposed terms of their
employment; and
(e) to decide how the Boards performance is to be evaluated and propose objective performance
criteria, subject to the approval by the Board, which address how the Board has enhanced long
term shareholders value. The Board will also implement a process to be proposed by the
Nominating Committee for assessing the effectiveness of the Board as a whole and for assessing
the contribution of each individual Director to the effectiveness of the Board (if applicable).
Each member of the Nominating Committee shall abstain from voting on any resolution and making any
recommendations and/or participating in any deliberations of our Nominating Committee in respect of the
assessment of his performance or re-nomination as Director. In the event that any member of the
Nominating 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 Directors
takes place annually. Each Director shall retire from office once every three (3) years and for this
purpose, at each annual general meeting, at least one-third of the Directors for the time being (or, if their
number is not a multiple of three (3), the number nearest to but not less than one-third) shall retire from
office by rotation (except for a Chief Executive Officer/Managing Director who may be appointed for a
term of up to three (3) years). A retiring Director shall be eligible for re-election at the meeting at which
he retires. Further details on the appointment and retirement of Directors can be found in the section
entitled Selected Extracts of Our Articles of Association in Appendix C of this Offer Document.
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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 Interested
Person 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 our
subsidiaries) 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 Proceeds
and Listing Expenses, Directors, Management and Staff Remuneration of Directors, Executive
Officers and Related Employees and General Information on our Company and our Group History of
this Offer Document, there have been no Interested Person Transactions over the Relevant Period
involving 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 the
business of consultancy, trading and investment. Its issued and paid-up share capital is 99.99% owned by
Innovation (China) Limited, one of the Controlling Shareholders of our Group while the balance is owned
by another two shareholders who are not related to our Directors, Controlling Shareholders and/or their
Associates. In the past, IWGPL had been engaged to provide management services to oversee the
operations of our Group and the total approximate amount of management fees paid by our Group to
IWGPL and the reimbursement of expenses incurred by IWGPL (such as travelling expenses and other
administration expenses) during the Relevant Period were as follows:
1 April 2011
to the Latest
Practicable
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. Our
Directors are of the opinion that the past transactions with IWGPL were not conducted on an arms length
basis as the fees were charged on an actual cost basis. As at the Latest Practicable Date, our Group has
ceased 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 providing
business 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 not
related to the Directors, Controlling Shareholders and/or their Associates. Both Ng Eng Tiong and Goh
Siew Luan are also the directors of FFPL. In the past, our Group had engaged FFPL as a service
provider to provide management, accounting and human resource services to our Group and the total
amount of fees paid by our Group to FFPL during the Relevant Period were as follows:
1 April 2011
to the Latest
Practicable
US$000 FY2008 FY2009 FY2010 1Q2011 Date
Fees incurred to FFPL 8 57
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Our Directors are of the opinion that the past transactions with FFPL were not conducted on an arms
length basis as the fees charged were not based on the then prevailing market rates during the Relevant
Period. 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 our
Group. The loans granted by IWGPL were interest free, unsecured and had no fixed terms of repayment
and were not transacted on an arms length basis.
Our Group had also in the past obtained loans from Ng Eng Tiong, to fund the working capital needs of
our 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 fixed
terms of repayment and were transacted on an arms length basis due to the interest being charged
according to the then prevailing market interest rates.
The amount of loans (including interest incurred (if any)) extended by the relevant Interested Persons to
our Group for the Relevant Period were as follows:
1 April 2011
to the Latest
Practicable
(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 Persons
as at the end of each of the Relevant Period were as follows:
As at the
As 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 Virgin
Islands. Choo Chee Kong, one of our Directors, is a 51% shareholder and a director of EPCI. The
balance 49% interest of EPCI is held by investors who are high net worth individuals and are not related
to our Directors, Controlling Shareholders and/or their Associates. Pursuant to a convertible bond
agreement dated 13 June 2009 entered into between CNMC and EPCI, EPCI subscribed for convertible
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bonds of principal amount of S$200,000 issued by CNMC with maturity of 12 months from the date of the
convertible bond agreement. On 13 June 2009, CNMC and EPCI entered into a separate convertible
bond 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 of
approximately US$9,000, US$15,000 and US$8,000 due to EPCI at an interest rate of 10% per annum in
FY2008, FY2009 and FY2010 respectively. The subscription of the convertible bonds by EPCI was
conducted on an arms length basis and on normal commercial terms.
EPCI subsequently elected to convert all of the convertible bonds into shares in CNMC and 32,493
ordinary shares in the share capital of CNMC were allotted and issued to EPCI on 9 July 2010
accordingly. Upon such conversion, the right of EPCI to repayment of the principal amount and any or all
fees, costs, expenses and other monies that may be payable by CNMC in relation to the principal
amount, 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/or
agreed to be paid by Innovation (China) Limited, Messiah Limited and Ng Eng Tiong on behalf of our
Group. Innovation (China) Limited, Messiah Limited and Ng Eng Tiong entered into an agreement dated
1 October 2010 with CNMC to capitalise these payments made and/or to be made on behalf of our
Group as non-reciprocal capital contributions in CNMC. The aggregate amount of all payments made
and/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 Limited
and Ng Eng Tiong on behalf of our Group were not transacted on an arms length basis as there was no
charge to our Group from Innovation (China) Limited, Messiah Limited and Ng Eng Tiong for making or
agreeing to make payment on our behalf. We do not expect to enter into future transactions of the above
nature 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 our
Group. 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 November
2010 waived future interest incurred on these loans. These loans are unsecured, have no fixed terms of
repayment and transacted on an arms length basis due to the interest being charged according to the
then prevailing market interest rates.
Our Group had also in the past obtained loans from Professor Lin Xiang Xiong to fund the working capital
needs of our Group. The loans granted by Professor Lin Xiang Xiong are interest free, unsecured and
have no fixed terms of repayment and were not transacted on an arms length basis.
The amount of loans including interest incurred (if any) extended by the relevant Interested Persons to
our Group for the Relevant Period were as follows:
1 April 2011
to the Latest
Practicable
(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
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The amounts due from our Group to the relevant Interested Persons as at the end of each of the
Relevant Period were as follows:
As at the
(US$000) 2008 2009 2010 2011 Date
Choo Chee Kong 174 178 97 99 285
Total 174 178 190 202 462
Changes in amounts due to the relevant Interested Persons as at the end of each of the Relevant Period
are a combined result of additional loans extended during each period, repayments of loans, and/or
exchange rate fluctuation between US$ and S$ or between US$ and MYR as loans are denominated in
S$ or MYR.
During the Relevant Period, the largest amounts owed by our Group to each of the following Interested
Persons, 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 not
collected by them and Choo Chee Kong and Ng Eng Tiong arising from outstanding directors fees and/or
salaries in respect of FY2010, 1Q2011 and from 1 April 2011 to the Latest Practicable Date, for the
purpose of retaining these amounts in the Group as funding for our working capital. These amounts due
to them are interest free, unsecured and have no fixed terms of repayment and were not transacted on
an arms length basis.
The amounts of salaries and/or directors fees owed to the relevant Interested Persons as at the end of
each of the Relevant Period were as follows:
As at the
(US$000) 2008 2009 2010 2011 Date
Choo Chee Kong 117 151 200
Lim Kuoh Yang 67 71 141
Ng Eng Tiong 67 75 88
Total 337 389 612
Changes in amounts due to the relevant Directors as at the end of each of the Relevant Period are due
to additional directors salaries or fees incurred and/or paid during each period and/or exchange rate
fluctuation between US$ and S$ during this period as all directors fees or salaries are denominated in
S$.
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During the Relevant Period, the largest amounts owed by our Group to each of the following Interested
Persons, 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 had
provided mining and extraction works to our Group from June 2011 to the Latest Practicable Date. The
total amount of fees payable by our Group to CMNM-JY for such services have not been billed by
CMNM-JY to our Group and no payment has been made by our Group to CMNM-JY as at the Latest
Practicable Date. The amount of fees incurred and/or payable to CMNM-JY for the services provided
were based on the actual costs incurred and are not expected to be material. Our Directors are of the
opinion that the transactions with CMNM-JY were not conducted on an arms length basis as the fees
were charged on an actual cost basis.
On completion of the Joint Venture Agreement, CMNM-JY is proposed to be 51% owned by CMNM and
49% owned by Xiamen Shenkun. Thereafter, the mining and extraction works undertaken by CMNM-JY
will be managed and supervised by our Group and would no longer be Interested Person Transactions
with 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 the
above as long as it is in our interests to do so, and in accordance with the guidelines and procedures for
Interested Person Transactions set out under the section entitled Guidelines and Review Procedures for
Ongoing 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 as
start-up funds to fund the working capital needs of CMNM-JY. The loans granted to CMNM-JY are
interest free, unsecured and have no fixed terms of repayment and were not transacted on an arms
length basis.
As at the Latest Practicable Date, loans of approximately US$227,000 are still outstanding and the
largest amount owed by CMNM-JY to our Group was US$227,000 during the Relevant Period. On
completion 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 of
the Group would no longer be interested person transactions with 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 the
above as long as it is in our interests to do so, and in accordance with the guidelines and procedures for
interested person transactions set out under the section entitled Guidelines and Review Procedures for
On-going and Future Interested Person Transactions of this Offer Document.
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GUIDELINES AND REVIEW PROCEDURES FOR ON-GOING AND FUTURE INTERESTED PERSON
TRANSACTIONS
To ensure that future transactions with Interested Persons are undertaken on normal commercial terms
and are consistent with our Groups usual business practices and policies, which are generally no more
favourable than those extended to unrelated third parties, the following procedures and Chapter 9 of the
Catalist Rules will be implemented by our Group:
(a) The Chief Financial Officer will maintain a register of Interested Persons. The register of Interested
Persons will be updated regularly and disclosed to the relevant personnel to enable identification of
Interested Persons. The register of Interested Persons will be reviewed by our Audit Committee at
least on a quarterly basis;
(b) The Chief Financial Officer will maintain a register of Interested Person Transactions, recording the
basis on which Interested Person Transactions are entered into and the approval or review by our
Audit Committee, Chief Financial Officer or any duly appointed Director as the case may be. The
register shall also record the basis for entry into the transactions, including the quotations and
other evidence obtained to support such basis. This register of Interested Person Transactions shall
be 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, quotes
from at least two (2) unrelated third parties in respect of the same or substantially the same type of
transactions will be used as comparison wherever possible. The purchase price or procurement
price shall not be higher than the most competitive price of the two (2) comparative prices from the
two (2) unrelated third parties. Our Audit Committee will review the comparables, taking into
account, the suitability, quality and cost of the product or service, and the experience and expertise
of the supplier;
(d) In relation to any sale of products or provision of services to Interested Persons, the price and
terms of two (2) other completed transactions of the same or substantially the same type of
transactions to unrelated third parties are to be used as comparison wherever possible. The
Interested Persons shall not be charged at rates lower than the lowest price of that charged to the
unrelated third parties;
(e) When renting properties from or to an Interested Person, the Directors shall take appropriate steps
to ensure that such rent is commensurate with the prevailing market rates, including adopting
measures such as making relevant enquiries with landlords of similar properties and obtaining
suitable reports or reviews published by property agents (where necessary), including independent
valuation report by property valuer, where appropriate. The rent payable shall be based on the
most competitive market rental rate of similar property in terms of size and location, based on the
results of the relevant enquiries. Such transactions shall be subject to review by our Audit
Committee on a quarterly basis.
(f) Where it is not possible to compare against the terms of other transactions with unrelated third
parties and given that the products and/or services may be purchased only from an Interested
Person, the Interested Person Transaction will be approved by our Groups Chief Executive Officer
and Executive Director, the Chief Financial Officer or Group Finance Manager or an equivalent of
the relevant company in the Group, who has no interest in the transaction, in accordance with our
Groups usual business practices and policies. In determining the transaction price payable to the
Interested 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 shall
not be an Interested Person in respect of the particular transaction. Any contracts to be made with
an Interested Person shall not be approved unless the pricing is determined in accordance with our
Groups usual business practices and policies, consistent with the usual margin given or price
received by our Group for the same or substantially similar type of transactions between our Group
and unrelated parties and the terms are no more favourable than those extended to or received
from unrelated parties;
(h) For the purposes above, where applicable, contracts for the same or substantially similar type of
transactions entered into between our Group and unrelated third parties will be used as a basis for
comparison to determine whether the price and terms offered to or received from the Interested
Person are no more favourable than those extended to unrelated parties;
(i) In addition, our Group shall monitor all Interested Person Transactions entered into by categorising
the transactions as follows:
(i) a category one Interested Person Transaction is one where the value thereof is in excess of
3.0% of the NTA of our Group; and
(ii) a category two Interested Person Transaction is one where the value thereof is below or
equal to 3.0% of the NTA of our Group.
All Category one Interested Person Transactions must be approved by our Audit Committee prior
to entry whereas Category two Interested Person Transactions need not be approved by our Audit
Committee 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 of
business of our Group is transacted, prior approval must be obtained from our Audit Committee. Our
Audit Committee will review all Interested Person Transactions, if any, on a quarterly basis to ensure that
they are carried out on an arms length basis and in accordance with the procedures outlined above. It
will take into account all relevant non-qualitative factors. In the event that a member of our Audit
Committee is interested in any Interested Person Transactions, he will abstain from reviewing that
particular transaction. Any decision to proceed with such an agreement or arrangement would be
recorded for review by our Audit Committee.
Disclosure will be made in our Groups annual report of the aggregate value of Interested Person
Transactions during the relevant financial year under review and in the subsequent annual reports for the
subsequent financial years of our Group.
Internal auditors will be appointed and their internal audit plan will incorporate a review of all the
Interested Person Transactions at least on an annual basis. The internal audit report will be reviewed by
our Audit Committee to ascertain whether the guidelines and procedures established to monitor
Interested Person Transactions have been compiled with.
Our Audit Committee shall also review from time to time such guidelines and procedures to determine if
they are adequate and/or commercially practicable in ensuring that Interested Person Transactions are
conducted on normal commercial terms, on an arms length basis and do not prejudice the interests of
our Group and our Shareholders. Further, if during these periodic reviews by our Audit Committee, our
Audit Committee is of the opinion that the guidelines and procedures as stated above are not sufficient to
ensure that Interested Person Transactions will be on normal commercial terms, on an arms length basis
and not prejudicial to the interests of our Group and our Shareholders, our Audit Committee will adopt
such new guidelines and review procedures for future Interested Person Transactions as may be
appropriate.
In addition, our Audit Committee will include the review of Interested Person Transactions as part of the
standard procedures while examining the adequacy of the internal controls of our Group. Our Audit
Committee will also review all Interested Person Transactions to ensure that the prevailing rules and
regulations 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 future
Interested Person Transactions, and if required under the Catalist Rules, the Companies Act or the SFA,
we will seek independent Shareholders approval for such transactions.
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155
All the Independent Directors, who are members of our Audit Committee, are of the view that the review
procedures and systematic monitoring mechanism of all Interested Person Transactions as mentioned
above, are adequate in ensuring that such transactions will be on normal commercial terms and will not
be 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 and
Staff 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 competes
materially and directly with the existing business of our Group; and
(c) in any enterprise or company that is our Groups customer or supplier of goods and services.
Save as disclosed in the sections entitled Interested Person Transactions and Directors, Management
and Staff Service Agreements of this Offer Document, none of our Directors have any interest in any
existing contract or arrangement which is significant in relation to the business of our Company and our
subsidiaries, taken as a whole.
INTERESTS OF EXPERTS
No expert is employed on a contingent basis by our Company or our subsidiaries; or has a material
interest, whether direct or indirect, in our Shares or the shares of our subsidiaries; or has a material
economic interest, whether direct or indirect, in our Company, including an interest in the success of the
Placement.
INTERESTS OF PPCF, THE MANAGER AND SPONSOR AND JOINT PLACEMENT AGENT
Company does not have any material relationship with the Manager and Sponsor and Joint Placement
Agent, 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 date
our Company is admitted and listed on Catalist; and
(c) Pursuant to the Management Agreement and as part of PPCFs fees as the Manager and Sponsor,
our Company issued and allotted 3,771,000 PPCF Shares to PPCF representing 0.99% of the
issued and paid-up share capital of our Company prior to the Placement, at the Placement Price
for 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 interest
in our Company at its discretion.
INTERESTS OF ASIASONS WFG, THE JOINT PLACEMENT AGENT
Company 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 WFGs parent company, Asiasons WFG Financial Ltd, a company listed on the Main
Board of the SGX-ST, is the sole shareholder of Raintree Strategic Consultancy Limited which
holds 6,262,500 Shares representing approximately 1.55% of the issued and paid-up share capital
of our Company post-Placement.
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DESCRIPTION OF ORDINARY SHARES
157
The following statements are brief summaries of the rights and privileges of our Shareholders conferred
by 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 reference
to our Articles, a copy of which is available for inspection at our registered office during normal business
hours 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. We
have only one class of shares, namely, our ordinary shares which have identical rights in all respects and
rank equally with one another. All of our Shares are in registered form. Our Company may, subject to the
provisions 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 the
acquisition 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. The
aggregate number of shares to be issued pursuant to such approval may not exceed 100% (or such
other limit as may be prescribed by the SGX-ST) of our issued share capital for the time being, of which
the aggregate number of Shares to be issued other than on a pro rata basis to our shareholders may not
exceed 50% (or such other limit as may be prescribed by the SGX-ST) of our issued share capital for the
time being (the percentage of issued share capital being based on our Companys issued share capital at
the time such authority is given after adjusting for new Shares arising from the conversion of convertible
securities or employee share options on issue at the time such authority is given and any subsequent
consolidation or subdivision of Shares).
The approval, if granted, will lapse at the conclusion of the annual general meeting following the date on
which the approval was granted or the date by which the annual general meeting is required by law to be
held, whichever is earlier but any approval may be previously revoked or varied by our Company in
general meeting. Subject to the foregoing, the provisions of the Companies Act and any special rights
attached to any class of shares currently issued, all new Shares are under the control of our Board of
Directors 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 the
person so registered is CDP, the persons named as the Depositors in the Depository Register maintained
by 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 Share
other than the absolute right thereto of the registered holder of that Share or of the person whose name
is entered in the Depository Register for that Share. Our Company may close our Register of Members
for any time or times if we provide the Accounting and Corporate Regulatory Authority of Singapore with
at least 14 days notice and the SGX-ST at least ten (10) clear market days notice. However, the register
may not be closed for more than 30 days in aggregate in any calendar year. We typically close our
Register 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 Catalist
Rules or the rules or by-laws of any stock exchange on which our Company is listed. Our Board of
Directors may decline to register any transfer of Shares which are not fully paid Shares or Shares on
which we have a lien. Our Shares may be transferred by a duly signed instrument of transfer in a form
approved by the SGX-ST or any stock exchange on which our Company is listed. Our Board of Directors
may also decline to register any instrument of transfer unless, among other things, it has been duly
158
stamped and is presented for registration together with the share certificate and such other evidence of
title as they may require. We will replace lost or destroyed certificates for Shares if it is properly notified
and if the applicant pays a fee which will not exceed $2 and furnishes any evidence and indemnity that
our 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 an
extraordinary general meeting whenever it thinks fit and must do so if shareholders representing not less
than 10% of the total voting rights of all Shareholders request in writing that such a meeting be held. In
addition, two or more shareholders holding not less than 10% of our issued share capital may call a
meeting. Unless otherwise required by law or by our Articles, voting at general meetings is by ordinary
resolution, requiring an affirmative vote of a simple majority of the votes cast at that meeting. An ordinary
resolution suffices, for example, for the appointment of directors. A special resolution, requiring the
affirmative vote of at least 75% of the votes cast at the meeting, is necessary for certain matters under
Singapore law, including voluntary winding up, amendments to the Memorandum of Association and our
Articles, a change of our corporate name and a reduction in the share capital, share premium account or
capital redemption reserve fund. We must give at least 21 days notice in writing for every general
meeting convened for the purpose of passing a special resolution. Ordinary resolutions generally require
at least 14 days notice in writing. The notice must be given to each of our shareholders who has supplied
us with an address in Singapore for the giving of notices and must set forth the place, the day and the
hour 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. Proxies
need not be Shareholders. A person who holds Shares through the SGX-ST book-entry settlement
system will only be entitled to vote at a general meeting as a Shareholder if his name appears on the
Depository Register maintained by CDP 48 hours before the general meeting. Except as otherwise
provided in our Articles, two or more shareholders must be present in person or by proxy to constitute a
quorum at any general meeting. Under our Articles, on a show of hands, every Shareholder present in
person and by proxy shall have one vote (provided that in the case of a Shareholder who is represented
by two proxies, only one of the two proxies as determined by that shareholder or, failing such
determination, the chairman of the meeting in his sole discretion shall be entitled to vote on a show of
hands), and on a poll, every Shareholder present in person or by proxy shall have one vote for each
Share which he holds or represents. A poll may be demanded in certain circumstances, including by the
chairman of the meeting or by any Shareholder present in person or by proxy and representing not less
than 10% of the total voting rights of all Shareholders having the right to attend and vote at the meeting
or 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 may
not pay dividends in excess of the amount recommended by our Board of Directors. We must pay all
dividends out of our profits. Our Board of Directors may also declare an interim dividend without the
approval of its shareholders. All dividends are paid pro rata among our Shareholders in proportion to the
amount paid up on each Shareholders Shares, unless the rights attaching to an issue of any Share
provides otherwise. Unless otherwise directed, dividends are paid by cheque or warrant sent through the
post to each Shareholder at his registered address. Notwithstanding the foregoing, the payment by us to
CDP 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 of
that payment.
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Capitalisation and Rights Issues
Our Board of Directors may, with approval by our Shareholders at a general meeting, capitalise any
reserves or profits (including profits or money carried and standing to an reserve) and distribute the same
as shares credited as paid-up to the shareholders in proportion to their shareholdings. Our Board of
Directors may also issue rights to take up additional Shares to Shareholders in proportion to their
shareholdings. Such rights are subject to any conditions attached to such issue and the regulations of
any stock exchange on which we are listed.
Takeovers
Under the Singapore Code on Take-overs and Mergers (Singapore Take-over Code), issued by the
Authority pursuant to section 321 of the SFA, any person acquiring an interest, either on his own or
together with parties acting in concert with him, in 30% or more of the voting Shares must extend a
takeover offer for the remaining voting Shares in accordance with the provisions of the Singapore
Takeover 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 voting
rights acquires additional voting shares representing more than 1% of the voting shares in any six-month
period. Under the Singapore Take-over Code, the following individuals and companies will be presumed
to 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 course
of 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 as
companies 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 person
manages on a discretionary basis, but only in respect of the investment account which such
person manages;
(e) a financial or other professional adviser, including a stockbroker, with its customer in respect of the
shareholdings 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 shareholdings
of the adviser and any of those funds in the customer total 10% or more of the customers
equity share capital;
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(f) directors of a company (together with their close relatives, related trusts and companies controlled
by any of such directors, their close relatives and related trusts) which is subject to an offer or
where 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 course
of 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 must
be accompanied by a cash alternative at not less than the highest price paid by the offeror or any person
acting 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 be
entitled to participate in any surplus assets in proportion to their shareholdings, subject to any special
rights attaching to any other class of shares.
Indemnity
To the extent permitted by Singapore law, our Articles provide that, subject to the Companies Act, our
Board of Directors and Executive officers shall be entitled to be indemnified by us against any liability
incurred in defending any proceedings, whether civil or criminal, which relate to anything done or omitted
to have been done as an officer, director or employee and in which judgement is given in their favour or
in which they are acquitted or in connection with any application under any statute for relief from liability
in respect thereof in which relief is granted by the court. We may not indemnify our Directors and
Executive Officers against any liability which by law would otherwise attach to them in respect of any
negligence, 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 by
Singapore law or by our Articles on the rights of non-resident Shareholders to hold or vote in respect of
the Shares.
Minority Rights
The rights of minority shareholders of Singapore-incorporated companies are protected, inter alia, under
Section 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 a
manner 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 to
pass a resolution, which unfairly discriminates against, or is otherwise prejudicial to, one or more of
the shareholders, including the applicant.
Singapore courts have wide discretion as to the reliefs they may grant and those reliefs are in no way
limited to those listed in the Companies Act itself. Without prejudice to the foregoing, Singapore courts
may:
(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 person
or persons and on such terms as the court may direct;
(d) make an order for the purchase of a minority Shareholders Shares by our other Shareholders or
by us and, in the case of a purchase of Shares by us, a corresponding reduction of our share
capital;
(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 of
our Company and to hold such shares or stocks (or any of them) as treasury shares in accordance with
requirements of Section 76 of the Companies Act. Our Company may make a purchase or acquisition of
our own Shares on a securities exchange if the purchase or acquisition has been authorised in advance
by our Company in general meeting; or otherwise than on a securities exchange if the purchase or
acquisition is made in accordance with an equal access scheme authorised in advance by our Company
in general meeting. The aggregate number of Shares held as treasury shares shall not at any time
exceed 10% of the total number of Shares of our Company at that time. Any excess shares shall be
disposed or cancelled before the end of a period of six (6) months beginning with the day on which that
contravention of limit occurs, or such further period as the Registrar may allow. Where Shares or stocks
are held as treasury shares by our Company through purchase or acquisition by our Company, our
Company 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 of
such a right is void. Such rights include any right to attend or vote at meetings and our Company shall be
treated 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 our
Companys assets (including any distribution of assets to members on a winding up) may be made to our
Company in respect of the treasury shares. However, this would not prevent an allotment of shares as
fully paid bonus shares in respect of the treasury shares or the subdivision or consolidation of any
treasury share into treasury share of a smaller amount, if the total value of the treasury shares after the
subdivision or consolidation is the same as the total value of the treasury share before the subdivision or
consolidation, as the case may be.
Where Shares are held as treasury shares, our Company may at any time (i) sell the Shares (or any of
them) 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 or
assets of another company or assets of a person; or (iv) cancel the Shares (or any of them).
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EXCHANGE CONTROLS
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Singapore and Hong Kong
As at the Latest Practicable Date, there are no laws or regulations in Singapore and Hong Kong that may
affect (a) the repatriation of capital, including the availability of cash and cash equivalents for use by our
Group; and (b) the remittance of profits that may affect dividends, interests or other payments to
Shareholders.
Malaysia
The foreign exchange administration rules in Malaysia are applied uniformly to transactions carried out
with all countries, except for the State of Israel for which special restrictions apply. There is no restriction
on amount of repatriation of capital, profits, and income earned from Malaysia. Repatriation of funds from
divestment 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
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The following is a discussion of certain tax matters arising under the current tax laws in Singapore, Hong
Kong 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 of
this Offer Document, no assurance can be given that the courts or fiscal authorities responsible for the
administration of such laws will agree with this interpretation or that changes in such law, which may be
retrospective, will not occur. The discussion is limited to a general description of certain tax
consequences in Singapore, Hong Kong and Malaysia with respect to ownership of the Shares by
Singapore investors, and does not purport to be a comprehensive or exhaustive description of all of the
tax considerations that may be relevant to a Shareholders decision with regard to the ownership of the
Shares.
Prospective investors should consult their tax advisers regarding Singapore, Hong Kong and
Malaysia tax and other tax consequences of owning and disposing the Shares. It is emphasized
that neither our Company, the Directors nor any other persons involved in this Placement accepts
responsibility for any tax effects or liabilities resulting from the subscription, purchase, holding or
disposal of our Shares.
SINGAPORE TAXATION
The following discussion describes the material Singapore income tax, stamp duty, goods and services
tax 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 derived
from Singapore. All foreign-sourced income (except for income received through a partnership in
Singapore) received on or after 1 January 2004 in Singapore by tax resident individuals will be exempt
from tax. Certain Singapore-sourced investment income (such as interest from debt securities) derived by
tax resident individuals on or after 1 January 2004 from certain financial instruments (other than income
derived through a partnership in Singapore or from the carrying on of a trade, business or profession) will
be exempt from tax.
A Singapore tax resident individual is taxed at progressive rates ranging from 2 per cent. to a maximum
rate 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 income
accrued in or derived from Singapore at a flat rate of 20 per cent. However, Singapore does not tax
capital gains. A nonresident individual (other than a director) exercising a short-term employment in
Singapore 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 of
assessment, he was physically present in Singapore or exercised an employment in Singapore (other
than 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 foreign
income) received or deemed received in Singapore by a Singapore tax resident corporate taxpayer on
or after 1 June 2003 are exempted from Singapore tax subject to meeting the qualifying conditions.
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Tax credits are granted for foreign tax paid on income derived from treaty and non-treaty countries that
are received and assessable to tax in Singapore. The tax credit is limited to the lower of Singapore tax
payable on that foreign income and foreign tax paid.
A non-Singapore tax resident corporate taxpayer, subject to certain exceptions, is subject to Singapore
income tax on income accrued in or derived from Singapore, and on foreign income received or deemed
received in Singapore.
A company is regarded as tax resident in Singapore if the control and management of the companys
business is exercised in Singapore. Normally, control and management of the company is vested in its
board of directors and therefore if the board of directors meets and conducts the companys business in
Singapore, 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 allowing
partial tax exemption on the first S$300,000 of a companys chargeable income as follows:
(i) 75 per cent. of up to the first S$10,000 of a companys chargeable income (excluding Singapore
franked dividends); and
(ii) 50 per cent. of up to the next S$290,000 of a companys chargeable income (excluding Singapore
franked dividends).
Further, companies will, subject to certain conditions, be eligible for full tax exemption on their normal
chargeable income (other than Singapore dividends) of up to S$100,000 and 50% tax exemption on up to
the next S$200,000 of normal chargeable income in each of the companys first three consecutive years
of assessment. The remaining chargeable income (after the tax exemption) will be taxed at the applicable
corporate tax rate.
Dividend Distributions
As the Company will be tax resident in Singapore, dividends paid by the Company would be considered
as sourced from Singapore. There will not be any withholding tax levied on dividends paid by companies
who are tax residents in Singapore. Dividends paid by the Company are tax exempt in the hand of the
recipients (both Singapore tax resident and non-tax resident).
Prior to 1 January 2003, Singapore operated an imputation system of taxation. Under the imputation
system, the income tax paid by a Singapore tax resident company on its taxable income was imputed to
and deemed to be paid on behalf of its shareholders, upon distribution. Where these profits were
distributed as dividends (commonly known as franked dividends) to shareholders, the dividends received
by the shareholders were net of the corporate income tax paid by the Company. Shareholders were taxed
on the gross amount of dividends (that is, the amount of net proceeds received plus an amount which the
Company had deducted from the gross proceeds and paid as corporate income tax). The income tax paid
effectively becomes available to shareholders as a tax credit for set-off against their Singapore income
tax 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 from
corporate profits is the final tax and the Company can pay tax exempt (1-tier) dividends which are tax
exempt in the hands of the shareholder, regardless of the tax residence status or the legal form of the
shareholder.
During a five-year transitional period expiring on 31 December 2007, companies with unutilised dividend
franking 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 are
fully utilised.
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Companies, however, have the irrevocable option to move to the One-Tier System at an earlier date
before the dividend franking credits are exhausted. The imputation credit system is available only up to
year 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 utilise
investment allowances or are granted tax rebates or receive foreign dividends for which a foreign tax
credit (obtained pursuant to a double taxation treaty with one of Singapores treaty partners or unilaterally
granted under the Singapore Income Tax Act, Chapter 134 of Singapore) has been allowed and pay
dividends out of these sources of income, the company may pay tax exempt dividends (referred to as
normal exempt dividends) out of such income. Normal exempt dividends paid to shareholders of shares
which are not of a preferential nature are free from Singapore income tax. In the case of a company
which is in the One-Tier System, such a company can pay tax exempt (one-tier) dividends (instead of
normal exempt dividends) out of their exempt profits to shareholders. Hence, dividends paid by such
companies as tax exempt (one-tier) dividends to all their shareholders, including shareholders of shares
of 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 regulations
which deal with the characterisation of capital gains, and hence, gains may be construed to be of an
income nature and therefore be subject to tax if they arise from activities which the IRAS regards as the
carrying on of a trade or business in Singapore. Any profits from the disposal of the Shares are not
taxable in Singapore unless the seller is regarded as having derived gains of a trading nature in
Singapore, 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 new
shares, credited as fully paid, pro-rata to shareholders (bonus issue) does not represent a distribution
of dividends by a company to its shareholders. Therefore, a Singapore resident shareholder receiving
shares 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 credited
as fully paid, the dividend declared will be treated as income to its shareholders. However, as the
Company will move to the One-Tier System after 31 December 2007, any dividend paid on or after 1
January 2008 will be exempt from Singapore tax. Similarly, when shareholders are given the right to elect
to receive an allotment of ordinary shares credited as fully paid in lieu of cash, the dividend declared will
be 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 the
adoption 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 1
January 2005. The FRS 39 Circular generally applies, subject to the tax treatment under the FRS 39
Circular should consult their own accounting and tax advisers regarding the Singapore income tax
consequences 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$1,000
or any part thereof, computed on the consideration paid or market value of our Shares registered in
Singapore, whichever is higher.
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The purchaser is liable for stamp duty, unless there is an agreement to the contrary. No stamp duty is
payable if no instrument of transfer is executed (such as in the case of scripless shares, the transfer of
which does not require instruments of transfer to be executed) or if the instrument of transfer is executed
outside Singapore. However, stamp duty may be payable if the instrument of transfer which is executed
outside Singapore is subsequently received in Singapore.
However, as our Shares will be listed on Catalist and their transfers will be scripless transfers via the
CDP, 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 another
person belonging in Singapore is an exempt sale not subject to GST. Any GST directly or indirectly
incurred 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 person
belonging outside Singapore, and that person is outside Singapore when the sale is executed, the sale
should generally, subject to satisfaction of certain conditions, be considered a taxable supply subject to
GST at zero-rate. Any GST incurred by a GST-registered investor in the making of this supply in the
course of furtherance of a business may, subject to the provisions of the Goods and Services Tax Act, be
offset against the investors GST liability and, in the event of an excess input tax credit, recovered from
the Comptroller of GST of Singapore.
Services such as brokerage, handling and clearing services rendered by a GST-registered person to an
investor belonging in Singapore in connection with the investors purchase, sale or holding of our Shares
will be subject to GST at the current rate of 7%. Similar services rendered to an investor belonging
outside Singapore is generally subject to GST at zero-rate, provided that the investor is outside
Singapore when the services are performed and the services provided do not benefit any Singapore
persons.
Estate duty
Singapore estate duty is imposed on the value of most immovable property situated in Singapore which
passes on the death of a person, whatever the domicile of the deceased, subject to specific exemption
limits. For persons domiciled in Singapore at the date of death, estate duty is also imposed on movable
property, wherever situated, subject to specific exemption limits. Movable assets of non-domiciles are
exempt from estate duty. The Shares are considered to be movable property situated in Singapore as the
Company is incorporated in Singapore.
Accordingly, the Shares held by an individual are subject to Singapore estate duty upon such individuals
death, if the individual is domiciled in Singapore. However, with effect from 15 February 2008, Singapore
estate duty has been abolished.
Individuals, whether or not domiciled in Singapore, should consult their own tax advisers
regarding 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 in
respect of dividend paid by CNMC.
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Tax on Gains from Sales
No tax is imposed in Hong Kong in respect of capital gains. However, trading gains from sale of property
by persons carrying on trade, profession or business in Hong Kong, where the gains are derived from or
arising 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% on
unincorporated 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 in
Malaysia. Dividends paid or credited by a company which is tax resident in Malaysia (Malaysian
resident 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 in
Malaysia.
A Malaysian resident company is entitled to deduct tax at the applicable corporate tax rate from such
dividends 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 so
deducted 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 hands
of its shareholders.
The income of any person, other than a Malaysian resident company carrying on the business of
banking, insurance or sea or air transport, for the basis year for a year of assessment derived from
sources 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 charged
upon gains arising from the disposal of real property in Malaysia or shares in a real property company
incorporated in Malaysia. As such, any gains from the subsequent sale of the shares in a Malaysian
company not being a real property company would not be subject to RPGT in Malaysia. However, any
gains from the subsequent sales of shares in a Malaysian company by a person who deals in shares
may 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 on
the profit at corporate level and again at shareholders level. The principle behind the imputation system is
to overcome the double taxation of income. Under the imputation system, companies resident in Malaysia
are required to deduct tax at source at the prevailing corporate tax rate on dividends paid to their
shareholders. 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 effect
from year of assessment 2008. Under this system, corporate income is taxed at corporate level and this
is 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 the
single-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-year
transitional period from 1 January 2008 to 31 December 2013 to fully utilised credit
balances.
(ii) These companies will automatically move to the single-tier tax system on 1 January 2014
although they may still have unutilised credit balances.
(iii) These companies will be given an option to make an irrevocable election to move to the
single-tier tax system.
(iv) These companies which have fully utilised the credit balances at any time during the
transitional 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 for
any tax discharged, remitted or refunded in respect of taxes which have earlier been
accounted for.
(vi) The tax on dividends paid to shareholders by small and medium companies is to be
deducted 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 longer
applicable to us.
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CLEARANCE AND SETTLEMENT
Upon listing and quotation on Catalist, our Shares will be traded under the book-entry settlement system
of the CDP, and all dealings in and transactions of the Shares through Catalist will be effected in
accordance with the terms and conditions for the operation of securities accounts with the CDP, as
amended,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 of
persons 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 register
maintained by CDP, rather than CDP itself, will be treated, under our Articles of Association and the
Companies Act, as members of our Company in respect of the number of Shares credited to their
respective securities accounts.
Persons holding our Shares in securities account with CDP may withdraw the number of Shares they
own from the book-entry settlement system in the form of physical share certificates. Such share
certificates will, however, not be valid for delivery pursuant to trades transacted on Catalist, although they
will 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 of
more than 1,000 Shares is payable upon withdrawing our Shares from the book-entry settlement system
and obtaining physical share certificates. In addition, a fee of S$2.00 or such other amount as our
Directors may decide, is payable to the Share Registrar for each share certificate issued and a stamp
duty of S$0.20 per S$100.00 or part thereof of the last-transacted price is also payable where our Shares
are withdrawn in the name of a third party. Persons holding physical share certificates who wish to trade
on Catalist must deposit with CDP their share certificates together with the duly executedinstruments of
transfer in favour of CDP, and have their respective securities accounts credited with the number of
Shares deposited before they can effect the desired trades. A fee of S$10.00 subject to Goods and
Services Tax at the prevailing rate of 7 per cent. is payable upon the deposit of each instrument of
transfer with CDP. The above fees may be subject to such charges as may be in accordance with CDPs
prevailing 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 sellers
securities account being debited with the number of Shares sold and the buyers securities account being
credited with the number of Shares acquired. No transfer of stamp duty is currently payable for the
Shares 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 the
transaction value subject to a maximum of S$600.00 per transaction. The clearing fee, instrument of
transfer deposit fee and share withdrawal fee may be subject to Singapore Goods and Services Tax at
the prevailing rate of 7 per cent. (or such other rate prevailing from time to time).
Dealings of our Shares will be carried out in S$ and will be effected for settlement on CDP on a scripless
basis. Settlement of trades on a normal ready basis on Catalist generally takes place on the third
Market Day following the transaction date, and payment for the securities is generally settled on the
following business day. CDP holds securities on behalf of investors in securities accounts. An investor
may open a direct account with CDP or a sub-account with a CDP depository agent. The CDP depository
agent may be a member company of the SGX-ST, bank, merchant bank or trust company.
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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 any
bankruptcy laws of any jurisdiction filed against him or against a partnership of which he was
a partner at the time he was a partner or at any time within two (2) years from the date he
ceased to be a partner;
(b) has, at any time during the last ten (10) years, had an application or a petition under any law
of any jurisdiction filed against an entity (not being a partnership) of which he was a director
or an equivalent person or key executive at the time when he was a director or an equivalent
person or a key executive of that entity or at any time within two (2) years from the date he
ceased to be a director or an equivalent person or a key executive of that entity, for the
winding 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 or
dishonesty which is punishable with imprisonment, or has been the subject of any criminal
proceedings (including any pending criminal proceedings of which he is aware) for such
purpose;
(e) has ever been convicted of any offence, in Singapore or elsewhere, involving a breach of
any law or regulatory requirement that relates to the securities or futures industry in
Singapore or elsewhere, or has been the subject of any criminal proceedings (including any
pending 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 any
civil proceedings in Singapore or elsewhere involving a breach of any law or regulatory
requirement that relates to the securities or futures industry in Singapore or elsewhere, or a
finding of fraud, misrepresentation or dishonesty on his part, nor has he been the subject of
any 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 the
formation 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 the
management of any entity or business trust;
(i) has ever been the subject of any order, judgement or ruling of any court, tribunal or
governmental body, permanently or temporarily enjoining him from engaging in any type of
business practice or activity;
(j) has ever, to his knowledge, been concerned with the management or conduct, in Singapore
or elsewhere, of the affairs of:
(i) any corporation which has been investigated for a breach of any law or regulatory
requirement governing corporations in Singapore or elsewhere; or
(ii) any entity (not being a corporation) which has been investigated for a breach of any
law 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 regulatory
requirement governing business trusts in Singapore or elsewhere; or
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(iv) any entity or business trust which has been investigated for a breach of any law or
regulatory requirement that relates to the securities or futures industry in Singapore or
elsewhere,
in connection with any matter occurring or arising during the period when he was so
concerned 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, or
has been reprimanded or issued any warning, by the Authority or any other regulatory
authority, exchange, professional body or government agency, whether in Singapore or
elsewhere.
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 a
sum of approximately S$24,000 for goods being sold and delivered to the tiles supply business in
Malaysia then owned by Professor Lin Xiang Xiong and subsequently obtained a bankruptcy order
against him. These goods were Italian tiles which were shipped to Malaysia, but Professor Lin
Xiang Xiongs company did not have sufficient funds to make payment due to a sharp increase in
import tax resulting from a change in import regulations in Malaysia. In 1995, that supplier
accepted and approved a scheme of arrangement proposed by Professor Lin Xiang Xiong, and the
Receiving and Adjudication Orders made against him were rescinded and annulled.
In July 2004, DBS Bank Ltd filed a bankruptcy petition against Lim Kuoh Yang in respect of a sum
of approximately S$25,000 owing due to unpaid credit card bills. The bankruptcy petition was
withdrawn in November 2004.
Inno-Sino Investments Pte Ltd (Inno-Sino) is an investment holding company incorporated in
Singapore and was controlled and managed by Professor Lin Xiang Xiong, his wife (Tan Swee
Ngin) and son (Lim Kuoh Yang). Innovation World-Wide Trader Pte Ltd (IWWT), a company
incorporated in Singapore, was principally engaged in the business of trading of building materials
and mining, processing, marketing, distribution and sale of dimension stones and was controlled
and managed by Professor Lin Xiang Xiong and his wife. Lim Kuoh Yang was the chief operation
officer of IWWT.
In April 1996, Professor Lin Xiang Xiong provided personal guarantee in favour of Bank of China
Limited (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 in
dimension stone mining and processing projects.
In January 1997, both Professor Lin Xiang Xiong and Lim Kuoh Yang provided personal
guarantees 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 industrial
building at No. 63 Kaki Bukit Place Singapore 416270 (the Property) which was purchased in
1995.
IWWT was not able to make repayment of the Loan I due to its inability to generate sufficient
revenue after losing a major customer who accounted for approximately 95% of IWWTs revenue.
Inno-Sino was not able to make repayment of the Loan II as it was not able to lease out the
Property due to the financial crisis which affected the lease market for light industrial buildings
adversely. The Property was subsequently sold by BOC and the guarantors were held liable for the
balance of the Loan II.
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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 amounts
outstanding under Loan I and Loan II plus accrued and unpaid interests thereon. Professor Lin
Xiang 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 amount
outstanding of the Loan II plus accrued and unpaid interests thereon. Lim Kuoh Yang was adjudged
a bankrupt in May 2005.
In November 2009, Professor Lin Xiang Xiong was discharged from his bankruptcy after his part
payment of the outstanding debts owing to his creditors through the recommendation of his official
assignee having considered the circumstances leading to his bankruptcy and the cooperation
extended by him during the bankruptcy period. Lim Kuoh Yang was discharged from his bankruptcy
after his part payment of the outstanding debts owing to his creditors in December 2009 on the
same ground.
In view of the aforesaid bankruptcy action, United Overseas Bank Limited which granted a
mortgage loan to Lim Kuoh Yang and his mother in respect of certain properties owned by them
also filed legal suit against them in 2005 to enforce the mortgage loan and to effect a sale of the
mortgaged 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-Sino
was unable to make repayment of the Loan II due to the reasons disclosed above. Inno-Sino was
wound 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 was
unable to make repayment of the Loan I due to the reasons disclosed above. IWWT was wound up
by 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). He
was subsequently convicted for the Drink Driving charge on 15 November 2007 and was fined
S$2,500 and suspended from driving for a period of 18 months commencing from 15 November
2007. Lim Kuoh Yang has since served the period of suspension and his driving suspension has
since 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 were
the directors of Falmac Limited but have both since resigned as the directors of Falmac Limited on
29 August 2011, 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 and Kuan Cheng Tuck that the first hearing was conducted between 14 July
2011 and 16 July 2011, and it is expected that the second hearing will be conducted between 28
November 2011 and 2 December 2011.
Please refer to the section entitled Risk Factors Some of our Directors may not be able to fully
devote their time to perform their respective roles in the Company in the event that they are
required to defend themselves against potential legal action of this Offer Document for further
details on the disclosures pertaining to Choo Chee Kong and Kuan Cheng Tuck.
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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 of
the Securities and Futures (Licensing and Conduct of Business) Regulations for failure to notify the
Authority 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 of
Westcomb Securities Pte Ltd within 14 days of such resignation and such appointments. No
charges 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 of
the Securities and Futures (Licensing and Conduct of Business) Regulations for failure to notify the
Authority of a change in his particulars in relation to his appointment as a non-executive director of
CNMC within 14 days of such appointment. Choo Chee Kong was appointed as a director of
CNMC 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 was
taken by the Authority in relation to the above.
(2) There is no shareholding qualification for Directors under the Articles of Association of our
Company.
(3) Save as disclosed in the sections entitled Restructuring Exercise and Interested Person
Transactions of this Offer Document, none of our Directors is interested, directly or indirectly, in
the promotion of, or in any property or assets which have, within the two (2) years preceding the
date of this Offer Document, been acquired or disposed of by or leased to, our Company or our
subsidiaries.
(4) No sum or benefit has been paid or is agreed to be paid to any Director or expert, or to any firm in
which such Director or expert is a partner or any corporation in which such Director or expert holds
shares or debentures, in cash or shares or otherwise, by any person to induce him to become, or
to qualify him as, a Director, or otherwise for services rendered by him or by such firm or
corporation in connection with the promotion or formation of our Company.
(5) Save as disclosed above and in the sections entitled Interested Person Transactions Potential
Conflicts of Interest and Restructuring Exercise of this Offer Document:
(a) None of our Directors, Executive Officers, Substantial Shareholders or any of their
Associates has had any interest, direct or indirect, in any transactions to which our Company
was or is to be a party;
(b) None of our Directors, Executive Officers, Substantial Shareholders or any of their
Associates has any interest, direct or indirect, in any company carrying on the same
business or a similar trade which competes materially and directly with the existing business
of our Group;
(c) None of our Directors, Executive Officers, Substantial Shareholders or any of their
Associates has any interest, direct or indirect, in any company that is our customer or
supplier of goods and services; and
(d) None of our Directors has any interest in any existing contract or arrangement which is
significant in relation to the business of our Company and our subsidiaries, taken as a
whole.
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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 our
Shares 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 our
Company and our subsidiaries within the last three (3) years preceding the date of this Offer
Document.
of this Offer Document, no shares in, or debentures of, our Company or any of our subsidiaries
has been issued, or are proposed to be issued, as fully or partially paid for cash or for a
consideration other than cash, during the last three (3) years preceding the date of lodgement of
of this Offer Document, no option to subscribe for shares in, or debentures of, our Company or our
subsidiaries has granted to, or was exercised by, any of our Directors or Executive Officers within
the two (2) financial years.
(5) Apart from the CNMC Performance Share Plan and the issue of the Employee Shares to Chen
Yan, the Chief Financial Officer of our Company, our Company does not have any arrangement
that 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 Latest
Practicable Date and as recorded in the Register of Directors Shareholdings and the Register of
Substantial Shareholders maintained under the provisions of the Companies Act are set out in the
section 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 of
members of our Company is limited.
The principal purpose of our Company is investment holding. The Memorandum of Association is
available for inspection at our registered office as stated in the section entitled General and
Statutory 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, inter
alia, for (a) a Directors power to vote on a proposal, arrangement or contract in which the Director
is interested; (b) the Directors 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 for
Directors 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 to
own Shares, are set out in Appendix C of this Offer Document.
The complete Articles of Association of our Company are available for inspection by Shareholders
at our registered office as stated in the section entitled General and Statutory Information
Documents for Inspection of this Offer Document.
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MATERIAL CONTRACTS
(1) The following contracts, not being contracts entered into in the ordinary course of business, have
been entered into by our Company and our subsidiaries within the two (2) years preceding the
date 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 Bee
Lee pursuant to which Phuah Bee Lee agreed to make available to CNMC a loan in
aggregate principal amount of S$250,000;
(ii) Convertible loan agreement dated 28 October 2009 made between CNMC and Caravel
Holdings Group Ltd pursuant to which Caravel Holdings Group Ltd agreed to make available
to CNMC a loan in aggregate principal amount of S$300,000;
(iii) Convertible loan agreement dated 28 October 2009 made between CNMC and Brilliant Elite
Holdings Limited pursuant to which Brilliant Elite Holdings Limited agreed to make available
to CNMC a loan in aggregate principal amount of S$500,000;
(iv) Convertible loan agreement dated 12 January 2010 made between CNMC and Seow Seng
Wei pursuant to which Seow Seng Wei agreed to make available to CNMC a loan in
(v) Convertible loan agreement dated 2 February 2010 made between CNMC and Future Gain
Enterprises Limited pursuant to which Future Gain Enterprises Limited agreed to make
available to CNMC a loan in aggregate principal amount of S$300,000;
(vi) Conditional sale and purchase agreement dated 8 March 2010 (Conditional SPA) made
between (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 Gain
Enterprises Limited, EP Capital Inc., Ng Eng Tiong, Sim Yap Kheng, Seow Seng Wei, Phuah
Bee Lee, Ma Kwan Chun, Wong Chock Puan, Albert and Chan Lie Leng (original CNMC
vendors) in relation to the proposed acquisition of the entire issued share capital of CNMC
by Falmac Limited from the original CNMC vendors, on and subject to the terms and
conditions of the Conditional SPA;
(vii) Convertible loan agreement dated 22 March 2010 made between CNMC and Lim Chee
Hoong pursuant to which Lim Chee Hoong agreed to make available to CNMC a loan in
(viii) A letter agreement dated 4 May 2010 made between CNMC and Lim Chee Hoong pursuant
to 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 Liang
David Llewellyn pursuant to which Lim Peng Liang David Llewellyn agreed to make available
to CNMC a loan in aggregate principal amount of S$1,000,000;
(x) Convertible loan agreement dated 15 November 2010 made between CNMC and Grande
Pacific Limited pursuant to which Grande Pacific Limited agreed to make available to CNMC
a loan in aggregate principal amount of S$3,000,000;
(xi) Joint Venture Agreement dated 28 January 2011 made between CMNM and Xiamen
Shenkun pursuant to which both parties agreed to establish a joint venture company in
Kelantan with CMNM and Xiamen Shenkun holding 51% and 49% of its issued shares,
respectively;
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(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 CNMC
vendors 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 of
the Conditional SPA;
(xiii) Tripartite agreement dated 21 April 2011 made between CNMC, CMNM and KSEDC to
further give effect to the spirit and intent of the agreement dated 16 May 2007 made
between CNMC and KSEDC; and
(xiv) Notification of termination dated 5 August 2011 from Falmac Limited to (i) CNMC; (ii) the
original CNMC vendors; and (iii) the additional CNMC vendors to cease and determine the
Conditional SPA.
Save as disclosed above, our Group has not entered into any material contracts, not being
contracts entered into in the ordinary course of business, within the two (2) years preceding the
date of this Offer Document.
MATERIAL LITIGATION
(1) Save as disclosed below, to the best of our knowledge and belief, having made all reasonable
enquiries, neither our Company nor any of our subsidiaries is engaged in any legal or arbitration
proceedings as plaintiff or defendant, including those which are pending or known to be
contemplated, which may have or which have had in the 12 months immediately preceding the
date of lodgement of the Offer Document, a material effect on our Groups financial position or
profitability 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 Shen
who has lodged a complaint with the Industrial Relations Department of Kelantan that he was
being dismissed by CMNM without just cause or excuse has sought reinstatement by CMNM and
compensation. CMNM had on 11 September 2011 settled this matter by paying a sum of
MYR1,824.10 to the said employee in lieu of pay and the remainder of the said employees annual
leave. The said employee has stated that he is not interested in being reinstated by CMNM. The
Industrial Relations Department of Kelantan had issued a letter dated 27 September 2011 stating
that 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 our
Company, the Vendors and PPCF as the Manager and Sponsor, our Company and the Vendors
appointed PPCF to sponsor and manage the Listing. PPCF will receive a management fee for such
services 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 Placement
Agents have agreed to procure subscriptions and/or purchases for the Placement Shares for a
placement commission of 3.0% of the aggregate Placement Price for each Placement Share, to be
paid by our Company and the Vendors in the proportion in which the Placement Shares are offered
by the Vendors and our Company pursuant to the Placement. The Joint Placement Agents may, at
their 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 the
Placement 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.
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(4) Other than pursuant to the Placement Agreement, there are no contracts, agreements or
understandings between our Company and any person or entity that would give rise to any claim
for brokerage commission, finders fees or other payments in connection with the subscription of
the Placement Shares.
(5) Subject to the consent of the SGX-ST being obtained, the Management Agreement may be
terminated by PPCF at any time before the close of the Application List on the occurrence of
certain 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 any
warranties, representations, covenants or undertakings given by our Company to PPCF in
the Management Agreement; or
(b) there shall have been, since the date of the Management Agreement any change or
prospective change in or any introduction or prospective introduction of any legislation,
regulation, policy, directive, guideline, rule or byelaw by any relevant government or
regulatory body, whether or not having the force of law, or any other occurrence of similar
nature that would materially change the scope of work, responsibility or liability required of
PPCF; or
(c) there is a conflict of interest for PPCF, or any dispute, conflict or disagreement with our
Company and/or the Vendors or where our Company and/or the Vendors wilfully fails to
comply with any advice from or recommendation of PPCF.
(6) The Placement Agreement and the obligations of the Joint Placement Agents under the Placement
Agreement are conditional upon:
(a) the Offer Document having been registered with the SGX-ST, acting as agent on behalf of
the 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 PPCF
shall decide in accordance with the Catalist Rules;
(b) the registration notice being issued or granted by the SGX-ST for the admission of our
Company to Catalist and for the dealing in, and for quotation of, all the issued Shares and
the New Shares on Catalist and such registration notice not being revoked or withdrawn on
or prior to the date of closing of the Application List for the Placement Shares under the
Placement (Closing Date) not being revoked;
(c) the compliance by our Company and the Vendors to the satisfaction of the SGX-ST with all
the conditions imposed by the SGX-ST in issuing the registration notice, where such
conditions are required to be complied with by the Closing Date;
(d) such approvals as may be required for the transactions described in the Placement
Agreement and in the Offer Document in relation to the Listing and the Placement being
obtained, and not withdrawn or amended, on or before the date on which the Company is
admitted to Catalist (or such other date as the Company, the Vendors and the Joint
Placement Agents may agree in writing) and the compliance in full to the satisfaction of all
the relevant authorities granting such approvals of all conditions (if any) attaching or in
relation thereto;
(e) there having been, in the opinion of the Joint Placement Agents, no material adverse
change or any development likely to result in a material adverse change in the financial or
other condition of our Group between the date of the Placement Agreement and the Closing
Date nor the occurrence of any event nor the discovery of any fact rendering untrue or
incorrect in any respect, as at the Closing Date, any of the warranties or representations nor
any breach by our Company and the Vendors of any of their obligations under the Placement
Agreement;
(f) the compliance by our Company and the Vendors with all applicable laws and regulations
concerning the Placement, the dealing in, and quotation of, all the issued Shares and the
New Shares on Catalist and the transactions contemplated in the Placement Agreement and
the 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 having
occurred which, in the reasonable opinion of the Joint Placement Agents, has or may have
an adverse effect on the Placement and the dealing in, and quotation of, all the issued
Shares and the New Shares on Catalist;
(g) the delivery by our Company and the Vendors to the Joint Placement Agents on the Closing
Date of a certificate, in the form set out in the Schedule to the Placement Agreement, signed
by the authorised signatories for and on behalf of the Company and the Vendors
respectively;
(h) the delivery to the Joint Placement Agents of all legal due diligence reports in relation to the
Listing;
(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 Agents
before the date of registration of the Offer Document with the SGX-ST, acting as agent on
behalf of the Authority; and
(j) the Management Agreement not being terminated or rescinded pursuant to the provisions of
the Management Agreement.
(7) In the event that 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 other date
and time as may be decided by the Joint Placement Agents), each of the Joint Placement
Agents shall have the right to terminate the Placement Agreement (by notice in writing to
the Company and the Vendors). Please refer to the section entitled Plan of Distribution of
this Offer Document for details.
(8) In the reasonable opinion of our Directors, PPCF and Asiasons WFG do not have a material
relationship 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 the
date our Company is admitted and listed on Catalist;
(c) Pursuant to the Management Agreement and as part of PPCFs fees as the Manager and
Sponsor, our Company issued and allotted 3,771,000 PPCF Shares to PPCF, representing
0.99% of the issued share capital of our Company prior to the Placement at the Placement
Price for each Share. After the completion of the relevant moratorium periods as set out in
the section entitled Shareholders Moratorium of this Offer Document, PPCF will dispose
of 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 WFGs parent company, Asiasons WFG Financial Ltd, a company listed on the
Main Board of the SGX-ST, is the sole shareholder of Raintree Strategic Consultancy
Limited which holds 6,262,500 Shares representing approximately 1.55% of the post-
Placement issued and paid-up share capital of our Company.
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MISCELLANEOUS
(1) The nature of the business of our Company has been stated earlier in this Offer Document. The
corporations which by virtue of Section 6 of the Companies Act are deemed to be related to our
Company 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 the
public 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 our
Company in respect of shares of another corporation or units of a business trust which has
occurred 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 an
interest, whether direct or indirect, in the shares of our Company or our subsidiaries, or has a
material economic interest, whether direct or indirect, in our Company, including an interest in the
success 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 to
any promoter at any time.
(6) Save as disclosed in the section entitled General and Statutory Information Management and
Placement Agreements of this Offer Document, no commission, discount or brokerage has been
paid or other special terms granted within the two years preceding the Latest Practicable Date or is
payable to any Director, promoter, expert, proposed director or any other person for subscribing or
agreeing to subscribe or procuring or agreeing to procure subscriptions for any shares in, or
debentures of, our Company or our subsidiaries.
(7) Application monies received by our Company in respect of successful applications (including
successful applications which are subsequently rejected) will be placed in a separate non-interest
bearing account with the Receiving Banker. In the ordinary course of business, the Receiving
Banker will deploy these monies in the inter-bank money market. All profits derived from the
deployment of such monies will accrue to the Receiving Banker. Any refund of all or part of the
application monies to unsuccessful or partially successful applicants will be made without any
interest 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 material
information including trading factors or risks which are unlikely to be known or anticipated by the
general 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 are
not likely to be affected by any of the following:
(a) known trends or demands, commitments, events or uncertainties that will result in or are
reasonably likely to result in our Groups liquidity increasing or decreasing in any material
way;
(b) material commitments for capital expenditure;
(c) unusual or infrequent events or transactions or any significant economic changes that may
materially affect the amount of reported income from operations; and
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(d) the business and financial prospects and any significant recent trends in production, sales
and inventory, and in the costs and selling prices of products and services and known trends
or uncertainties that have had or that we reasonably expect will have a material favourable
or unfavourable impact on revenues, profitability, liquidity, capital resources or operating
income or that would cause financial information disclosed to be not necessarily indicative of
the 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 has
occurred since the end of FY2010 to the Latest Practicable Date which may have a material effect
on the financial position and results of our Group or the financial information provided in this Offer
Document.
(11) We currently have no intention of changing our auditors after the listing of our Company on
Catalist.
CONSENTS
(1) The Independent Auditors and Reporting Accountants, KPMG LLP, has given and has not
withdrawn 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 years
ended 31 December 2008, 2009 and 2010 as set out in Appendix A of this Offer Document and
the Review Report in relation to the Unaudited Condensed Interim Combined Financial
Information for the three months ended 31 March 2011 as set out in Appendix B of this Offer
Document and all references thereto, in the form and context in which it is respectively included
and references to its name in the form and context in which they appear in this Offer Document
and 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 with
the inclusion herein of the BDA Technical Report set out in Appendix F in the form and context in
which it appears in this Offer Document and all references to its name in the form and context in
which it appears in this Offer Document and to act in such capacity in relation to this Offer
Document.
(3) JLLS has given and has not withdrawn its written consent to the issue of this Offer Document with
the inclusion herein of the Independent Valuation Report set out in Appendix G in the form and
context in which it appears in this Offer Document and all references to its name in the form and
context in which it appears in this Offer Document and to act in such capacity in relation to this
Offer Document.
(4) Skrine has given and has not withdrawn its written consent to the issue of this Offer Document with
the inclusion herein of the Abridged Due Diligence Report and its legal opinion set out in Appendix
D and Appendix E respectively in the form and context in which it appears in this Offer Document
and all references to its name in the form and context in which it appears in this Offer Document
and 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 Offer
Document with the inclusion herein of the statement under the section entitled Prospects - Price
Outlook of this Offer Document, viz 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 with regard to its report Gold Report dated
29 March 2011 and all references to its name in the form and context in which it appears in this
Offer Document.
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(6) The Manager and Sponsor, the Joint Placement Agents, the Solicitors to the Placement and Legal
Adviser 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 Bankers
and the Receiving Banker, have each given and have not withdrawn their written consents to the
issue of this Offer Document with the inclusion herein of their name and references thereto in the
form and context in which they respectively appear in this Offer Document and to act in such
respective capacities in relation to this Offer Document.
(7) Each of the Solicitors to the Placement and Legal Adviser 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 Bankers and the Receiving Banker do not make or purport
to make any statement in this Offer Document or any statement upon which a statement in this
Offer Document is based and each of them makes no representation regarding any statement in
this Offer Document and to the maximum extent permitted by law, expressly disclaims and takes
no 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 and
collectively accept full responsibility for the accuracy of the 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 true disclosure of all material facts about the
Placement, the Company and its subsidiaries, and the Directors are not aware of any facts the
omission of which would make any statement in this Offer Document misleading.
Where information in this Offer Document has been extracted from published or otherwise publicly
available sources or obtained from a named source, the sole responsibility of the Directors has
been to ensure that such information has been accurately and correctly extracted from those
sources 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 of
the 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 true
disclosure of all material facts about the Placement, the Company and its subsidiaries, and the
Vendors and the directors of the Vendors (where applicable) are not aware of any facts the
omission of which would make any statement in this Offer Document misleading.
Where information in this Offer Document has been extracted from published or otherwise publicly
available sources or obtained from a named source, the sole responsibility of the Vendors and the
directors of the Vendors (where applicable) has been to ensure that such information has been
accurately and correctly extracted from those sources and/or reproduced in the Offer Document in
its proper form and context.
DOCUMENTS FOR INSPECTION
(1) The following documents or copies thereof may be inspected at our registered office at 5 Shenton
Way, 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 on
behalf 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 years
ended 31 December 2008, 2009 and 2010 and the Combined Financial Statements for the
years ended 31 December 2008, 2009 and 2010 as set out in Appendix A of this Offer
Document;
(iii) the Review Report on the Unaudited Condensed Interim Combined Financial Information for
the three months ended 31 March 2011 and the Unaudited Condensed Interim Combined
Financial Information for the three months ended 31 March 2011 as set out in Appendix B of
this 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 Offer
Document;
(ix) the Service Agreements referred to in this Offer Document;
(x) the material contracts referred to in the subsection entitled Material Contracts of this Offer
Document; and
(xi) the letters of consent referred to in the subsection entitled Consents of this Offer
Document.
182
A-1
APPENDIX A INDEPENDENT AUDITORS REPORT ON THE
31 DECEMBER 2008, 2009 AND 2010
The Board of Directors
CNMC Goldmine Holdings Limited
No 5 Shenton Way
#11-03 UIC Building
Singapore 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 financial
position as at 31 December 2008, 2009 and 2010 and the combined statements of comprehensive
income, changes in equity and cash flows for the years then ended, and a summary of significant
accounting policies and other explanatory notes, as set out on pages A-3 to A-45.
Managements responsibility for the combined financial statements
Management is responsible for the preparation and fair presentation of these combined financial
statements in accordance with the Singapore Financial Reporting Standards, and for devising and
maintaining a system of internal accounting controls sufficient to provide a reasonable assurance that
assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly
authorised and that they are recorded as necessary to permit the preparation of true and fair profit and
loss 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 require
that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the combined financial statements. The procedures selected depend on the auditors 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 control
relevant to the entitys preparation of the combined financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entitys internal control. An audit also includes
evaluating the appropriateness of accounting principles used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall presentation of the combined financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
A-2
APPENDIX A INDEPENDENT AUDITORS REPORT ON THE
31 DECEMBER 2008, 2009 AND 2010
Opinion
In our opinion, the combined financial statements of the Group are properly drawn up in accordance with
the provisions of the Act and Singapore Financial Reporting Standards to give a true and fair view of the
state of affairs of the Group as at 31 December 2008, 2009 and 2010 and the combined results, changes
in 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 connection
with the Initial Public Offering of the shares of the Company on the Catalist Board of the Singapore
Exchange Securities Trading Limited.
KPMG LLP
Public Accountants and
Certified Public Accountants
Singapore
18 October 2011
Tan Huay Lim
Partner
CNMC GOLDMINE HOLDINGS LIMITED AND ITS SUBSIDIARIES
COMBINED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2008, 2009 AND 2010
APPENDIX A COMBINED FINANCIAL STATEMENTS FOR THE
YEARS ENDED 31 DECEMBER 2008, 2009 AND 2010
A-3
Note 2010 2009 2008
US$ US$ US$
Assets
Exploration and evaluation assets 4 18,475 3,198,982 975,216
Mine properties 5 4,401,346 413,339 463,416
Property, plant and equipment 6 1,536,383 839,958 86,872
Deferred tax assets 7 358,845
Non-current assets 6,315,049 4,452,279 1,525,504
Inventories 8 120,714
Other receivables, prepayments and deposits 9 542,197 103,269 104,937
Cash and cash equivalents 10 1,113,671 48,755 87,659
Current assets 1,776,582 152,024 192,596
Total assets 8,091,631 4,604,303 1,718,100
Share capital 11 7,291,308 2,050,560 1,500,000
Accumulated losses (4,577,383) (2,839,833) (1,760,152)
Translation reserves 11 11,089 (20,699) (24,528)
2,725,014 (809,972) (284,680)
Non-controlling interests (159,750) 26,677 27,438
Total equity 2,565,264 (783,295) (257,242)
Liabilities
Interest-bearing borrowings 12 3,081,446 1,240,426 50,629
Derivative financial instrument 13 40,309 55,267
Rehabilitation provision 14 41,797
Non-current liabilities 3,163,552 1,295,693 50,629
Interest-bearing borrowings 12 8,046 700,428 688,339
Derivative financial instrument 13 115,440 83,638 8,146
Trade and other payables 15 2,239,215 3,307,725 1,228,120
Current tax liabilities 114 114 108
Current liabilities 2,362,815 4,091,905 1,924,713
Total liabilities 5,526,367 5,387,598 1,975,342
Total equity and liabilities 8,091,631 4,604,303 1,718,100
The accompanying notes form an integral part of these combined financial statements.
COMBINED STATEMENT OF COMPREHENSIVE INCOME
A-4
2010 2009 2008
Note US$ US$ US$
Revenue 530,169
Changes in inventories of finished goods 78,563
Other operating income 16 267,440 33,392 63,576
Amortisation and depreciation 17 (228,012) (102,742) (73,777)
Contractor expenses (144,042) (121,401) (105,256)
Employees compensation (377,114) (190,700) (175,523)
Key management remuneration (827,290) (41,605) (4,859)
Marketing and publicity expenses (68,198) (28,196) (40,757)
Office and administration expenses (73,730) (18,594) (39,284)
Professional fees (295,634) (241,041) (135,049)
Rental expense on operating lease (200,814) (86,624) (71,867)
Royalty fee expenses (44,160)
Site and factory expenses (265,576) (39,912) (31,719)
Travelling and transportation expenses (99,930) (41,077) (45,515)
Other operating expenses 18 (319,250) (31,711) (274,925)
Results from operating activities (2,067,578) (910,211) (934,955)
Finance income 19 22 420
Finance expenses 19 (221,897) (170,685) (56,518)
Net finance costs (221,897) (170,663) (56,098)
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 of
foreign subsidiaries 38,441 4,267 (26,919)
Total comprehensive loss for the year (1,892,189) (1,076,613) (1,018,152)
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 share
Basic 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..
COMBINED STATEMENTS OF CHANGES IN EQUITY
Total attributable
Share Translation Accumulated to equity holders Non-controlling Total
capital reserve losses of the Company interests equity
US$ US$ US$ US$ US$ US$
Group
At 1 January 2008 1,500,000 (164) (769,986) 729,850 729,850
for the year
Loss for the year (990,166) (990,166) (1,067) (991,233)
Other comprehensive loss
Exchange differences arising
on consolidation of foreign
subsidiaries (24,364) (24,364) (2,555) (26,919)
for 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)
for the year
Loss for the year (1,079,681) (1,079,681) (1,199) (1,080,880)
subsidiaries 3,829 3,829 438 4,267
for the year 3,829 (1,079,681) (1,075,852) (761) (1,076,613)
Transactions with owners of
the Company, recognised
directly 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)
A-5
COMBINED STATEMENTS OF CHANGES IN EQUITY
Total attributable
Share Translation Accumulated to equity holders Non-controlling Total
capital reserve losses of the Company interests equity
Group
At 1 January 2010 2,050,560 (20,699) (2,839,833) (809,972) 26,677 (783,295)
for the year
Loss for the year (1,737,550) (1,737,550) (193,080) (1,930,630)
Other comprehensive income
subsidiaries 31,788 31,788 6,653 38,441
for the year 31,788 (1,737,550) (1,705,762) (186,427) (1,892,189)
Transactions with owners of
the Company, recognised
directly in equity
Contributions by owners of
the Company
Non-reciprocal capital
contributions 2,562,939 2,562,939 2,562,939
Conversion of convertible notes
and 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
A-6
COMBINED STATEMENTS OF CASH FLOWS
Note 2010 2009 2008
US$ US$ US$
Operating activities
Loss for the year (1,930,630) (1,080,880) (991,233)
Adjustments for:
Depreciation of property, plant and equipment 149,698 52,665 40,392
Amortisation of mine properties 81,314 50,077 33,385
Plant 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 56,428
Interest income (22) (420)
Interest expense 184,580 149,292 56,518
Income 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 22 420
Interest paid (184,580) (149,292) (56,518)
Cash flows from operating activities (2,038,998) (1,064,790) (699,541)
Investing activities
Purchase 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 activities
Deposits pledged (1,606)
Proceeds from issue of share capital 550,560
Proceeds from issuance of convertible notes 3,963,070 1,361,273 696,135
Proceeds from loans from directors 347,450
Capital injection by non-controlling interest 31,060
Payment 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) 7,616
Cash and cash equivalents at beginning of the year 48,755 87,659 79,985
Effect 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 an
aggregate cost of US$849,662 (31/12/2009: US$805,751 and 31/12/2008: US$35,308) of which
US$18,487 (31/12/2009: US$Nil and 31/12/2008: US$16,672) was acquired by means of finance lease
and 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 the
acquisition 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 total
consideration 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.
A-7
A-8
NOTES TO THE COMBINED FINANCIAL STATEMENTS
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 in
note 3.
The combined financial statements have been prepared solely for inclusion in the Offer
Document of CNMC Goldmine Holdings Limited in connection with the Initial Public Offering
of the shares of the Company on the Catalist Board of the Singapore Exchange Securities
Trading Limited.
These combined financial statements of the Group were authorised for issue by the directors
of the Company on 18 October 2011.
(b) The Company
CNMC Goldmine Holdings Limited was incorporated in the Republic of Singapore on 11
August 2011 as CNMC Goldmine Holdings Pte Ltd, a private limited company and has its
registered address at No.5 Shenton Way, #11-03 UIC Building, Singapore 068808. On 14
October 2011, the Company changed its name to CNMC Goldmine Holdings Limited.
The principal activities of the Company are those of an investment holding company. The
principal activities of the subsidiaries are set out in note 1(d) to the combined financial
statements.
(c) The restructuring exercise
Pursuant to a group restructuring, the Company entered into a share swap agreement dated
14 October 2011 with the shareholders of CNMC Goldmine Limited (CNMC HK) to acquire
the entire issued share capital of CNMC HK comprising 14,004,524 ordinary shares in the
capital 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 consideration
the net asset value of CNMC HK as at 31 December 2010. This was fully satisfied by the
allotment 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 holding
company of CNMC HK.
The restructuring exercise was accounted for as a combination of businesses under
common control. The presentation reflects the economic substance of the combining
companies, which were under common control throughout the relevant period, as a single
economic enterprise, although the legal parent-subsidiary relationships were not established
until after the reporting date.
A-9
(d) Subsidiaries
The combined financial statements of the Group have been prepared to reflect the
operations of the Company and the subsidiaries as a single economic enterprise and consist
of those companies under common control during the financial years ended 31 December
2008, 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 equity
activities incorporation held by the Group
2008 2009 2010
% % %
Direct subsidiary
CNMC Goldmine Limited Investment holding company. Hong Kong SAR 100 100 100
Indirect subsidiaries
Subsidiaries of CNMC
Goldmine Limited
CMNM Mining Group Exploration and mining of Malaysia 81 81 81
Sdn. Bhd. gold deposits.
MCS Mining Group Exploration and mining of Malaysia 87.5 87.5 87.5
Sdn. Bhd. gold deposits. Currently
dormant.
CNMC-Nalata Mining Exploration and mining of Malaysia 80 80 80
Sdn. Bhd gold deposits. Currently
dormant.
(e) Auditors
The following are the auditors of the statutory financial statements of the companies in the
Group 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 2010
Limited Certified Public Accountants,
Hong Kong SAR
CMNM Mining Group KPMG 31 December 2008, 2009 and 2010
Sdn. Bhd. Chartered Accountants, Malaysia
MCS Mining Group KPMG 31 December 2008, 2009 and 2010
CNMC-Nalata Mining KPMG 31 December 2008, 2009 and 2010
A-10
The audited reports on the statutory financial statements of the companies within Group for
the financial years ended 31 December 2008, 2009 and 2010 were not subject any material
qualifications, modifications or disclaimers.
The statutory financial statements of CNMC HK for the relevant years have been prepared in
accordance with the Hong Kong Financial Reporting Standards.
The statutory financial statements of the Malaysian subsidiaries for the relevant years have
been 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 the
financial years ended 31 December 2008, 2009 and 2010 and had negative cash flows from
operating activities of US$699,541, US$1,064,790 and US$2,038,998 respectively for the financial
years ended 31 December 2008, 2009 and 2010. Notwithstanding this, the combined financial
statements of the Group have been prepared on a going concern basis, as certain directors of the
Group have undertaken to provide continuing financial support to enable the Group to continue to
operate as a going concern in the foreseeable future.
The combined financial statements of the Group do not include any adjustment relating to the
recoverability and classification of reported asset amounts or the amounts and classification of
liabilities 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 in
these 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 Singapore
Financial Reporting Standards (FRSs).
(b) Basis of preparation
These combined financial statements of the Group represent the combination or aggregation
of all the financial statements of the companies in the Group, on the basis that the Group
had been in existence prior to 1 January 2008.
The combined financial statements have been prepared on the historical basis except as
otherwise disclosed below.
(c) Functional and presentation currency
These combined financial statements are presented in US dollars, which is the Companys
functional currency.
A-11
(d) Use of estimates and judgements
The preparation of the combined financial statements in conformity with FRSs requires
management to make judgements, estimates and assumptions that affect the application of
accounting 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 to
accounting estimates are recognised in the period in which the estimates are revised and in
any future periods affected.
Information about critical judgements in applying accounting policies that have the most
significant effect on the amounts recognised in the combined financial statements and,
assumptions and estimation uncertainties that have a significant risk of resulting in a
material 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 has
the power to govern the financial and operating policies of an entity so as to obtain
benefits from its activities. In assessing control, potential voting rights presently
exercisable are taken into account. The financial statements of subsidiaries are
included in the consolidated financial statements from the date that control
commences until the date that control ceases. The accounting policies of subsidiaries
have been changed where necessary to align them with the policies adopted by the
Group.
(ii) Business combinations
Business combinations arising from transfers of interests in entities that are under the
common control of the shareholders that control the Group are accounted for as if the
acquisition had occurred at the beginning of the earliest comparative period presented
or, if later, at the date that common control was established. The assets and liabilities
acquired are recognised in the combined financial statements at the carrying amounts
recognised in the acquired entities financial statements. The components of equity of
the acquired entities are added to the same components within Group equity. Any
difference between the cash paid for the acquisition and net assets acquired is
recognised in equity.
All other business combinations are accounted for under the purchase method. The
cost of an acquisition is measured at the fair value of the assets given, equity
instruments issued and liabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. The excess of the Groups interest in the
net fair value of the identifiable assets, liabilities and contingent liabilities over the cost
of acquisition is credited to the profit or loss in the period of the acquisition.
A-12
(iii) Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the
subsidiary, any non-controlling interests and the other components of equity related to
the subsidiary. Any surplus or deficit arising on the loss of control is recognised in
profit or loss. If the Group retains any interest in the previous subsidiary, then such
interest is measured at fair value at the date that control is lost. Subsequently it is
accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
(iv) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated in preparing the consolidated
financial statements. Unrealised gains arising from transactions with equity-accounted
investee are eliminated against the investment to the extent of the Groups interest in
the 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 owners
in their capacity as owners and therefore no goodwill is recognised as a result of such
transactions. The adjustments to non-controlling interests are based on a
proportionate amount of the net assets of the subsidiary.
(f) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional
currencies of Group entities at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date
are retranslated to the functional currency at the exchange rate at that date. The
foreign currency gain or loss on monetary items is the difference between amortised
cost in the functional currency at the beginning of the year, adjusted for effective
interest and payments during the year, and the amortised cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the exchange rate
at the date that the fair value was determined. Non-monetary items in a foreign
currency that are measured in terms of historical cost are translated using the
exchange 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 equity
investments, a financial liability designated as a hedge of the net investment in a
foreign operation that is effective, or qualifying cash flow hedges, which are
recognised in other comprehensive income.
A-13
(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated to US dollars at exchange rates at
the reporting date. The income and expenses of foreign operations, excluding foreign
operations in hyperinflationary economies, are translated to US dollars at exchange
rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income, and
presented in the foreign currency translation reserve (translation reserve) in equity.
However, if the operation is a non-wholly-owned subsidiary, then the relevant
proportionate share of the translation difference is allocated to the non-controlling
interests. When a foreign operation is disposed of such that control, significant
influence or joint control is lost, the cumulative amount in the translation reserve
related to that foreign operation is reclassified to profit or loss as part of the gain or
loss on disposal. When the Group disposes of only part of its interest in a subsidiary
that includes a foreign operation while retaining control, the relevant proportion of the
cumulative amount is reattributed to non-controlling interests.
When the settlement of a monetary item receivable from or payable to a foreign
operation is neither planned nor likely in the foreseeable future, foreign exchange
gains and losses arising from such a monetary item are considered to form part of a
net investment in a foreign operation and are recognised in other comprehensive
income, 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 that
they are originated. All other financial assets (including assets designated at fair value
through profit or loss) are recognised initially on the trade date, which is the date that
the Group becomes a party to the contractual provisions of the instrument.
The Group derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the contractual cash
flows on the financial asset in a transaction in which substantially all the risks and
rewards of ownership of the financial asset are transferred. Any interest in transferred
financial assets that is created or retained by the Group is recognised as a separate
asset or liability.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously.
The Group classifies non-derivative financial assets into loans and receivables
category.
Loans and receivables
Loans and receivables are financial assets with fixed or determinable payments that
are not quoted in an active market. Such assets are recognised initially at fair value
plus any directly attributable transaction costs. Subsequent to initial recognition, loans
and 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 on
the date that they are originated. All other financial liabilities are recognised initially on
the trade date, which is the date that the Group becomes a party to the contractual
provisions of the instrument.
The Group derecognises a financial liability when its contractual obligations are
discharged, cancelled or expired.
Financial assets and liabilities are offset and the net amount presented in the
statement of financial position when, and only when, the Group has a legal right to
offset the amounts and intends either to settle on a net basis or to realise the asset
and settle the liability simultaneously.
The Group classifies non-derivative financial liabilities into the other financial liabilities
category. Such financial liabilities are recognised initially at fair value plus any directly
attributable transaction costs. Subsequent to initial recognition, these financial
liabilities are measured at amortised cost using the effective interest method.
Other financial liabilities comprise loans and borrowings, and trade and other
payables.
(iii) Share capital
Ordinary shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the
issue of ordinary shares are recognised as a deduction from equity, net of any tax
effects.
Distribution of non-cash assets to owners of the Company
The Group measures a liability to distribute non-cash assets as a dividend to the
owners of the Company at the fair value of the assets to be distributed. The carrying
amount of the dividend is remeasured at each reporting date and at the settlement
dates with any changes recognised directly in equity as adjustments to the amount of
the distribution. On settlement of the transactions, the Group recognises the
difference, if any, between the carrying amount of the assets distributed and the
carrying amount of the liability in profit or loss.
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A-15
(iv) Compound financial instruments
A convertible loan note is regarded as hybrid instrument, consisting of an embedded
derivative, the economic characteristic and risks of which are not closely related to
that of the host instrument, the loan.
At inception, the embedded derivative is bifurcated from the host instrument and
recorded as liability in accordance with FRS 39 Financial Instruments: Recognition
and Measurement. For embedded derivative for which the fair value cannot be
determined reliably, the fair value of the embedded derivative is the difference
between 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 the
contract is entered into and is subsequently carried at fair value.
Fair value changes for derivative instruments that do not qualify for hedge accounting
are included in the statement of comprehensive income in the financial year when the
changes arise.
Interests, dividends, losses and gains relating to the financial liability are recognised in
the 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, plant
and equipment or mine properties. Items of property, plant and equipment and mine
properties are measured at cost less accumulated depreciation and accumulated
impairment 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 for
their intended use, the costs of dismantling and removing the items and restoring the
site on which they are located, and capitalised borrowing costs. Purchased software
that is integral to the functionality of the related equipment is capitalised as part of the
equipment.
When a mine construction project moves into production stage, the capitalisation of
certain mine construction costs ceases and costs are either regarded as part of the
cost of inventory or expensed, except for costs which qualify for capitalisation relating
to mining asset additions or improvements, underground mine development or
mineable reserve development.
When parts of an item of property, plant and equipment and mine properties have
different useful lives, they are accounted for as separate items (major components) of
property, plant and equipment and mine properties.
A-16
The gain or loss on disposal of an item of property, plant and equipment and mine
properties is determined by comparing the proceeds from disposal with the carrying
amount of the property, plant and equipment and mine properties, and is recognised
net within other income/other expenses in profit or loss. When revalued assets are
sold, any related amount included in the revaluation reserve is transferred to retained
earnings.
(ii) Subsequent costs
The cost of replacing a component of an item of property, plant and equipment is
recognised in the carrying amount of the item if it is probable that the future economic
benefits embodied within the component will flow to the Group, and its cost can be
measured reliably. The carrying amount of the replaced component is derecognised.
The costs of the day-to-day servicing of property, plant and equipment are recognised
in 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, in
which case the straight-line method is applied. The unit of account for run of mines
costs are recoverable ounces of gold. The unit-of-production rate for the
depreciation/amortisation of mine development costs takes into account expenditure
incurred to date, together with sanctioned future development expenditure.
Mining rights are amortised to profit or loss on a straight-line basis over the assigned
term 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. Significant
components of individual assets are assessed and if a component has a useful life
that is different from the remainder of that asset, that component is depreciated
separately.
For other plant and equipment, depreciation is recognised in profit or loss on a
straight-line basis over the estimated useful lives of each component of an item of
property, plant and equipment. Leased assets are depreciated over the shorter of the
lease term and their useful lives unless it is reasonably certain that the Group will
obtain ownership by the end of the lease term.
The estimated useful lives for the current and comparative years of other plant and
equipment 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 reporting
date 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 which
they are incurred.
(ii) Exploration and evaluation costs
Once the legal right to explore has been acquired, exploration and evaluation
expenditure is charged to profit or loss as incurred, unless the directors conclude that
a future economic benefit is more likely than not to be realised. These costs include
materials and fuel used, surveying costs, drilling costs and payments made to
contractors.
In evaluating if expenditures meet the criteria to be capitalised, several different
sources of information are utilised. The information that is used to determine the
probability of future benefits depends on the extent of exploration and evaluation that
has been performed.
Drilling and related costs incurred on sites without an existing mine and on areas
outside the boundary of a known mineral deposit which contains proven and probable
reserves are exploration and evaluation expenditures and are expensed as incurred to
the date of establishing that costs incurred are economically recoverable. Further
exploration and evaluation expenditures, subsequent to the establishment of economic
recoverability, are capitalised and included in the carrying amount of the mineral
assets.
Management evaluates the following criteria in its assessments of economic
recoverability and probability of future economic benefit:
Geology whether or not there is sufficient geologic and economic certainty of
being able to convert a residual mineral deposit into a proven and probable
reserve at a development.
Scoping there is a scoping study or preliminary feasibility study that
demonstrates the additional resources will generate a positive commercial
outcome. Known metallurgy provides a basis for concluding there is a
significant likelihood of being able to recoup the incremental costs of extraction
and production.
Accessible facilities mining property can be processed economically at
accessible mining and processing facilities where applicable.
Life of mine plans an overall life of mine plan and economic model to support
the mine and the economic extraction of resources/reserves exists. A long-term
life of mine plan, and supporting geological model identifies the drilling and
related development work required to expand or further define the existing
orebody.
Authorisations operating permits and feasible environmental programs exist or
are obtainable.
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A-18
Prior to capitalising exploration drilling and related costs, management will determine
that 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 the
recovery of expenditure is unlikely, the amount is written off in profit or loss in the
period when the new information becomes available.
Once reserves are established and development is sanctioned, exploration and
evaluation assets are tested for impairment and transferred to Mines under
construction. No amortisation is charged during the exploration and evaluation
phase.
(iii) Mines under construction
Upon transfer of Exploration and evaluation costs into Mines under construction, all
subsequent expenditure on the construction, installation or completion of infrastructure
facilities is capitalised within Mines under construction. Development expenditure is
net of proceeds from all but the incidental sale of ore extracted during the
development phase. After production starts, all assets included in Mines under
construction are transferred to Producing mines.
(j) Inventories
Gold in process inventory consists of gold contained in the ore on leach ponds and in circuit
material within processing operation. Gold dor 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 expenditure
incurred in acquiring the inventories, production or conversion costs and other costs incurred
in bringing them to their existing location and conditions.
Net realisable value is the estimated selling price in the ordinary course of business, less the
estimated costs of completion and selling expenses. The estimated selling price per ounce
of gold is determined by the average of predicted future gold prices over the next twelve
months. The estimated costs of completion are refining costs which are determined based
on current refining costs per ounce of gold charged by its suppliers. Consequently, there are
no additional selling costs.
Materials and supplies are valued at the lower cost and net realisable value. Any provision
for obsolescence is determined by reference to specific items of stocks. A regular review is
undertaken to determine the extent of any provision for obsolescence.
A-19
(k) Impairment
(i) Non-derivative financial assets
A financial asset not carried at fair value through profit or loss is assessed at each
reporting date to determine whether there is objective evidence that it is impaired. A
financial asset is impaired if objective evidence indicates that a loss event has
occurred after the initial recognition of the asset, and that the loss event had a
negative effect on the estimated future cash flows of that asset that can be estimated
reliably.
Objective evidence that financial assets are impaired can include default or
delinquency by a debtor, restructuring of an amount due to the Group on terms that
the Group would not consider otherwise, indications that a debtor or issuer will enter
bankruptcy, adverse changes in the payment status of borrowers or issuers in the
Group.
Loans and receivables
The Group considers evidence of impairment for loans and receivables at both a
specific asset and collective level. All individually significant receivables are assessed
for specific impairment. All individually significant loans and receivables found not to
be specifically impaired are then collectively assessed for any impairment that has
been incurred but not yet identified. Loans and receivables that are not individually
significant are collectively assessed for impairment by grouping together loans and
receivables with similar risk characteristics.
In assessing collective impairment the Group uses historical trends of the probability
of default, the timing of recoveries and the amount of loss incurred, adjusted for
managements judgement as to whether current economic and credit conditions are
such that the actual losses are likely to be greater or less than suggested by historical
trends.
Losses are recognised in profit or loss and reflected in an allowance account against
loans and receivables. Interest on the impaired asset continues to be recognised.
When a subsequent event causes the amount of impairment loss to decrease, the
decrease in impairment loss is reversed through profit or loss.
(ii) Non-financial assets
The carrying amounts of the Groups non-financial assets, other than inventories and
deferred tax assets, are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then the assets recoverable
amount is estimated. An impairment loss is recognised if the carrying amount of an
asset or its related cash-generating unit (CGU) exceeds its estimated recoverable
amount.
The recoverable amount of an asset or CGU is the greater of its value in use and its
fair value less costs to sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or
CGU. For the purpose of impairment testing, assets that cannot be tested individually
A-20
are grouped together into the smallest group of assets that generates cash inflows
from continuing use that are largely independent of the cash inflows of other assets or
CGU.
The Groups corporate assets do not generate separate cash inflows and are utilised
by more than one CGU. Corporate assets are allocated to CGUs on a reasonable and
consistent basis and tested for impairment as part of the testing of the CGU to which
the corporate asset is allocated.
Impairment losses are recognised in profit or loss. Impairment losses recognised in
respect of CGUs are allocated first to reduce the carrying amount of any goodwill
allocated to the CGU (group of CGUs), and then to reduce the carrying amounts of
the 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 for
any indications that the loss has decreased or no longer exists. An impairment loss is
reversed if there has been a change in the estimates used to determine the
recoverable amount.
An impairment loss is reversed only to the extent that the assets carrying amount
does not exceed the carrying amount that would have been determined, net of
depreciation 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 entity
pays fixed contributions into a separate entity and will have no legal or constructive
obligation to pay further amounts. Obligations for contributions to defined contribution
pension plans are recognised as an employee benefit expense in profit or loss in the
periods during which services are rendered by employees.
(ii) Short-term employee benefits
Short-term employee benefit obligations are measured on an undiscounted basis and
are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the Group has a present legal or constructive
obligation 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 legal
or constructive obligation that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the obligation.
When the Group expects some or all of the provision to be reimbursed, for example
under an insurance contract, the reimbursement is recognised as a separate asset but
only when the reimbursement is virtually certain. The provision relating to any
provision is presented in profit or loss net of any reimbursement.
A-21
Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks
specific 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 constructive
obligations required to restore operating locations in the period in which the obligation
is incurred. The nature of these restoration activities includes dismantling and
removing structures, rehabilitating mines and tailings dams, dismantling operating
facilities, 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/environment
is disturbed at the production location. When the liability is initially recognised, the
present value of the estimated costs is capitalised by increasing the carrying amount
of 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 change
in present value based on the discount rates that reflect current market assessments
and the risks specific to the liability.
The periodic unwinding of the discount is recognised in profit or loss as a finance
cost. Additional disturbances or changes in rehabilitation costs will be recognised as
additions or charges to the corresponding assets and rehabilitation liability when they
occur.
For closed sites, changes to estimated costs are recognised immediately in profit or
loss.
(n) Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable and
represents amounts receivable for goods sold in the normal course of business, net of
discounts and sales related taxes.
Revenue from the sale of gold is recognised when there has been a transfer of risks and
rewards to the customer, no further work or processing is required by the Group, the quality
of the goods has been determined with reasonable accuracy, the price is fixed or
determinable, and collectability is reasonably assured. This is generally when title passes
and the goods have been delivered to a contractually agreed location.
Interest income is recognised in profit or loss as it accrues, using the effective interest
method.
(o) Lease payments
Payments made under operating leases are recognised in profit or loss on a straight-line
basis over the term of the lease. Lease incentives received are recognised as an integral
part of the total lease expense, over the term of the lease.
Minimum lease payments made under finance leases are apportioned between the finance
expense and the reduction of the outstanding liability. The finance expense is allocated to
each period during the lease term so as to produce a constant periodic rate of interest on
the remaining balance of the liability.
A-22
Contingent lease payments are accounted for by revising the minimum lease payments over
the 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 or
contains a lease. A specific asset is the subject of a lease if fulfilment of the arrangement is
dependent on the use of that specified asset. An arrangement conveys the right to use the
asset if the arrangement conveys to the Group the right to control the use of the underlying
asset.
At inception or upon reassessment of the arrangement, the Group separates payments and
other consideration required by such an arrangement into those for the lease and those for
other elements on the basis of their relative fair values. If the Group concludes for a finance
lease that it is impracticable to separate the payments reliably, then an asset and a liability
are recognised at an amount equal to the fair value of the underlying asset. Subsequently
the liability is reduced as payments are made and an imputed finance charge on the liability
is recognised using the Groups incremental borrowing rate.
(p) Finance income and finance costs
Finance income comprises interest income on funds invested. Interest income is recognised
as 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 production
of 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 is
recognised in profit or loss except to the extent that it relates to a business combination, or
items 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 the
year, using tax rates enacted or substantively enacted at the reporting date, and any
adjustment to tax payable in respect of previous years. Current tax payable also includes any
tax liability arising from the declaration of dividends.
Deferred tax is recognised in respect of temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the amounts used for
taxation purposes. Deferred tax is not recognised for:
temporary differences on the initial recognition of assets or liabilities in a transaction
that is not a business combination and that affects neither accounting nor taxable
profit or loss;
temporary differences related to investments in subsidiaries to the extent that it is
probable that they will not reverse in the foreseeable future; and
taxable temporary differences arising on the initial recognition of goodwill.
A-23
Deferred tax is measured at the tax rates that are expected to be applied to temporary
differences when they reverse, based on the laws that have been enacted or substantively
enacted by the reporting date.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset
current tax liabilities and assets, and they relate to income taxes levied by the same tax
authority on the same taxable entity, or on different tax entities, but they intend to settle
current tax liabilities and assets on a net basis or their tax assets and liabilities will be
realised simultaneously.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible
temporary differences, to the extent that it is probable that future taxable profits will be
available against which they can be utilised. Deferred tax assets are reviewed at each
reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realised.
(r) Loss per share
The Group presents basic and diluted loss per share data for its ordinary shares. Basic loss
per share is calculated by dividing the profit or loss attributable to ordinary shareholders of
the Company by the weighted average number of ordinary shares outstanding during the
year, adjusted for own shares held. Diluted loss per share is determined by adjusting the
profit or loss attributable to ordinary shareholders and the weighted average number of
ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive
potential ordinary shares, which comprise convertible notes.
(s) Segment reporting
An operating segment is a component of the Group that engages in business activities from
which it may earn revenues and incur expenses, including revenues and expenses that
relate to transactions with any of the Groups other components. All operating segments
operating results are reviewed regularly by the Groups chief operating decision maker to
make decisions about resources to be allocated to the segment and to assess its
performance, and for which discrete financial information is available.
Segment results that are reported to the Groups chief operating decision maker include
items directly attributable to a segment as well as those that can be allocated on a
reasonable basis. Unallocated items comprise mainly corporate assets, corporate expenses
and 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 for
annual periods beginning after 1 January 2010, and have not been applied in preparing
these combined financial statements. None of these is expected to have a significant effect
on the combined financial statements of the Group.
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4. EXPLORATION AND EVALUATION ASSETS
2010 2009 2008
US$ US$ US$
As at 1 January 3,198,982 975,216
Expenditure incurred during the year 783,814 2,223,766 975,216
Expenditure transferred to mine properties (3,964,321)
As at 31 December 18,475 3,198,982 975,216
5. MINE PROPERTIES
Mining Mine design Producing
rights in progress mines Total
US$ US$ US$ US$
Cost
As at 1 January 2008
Additions 496,801 496,801
At 31 December 2008, 1 January 2009
and 31 December 2009 496,801 496,801
Additions 105,000 105,000
Expenditure transferred from exploration
and evaluation assets 3,964,321 3,964,321
As at 31 December 2010 496,801 105,000 3,964,321 4,566,122
Accumulated amortisation
Amortisation charge for the year 33,385 33,385
As at 31 December 2008 33,385 33,385
Amortisation charge for the year 50,077 50,077
As at 31 December 2009 83,462 83,462
Amortisation charge for the year 50,078 31,236 81,314
As at 31 December 2010 133,540 31,236 164,776
Carrying amount
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 the
Sokor gold field project located in the District of Tanah Merah, Kelantan, Malaysia for a period of 10
years from 8 April 2008.
Mine design is not amortised until the contractor completes the mine design at the mine site.
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Impairment of mine properties
The Group has substantial investments in mine properties for its mining operations in Malaysia.
Management has identified the Groups mine properties as a single cash-generating unit (CGU).
Impairment loss is recognised when events and circumstances indicate that the Groups mine
properties may be impaired and the carrying amounts of mine properties exceed their recoverable
amounts.
In assessing whether impairment is required for the carrying value of mine properties, its carrying
value is compared with its recoverable amount. The recoverable amount is the higher of the
assets fair value less costs to sell and value in use. Given the nature of the Groups activities,
information on the fair value of an asset is usually difficult to obtain unless negotiations with
potential purchasers or similar transactions are taking place. Consequently, unless indicated
otherwise, the recoverable amount used in assessing the impairment charges described below is
value 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 all
production were to be reduced by 10% for the remaining useful life of the mining right, this would
not be sufficient to reduce the excess of recoverable amount over the carrying amounts of the
CGU to zero. Consequently, management believes no reasonably possible change in the
production assumption would cause the carrying amount of mine properties to exceed their
recoverable amount.
The Group generally estimates value in use using a discounted cash flow model. The future cash
flows are adjusted for risks specific to mine properties and discounted using a rate of 14.2%. This
discount rate is derived from the Groups post-tax weighted average cost of capital. Management
also believes that currently there is no reasonably possible change in the discount rate, estimated
future gold prices and future operating costs which would reduce the Groups excess of
recoverable amount over the carrying amounts of the CGU to zero.
Based on the assessment, management determined that no impairment to the mine properties is
considered necessary as at 31 December 2010.
Amortisation
The carrying amount of the mining right and mine design are amortised on a straight-line basis
over 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 the
economically recoverable reserves of the mine concerned.
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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. Any
changes in estimates of the recoverable reserve of the mine and, the useful life and residual values
of the mine properties would impact the amortisation charges and consequently affect the Groups
results.
6. PROPERTY, PLANT AND EQUIPMENT
Plant Fixture Construction
and and Motor work in
Buildings equipment fittings vehicles progress Total
Cost
At 1 January 2008 8,666 35,903 56,535 101,104
Additions 12,310 1,879 21,119 35,308
At 31 December 2008 20,976 37,782 77,654 136,412
Additions 27,437 39,628 10,314 728,372 805,751
At 31 December 2009 27,437 60,604 37,782 87,968 728,372 942,163
Additions 490,146 245,750 13,243 67,738 32,785 849,662
Disposals (4,394) (4,394)
Reclassification 269,799 458,573 (728,372)
At 31 December 2010 787,382 764,927 51,025 151,312 32,785 1,787,431
Accumulated
depreciation and
impairment losses
At 1 January 2008 959 4,080 4,109 9,148
Depreciation charge
for the year 4,213 15,557 20,622 40,392
At 31 December 2008 5,172 19,637 24,731 49,540
Depreciation charge
for the year 2,313 6,637 16,937 26,778 52,665
At 31 December 2009 2,313 11,809 36,574 51,509 102,205
Depreciation charge
for the year 55,861 60,131 5,257 28,449 149,698
Disposals (855) (855)
At 31 December 2010 58,174 71,940 41,831 79,103 251,048
Carrying amount
At 1 January 2008 7,707 31,823 52,426 91,956
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 were
US$50,030, US$25,863 and US$5,267 respectively.
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Impairment
Impairment loss is recognised when events and circumstances indicate that the Groups property,
plant and equipment may be impaired and the carrying amounts of the property, plant and
equipment exceed their recoverable amounts.
The recoverable amount is determined based on value-in-use calculation. The value-in-use
calculation uses cash flow projections over the period of five years and is discounted using a rate
of 14.2%. Based on the assessments, management determined that no impairment to the
property, plant and equipment is considered necessary as at 31 December 2010.
Depreciation
The carrying amount of the property, plant and equipment is depreciated on a straight-line basis
over the remaining useful life of each property, plant and equipment. Management reviews and
revises the estimates of the remaining useful life and residual values of the property, plant and
equipment at the end of each financial year based on their age and condition at that time.
Changes in the way the property, plant and equipment are used and other factors (such as market
or technological factors) could impact the useful life and residual values of the property, plant and
equipment, therefore future depreciation charges could be revised. Any changes in the useful life
and residual values of the property, plant and equipment would impact the depreciation charges
and consequently affect the Groups results.
7. DEFERRED TAX ASSETS
Unrecognised deferred tax assets
2010 2009 2008
US$ US$ US$
Deductible temporary differences 167,807 86,110
The deductible temporary differences do not expire under current tax legislation. No deferred tax
assets have been recognised as at 31 December 2008 and 2009 because it is not probable that
future taxable profits will be available against which the Group can utilise the benefits.
Recognised deferred tax assets
2010 2009 2008
US$ US$ US$
Deferred tax assets
Property, plant and equipment 50,789
Unutilised tax losses carried forward 128,665
Mine properties 176,900
Others 2,491
358,845
For the financial year ended 31 December 2010, deferred tax assets was recognised by
management based on their assessment of available future taxable profits of a subsidiary of the
Group which will be available to be utilised. Management will review the amount of deferred tax
assets recognised at each reporting date and will reduce the extent of deferred tax assets
recognised if it is no longer probable that the related tax benefit will be realised.
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8. INVENTORIES
2010 2009 2008
US$ US$ US$
Gold dor bars 78,563
Consumables 42,151
120,714
9. OTHER RECEIVABLES, PREPAYMENTS AND DEPOSITS
2010 2009 2008
US$ US$ US$
Amounts owing by shareholders (non-trade) 333,182
Loans to directors 14,226
Other receivables 22,604 24,374 4,565
Deposits 35,411 28,485 28,569
Loan and receivables 391,197 52,859 47,360
Prepayments 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 are
repayable on demand.
The Groups exposure to credit and currency risks and impairment losses related to other
receivables, prepayments and deposits is disclosed in note 25.
10 CASH AND CASH EQUIVALENTS
2010 2009 2008
US$ US$ US$
Cash at banks and in hand 1,112,065 48,755 87,659
Fixed deposits 1,606
1,113,671 48,755 87,659
Less: Deposits pledged (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 a
management personnel of a subsidiary.
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11 SHARE CAPITAL AND RESERVE
Share capital
2010 2009 2008
US$ US$ US$
Issued and fully paid:
At 1 January 2,050,560 1,500,000 1,500,000
Issue 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 to
US$2,050,560 via the issue of 487,000 new ordinary shares for cash at an issue price of
US$550,560.
(b) On 9 July 2010, CNMC HK issued 1,087,438 ordinary shares upon the conversion of
convertible notes amounting to US$2,677,809.
During the financial year ended 31 December 2010, certain directors of the Company entered into
an agreement with CNMC HK to capitalise payments made on behalf by the directors on behalf of
CNMC HK as non-reciprocal capital contributions in CNMC HK.
For the purposes of preparing the combined financial statements, the share capital as at 31
December 2008, 2009 and 2010 comprises the share of the Company and its subsidiaries.
The holders of ordinary shares are entitled to receive dividends as declared from time to time and
are entitled to one vote per share at meetings of the Company. All shares rank equally with regard
to the Companys residual assets.
Capital management
The Group defines capital as total shareholders equity attributable to equity holders of the
Company excluding non-controlling interest. The Boards policy is to maintain a strong capital base
so as to maintain investor, creditor and market confidence and to sustain future development of the
business. Capital consists of share capital, reserves and non-controlling interests of the Group.
The Board closely monitors the cash flow forecasts and working capital requirements of the Group
to ensure that there are sufficient financial resources available to meet the needs of the business.
There were no changes in the Groups approach to capital management during the financial years
ended 31 December 2008, 2009 and 2010. The Company and its subsidiaries are not subject to
externally imposed capital requirements.
Translation reserve
The translation reserve comprises foreign exchange differences arising from the translation of the
financial statements of foreign operations whose functional currencies are different from the
functional currency of the Company.
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12. INTEREST-BEARING BORROWINGS
2010 2009 2008
US$ US$ US$
Convertible notes 3,039,837 1,195,702
Finance lease liabilities 41,609 44,724 50,629
3,081,446 1,240,426 50,629
Current
Current portion of convertible notes 693,669 682,172
Current 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 693,669 682,172
After 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 2008
Convertible notes S$ 10% and 12% 1 year 694,900 682,172
Finance lease liabilities RM 2.8% and 4.5% 7 and 9 years 69,584 56,796
764,484 738,968
At 31 December 2009
Convertible notes S$ 6% and 10% 1 and 2 years 2,066,250 1,889,371
Finance 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 2010
Convertible notes S$ 6% and 10% 1.3 to 3 years 3,501,000 3,039,837
3,558,519 3,089,492
Finance lease liabilities
Finance lease liabilities are repayable as follows:
Future
minimum
lease
payments Interest Principal
US$ US$ US$
At 31 December 2008
Within 1 year 9,453 3,286 6,167
After 1 year but within 5 years 37,812 8,346 29,466
After 5 years 22,589 1,426 21,163
69,854 13,058 56,796
At 31 December 2009
Within 1 year 9,612 2,853 6,759
After 5 years 13,358 548 12,810
61,420 9,937 51,483
At 31 December 2010
Within 1 year 10,672 2,626 8,046
After 5 years 5,649 131 5,518
57,519 7,864 49,655
Convertible notes
2010 2009 2008
US$ US$ US$
At 1 January 1,889,371 682,172
Proceeds from issue of convertible notes 3,963,070 1,361,273 696,135
Conversion 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 the
Company, CNMC Goldmine Limited (CNMC HK) issued convertible notes which are unsecured
and bear interests ranging from 6% to 12% per annum with a total principal amount of
S$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 HKs shares based on the lower pricing
of:
(i) the conversion price of S$0.40 per share; or
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(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 early
redemption date or at maturity ranging from 12 to 36 months from the commencement date
of the convertible notes.
On 9 July 2010, CNMC HK converted US$2,677,809 convertible loan notes which bear interests of
6% 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 reliably
measured, the fair value of the embedded derivative was calculated as the difference between the
fair value of the whole instrument and the fair value of the host debt. The value of the conversion
right of US$284,284 (2009: US$164,151; 2008: US$12,728), being the difference between the
principal 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$683,407),
discounted at an estimated market interest rate of 12.42% (2009: 12.19%; 2008: 12.27%), had
been separately accounted for as a derivative liability (refer to note 13).
13. DERIVATIVE FINANCIAL INSTRUMENT
2010 2009 2008
US$ US$ US$
At 1 January 138,905 8,146
Conversion right recognised during the year (refer to note 12) 284,284 164,151 12,728
Unwinding 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 convertible
notes to shares of the Company for the financial year ended 31 December 2010 amount to
US$113,570 (2009: Nil; 2008: Nil). The Groups derivative financial instrument did not qualify for
hedge accounting.
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14. REHABILITATION PROVISION
2010 2009 2008
US$ 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 related
production facilities on a discounted basis at the time of developing the mine and installing and
using those facilities.
The rehabilitation provision represents the present value of rehabilitation costs relating to the mine
site, which are expected to be incurred up to 2018. These provisions have been created based on
the Groups internal estimates. Assumptions, based on the current economic environment, have
been made which management believes are a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any material changes to the
assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices
for the necessary decommissioning works required which will reflect market conditions at the
relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine cease
to produce at economically viable rates. This, in turn, will depend upon future gold prices, which
are inherently uncertain.
15. TRADE AND OTHER PAYABLES
2010 2009 2008
US$ US$ US$
Trade payables 104,854 30,511 10,189
Other payables 1,140 90,074
Amount due to affiliated corporations (non-trade) 50,092
Amount due to contractors 21,646 1,867,448 554,221
Accrued operating expenses 1,475,382 913,350 316,260
Remuneration 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 a
position to exercise significant influence; and/or
b) which directly or indirectly, through one or more intermediaries, are under the control of a
common shareholder.
The non-trade amounts due to affiliated corporations do not bear interest and are repayable on
demand.
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16. OTHER OPERATING INCOME
2010 2009 2008
US$ US$ US$
Unwinding of discount on derivative financial instrument 267,440 33,392 4,582
Rental income on operating lease 4,159
Net foreign exchange gain 54,835
267,440 33,292 63,576
17. AMORTISATION AND DEPRECIATION
2010 2009 2008
US$ US$ US$
Amortisation of mine properties 81,314 50,077 33,385
Depreciation of property, plant and equipment 146,698 52,665 40,392
228,012 102,742 73,777
18. OTHER OPERATING EXPENSES
2010 2009 2008
US$ US$ US$
Bad debts written off 56,428
Pre-feasibility cost written off 213,380
Net 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 2008
US$ US$ US$
Finance income
Interest income on cash and cash equivalents 22 420
Finance expenses
Interest 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)
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20. INCOME TAX (CREDIT)/EXPENSE
2010 2009 2008
US$ US$ US$
Current tax expense
Current year 6 180
Deferred tax credit
Origination 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 Groups operations are mainly in Malaysia. The tax expense on the loss differs from the
amount that would arise using Malaysian income tax rates are explained below:
2010 2009 2008
US$ US$ US$
Reconciliation of effective tax rate
Loss 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 59,473
Non-deductible expenses 309,103 144,304 134,463
Effect of deferred tax assets not recognised 81,687 61,909
Recognition 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 is
required in determining the capital allowances, the types and rates of taxes payable, deductibility of
certain expenses, and taxability of certain income during the estimation of the provision for income
taxes. There are many transactions and calculations for which the ultimate tax determination is
uncertain during the ordinary course of business. The Group recognises liabilities for anticipated
tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such
differences will impact the revenue, provision for income tax and deferred income tax provisions in
the period in which such determination is made.
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21. LOSS PER SHARE
2010 2009 2008
US$ 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 2008
Number Number Number
of shares of shares of shares
000 000 000
Issued ordinary shares as at 1 January 12,187 11,700 11,700
Effect of new shares issued on 12 May 2009 311
Effect of new shares issued upon conversion of
convertible 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 to
note 12) were not included in the determination of diluted loss per share of the Group, as the
convertible 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 financial
years 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, the
Groups chief operating decision maker reviews internal management reports on at least a
quarterly basis. The following summary describes the operations in the Groups reportable
segment:
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 is
measured based on segment profit before income tax, as included in the internal management
reports that are reviewed by the Groups chief operating decision maker. Segment profit is used to
measure performance as management believes that such information is the most relevant in
evaluating the results of certain segments relative to other entities that operate within these
industries. Inter-segment pricing is determined on an arms length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items mainly comprise tax assets
and liabilities and corporate revenue, assets, expenses and liabilities.
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Information about reportable segments
Other Inter-segment
Gold mining operations eliminations Total
US$ US$ US$ US$
Year ended 31 December 2008
Interest income 420 420
Interest 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)
Reportable segment assets 1,799,525 1,513,932 (1,595,357) 1,718,100
Capital expenditure* 1,503,253 4,072 1,507,325
Reportable segment liabilities (1,887,921) (594,202) 1,197,207 (1,284,916)
Interest income 22 22
Reportable segment losses before taxation (581,498) (499,376) (1,080,874)
Capital expenditure* 3,029,517 3,029,517
Reportable segment liabilities (5,380,281) (774,517) 2,795,590 (3,359,208)
Total revenue from external customers 530,169 530,169
Reportable segment losses before taxation (1,366,283) (923,192) (2,289,475)
Capital expenditure* 1,722,467 16,009 1,738,476
Reportable segment liabilities (8,470,054) (1,076,683) 7,216,070 (2,330,667)
* Capital expenditure consists of additions of property, plant and equipment, mine properties and, exploration and
evaluation assets.
Reconciliation of reportable segment assets and liabilities
2010 2009 2008
US$ US$ US$
Assets
Total assets for reportable segments 7,732,786 4,604,303 1,718,100
Unallocated assets 358,845
Combined total assets 8,091,631 4,604,303 1,718,100
Liabilities
Total liabilities for reportable segments (2,330,667) (3,359,208) (1,284,916)
Unallocated liabilities (3,195,700) (2,028,390) (690,426)
Combined total liabilities (5,526,367) (5,387,598) (1,975,342)
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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 Groups revenue for the
financial year ended 31 December 2010. The Group do not have any revenue from external
customers 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 2008
US$ US$ US$
Exploration and evaluation assets 195,000 767,195 2,483,584
Plant 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 respect
of properties are payable as follows:
2010 2009 2008
US$ US$ US$
Within 1 year 95,510 85,686 2,048
After 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 and
responsibility for planning, directing and controlling the activities of the Company, directly or
indirectly. The amounts stated below for key management compensation are for all the
executive directors and other key management personnel. The amounts do not include
compensation, if any, of certain key management personnel and directors of the Company
who received compensation from related corporations in their capacity as directors and, or
executives of those related corporations.
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Compensation payable to key management personnel comprise:
2010 2009 2008
US$ US$ US$
Short-term employee benefits 807,264 38,013 4,244
Post-employment benefits 20,026 3,592 615
827,290 41,605 4,859
Included in key management personnel compensation is remuneration of certain directors
amounting to US$760,747 (2009: US$13,241; 2008: Nil). Directors remuneration includes
salaries, bonuses, fees and other emoluments.
(b) Significant transactions with related parties
Other than disclosed elsewhere in the financial statements, transactions with related parties
in the normal course of business on terms agreed between the parties are as follows:
2010 2009 2008
US$ US$ US$
Transactions with affiliated corporations
Interest expenses 145,922 53,689
Management services 155,628 130,202
Payment 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 Groups exposure to each of the above risks, the Groups
objectives, policies and processes for measuring and managing risk, and the Groups management
of capital.
Risk management framework
Risk management is integral to the whole business of the Group. The management has a system
of controls in place to create an acceptable balance between the cost of risks occurring and the
cost of managing the risks. The management continually monitors the Groups risk management
process to ensure that an appropriate balance between risk and control is achieved. Risk
management policies and systems are reviewed regularly to reflect changes in market conditions
and the Groups activities.
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Credit risk
As the Group does not hold any collateral, the maximum exposure to credit risk for each class of
financial instruments is the carrying amount of that class of financial instruments presented on the
combined statement of financial position and in notes 8 and 9 to the combined financial
statements.
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 its
obligations when they fall due, or will have to do so at excessive cost. The risk can arise from
mismatches in the timing of cash flows. Funding risk arises when the necessary liquidity to fund
illiquid asset positions cannot be obtained at the expected terms and when required.
Management of liquidity risk
The Groups approach to managing liquidity is to ensure, as far as possible, that it will always have
sufficient liquidity to meet its liabilities when due, under normal and stressed conditions, without
incurring unacceptable losses or risking damage to the Groups reputation.
Typically the Group ensures that it has sufficient cash on demand to meet expected operational
expenses for a period of 18 months, including the servicing of financial obligations; this excludes
the potential impact of extreme circumstances that cannot be reasonably predicted, such as
natural disasters.
The directors of the Company have carried out a review of cash flow forecast of the Group for the
twelve months ending 31 December 2011 after taking into account the Groups net current
liabilities as at 31 December 2010 and negative operating cash flows for the year ended 31
December 2010. The Group is expected to raise funds from loans and borrowings and issue of
shares of the Company in connection with the initial public offering. In addition, certain directors of
the Company have also undertaken to provide continuing financial support to the Group and the
Group currently also relies on funding from certain directors of the Company to finance the Groups
operations.
The directors believe that, based on the review of the cash flow forecast, the various plans in place
to procure funding and the financial support from certain directors of the Company, the Group will
be able to secure adequate funding to continue its operations and to pay its debts as and when
they 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 assumptions
may not be realised.
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Exposure to liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest
payments and excluding the impact of netting arrangements:
Carrying Cash Within Within 1 to More than
amount outflow 1 year 5 years 5 years
US$ US$ US$ US$ US$
At 31 December 2008
Trade and other payables 1,228,120 1,228,120 1,228,120
Interest-bearing borrowings:
- Convertible notes 682,172 694,900 694,900
- Finance lease liabilities 56,796 69,854 9,453 37,812 22,589
1,967,088 1,992,874 1,932,473 37,812 22,589
At 31 December 2009
Trade and other payables 3,307,725 3,307,725 3,307,725
- Convertible notes 1,889,371 2,066,250 712,500 1,353,750
5,248,579 5,435,395 4,029,837 1,392,200 13,358
At 31 December 2010
Trade payables 2,239,215 2,239,215 2,239,215
- Convertible notes 3,039,837 3,501,000 3,501,000
5,328,707 5,797,734 2,249,887 3,542,198 5,649
Market risks
Market risk is the risk that changes in market prices, such as interest rate and foreign exchange
rates will affect the Groups income or the value of its holdings of financial instruments. The
objective of market risk management is to manage and control market risk exposures within
acceptable parameters, while optimising the return on risk.
Interest rate risk
The Group does not have any of its borrowing in variable rate instruments. Accordingly, the
exposure 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. The
Company 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 retail
demand, central bank lending, forward sales by producers and speculators, level of worldwide
production, short-term changes in supply and demand because of speculative hedging activities
and certain other factors related to gold.
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Currency risk
The Groups revenue is denominated in United States Dollars (US$). However, the Groups main
operations are in Malaysia where the operating expenses are primarily incurred in Singapore
Dollars (S$), Ringgit Malaysia (RM), US$ and Chinese Renminbi (RMB). The results of the Groups
operations are subject to currency transaction risk and currency translation risk. The operating
results and financial position of the Group are reported in US$ in the Groups combined financial
statements.
The fluctuation of the abovementioned currencies in relation to the US$ will consequently have an
impact on the profitability of the Group and may also affect the value of the Groups assets and the
amount of shareholders equity.
The Group has not entered into any agreements or purchased any instruments to hedge possible
currency risks at the respective reporting dates.
Exposure to currency risk
The Groups exposure to foreign currency risk was as follows based on notional amounts:
USD SGD MYR RMB Total
US$ US$ US$ US$ US$
At 31 December 2008
Loans and receivables 29,150 18,210 47,360
Cash and cash equivalents 76,199 11,460 87,659
Interest-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 liabilities
denominated in the
respective entities functional
currency 557,364 13,983 571,347
Net currency exposure (1,038,362) (166,769) (55,591) (1,260,722)
Sensitivity analysis (103,836) (16,674) (5,559) (126,069)
At 31 December 2009
Loans and receivables 45,998 6,861 52,859
Cash and cash equivalents 29,024 19,731 48,755
Interest-bearing borrowings (1,889,371) (51,483) (1,940,854)
Trade and other payables (2,014,818) (653,442) (465,468) (173,997) (3,307,725)
Net financial liabilities (2,014,818) (2,467,791) (490,359) (173,997) (5,146,965)
Less: Net financial liabilities
denominated in
the respective entities
functional currency 2,014,818 16,348 2,031,166
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USD SGD MYR RMB Total
US$ US$ US$ US$ US$
At 31 December 2010
Loans and receivables 331,576 44,635 14,986 391,197
Cash and cash equivalents 978,669 133,396 1,112,065
Interest-bearing borrowings (3,039,837) (49,655) (3,089,492)
Trade and other payables (256,917) (1,067,866) (699,454) (214,978) (2,239,215)
Net financial assets/(liabilities) 74,659 (3,084,399) (600,727) (214,978) (3,825,445)
Less: Net financial (assets)/
liabilities denominated in the
respective entities functional
currency (74,659) 20,226 (54,433)
A 10% strengthening of United States dollar against the Singapore dollar, Ringgit Malaysia and
Chinese Renminbi at the respective reporting dates would increase equity and decrease
accumulated 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 and
Chinese Renminbi would have had the equal but opposite effect to the amounts shown above, on
the basis that all other variables remain constant.
Estimation of fair values
The following summarises the significant methods and assumptions used in estimating the fair
values of financial instruments of the Group.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes, is calculated based on the present value
of future principal and interest cash flows, discounted at the market rate of interest at the reporting
date.
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 and
other payables) are assumed to approximate their fair values because of the short period to
maturity. All other financial assets and liabilities are discounted to determine their fair values.
A-44
Fair value versus carrying amount
The fair values of financial assets and liabilities with the carrying amounts shown in the combined
statements of financial position are as follows:
Other Total
Loans and financial carrying
receivables liabilities amount Fair value
Note US$ US$ US$ US$
At 31 December 2008
Assets
Other receivables and deposits 9 47,360 47,360 47,360
Cash and cash equivalents 10 87,659 87,659 87,659
135,019 135,019 135,019
Liabilities
Interest-bearing borrowings 12 738,968 738,968 738,968
1,967,088 1,967,088 1,967,088
At 31 December 2009
Assets
Cash and cash equivalents 10 48,755 48,755 48,755
101,614 101,614 101,614
Liabilities
Interest-bearing borrowings 12 1,940,854 1,940,854 1,940,854
5,248,579 5,248,579 5,248,579
At 31 December 2010
Assets
Cash and cash equivalents 10 1,113,671 1,113,671 1,113,671
1,504,868 1,504,868 1,504,868
Liabilities
Interest-bearing borrowings 12 3,089,492 3,089,492 3,089,492
5,328,707 5,328,707 5,328,707
A-45
26 SUBSEQUENT EVENTS
On 14 October 2011, the holders of the convertible notes of approximately US$3,039,837 have
converted the convertible notes which bear interests of 6% to 10% per annum into 730,086
ordinary shares.
On 14 October 2011, the Company issued and aggregate of 374,999,999 ordinary shares to the
shareholders 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 Companys
shareholders approved, inter alia, the following:
(a) the conversion of the Company into a public listed company and the consequential change
of 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 Finance
Pte. Ltd. in part satisfaction of their management fee as Manager and Sponsor of the Initial
Public Offering of the Company;
(d) the allotment and issue of 2,022,000 ordinary shares to Chen Yan, the Chief Financial
Officer of the Company;
(e) the allotment and issue of 23,900,000 ordinary shares in connection with the Initial Public
Offering of the shares of the Company on the Catalist Board of the Singapore Exchange
Limited. The new shares, when fully paid up will rank pari passu in all respects with the
existing shares of the Company;
(f) the approval of the listing and quotation of all issued ordinary shares (including the new
ordinary shares to be issued and allotted pursuant to the Initial Public Offering) and the
ordinary shares awarded under the CNMC Performance Share Plan on the Catalist Board of
the Singapore Exchange Limited;
(g) the adoption of the CNMC Performance Share Plan, and the authorisation of the Companys
Directors, pursuant to Section 161 of the Companies Act, to allot and issue ordinary shares
granted under the CNMC Performance Share Plan; and
(h) that authority be given to the Directors, pursuant to Section 161 of the Companies Act and
by way of ordinary resolution in a general meeting to issue shares by way of right, bonus,
agreements, options, warrants, debentures, convertible securities or other instruments
convertible into ordinary shares. Any issue of shares will need to comply with SGX-ST
Listing Manual Section B: Rules of Catalist.
CNMC Goldmine Holdings Limited
No. 5 Shenton Way
#11-03 UIC Building
Singapore 068808
Introduction
We have reviewed the accompanying unaudited condensed interim combined financial information of
CNMC Goldmine Holdings Limited (the Company) and its subsidiaries (the Group), which comprise
the condensed combined statement of financial position of the Group as at 31 March 2011, the
condensed combined statement of comprehensive income, statement of changes in equity and statement
of cash flows of the Group for the three months then ended and certain explanatory notes as set out on
pages B-2 to B-15 (the Interim Financial Information). Management is responsible for the preparation
and presentation of this Interim Financial Information in accordance with Singapore Financial Reporting
Standard (FRS) 34 Interim Financial Reporting. Our responsibility is to express a conclusion on this
Interim Financial Information based on our review.
The interim financial information of the Group for the three months ended 31 March 2010 have not been
audited 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 Review
of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim
financial information consists of making inquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with Singapore Standards on Auditing and consequently
does not enable us to obtain assurance that we would become aware of all significant matters that might
be 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 accompanying
interim financial information is not prepared, in all material respects, in accordance with FRS 34 Interim
Financial Reporting.
This report has been prepared solely for inclusion in the Offer Document of the Company in connection
with the Initial Public Offering of the shares of the Company on the Catalist Board of the Singapore
Exchange Securities Trading Limited.
KPMG LLP
Public Accountants and
Certified Public Accountants
Singapore
18 October 2011
Tan Huay Lim
Partner
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 position
As at 31 March 2011
Unaudited Audited
31 March 31 December
2011 2010
Note US$ US$
Assets
Exploration and evaluation assets 6 203,208 18,475
Mine properties 7 4,400,338 4,401,346
Property, plant and equipment 8 2,168,040 1,536,383
Deferred tax assets 9 373,379 358,845
Inventories 10 123,385 120,714
Other receivables, prepayments and deposits 11 517,182 542,197
Cash 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
Share capital 7,291,308 7,291,308
Accumulated losses (5,210,218) (4,577,383)
Translation reserve 10,231 11,089
2,091,321 2,725,014
Total equity 1,895,138 2,565,264
Liabilities
Interest-bearing borrowings 13 1,161,748 3,081,446
Rehabilitation provision 15 42,776 41,797
Interest-bearing borrowings 13 1,985,921 8,046
Trade and other payables 16 3,030,523 2,239,215
Current tax liabilities 109 114
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 FINANCIAL
INFORMATION FOR THE THREE MONTHS ENDED 31 MARCH 2011
B-2
Condensed combined statement of comprehensive income
For the three months ended 31 March 2011
Unaudited
Three months ended
31 March 2011 31 March 2010
Note US$ US$
Revenue 537,320
Other operating income 97,083 22,297
Amortisation 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)
Exchange differences arising on consolidation of foreign subsidiaries (1,471) 23,548
Total comprehensive loss for the period (670,126) (681,508)
Owners of the Company (632,835) (637,428)
Loss for the period (668,655) (705,056)
Total comprehensive loss attributable to:
Owners of the Company (633,693) (617,719)
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)
B-3
Condensed combined statements of changes in equity
Total
attributable
to equity
holders Non-
Share Translation Accumulated of the controlling Total
capital reserve losses Company interests equity
Group
At 1 January 2011 7,291,308 11,089 (4,577,383) 2,725,014 (159,750) 2,565,264
for the period
Loss for the period (632,835) (632,835) (35,820) (668,655)
subsidiaries (858) (858) (613) (1,471)
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)
for the period
Loss for the period (637,428) (637,428) (67,628) (705,056)
Other comprehensive
income
subsidiaries 19,709 19,709 3,839 23,548
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)
B-4
Combined statement of cash flows
Unaudited
Three months ended
31 March 2011 31 March 2010
Note US$ US$
Operating activities
Loss for the period (668,655) (705,056)
Adjustments for:
Depreciation of property, plant and equipment 97,049 13,575
Amortisation of mine properties 26,008 12,519
Unwinding of discount on derivative financial instrument (37,507) (22,297)
Unwinding of discount on rehabilitation provision 979
Interest expense 75,561 73,931
Income 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 27,440
Trade 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 activities
Purchase of property, plant and equipment (257,575) (51,132)
Cash flows from investing activities (257,575) (51,132)
Financing activities
Proceeds from issuance of convertible notes 676,940
Payment 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) 26,436
Cash and cash equivalents at beginning of the period 1,112,065 48,755
Effect 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 with
an 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).
B-5
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 financial
information) of CNMC Goldmine Holdings Limited (the Company) and its subsidiaries
(collectively, the Group) has been prepared on a condensed basis in accordance with Singapore
Financial Reporting Standard FRS 34 Interim Financial Reporting.
The interim financial information, which does not include the full disclosures of the type normally
included in a complete set of financial statements, are to be read in conjunction with the combined
financial statements for the financial years ended 31 December 2008, 2009 and 2010 (Combined
Financial 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 those
companies 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 control
of the Company.
Accounting policies and methods of computation used in the interim financial information are
consistent with those applied in the Combined Financial Statements as set out in Appendix A of
2 Going concern
The Group incurred net loss of US$705,056 and US$668,655 respectively for the three months
ended 31 March 2010 and 31 March 2011 and had negative cash flows from operating activities of
US$597,679 and US$426,799 respectively for the three months ended 31 March 2010 and 2011.
Notwithstanding these, the interim financial information of the Group have been prepared on a
going concern basis, as certain directors of the Group have undertaken to provide continuing
financial support to enable the Group to continue operating as a going concern in the foreseeable
future.
The interim financial information of the Group do not include any adjustment relating to the
recoverability and classification of reported asset amounts or the amounts and classification of
liabilities that might result if the going concern basis were found to be inappropriate.
3 Seasonal operations
The Group does not generally experience seasonality in its business. However, adverse weather
during north-east monsoon season in Peninsula Malaysia which starts around November and
continues until end January, may affect the mining activities of the Group. Measures will be taken
by the Group to shelter its key production areas to mitigate such risk.
4 Dividends
No dividend is declared or recommended for the three months ended 31 March 2011 (31/3/2010:
Nil).
B-7
5 Restructuring exercise
The Group implemented a restructuring exercise to rationalise the Groups structure in preparation
for the listing of the Companys shares on the Catalist Board of the Singapore Exchange Securities
Trading Limited. Further details of the restructuring exercise are set out in note 1(c) to the
Combined Financial Statements as set out in Appendix A of this Offer Document. As a result of
the restructuring exercise, the Company became the holding company of the Group.
6 Exploration and evaluation assets
Unaudited Audited
2011 2010
US$ US$
At beginning of the period/year 18,475 3,198,982
Expenditure incurred during the period/year 184,733 783,814
Expenditure transferred to mine properties (3,964,321)
At end of the period/year 203,208 18,475
7 Mine properties
Mine
Mining design in Producing
rights progress mines Total
US$ US$ US$ US$
Unaudited
Cost
At 31 December 2010 and 1 January 2011 496,801 105,000 3,964,321 4,566,122
Additions 25,000 25,000
At 31 March 2011 496,801 130,000 3,964,321 4,591,122
Accumulated depreciation
At 31 December 2010 and 1 January 2011 133,540 31,236 164,776
Amortisation charge for the period 12,519 13,489 26,008
At 31 March 2011 146,059 44,725 190,784
Carrying amount
At 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
B-8
8 Property, plant and equipment
Plant Fixture Construction
and and Motor work in
Buildings equipment fittings vehicles progress Total
Unaudited
Cost
At 31 December 2010 and
1 January 2011 787,382 764,927 51,025 151,312 32,785 1,787,431
Additions 589,627 24,696 114,383 728,706
At 31 March 2011 787,382 1,354,554 51,025 176,008 147,168 2,516,137
Accumulated depreciation
At 31 December 2010 and
1 January 2011 58,174 71,940 41,831 79,103 251,048
Depreciation charge for the
period 28,017 54,928 1,104 13,000 97,049
At 31 March 2011 86,191 126,868 42,935 92,103 348,097
Carrying amount
At 31 December 2010 729,208 692,987 9,194 72,209 32,785 1,536,383
At 31 March 2011 701,191 1,227,686 8,090 83,905 147,168 2,168,040
9 Deferred tax assets
At 1 January Recognised in At 31 March
2011 profit or loss 2011
US$ US$ US$
Property, plant and equipment 50,789 26,145 76,934
Unutilised tax losses carried forward 128,665 (15,867) 112,798
Mine properties 176,900 4,934 181,834
Others 2,491 (678) 1,813
358,845 14,534 373,379
10 Inventories
Unaudited Audited
2011 2010
US$ US$
Gold dor bars 83,764 78,563
Consumables 39,621 42,151
123,385 120,714
B-9
11 Other receivables, prepayment and deposits
Unaudited Audited
2011 2010
US$ US$
Amounts owing by shareholders (non-trade) 333,182 333,182
Other receivables 8,884 22,604
Deposits 38,070 35,411
Loan and receivables 380,136 391,197
Prepayments 137,046 151,000
517,182 542,197
The non-trade amounts owing by shareholders is unsecured, do not bear interest and are
repayable on demand.
12 Cash and cash equivalents
Unaudited Audited
2011 2010
US$ US$
Cash at banks and in hand 447,274 1,112,065
Fixed deposits 1,651 1,606
448,925 1,113,671
Less: Deposits pledged (1,651) (1,606)
Cash and cash equivalents in the statements of cash flows 447,274 1,112,065
Deposits pledged represents balance placed with a bank for corporate credit card facility for a
management personnel of a subsidiary.
13 Interest-bearing borrowings
Unaudited Audited
2011 2010
US$ US$
Convertible notes 1,122,699 3,039,837
Finance lease liabilities 39,049 41,609
1,161,748 3,081,446
Current
Current 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
B-10
Unaudited Audited
2011 2010
US$ US$
Maturities of liabilities (excluding financial lease liabilities)
Within 1 year 1,977,510
After 1 year but within 5 years 1,122,699 3,039,837
After 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 Carrying
Currency interest rate maturity Face value amount
% US$ US$
Unaudited
At 31 March 2011
3,555,818 3,147,669
Audited
At 31 December 2010
3,558,519 3,089,492
Finance lease liabilities
Finance lease liabilities are repayable as follows:
Future
minimum
lease
payments Interest Principal
US$ US$ US$
Unaudited
At 31 March 2011
Within 1 year 10,972 2,561 8,411
After 5 years 2,403 73 2,330
54,818 7,358 47,460
Audited
At 31 December 2010
Within 1 year 10,672 2,626 8,046
After 5 years 5,649 131 5,518
57,519 7,864 49,655
B-11
Convertible notes
Unaudited Audited
2011 2010
US$ US$
At beginning of the period/year 3,039,837 1,889,371
Proceeds from issue of convertible notes 3,963,070
Conversion 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 Audited
2011 2010
US$ US$
At beginning of the period/year 155,749 138,905
Conversion right recognised during the year (refer to note 13) 284,284
Conversion rights
- current 109,171 115,440
- non-current 9,071 40,309
118,242 155,749
The Groups derivative financial instrument did not qualify for hedge accounting.
15 Rehabilitation provision
Unaudited Audited
2011 2010
US$ US$
At beginning of the period/year 41,797
Additions 41,797
The Group makes full provision for the future cost of rehabilitating the mine site and related
production facilities on a discounted basis at the time of developing the mine and installing and
using those facilities.
B-12
The rehabilitation provision represents the present value of rehabilitation costs relating to the mine
site, which are expected to be incurred up to 2018. These provisions have been created based on
the Groups internal estimates. Assumptions, based on the current economic environment, have
been made which management believes are a reasonable basis upon which to estimate the future
liability. These estimates are reviewed regularly to take into account any material changes to the
assumptions. However, actual rehabilitation costs will ultimately depend upon future market prices
for the necessary decommissioning works required which will reflect market conditions at the
relevant time. Furthermore, the timing of rehabilitation is likely to depend on when the mine cease
to produce at economically viable rates. This, in turn, will depend upon future gold prices, which
are inherently uncertain.
16 Trade and other payables
Unaudited Audited
2011 2010
US$ US$
Trade payables 227,106 104,854
Other payables 1,172 1,140
Amount due to contractors 511,966 21,646
Accrued operating expenses 1,699,043 1,475,382
Remuneration and fees due to key management 389,225 406,683
Loan 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:
Unaudited
Three months ended
31 March 31 March
2011 2010
US$ US$
Cost of borrowings arrangement fees 24,578 24,139
Interest expense on convertible notes 75,054 73,931
Interest expense on directors loans 5,343
Interest expense on finance lease liabilities 507 236
18 Segmental information
Business segments
The Group has one reportable segment as described below. For the reportable segment, the
Groups chief operating decision maker reviews internal management reports on at least a
quarterly basis. The following summary describes the operations in the Groups reportable
segment:
Gold mining: Exploration, development, mining and marketing of gold.
Other operations include investment holding company and provision of corporate services.
B-13
Information regarding the results of the reportable segment is included below. Performance is
measured based on segment profit before income tax, as included in the internal management
reports that are reviewed by the Groups chief operating decision maker. Segment profit is used to
measure performance as management believes that such information is the most relevant in
evaluating the results of certain segments relative to other entities that operate within these
industries. Inter-segment pricing is determined on an arms length basis.
Segment results, assets and liabilities include items directly attributable to a segment as well as
those that can be allocated on a reasonable basis. Unallocated items mainly comprise tax assets
and liabilities and corporate revenue, assets, expenses and liabilities.
Information about reportable segments
Inter-
Other segment
Gold mining operations eliminations Total
US$ US$ US$ US$
Unaudited
Three months ended 31 March 2011
Total revenue from external customers 537,320 537,320
Interest expense (507) (75,054) (75,561)
Unaudited
Three months ended 31 March 2010
Total revenue from external customers
Interest expense (236) (73,695) (73,931)
19 Loss per share
Unaudited
Three months ended
31 March 31 March
2011 2010
US$ US$
Basic and diluted loss per share is based on:
Net loss attributable to ordinary shareholders 668,655 705,056
Unaudited
Three months ended
31 March 2011 31 March 2010
Number 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 not
included in the determination of diluted loss per share of the Group, as the convertible notes are
considered 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 3
months ended 31 March 2010 and 2011.
B-14
20 Net asset value per share
Unaudited Audited
2011 2010
US$ 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 calculated
based 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 Audited
2011 2010
US$ US$
Exploration and evaluation assets 2,157,741 195,000
Plant 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 respect
of properties are payable as follows:
Unaudited Audited
2011 2010
US$ US$
Within 1 year 90,771 95,510
After 1 year but within 5 years 67,374 93,968
After 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 the
Group if the Group has the ability, directly or indirectly, to control the party or exercise significant
influence over the party in making financial and operating decisions, or vice versa, or where the
Group and the party are subject to common control or common significant influence. Related
parties may be individuals or other entities.
Related party transactions
Other than disclosed elsewhere in the interim financial information, there were no significant
related party transactions.
B-15
23 Subsequent events
On 14 October 2011, the holders of the convertible notes of approximately US$3,039,837 have
converted the convertible notes which bear interests of 6% to 10% per annum into 730,086
ordinary shares.
On 14 October 2011, the Company issued and aggregate of 374,999,999 ordinary shares to the
shareholders 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 Companys
shareholders approved, inter alia, the following:
(a) the conversion of the Company into a public listed company and the consequential change
of 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 Finance
Pte. Ltd. in part satisfaction of their management fee as Manager and Sponsor of the Initial
Public Offering of the Company;
(d) the allotment and issue of 2,022,000 ordinary shares to Chen Yan, the Chief Financial
Officer of the Company;
(e) the allotment and issue of 23,900,000 ordinary shares in connection with the Initial Public
Offering of the shares of the Company on the Catalist Board of the Singapore Exchange
Limited. The new shares, when fully paid up will rank pari passu in all respects with the
existing shares of the Company;
(f) the approval of the listing and quotation of all issued ordinary shares (including the new
ordinary shares to be issued and allotted pursuant to the Initial Public Offering) and the
ordinary shares awarded under the CNMC Performance Share Plan on the Catalist Board of
the Singapore Exchange Limited;
(g) the adoption of the CNMC Performance Share Plan, and the authorisation of the Companys
Directors, pursuant to Section 161 of the Companies Act, to allot and issue ordinary shares
granted under the CNMC Performance Share Plan; and
(h) that authority be given to the Directors, pursuant to Section 161 of the Companies Act and
by way of ordinary resolution in a general meeting to issue shares by way of rights, bonus,
agreements, options, warrants, debentures, convertible securities or other instruments
convertible into ordinary shares. Any issue of shares will need to comply with SGX-ST
Listing Manual Section B: Rules of Catalist.
The discussion below provides information about certain provisions of our Memorandum and Articles of
Association and the laws of Singapore. This description is only a summary and is qualified by reference
to the laws of Singapore and our Articles.
The instruments that constitute and define our Company are the Memorandum and Articles of
Association of our Company.
Memorandum of Association
The registration number with which our Company was incorporated is 201119104K. Our Memorandum of
Association states that the liability of our Shareholders is limited to the amount, if any, for the time being
unpaid on the shares respectively held by them.
Articles of Association
The provisions in the Articles of Association of our Company relating to:
(a) a Directors power to vote on a proposal, arrangement or contract in which the Director is
interested
Article 100
A Director shall not vote in respect of any contract or arrangement or any other proposal
whatsoever in which he has any personal material interest, directly or indirectly. A Director shall not
be counted in the quorum at a meeting in relation to any resolution on which he is debarred from
voting.
(b) the Directors power to vote on remuneration (including pension or other benefits) for himself or for
any other director, and whether the quorum at a meeting of the board of Directors to vote on
Directors 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 an
Ordinary Resolution of the Company, shall not be increased except pursuant to an Ordinary
Resolution passed at a General Meeting where notice of the proposed increase shall have been
given in the notice convening the General Meeting and shall (unless such resolution otherwise
provides) be divisible among the Directors as they may agree, or failing agreement, equally, except
that any Director who shall hold office for part only of the period in respect of which such
remuneration is payable shall be entitled only to rank in such division for a proportion of
remuneration related to the period during which he has held office. The ordinary remuneration of
an executive Director may not include a commission on or a percentage of turnover and the
ordinary remuneration of a non-executive Director shall be a fixed sum, and not by a commission
on 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, or
who otherwise performs services which in the opinion of the Directors are outside the scope of the
ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or
otherwise as the Directors may determine, provided that such extra remuneration (in case of an
executive Director) shall not be by way of commission on or a percentage of turnover and (in the
case of a Director other than a non-executive Director) shall be a fixed sum, and not by a
commission on or a percentage of profits or turnover.
APPENDIX C SELECTED EXTRACTS OF OUR ARTICLES OF ASSOCIATION
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Article 79
The Directors may repay to any Director all such reasonable expenses as he may incur in
attending and returning from meetings of the Directors or of any committee of the Directors or
General 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 the
time being holding any executive office and for the purpose of providing any such pensions or
other 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 all
the powers of the Company to borrow money, to mortgage or charge its undertaking, property and
uncalled capital and to issue debentures and other securities, whether outright or as collateral
security 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 is
not a multiple of three, the number nearest to but not less than one-third) shall retire from office by
rotation, Provided that no Director holding office as Managing Director shall be subject to
retirement by rotation or be taken into account in determining the number of Directors to retire. For
the 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 retire
and not to offer himself for re-election. Any further Directors so to retire shall be those of the other
Directors 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-elected
Directors 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 these
Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring
Director or some other person eligible for appointment. In default, the retiring Director shall be
deemed 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 following
Article; or
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(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 is
passed 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 or
deemed to have been re-elected will continue in office without a break.
(e) the number of shares, if any, required for Directors qualification
Article 76
A Director shall not be required to hold any shares of the Company by way of qualification. A
Director who is not a Member of the Company shall nevertheless be entitled to receive notice of
and 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 without
the 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 rights
attached to any shares for the time being issued, the Directors may allot and issue shares or
grant options over or otherwise dispose of the same to such persons on such terms and
conditions and for such consideration and at such time and whether or not subject to the
payment of any part of the amount thereof in cash or otherwise as the Directors may think
fit, and any shares may, subject to compliance with Sections 70 and 75 of the Act, be issued
with such preferential, deferred, qualified or special rights, privileges, conditions or
restrictions, whether as regards Dividend, return of capital, participation in surplus assets
and profits, voting, conversion or otherwise, as the Directors may think fit, and preference
shares 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 with
the Act, Provided Always that no options shall be granted over unissued shares except in
accordance with the Act and the Designated Stock Exchanges listing rules.
(B) The Directors may, at any time after the allotment of any share but before any person has
been entered in the Register of Members as the holder, recognise a renunciation thereof by
the allottee in favour of some other person and may accord to any allottee of a share a right
to effect such renunciation upon and subject to such terms and conditions as the Directors
may think fit to impose.
(C) Except so far as otherwise provided by the conditions of issue or by these Articles, all new
shares shall be issued subject to the provisions of the Statutes and of these Articles with
reference 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 shares
shall not at any time exceed the total number of the issued ordinary shares. Preference
shareholders shall have the same rights as ordinary shareholders as regards receiving of
notices, reports and balance-sheets and attending General Meetings of the Company, and
preference shareholders shall also have the right to vote at any General Meeting convened
for the purpose of reducing capital or winding-up or sanctioning a sale of the undertaking of
the Company or where the proposal to be submitted to the General Meeting directly affects
their rights and privileges or when the Dividend on the preference shares is more than six
months in arrear.
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(B) The Company has power to issue further preference capital ranking equally with, or in
priority to, preference shares already issued.
Article 9
(A) Whenever the share capital of the Company is divided into different classes of shares, the
variation or abrogation of the special rights attached to any class may, subject to the
provisions 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 a
Special Resolution passed at a separate General Meeting of the holders of the shares of the
class (but not otherwise) and may be so made either whilst the Company is a going concern
or during or in contemplation of a winding-up. To every such separate General Meeting all
the provisions of these Articles relating to General Meetings of the Company and to the
proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be
two or more persons holding at least one-third of the total number of the issued shares of
the class present in person or by proxy or attorney and that any holder of shares of the class
present in person or by proxy or attorney may demand a poll and that every such holder
shall on a poll have one vote for every share of the class held by him where the class is a
class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for
every share of the class where the class is a class of preference shares within the meaning
of Section 180(2) of the Act, Provided Always that where the necessary majority for such a
Special Resolution is not obtained at such General Meeting, the consent in writing, if
obtained from the holders of three-quarters of the total number of the issued shares of the
class concerned within two months of such General Meeting, shall be as valid and effectual
as a Special Resolution carried at such General Meeting.
(B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference
capital (other than redeemable preference capital) and any variation or abrogation of the
rights attached to preference shares or any class thereof.
(C) The special rights attached to any class of shares having preferential rights shall not unless
otherwise expressly provided by the terms of issue thereof be deemed to be varied by the
creation or issue of further shares ranking as regards participation in the profits or assets of
the Company in some or all respects pari passu therewith but in no respect in priority
thereto.
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 any
limitation thereof as may be prescribed by the Designated Stock Exchange from time to time) after
the closing date of any application for shares or (as the case may be) the date of lodgement of a
registrable transfer, to one certificate for all his shares of any one class or to several certificates in
reasonable 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 by
law or by the rules, bye-laws or listing rules of the Designated Stock Exchange) but the
Directors may in their discretion decline to register any transfer of shares upon which the
Company has a lien, and in the case of shares not fully paid up, may refuse to register a
transfer to a transferee of whom they do not approve, Provided Always that in the event of
the Directors refusing to register a transfer of shares, the Company shall within ten market
days (or such period as the Directors may determine having regard to any limitation thereof
as may be prescribed by the Designated Stock Exchange from time to time) after the date
on which the application for a transfer of shares was made, serve a notice in writing to the
applicant stating the facts which are considered to justify the refusal as required by the
Statutes.
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(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 determine
having regard to any limitation thereof as may be prescribed by the Designated Stock
Exchange from time to time) as the Directors may from time to time require is paid to
the Company in respect thereof;
(ii) the amount of proper duty (if any) with which each instrument of transfer is chargeable
under 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) as
the Directors may appoint accompanied by a certificate of payment of stamp duty (if
stamp duty is payable on such instrument of transfer in accordance with any law for
the time being in force relating to stamp duty), the certificates of the shares to which it
relates, and such other evidence as the Directors may reasonably require to show the
right of the transferor to make the transfer and, if the instrument of transfer is executed
by 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, or
where 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 vote
thereat 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 the
Company, the Company being entitled to deem each such Depositor, or each proxy of a
Depositor who is to represent the entire balance standing to the Securities Account of the
Depositor, to represent such number of shares as is actually credited to the Securities
Account of the Depositor as at such time, according to the records of CDP as supplied by
CDP to the Company, and where a Depositor has apportioned the balance standing to his
Securities Account between two proxies, to apportion the said number of shares between
the two proxies in the same proportion as previously specified by the Depositor in appointing
the proxies; and accordingly no instrument appointing a proxy of a Depositor shall be
rendered invalid merely by reason of any discrepancy between the proportion of Depositors
shareholding specified in the instrument of proxy, or where the balance standing to a
Depositors Securities Account has been apportioned between two proxies the aggregate of
the proportions of the Depositors shareholding they are specified to represent, and the true
balance standing to the Securities Account of a Depositor as at the time of the General
Meeting, 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 the
extent of the payment discharge the Company from any further liability in respect of the
payment;
(c) the delivery by the Company to CDP of provisional allotments or share certificates in respect
of the aggregate entitlements of Depositors to new shares offered by way of rights issue or
other preferential offering or bonus issue shall to the extent of the delivery discharge the
Company from any further liability to each such Depositor in respect of his individual
entitlement; and
(d) the provisions in these Articles relating to the transfers, transmissions or certification of
shares shall not apply to the transfer of book-entry securities (as defined in the Statutes).
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Article 42
Except as required by the Statutes or law, no person shall be recognised by the Company as
holding any share upon any trust, and the Company shall not be bound by or compelled in any
way to recognise (even when having notice thereof) any equitable, contingent, future or partial
interest in any share, or any interest in any fractional part of a share, or (except only as by these
Articles 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 these
Articles contained relating to CDP or to Depositors or in any depository agreement made by the
Company 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 person
or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this
purpose seniority shall be determined by the order in which the names stand in the Register of
Members or, as the case may be, the order in which the names appear in the Depository Register
in respect of the joint holding.
Article 64
Where in Singapore or elsewhere a receiver or other person (by whatever name called) has been
appointed by any court claiming jurisdiction in that behalf to exercise powers with respect to the
property or affairs of any Member on the ground (however formulated) of mental disorder, the
Directors may in their absolute discretion, upon or subject to production of such evidence of the
appointment as the Directors may require, permit such receiver or other person on behalf of such
Member, to vote in person or by proxy at any General Meeting, or to exercise any other right
conferred 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 either
personally or by proxy or to exercise any other right conferred by membership in relation to
General Meetings if any call or other sum payable by him to the Company in respect of such
shares 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 the
proportion between the amount paid and the amount (if any) unpaid on each reduced share
shall 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 behalf
have not been taken or agreed to be taken by any person or which have been forfeited and
diminish the amount of its share capital by the number of the shares so cancelled.
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Article 11
(A) The Company may reduce its share capital or any other undistributable reserve in any
manner permitted, and with, and subject to, any incident authorized, and consent or
confirmation required, by law.
(B) The Company may purchase or otherwise acquire its issued shares subject to and in
accordance with the provisions of the Statutes and any applicable rules of the Designated
Stock Exchange (hereafter, the Relevant Laws), on such terms and subject to such
conditions as the Company may in General Meeting prescribe in accordance with the
Relevant 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 immediately
on 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, the
Company may hold or deal with any such share which is so purchased or acquired by it in
such manner as may be permitted by, and in accordance with the Relevant Laws. Without
prejudice to the generality of the foregoing, upon cancellation of any share purchased or
otherwise acquired by the Company pursuant to these Articles and the Statutes, the number
of 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 the
Company, 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 necessary
to change the rights
Article 9
(A) Whenever the share capital of the Company is divided into different classes of shares, the
variation or abrogation of the special rights attached to any class may, subject to the
provisions 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 a
Special Resolution passed at a separate General Meeting of the holders of the shares of the
class (but not otherwise) and may be so made either whilst the Company is a going concern
or during or in contemplation of a winding-up. To every such separate General Meeting all
the provisions of these Articles relating to General Meetings of the Company and to the
proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be
two or more persons holding at least one-third of the total number of the issued shares of
the class present in person or by proxy or attorney and that any holder of shares of the class
present in person or by proxy or attorney may demand a poll and that every such holder
shall on a poll have one vote for every share of the class held by him where the class is a
class of equity shares within the meaning of Section 64(1) of the Act or at least one vote for
every share of the class where the class is a class of preference shares within the meaning
of Section 180(2) of the Act, Provided Always that where the necessary majority for such a
Special Resolution is not obtained at such General Meeting, the consent in writing, if
obtained from the holders of three-quarters of the total number of the issued shares of the
class concerned within two months of such General Meeting, shall be as valid and effectual
as a Special Resolution carried at such General Meeting.
(B) The provisions in Article 9(A) shall mutatis mutandis apply to any repayment of preference
capital (other than redeemable preference capital) and any variation or abrogation of the
rights attached to preference shares or any class thereof.
(C) The special rights attached to any class of shares having preferential rights shall not unless
otherwise expressly provided by the terms of issue thereof be deemed to be varied by the
creation or issue of further shares ranking as regards participation in the profits or assets of
the Company in some or all respects pari passu therewith but in no respect in priority
thereto.
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(i) dividends and distribution
Article 123
The Company may by Ordinary Resolution declare Dividends but no such Dividend shall exceed
the 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 fixed
Dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for
the payment thereof and may also from time to time declare and pay interim Dividends on shares
of 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 as
otherwise permitted under the Act:
(a) all Dividends in respect of shares must be paid in proportion to the number of shares held
by a Member, but where shares are partly paid, all Dividends must be apportioned and paid
proportionately 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 or
credited as paid during any portion or portions of the period in respect of which the Dividend
is paid.
For the purposes of this Article, an amount paid or credited as paid on a share in advance of a call
is to be ignored.
Article 126
(A) No Dividend shall be paid otherwise than out of profits available for distribution under the
provisions of the Statutes. The payment by the Directors of any unclaimed dividends or other
moneys payable on or in respect of a share into a separate account shall not constitute the
Company a trustee in respect thereof. All Dividends remaining unclaimed after one year from
having been first payable may be invested or otherwise made use of by the Directors for the
benefit of the Company, and any Dividend or any such moneys unclaimed after six years
from having been first payable shall be forfeited and shall revert to the Company Provided
Always that the Directors may at any time thereafter at their absolute discretion annul any
such forfeiture and pay the Dividend so forfeited to the person entitled thereto prior to the
forfeiture. If CDP returns any such Dividend or moneys to the Company, the relevant
Depositor shall not have any right or claim in respect of such Dividend or moneys against
the Company if a period of six years has elapsed from the date of the declaration of such
Dividend 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 Depositor
shall, to the extent of the payment made, discharge the Company from any liability to the
Depositor 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 the
Company.
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Article 128
(A) The Directors may retain any Dividend or other monies payable on or in respect of a share
on which the Company has a lien and may apply the same in or towards satisfaction of the
debts, 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 person
is under the provisions as to the transmission of shares herein before contained entitled to
become a Member, or which any person is under those provisions entitled to transfer, until
such 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 not
under seal) shall be effective only if such document is signed by the Member (or the person
entitled to the share in consequence of the death or bankruptcy of the holder) and delivered to the
Company 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 direct
payment of a Dividend in whole or in part by the distribution of specific assets (and in particular of
paid-up shares or debentures of any other company) and the Directors shall give effect to such
resolution. Where any difficulty arises with regard to such distribution, the Directors may settle the
same as they think expedient and in particular, may issue fractional certificates, may fix the value
for distribution of such specific assets or any part thereof, may determine that cash payments shall
be made to any Member upon the footing of the value so fixed in order to adjust the rights of all
parties 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 cheque
or 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 two
or more persons are registered in the Register of Members or (as the case may be) entered in the
Depository Register as joint holders of the share or are entitled thereto in consequence of the
death or bankruptcy of the holder, to any one of such persons) or to such person and such
address as such Member or person or persons may by writing direct. Every such cheque or
warrant shall be made payable to the order of the person to whom it is sent or to such person as
the holder or joint holders or person or persons entitled to the share in consequence of the death
or bankruptcy of the holder may direct and payment of the cheque or warrant by the banker upon
whom it is drawn shall be a good discharge to the Company. Every such cheque or warrant shall
be 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) the
Depository Register as joint holders of any share, or are entitled jointly to a share in consequence
of the death or bankruptcy of the holder, any one of them may give effectual receipts for any
Dividend or other moneys payable or property distributable on or in respect of the share.
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Article 133
Any resolution declaring a Dividend on shares of any class, whether a resolution of the Company
in General Meeting or a resolution of the Directors, may specify that the same shall be payable to
the persons registered as the holders of such shares in the Register of Members or (as the case
may be) the Depository Register at the close of business on a particular date and thereupon the
Dividend shall be payable to them in accordance with their respective holdings so registered, but
without prejudice to the rights inter se in respect of such Dividend of transferors and transferees of
any such shares.
(j) any limitation on the right to own Shares, including limitations on the right of non-resident or
foreign 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 General
Meeting or except as permitted by the rules of the Designated Stock Exchange, all new
shares shall before issue be offered to such persons who as at the date (as determined by
the Directors) of the offer are entitled to receive notices from the Company of General
Meetings in proportion, as far as the circumstances admit, to the number of the existing
shares to which they are entitled. The offer shall be made by notice specifying the number of
shares offered, and limiting a time within which the offer, if not accepted, will be deemed to
be declined, and, after the expiration of that time, or on the receipt of an intimation from the
person to whom the offer is made that he declines to accept the shares offered, the
Directors may dispose of those shares in such manner as they think most beneficial to the
Company. The Directors may likewise so dispose of any new shares which (by reason of the
ratio which the new shares bear to shares held by persons entitled to an offer of new
shares) cannot, in the opinion of the Directors, be conveniently offered under this Article
5(A).
(B) Notwithstanding Article 5(A) above, the Company may by Ordinary Resolution in General
Meeting give to the Directors a general authority, either unconditionally or subject to such
conditions 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) that
might or would require shares to be issued, including but not limited to the
creation and issue of (as well as adjustments to) warrants, debentures or other
instruments convertible into shares; and
(b) (notwithstanding the authority conferred by the Ordinary Resolution may have ceased
to be in force) issue shares in pursuance of any Instrument made or granted by the
Directors while the Ordinary Resolution was in force,
Provided that:
(1) the aggregate number of shares to be issued pursuant to the Ordinary
Resolution (including shares to be issued in pursuance of Instruments made or
granted pursuant to the Ordinary Resolution) shall be subject to such limits and
manner of calculation as may be prescribed by the Designated Stock
Exchange;
(2) in exercising the authority conferred by the Ordinary Resolution, the Company
shall comply with the provisions of the listing rules of the Designated Stock
Exchange for the time being in force (unless such compliance is waived by the
Designated Stock Exchange) and these Articles; and
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(3) (unless revoked or varied by the Company in General Meeting) the authority
conferred by the Ordinary Resolution shall not continue in force beyond the
conclusion of the Annual General Meeting of the Company next following the
passing of the Ordinary Resolution, or the date by which such Annual General
Meeting of the Company is required by law to be held, or the expiration of such
other 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 not
to offer new shares to Members to whom by reason of foreign securities laws, such offers
may 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 and
conditions as the Company may direct.
Article 34
(A) There shall be no restriction on the transfer of fully paid up shares (except where required by
law or by the rules, bye-laws or listing rules of the Designated Stock Exchange) but the
Directors may in their discretion decline to register any transfer of shares upon which the
Company has a lien, and in the case of shares not fully paid up, may refuse to register a
transfer to a transferee of whom they do not approve, Provided Always that in the event of
the Directors refusing to register a transfer of shares, the Company shall within ten market
days (or such period as the Directors may determine having regard to any limitation thereof
as may be prescribed by the Designated Stock Exchange from time to time) after the date
on which the application for a transfer of shares was made, serve a notice in writing to the
applicant stating the facts which are considered to justify the refusal as required by the
Statutes.
(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 determine
having regard to any limitation thereof as may be prescribed by the Designated Stock
Exchange from time to time) as the Directors may from time to time require is paid to
the Company in respect thereof;
(b) the amount of proper duty (if any) with which each instrument of transfer is chargeable
under 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) as
the Directors may appoint accompanied by a certificate of payment of stamp duty (if
stamp duty is payable on such instrument of transfer in accordance with any law for
the time being in force relating to stamp duty), the certificates of the shares to which it
relates, and such other evidence as the Directors may reasonably require to show the
right of the transferor to make the transfer and, if the instrument of transfer is executed
by 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 as
holding any share upon any trust, and the Company shall not be bound by or compelled in any
way to recognise (even when having notice thereof) any equitable, contingent, future or partial
interest in any share, or any interest in any fractional part of a share, or (except only as by these
Articles 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 these
Articles contained relating to CDP or to Depositors or in any depository agreement made by the
Company with any common depository for shares shall in any circumstances be deemed to limit,
restrict or qualify the above.
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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) on
27 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 comprising
of 500,000 ordinary shares of MYR1.00 each. The shareholders of CMNM as at the date of this
Report and their respective shareholding are as follows:
Number of Percentage of
Name 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, CMNM
had 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 other
CNMC subsidiaries for Lead-Zinc rock mining at the mining site and to jointly manage mining
production.
On 13 March 2011, CMNM-Juyuan Mining Service Sdn. Bhd. (CMNM-Juyuan) was incorporated
as the joint venture company. Pursuant to the joint venture agreement, CMNM and Xiamen shall
hold 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 also
the present directors of CMNM-Juyuan. The Management has informed us that the 3 subscriber
shares will be transferred and new shares will be issued and allotted to CMNM and Xiamen
respectively in the proportion of 51% : 49%. Notwithstanding this, as at the date of this Report, the
Management has informed us that the shares have yet to be issued and allotted to CMNM and
Xiamen. 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 letter
PTG.KN.SG.20/2/178(33) dated 23 April 2007 for the purpose of undertaking the operation of
exploring, mining, removing, processing and selling gold in an area covering approximately 957.52
hectares 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) where
the parties agreed to combine their respective resources to explore, exploit, win and obtain gold
and other minerals from the Sokor Block through CMNM.
APPENDIX D ABRIDGED DUE DILIGENCE REPORT
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1.3 Following the payment by CNMC of an amount of MYR1,018,020.00 to the Department of Lands
and Mines of Kelantan on 13 June 2007 as stipulated under the Original Agreement, the mining
lease for Lot 2014 pursuant to ML 2/2008 (Mining Lease) was issued to KSEDC pursuant to the
Kelantan Mineral Enactment 2001 (Mineral Enactment) for a term of 10 years commencing from
8 April 2008 and expiring on 7 April 2018. There are conditions attached to the Mining Lease as
well as statutory conditions to which the holder of the Mining Lease must comply with. We are
unable to independently verify the compliance with the conditions by the holder of the Mining
Lease however the Management has informed us that to the best of their knowledge all conditions
to 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 the
valid grant of the mining rights under the Original Agreement and treatment of revenue by CMNM
and CNMC, a tripartite agreement dated 21 April 2011 (Tripartite Agreement) was entered into
between CNMC, CMNM and KSEDC to further give effect to the spirit and intent of the Original
Agreement wherein:
(a) certain terms of the Original Agreement were revised as more particularly described in
Paragraph B1.5.3 below.
(b) CMNM is included as a party to the Original Agreement wherein the terms and obligations
stated therein were extended to CMNM; and
(c) the Tripartite Agreement is supplemental to the Original Agreement and the Original
Agreement 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 (Mining
Rights) to carry on the mining, removing, processing and selling of the gold (Works) on
the Sokor Block for a period of 10 years from the date of issuance of the Mining Lease. It
should be noted that the Mining Lease is held by KSEDC and not by CNMC or
CMNM. CNMC and CMNM have only been granted Mining Rights in contractual
nature pursuant to the Agreements. It is provided under the Original Agreement that
KSEDC shall use its best endeavour before 1 year from the expiry of the Mining Lease to
apply for the renewal of the Mining Lease in CNMCs name for the next 21 years subject to
the consent and approval of the Kelantan State Authority and the right of first refusal by
CNMC provided always that CNMC had settled all payments due to the Kelantan State
Authority 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 and
all operations for the exploration of mining, development and production of precious metals
including gold and other minerals (Mining Operations) on the Sokor Block through
CMNM which has been set up for this purpose.
1.5.3 After the Mining Lease was issued, CMNM, CNMC and KSEDC entered into the Tripartite
Agreement. The Tripartite Agreement states inter alia that:
(a) KSEDC, as the holder of the Mining Lease, grants CMNM the exclusive right to carry
out the Works and the Mining Operations at the Sokor Block as stated in the Original
Agreement;
(b) all Works and Mining Operations carried out by CMNM subject to the CMNM Board
of Directors approvals to such Works done in accordance with the Original
Agreement prior to the date of the Tripartite Agreement when entered into are ratified
by KSEDC and CNMC;
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(c) all gold and minerals mined, processed and obtained by CMNM shall belong to and
beneficially-owned by CMNM;
(d) CMNM shall pay KSEDC a tribute amounting to 5% of the gross proceeds of the
sales value of other minerals when executed from the Said Area, subject to State
Approval;
(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 are
extended 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 executed
to the Kelantan State Authority and the payment of royalty to be effected as prescribed in
the Kelantan Mineral Regulations 2002;
1.6.2 a tribute amounting to 3% of the gross proceeds of the sales value of primary gold when
executed to KSEDC;
1.6.3 a tribute amounting to 10% of the gross proceeds of the sales value of alluvial and eluvial
gold when executed to KSEDC; and
1.6.4 a tribute amounting to 5% of the gross proceeds of the sales value of other minerals when
executed to KSEDC.
The Management has confirmed that as at the date of this Report, all royalties and tribute have
been 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 CMNM
were 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 prior
written consent of KSEDC. The shareholding in CMNM shall be maintained in the
proportion 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 of
CMNM.
1.7.2 We note that there has been a change in shareholding in CMNM through the transfer of
5,000 shares from Hu Pang Chaw to CNMC Goldmine Ltd on 16 July 2011 and a change
in directors in CMNM with the resignation of Lee Kong Hian as director of CMNM. CMNM
has on 16 August 2011 obtained the written consent of KSEDC in relation to the above
changes.
2. Approved Operational Mining Scheme
2.1 The Department of Mineral and Geosciences of Kelantan had on 19 July 2010 issued its approval
to KSEDC under Section 10 of the Mineral Development Act 1994 (MDA) for the operational
mining scheme dated 31 May 2010 to carry out small scale operation by CMNM on the Sokor
Block. The approved operational mining scheme expired on 29 June 2011 and was renewed for a
further period from 30 June 2011 to 29 June 2012.
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2.2 The approved operational mining scheme is subject to certain conditions. We are unable to
independently verify compliance with the conditions under the approved operations mining scheme
however the Management has informed us that all the conditions under the approved operational
mining 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 Director
and the Superintendant of Mines upon commencement of any development work on the land
which is the subject of the Mining Lease and within 14 days before commencing to mine the said
land.
3.2 CMNM had issued a letter dated 21 February 2011 notifying the Department of Mineral and
Geosciences of Kelantan of the commencement of work on the land under the Mining Lease from
July 2010. Notwithstanding the aforesaid, it should be noted that the notice was issued after the
commencement 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 2
December 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 the
event of a change in the shareholding structure of composition of the board of directors of CMNM
and to utilise the services of Malaysian citizens including appointment of distributors which are
owned by Malaysian citizens where at least 30% of domestic sales are to be distributed by
Bumiputera distributors. We are unable to independently verify compliance with the conditions
under the manufacturing licence however the Management has confirmed that all conditions
attached 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 be
issued with valid certificates of fitness before it is permitted to be operated. As at the date of this
Report, CMNM is in possession of two unfired pressure vessels (air compressor) which require
certificates 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 of
the Chief Inspector of Factories and Machinery (CI(FM)). CMNM had lodged the prescribed
notices 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 the
machineries 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 month
after he has served on the CI(FM) a notice in the prescribed form. CMNM had served the
prescribed notice on CI(FM) however it should be noted that the prescribed notice was served on
CI(FM) after the premises commenced its use as a factory in July 2010. Notwithstanding that, it
should be noted that CI(FM) had responded on 14 April 2011 that CMNM had been duly registered
with the Department of Occupational Safety and Health (DOSH) and provided CMNM with a
Workplace 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 or
operating installations unless the installations are registered on a valid Certificate of Registration.
Installations are defined under the Electricity Supply Act 1990 to include generators.
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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 whereas
the back-up generator does not need to be issued with a certificate of registration in accordance to
Section 21(2) of the Electricity Supply Act 1990.
6.3 We have sighted the certificates of registration issued by the Energy Commission for both
generators owned by CMNM.
6.4 The certificates of registration are subject to conditions imposed by the Energy Commission. The
Management has confirmed to us that all conditions attached to the Certificate of Registration for
generators 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 the
Schedule of the Control of Supplies Regulations 1974 requires a person to possess letters of
authority 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 and
Co-operatives pursuant to the Control of Supplies Act issued to CMNM to purchase and store a
maximum of 24,570 litres of diesel at Sokor Block. This letter is valid for a period from 8 June 2011
to 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 conditions
attached 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 CMNMs
application for a pioneer status incentive under the Promotion of Investments Act 1986 where
CMNM 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 the
total 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 of
the approval by submitting the relevant corporate documents to MIDA. CMNM is also required to
inform MIDA if CMNM changes its factory site. The Management has informed us that CMNM has
yet 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 expatriate
personnel comprising 2 expatriate Metallurgy Engineers and 2 expatriate Mechanical and Electrical
Engineers, for a period of 5 years and subject to the condition that CMNM shall train Malaysian
citizens to take over this position upon the expiry of the said period.
D-5
9.2 The 2 expatriates from the Peoples Republic of China (PRC) were appointed, namely Lian
Lihong and Li LianGuo, both of whom are engineers providing technical support in the installation
drilling machine at the Sokor Block. We have sighted a copy of their professional visit passes
which entitles both Lian Lihong and Li LianGuo to enter West Malaysia and Sabah and remain until
24 June 2011 and 4 July 2011 respectively.
9.3 The Management has informed us that the employment contract for Li LianGuo has expired and
that he has returned to PRC. We have also been informed that Lian Lihong has returned to PRC
on 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 issued
by the Energy Commission to CMNM required the generators owned by CMNM to be worked or
operated by or under the control of competent persons qualified under the Electricity Supply Act
1990 and the Electricity Regulations 1994.
10.2 The Management has hired a competent person with the Energy Commission to work and operate
the generators owned by CMNM. As such, they are in compliance with Section 23 of the Electricity
Supply 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 the
Environmental Impact Assessment (EIA) Report submitted by CMNM for the Sokor Block
pursuant to Section 34A of the EQA, subject to certain conditions (EIA Approval). The EIA
Approval 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 14
April 2011 respectively (DOE Notices) stating that CMNM had failed to comply with several
conditions under the EIA Approval and accordingly directed and ordered CMNM to comply with the
said 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 had
complied with and carried out all directions and orders under the DOE Notices.
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2. Compliance with Safety and Health Laws
2.1 CMNM is in compliance with all safety and health laws, including establishing a safety and health
committee, having safety and health committee meetings, formulating safety and health policies,
appointing a safety and health officer and notifying DOSH of accidents and dangerous
occurrences.
2.2 DOSH has sent a notice dated 17 March 2011 to CMNM ordering CMNM to comply with certain
safety and health matters immediately and to submit a status report by 17 April 2011. CMNM has
responded to DOSH by submitting a status report on 12 April 2011 stating that they have complied
with 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 with
the remedial work carried out by CMNM pursuant to DOSHs 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 are
expatriate engineers appointed pursuant to MIDAs letter of approval to CMNM dated 18 June
2010. The Management has confirmed that that the employment contract for Li Lianguo has
expired 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 the
months of July, August and September 2011 and Employees Social Security (SOCSO)
contribution statements for the months of June, July and August 2011 filed by CMNM for all local
workers evidencing that CMNM has contributed EPF and SOCSO for all local workers for that
month in accordance to the Employees Provident Fund Act 1991 and the Employees Social
Security Act 1969. The Management has also confirmed that all EPF and SOCSO contributions
are up-to-date.
3. A former employee of CMNM, Mr. Ong Shih Sheh, had lodged a complaint pursuant to Section 20
of the Industrial Relations Act 1967 against CMNM where the former employee is alleging that he
was dismissed without just cause or excuse by CMNM and is seeking reinstatement by CMNM. An
action under Section 20 of the Industrial Relations Act 1967 must be brought by an employee who
is seeking reinstatement in his former employment. Pursuant to this complaint, the Minister of
Labour may if he thinks fit, refer the complaint to the Industrial Court for an award. We understand
that the matter is still undergoing negotiations.
4. The Industrial Relations Department of Kelantan had on 9 August 2011 issued a notice to CMNM
to attend for negotiation on 21 August 2011 to be attended by CMNM, the former employee and
the Industrial Relations Department of Kelantan. The negotiation was subsequently postponed to
September 2011.
5. However, the Management has informed us that the Industrial Relations Department of Kelantan
has indicated that they will drop the case since Mr. Ong Shih Sheh is not interested in seeking
reinstatement. However, as at the date of this Report, no formal notice has been issued by the
Department.
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II. CNMC-NALATA MINING SDN. BHD (Company No. 804206-X) (CNMC-NALATA)
1. CNMC-Nalata was duly incorporated in Malaysia under the Companies Act on 24 January 2008
under its present name to carry on the business as mining, planters, cultivators and land
developers. 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 is
MYR500,000.00 comprising of 500,000 ordinary shares of MYR1.00 each. As at the date of this
Report, the shareholders of CNMC-Nalata and their respective shareholding are as follows:
CNMC 400,000 80%
Hu Pang Chaw 25,000 5%
Nalata Enterprise Sdn. Bhd. 25,000 5%
Total 500,000 100%
3. As at the date of this report, the directors of CNMC-Nalata are Hu Pang Chaw, Abdul Halim bin
Mohd Yusoff, Lin Xiang Xiong @ Lin Ye and Choo Chee Kong and the Secretary of CNMC-Nalata
is Tan Siew Chin.
4. As at the date of this Report, CNMC-Nalata does not have any subsidiaries or associated
companies.
1. A mining certificate dated 14 October 1997 was issued by the Kelantan State Authority to Nalata
Enterprise Sdn. Bhd. (Nalata) for the Kuala Krai Mining Area located at PT. 541, District of Kuala
Krai, Daerah Dabong, Mukim Kandek, Kelantan, Malaysia (Kuala Krai Mining Area). The mining
certificate 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 licence
for the Kuala Krai Mining Area and it was agreed that CNMC shall pay to the Director of Lands and
Mines of Kelantan the sum of MYR125,370.00 being fees for renewal of the mining licence and late
submission and arrears of quit rent on or before 14 November 2007. In consideration of CNMC
paying the renewal application fees to the authority, Nalata shall obtain an approval letter from the
Director of Land and Mines for renewal of the mining licence for a period of 10 + 21 years. The
Transfer Agreement shall immediately terminate if the approval for the renewal of the mining
licence 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. The
Management confirmed that there is currently no renewal to the mining certificate but intends to
apply for the renewal of the said mining certificate subject to geologists analysis of potential. The
Management also verbally confirmed that no renewal fees have been paid by CNMC as required in
the Transfer Agreement so far. Notwithstanding that CNMC-Nalata has not been issued with any
mining licence at the Kuala Krai Mining Area, the Management has informed us that the Transfer
Agreement is still subsisting.
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III. MCS MINING GROUP SDN. BHD (Company No. 668128-K) (MCS)
1. MCS was duly incorporated in Malaysia under the Companies Act on 4 October 2004 under its
present name. We had been informed by the Management that as at the date of this Report, MCS
is 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 is
MYR1,000,000.00 comprising of 1,000,000 ordinary shares of MYR1.00 each. As at the date of
this Report, the shareholders of MCS and their respective shareholding are as follows:
Kho Ah Tee JP 25,000 2.5%
CNMC 875,000 87.5%
Total 1,000,000 100%
3. As at the date of this Report, the directors of MCS are Hu Pang Chaw, Abdul Halim bin Mohd
Yusoff, Lin Xiang Xiong @ Lin Ye and Choo Chee Kong and the present Secretary of MCS is Tan
Siew Chin.
4. As at the date of this Report, MCS does not have any subsidiaries or associated companies.
1. The Kelantan Chief Ministers Office had on 17 May 2005 issued a letter to MCS (Chief
Ministers Letter) stating that subject to formal approval from the State Authority, MCS is granted
authorization to explore all minerals in the State Land (Forest Reserve) covering an area of
approximately 8,330 acres (33.71 sq km) in the Districts of Kuala Krai, Jeli and Tanah Merah in
Kelantan, Malaysia. The Chief Ministers Letter refers to this initial area of 8,330 acres (33.71 sq
km) as First Phase. It further states that a remaining area of 21,670 acres (87.69 sq km) will be
approved as the Second Phase of the exploration based on an exploration plan which has not
been submitted by MCS to the State Authority.
2. The Chief Ministers Letter states that subject to the formal approval to be issued by the State
Authority, 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 fees
payable under the Chief Ministers Letter.
4. Subsequently, a letter dated 14 July 2005 was issued by Director of Lands and Mines, Kelantan to
MCS granting MCS the approval to explore gold in District of Tanah Merah, District of Jeli and
District of Kuala Krai over an area of 15,518.45 acres (62.8 sq km) (State Authoritys Letter).
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5. Pursuant to the State Authoritys Letter, an Exploration Licence in Form E was issued to MCS
dated 10 April 2006 to explore gold in District of Tanah Merah, District of Jeli and District of Kuala
Krai over an area of 15,518.45 acres (62.8 sq km) (Sokor Gold Zone), from 10 April 2006 to 9
April 2007 attaching the conditions to be complied.
6. The Exploration Licence had expired on 9 April 2007. We have sighted applications by MCS for
the renewal of the Exploration Licence for a total of 4,170.47 hectares (10,305.45 acres/ 41.7 sq
km) of land in various locations in Kelantan. The Management has confirmed that they are in the
process 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 for
Exploration License set out in Paragraph B6 above.
8. There is a discrepancy between the areas stated in the Chief Ministers Letter and the State
Authoritys Letter. Notwithstanding this, the Chief Ministers Letter is not conclusive that approval to
explore in the areas stated in the letter has been granted as the power to grant the mining lease
lies in the State Authority pursuant to the Mineral Enactment. We are therefore of the view that the
62.8 sq km stated in the State Authoritys Letter and the Exploration Licence dated 10 April 2006
is conclusive as the area in which the exploration licence is granted. We are also unable to
confirm if the 21,670 acres of land stated as Second Phase in the Chief Ministers Letter has been
approved 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, Daerah
Temangan, Machang with certain conditions to be complied with. The Management confirmed to us
that 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 fresh
applications for prospecting licences to prospect gold for a total of 1,610.32 hectares (3,979.19
acres/ 16.10 sq km) of land in various locations in Kelantan. The details of the application are as
follows:
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 Bunga Tanjung & Lubuk Bongor, Daerah Kuala Balah, 465.59/ 1,150.50/ 4.65
Jajahan Jeli
Mukim Jeli Tepi Sungai, Mukim Sokor, Mukim Lubok Bongor, 369.0/ 911.81/ 3.69
Daerah Jeli, Daerah Sokor, Daerah Kuala Balah, Jajahan Tanah
Merah, Jajahan Jeli
D-10
11. As at the date of this Report, the State Authority has not granted approval for the application for
prospecting 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 and
District of Kuala Krai as MCS is dormant as at the date of this Report.
D-11
29 September 2011
CNMC Goldmine Holdings Pte Ltd
No. 5 Shenton Way,
#11-03, UIC Building,
Singapore 068808
PrimePartners Corporate Finance Pte. Ltd.
20 Cecil Street
#21-02 Equity Plaza
Singapore 049705 By Email/ Courier
Dear Sirs,
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 Exchange
Securities Trading Limited through an Initial Public Offering
We are a law firm practicing in Kuala Lumpur, Malaysia. We had conducted a legal due diligence review
on CMNM Mining Group Sdn. Bhd. (CMNM), MCS Mining Group Sdn. Bhd. (MCS) and CNMC-Nalata
Mining 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 by
CNMC and the Subsidiaries (collectively, the Group) which fall within the terms of reference and scope
of our legal due diligence exercise carried out on the Subsidiaries. In such examination, we have
assumed the genuineness of all signatures and the authenticity of all documents submitted to us as
originals 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 seals
are genuine.
In addition, the Group has also confirmed and represented to us the disclosures made during the legal
due 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 opinions
based on any laws other than the laws of Malaysia. Therefore our opinion expressed herein relates only
to the laws of Malaysia currently in force and all references herein to applicable Malaysian laws shall be
construed 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 Companies
Act) and are validly existing in Malaysia and each of the Subsidiaries have the status of an
independent legal entity, having full capacity, power and authority to enter into legally binding and
enforceable contracts and undertakings, with full power to sue or to be sued in its own name. The
principal business activity of CMNM is mining, whereas the Group has confirmed to us that MCS
and 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 its
properties and other assets and to conduct its business as it is now being conducted and the same
is described in its memorandum of association (Memorandum) and its articles of association
(Articles) and other constitutive documents, including but not limited to its certificate of
incorporation.
APPENDIX E LEGAL OPINION FROM SKRINE
E-1
E-2
1.3 The Articles of the Subsidiaries constitute a legal document regulating the relationship between the
respective Subsidiaries and each of its shareholders and among the shareholders inter se, and is
valid 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 other
matters 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 independent
legal entity;
1.4.2 the business by each of the Subsidiaries as presently conducted and as set out in its
Memorandum and Articles of Association; or
1.4.3 the Subsidiaries power and authority to own, use, lease and operate its properties and
other assets.
1.5 Based on our review, the Subsidiaries had not complied with several provisions under the
Companies Act in the past however these past material non-compliance issues have been
resolved.
2. Compliance with Laws, Approvals and Licences
2.1 The Subsidiaries are required to comply with and hold valid licences, permits and approvals to
carry on its mining operations. Most of these licences, permits and approvals are issued subject to
conditions to be complied with.
2.2 To the best of our knowledge, CMNM has obtained the relevant material licences, permits and
approvals 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 the
various governmental approvals, licenses and permits in relation to its mining operations in
Malaysia, including but not limited to the environmental impact assessment and mining lease
approvals and factory operations. In addition, certain licences, permits and approvals required for
its mining operations had not been obtained by CMNM in the past. We understand from the Group
that steps were taken to rectify these non-compliances as well as to apply for the required
licences, permits and approvals. These rectification actions do not exonerate the Group, its
employees and/or the directors of the Group from such non-compliances. Consequently, the Group
may still be liable for statutory penalties and enforcement actions including, inter alia, fines
enforced by the relevant authorities for the non-compliances, suspension of the mining operations
and 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 State
Economic 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. The
mining lease is not issued in CMNMs name and CMNMs right to mine in the Sokor Mining Area is
only a contractual right.
3.2 MCS had previously been granted a prospecting licence and an exploration licence by the Director
of Lands and Mines, Kelantan which had expired on 25 July 2006 and 9 April 2007 respectively
whereas CNMC-Nalata had been granted a contractual right by Nalata Enterprise Sdn. Bhd to
mine 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, explore
or mine in Malaysia.
E-3
4. Litigation
4.1 The Subsidiaries and its property or assets do not have any right of immunity, on the grounds of
sovereignty or otherwise, from any legal action, writ or proceeding, from the giving of relief in any
legal action, suit or proceeding, from set-off or counterclaim, from the jurisdiction of any competent
court, from service of process upon them or any agent, from attachment prior to judgement, from
attachment in aid of execution, or from execution or any other process for the enforcement of any
judgement or other legal process in Malaysia.
4.2 There are no public searches available in Malaysia to investigate whether the Subsidiaries are
involved in litigation proceedings. Upon our due inquiries, we are informed by the Group that save
as disclosed in Paragraph 4.3 below, the Subsidiaries are not engaged in any litigation, mediation
or 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. Ong
Shih Sheh, who had lodged an action pursuant to Section 20 of the Industrial Relations Act 1967
against CMNM where the former employee is alleging that he was dismissed without just cause or
excuse by CMNM and is seeking reinstatement by CMNM. The matter is set for negotiations in
September 2011 which will be attended by CMNM, the former employee and the Industrial
Relations Department of Kelantan. Pursuant to this complaint, the Minister of Labour may if he
thinks 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 of
shareholdings of the existing shareholders of the Subsidiaries pursuant to the register of
shareholders 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:
CNMC 405,000 81%
KSEDC 50,000 10%
Total 500,000 100%
MCS:
CNMC 875,000 87.5%
Kho Ah Tee JP 25,000 2.5%
Total 1,000,000 100%
CNMC-Nalata:
CNMC 400,000 80%
Nalata Enterprise Sdn. Bhd. 25,000 5%
Total 500,000 100%
5.3 All issues, allotments and transfers of shares in the capital of each of the Subsidiaries and the
present authorised share capital of each of the Subsidiaries are valid and have been effected in
accordance 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 each
paragraph should be looked at as a whole and no part should be extracted and referred to
independently.
6.2 Headings are for reference and shall not in any manner affect the interpretation of this opinion.
Yours faithfully,
SKRINE
E-4
APPENDIX F BDA TECHNICAL REPORT
F-1
BDA
B E H R E
D O L B E A R
A U S T R A L I A
A C N No . 0 6 5 7 1 3 7 2 4
Minerals Industry Consultants
Level 9, 80 Mount Street
North Sydney, NSW 2060
Australia
Tel: 612 9954 4988
Fax: 612 9929 2549
Email: bdaus@bigpond.com
Denver New York Toronto London Guadalajara Santiago Sydney
12 August 2011
CNMC Goldmine Limited
5 Shenton Way
#11-03 UIC Building
Singapore 068808
Mr Mark Liew,
Managing Director, Corporate Finance
PrimePartners Corporate Finance Pte. Ltd.
#21-02 Equity Plaza
Singapore 049705
Dear Sirs
INDEPENDENT TECHNICAL REVIEW
SOKOR GOLD PROJECT - KELANTAN - MALAYSIA - CNMC GOLDMINE LIMITED
BEHRE DOLBEAR AUSTRALIA PTY LIMITED
The Sokor gold project ('the project) in Kelantan State in northern Peninsular Malaysia is currently owned 81%
by CNMC Goldmine Limited ('CNMC) through its subsidiary CMNM Mining Group Sdn. Bhd. ('CMNM).
CMNM holds the rights to mine and produce gold from an area of approximately 10 square kilometres ('km
2
)
in the Ulu Sokor area in Kelantan (the 'Sokor Block). CNMC, through its subsidiary MCS Mining Group Sdn.
Bhd., has also made application for a renewal of an exploration licence covering up to 62.8km
2
surrounding the
Sokor Block. CNMC has commissioned the construction of a 60,000 tonne per annum ('tpa) 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
Securities Trading Limited ('SGX-ST) by way oI an Initial Public OIIering ('IPO). CNMC is being advised
by Prime Partners Corporate Finance Pte. Ltd.
CNMC has requested that Behre Dolbear Australia Pty Limited ('BDA) carries 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.
BDA is the Australian subsidiary of Behre Dolbear & Company Inc., an international minerals industry
consulting 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 feasibility
studies.
This report contains forecasts and projections based on data provided by CNMC. BDA`s assessment oI the
resources/reserves, production schedule, the projected capital and operating costs and the estimate of mine life
are 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 cannot
be assured and factors both within and beyond the control of the company could cause the actual results to be
materially diIIerent Irom BDA`s assessments and any projections contained in this 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 the
SGX-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 document or used Ior any purpose without BDA`s written consent to the Iorm and context in
which it appears.
Yours faithfully
BEHRE DOLBEAR AUSTRALIA PTY LTD
Malcolm C Hancock
Executive Director - BDA
John S McIntyre
Managing Director - BDA
F-3
BEHRE DOLBEAR
SOKOR GOLD PROJECT - KELANTAN MALAYSIA - CNMC GOLDMINE LIMITED
CONTENTS
1.0 INTRODUCTION
2.0 EXECUTIVE SUMMARY
2.1 Background
2.2 Project Overview
3.0 RISK SUMMARY
3.1 Project Risk Summary
3.2 Risk Mitigation Factors
4.0 SOURCES OF INFORMATION
5.0 SOKOR GOLD PROJECT
5.1 Project Location
5.2 Project Ownership
5.3 Exploration and Mining History
5.4 Project Status
6.0 GEOLOGY AND MINERALISATION
6.1 Regional Geology
6.2 Local Geology
6.3 Deposit Geology and Mineralisation
6.4 Exploration Potential
7.0 GEOLOGICAL DATA
7.1 Trenching and Drilling
7.2 Survey
7.3 Logging
7.4 Sampling and Sample Preparation
7.5 Assaying
7.6 Quality Assurance/Quality Control
7.7 Bulk Density
8.0 RESOURCES AND RESERVES
8.1 Standards and Definitions
8.2 Resource Estimation
8.3 Reserve Estimation
8.4 Future Reserve Potential
9.0 MINING
9.1 Overview
9.2 Production Schedule
10.0 PROCESSING
10.1 General
10.2 Metallurgical Testwork
10.3 Plant Design
10.4 Further Process Development
10.5 Operating History
11.0 INFRASTRUCTURE
11.1 Site Access and Climate
11.2 Power and Water Supply
11.3 Mine Site Facilities
F-4
BEHRE DOLBEAR
12.0 ENVIRONMENTAL AND COMMUNITY ISSUES
12.1 Environmental Issues
12.2 Social Issues
13.0 LIFE OF MINE PRODUCTION SCHEDULE
14.0 CAPITAL COSTS
14.1 Initial Development Capital
14.2 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 Deposits
Figure 3 Resource Cross Sections- Manson`s Lode and New Discovery Deposits
Figure 4 Resource Cross Sections - Ketubong and Rixen`s Deposits
Figure 5 Manson`s Lode and New Discovery Open Pits and Vat Leach Site Plan
Figure 6 Rixen`s Open Pit and Heap Leach Site Plan
APPENDICES
Appendix 1 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2004
Edition
Appendix 2 Chinese Resources and Reserves Reporting Standard 1999
Appendix 3 Glossary of Technical Terms, Abbreviations and Units of Measurement
F-5
BEHRE DOLBEAR
SOKOR GOLD PROJECT - KELANTAN MALAYSIA - CNMC GOLDMINE LIMITED
1.0 INTRODUCTION
CNMC Goldmine Limited ('CNMC or 'the company) through its subsidiary CMNM Mining Group Sdn. Bhd.
('CMNM) 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 ('km
2
) in the Ulu Sokor area in Kelantan (the
'Sokor Block). CNMC, through its subsidiary MCS Mining Group Sdn. Bhd. ('MCS), has also lodged an
application for renewal of an exploration licence covering up to 62.8km
2
surrounding the Sokor Block. CNMC
has commissioned the construction of a 60,000 tonne per annum ('tpa) 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
Securities Trading Limited ('SGX-ST) by way oI an Initial Public OIIering ('IPO). CNMC is being advised
by Prime Partners Corporate Finance Pte. Ltd. ('PPCF). CNMC has requested that Behre Dolbear Australia Pty
Limited ('BDA) carries 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, geophysical
surveys and surface trenching and diamond drilling. The 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 the deposits. Gold mineral resources (inclusive of ore reserves)
currently total 2.2 million tonnes ('Mt) at 2.62 grams per tonne gold ('g/t Au) with contained gold oI 183,500
ounces ('ozs). 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 gold
processing plant with a capacity to treat around 60,000tpa at an estimated head grade of 5.0g/t Au from the
Manson`s Lode And New Discovery deposits, and with a gold metal recovery of 80%. CNMC completed the
first gold pour during July 2010 and continues to ramp up plant throughput to the planned production rate of
60,000tpa. 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 62.8km
2
in order to increase gold
resources and mineable reserves, and to complete a feasibility study on the exploitation of the primary sulphide
ore at depth using a carbon in leach ('CIL) process.
BDA is the Australian subsidiary of Behre Dolbear & Company Inc., an international minerals industry
consulting 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 feasibility
studies.
BDA is well acquainted with the Sokor gold project. BDA first visited the project site at Ulu Sokor in October
2007 to review CNMC`s exploration and mineral resource and ore reserve estimation procedures. BDA made a
further visit to review initial exploration drilling results and ongoing exploration procedures in April 2008. More
recently BDA made site visits in June and August 2010.
BDA`s review covers the geology, exploration, resources 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,
Australian Institute oI Geoscientists and Minerals Council oI Australia, December 2004 ('JORC Code). BDA
has not undertaken an audit of the data or re-estimated the resources or reserves and has relied on the data,
F-6
BEHRE DOLBEAR
reports and information which have been provided by CNMC; BDA has nevertheless made such enquiries and
exercised its judgement as it deems necessary and has found no reason to doubt the reliability of the data, reports
and information which have been provided by CNMC.
CNMC has reported its mineral resource estimate under the Chinese 1999 Classification of Resources/Reserves
for Solid Fuels and Mineral Commodities (GB/T 17766-1999) ('Chinese Code). The resource estimates were
prepared by CNMC`s ChieI Geologist and the directors oI CNMC accept responsibility Ior these estimates. An
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 those
which would be ascribed to Measured and Indicated resources under the JORC Code, considering aspects such
as 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 resources
according 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 various
technical 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 reasonably
made and are in compliance with the reporting standards under the JORC Code. Malcolm C Hancock and John
S 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, fulfil
the requirements of qualified persons and accept responsibility for the independent technical report and the
comparable JORC Code categorisation of the resource estimate as tabulated in the form and context in which it
appears in this report.
BDA has not reviewed the tenement status with respect to any legal or statutory issues. CNMC advises that
there 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 relevant
project licences, permits and approvals which CNMC requires to carry on its mining operations. Skrine`s legal
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 the
conditions imposed thereunder.
This report contains forecasts and projections based on data provided by CNMC. BDA`s assessment oI the
production schedule, the projected capital and operating costs and the estimate of mine life are 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 cannot be assured and
factors both within and beyond the control of the company could cause the actual results to be materially
diIIerent Irom BDA`s assessments and any projections contained in this report.
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 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 document or used Ior any purpose without BDA`s written consent to the
form and context in which it appears.
F-7
ULU SOKOR
PROJECT AREA
Kota Bharu
Tanah Merah
K E L A N T A N
S T A T E
T HAI LAN D
MALAY S I A
5
0
0
0
0
0
E
4
0
0
0
0
0
E
4
5
0
0
0
0
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 Project
THAILAND
CHINA
CAMBODIA
LAOS
V
IE
T
N
A
M
PHILIPPINES
INDONESIA
MALAYSIA
MYANMAR
SOUTH
CHINA
SEA
1
2
0
0
0
"
1
1
0
0
0
"
1
0
0
0
0
"
1
3
0
0
0
"
10 00"
20 00"
0 00"
500 0
Kilometres
Regional Location Plan
Kuantan
Singapore
Kuala
Lumpur
PROJECT LOCATION PLAN
Figure 1
25 0
Kilometres
BDA - 088 (02)
Sokor Gold Project
Behre Dolbear Australia Pty Ltd
F-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 visits
have 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 plans
and projected capital and operating costs, consistent with the requirements of the Rules Governing the Listing of
Securities 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 CMNM
Mining Group Sdn. Bhd. The project is located in the Ulu Sokor region of Kelantan State in Malaysia. The
project 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 and
diamond drilling within the Sokor Block. CNMC through its subsidiary MCS Mining Group Sdn. Bhd. has also
lodged an application for renewal of an exploration licence covering up to 62.8km
2
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 the
deposits. Gold mineral resources (inclusive of ore reserves) currently total 2.2Mt at 2.62g/t Au with contained
gold 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 gold
processing plant with a capacity to treat 60,000tpa at an estimated head grade of 5.0g/t Au Irom the Manson`s
Lode 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 is
continuing ramp up of plant throughput. CNMC plans to increase throughput to around 80,000tpa during 2011
by commissioning a heap leach Iacility to treat oxide ore Irom Rixen`s deposit commencing in the fourth quarter
of 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 Scheme
approval was obtained in January 2010 and is subject to initial mine production not exceeding 300,000tpa of
mined 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 sulphide
mineralisation using a carbon in leach process. CNMC plans to continue exploration in parallel with gold
production and aims to complete a feasibility study on an expanded project in the first half of 2012.
Environmental approvals Ior the project include submission oI an Environmental Impact Assessment ('EIA) in
January 2008 and a supplementary EIA report in March 2009 with approval received in June 2009. An
Environmental Management Plan ('EMP) 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.
Corporate income tax in Malaysia is 25%. CMNM submitted an application to the Malaysian Industrial
Development Authority ('MIDA) Ior Pioneer 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 Certificate
and has not fulfilled the relevant conditions, tax exemption under the Pioneer Tax Status does not apply to
CMNM 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 depth
using a carbon in leach process.
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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 ('KSG) and the remaining 9% is held by
other 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 Kelantan State Economic Development Corporation ('KSEDC) 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
10km
2
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 62.8km
2
, with the exact area
depending on availability of and access to land surrounding the Sokor Block. This EL licence has expired and
an 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 gross
revenue is payable to KSEDC.
BDA has not undertaken any due diligence review of the ownership or tenement status for the project. CNMC
has advised BDA that CMNM`s mining rights to the Sokor gold project are in good standing. BDA notes that
CNMC 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. Skrine`s legal 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 the conditions imposed
thereunder.
Geology/Mineralisation
The Sokor gold project is located in the Central Belt of Peninsular Malaysia which extends from the Thailand
border 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`s concession
area is divided into two parts by the north-south trending Ketubong-Rixen fault. The southern and eastern parts
are dominated by calcareous and argillaceous sediments interbedded with carbonate rocks which dip eastwards
at 10-40. The western part of the concession is dominated by tuffaceous volcanic rocks interbedded with minor
calcareous 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, Manson`s Lode, New Discovery and Ketubong, and a Iourth
deposit, Rixen`s approximately 3km to the north oI Ketubong. Gold mineralisation is generally hosted in acid to
intermediate volcanic rocks and in carbonate-rich rocks, and is associated with major fault structures. The gold
mineralisation ranges in thickness from a few metres up to 35m and generally dips to the east at relatively
shallow angles of 10-30. Gold is typically enriched near the surface and is associated with pyrite and minor
base metal sulphides including chalcopyrite, galena and sphalerite. The depth to the base of oxidation varies
between deposits from a shallow depth of less than 3m in Ketubong to 40-60m in Rixen`s.
Manson`s Lode deposit extends over a strike length of 450m and has been defined by 120 drill holes totalling
The New Discovery deposit is located approximately 500m west-northwest oI Manson`s Lode. Gold is
holes totalling 3,238m. The deposit has been drilled on a 20m x 20m grid in the oxide zone and on a 20m x 40m
grid in the primary zone to a depth of 200m and remains open at depth. Drill hole gold grades range from 1-9g/t
Au, averaging around 3.6g/t Au; silver and base metal grades are typically low.
The Ketubong deposit is located approximately 600m to the northwest oI Manson`s Lode and is a continuation
northwards of the New Discovery deposit along the Ketubong-Rixen fault. The deposit has been defined by
trenching 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/t
Au 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 of
massive gossan. Drill hole gold grades in mineralisation range from1-8g/t Au averaging around 3.5g/t Au; the silver
grade averages around 92g/t Ag. Base metal grades average 2.2% Pb and 2.1% Zn; minor copper is also present.
F-10
7
5
0
7
5
0
2
5
0
5
0
0
2
5
0
2
5
0
5
0
0
5
0
0
7
5
0
750
1
0
0
0
1
0
0
0
5
0
0
5
0
0
6 167 000
4
4
4
0
0
0
E
4
4
6
0
0
0
E
6 166 000 N
6 168 000 N
6 164 000 N
Rixens
Deposit
D D
C C
B B
Ketubong
Deposit
New
Discovery
Deposit
Mansons Lode
Deposit
S
.
L
i
a
n
g
R
i
v
e
r
Sejana 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 LOCATION
SOKOR MINING LICENCE
Figure 2
1000 0
Metres
Sokor Gold Project
BDA - 088 (02)
F-11
BEHRE DOLBEAR
Rixen`s deposit is located 3km north oI Ketubong and 5km Irom the process plant. Gold mineralisation is
contained in silicified volcanic rocks to the west of the Ketubong-Rixen fault. The deposit has been delineated
by soil sampling over a strike length of 800m and defined by drilling on a 100m x 100m grid over a strike length
of 300m with nine drill holes totalling 904m. The deposit requires additional drilling to confirm continuity of
grade and thickness in the area already drilled and step-out drilling along strike and down dip to test for
extensions 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 core
samples 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 CMNM`s concession area
and in the surrounding exploration licence which has yet to be systematically explored. Potential exists for
extensions 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 first
quarter of 2011 with the objective of increasing the resource base of the project by initially drill testing
extensions to the known deposits oI New Discovery, Ketubong and Rixen`s and increasing the reserve base by
converting Inferred resources to Measured and Indicated resources and thence to Proved and Probable reserves.
This programme will be supplemented by a 2,500m reverse circulation ('RC) drilling (the first RC drilling to be
undertaken by CNMC) designed exclusively to infill the Rixen`s deposit.
In conjunction with the resource drilling programme, CNMC plans to conduct additional metallurgical testwork
to assess the Rixen`s and Manson`s Lode oxide 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 four
known deposits, Manson`s Lode, New Discovery, Ketubong and Rixen`s, by CNMC`s chieI geologist. CNMC
used 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 the
comparable JORC Code categorisation.
Table 2.1
Summary of Sokor Gold Resources - June 2010
Deposit Type Category Category Tonnage Gold Grade Contained Au
JORC Code Chinese Code kt Au g/t kozs
Manson`s Lode Backfill Measured 121b 101 1.73 5.6
Manson`s Lode Backfill Inferred 333 29 1.86 1.7
New Discovery Alluvial Measured 121b 22 1.10 0.8
New Discovery Alluvial Inferred 333 13 0.82 0.3
All Oxide Measured 121b 71 7.62 17.5
All Oxide Indicated 122b 747 1.93 46.4
All Oxide Inferred 333 338 2.26 24.6
Sub-Total Bck/Alluv/Ox Measured 121b 194 3.81 23.9
Sub-Total Bck/Alluv/Ox Indicated 122b 747 1.93 46.4
Sub-Total Bck/Alluv/Ox Inferred 333 380 2.18 26.6
Sub-Total Bck/Alluv/Ox Meas/Ind/Inf 121b/122b/333 1,321 2.28 96.9
All Primary Measured 121b 433 3.39 47.3
All Primary Indicated 122b 88 1.79 5.1
All Primary Inferred 333 340 3.14 34.2
Sub-Total Primary Meas/Ind/Inf 121b/122b/333 861 3.13 86.6
Total All Meas/Ind 121b/122b 1,462 2.61 122.7
Total All Inferred 333 720 2.63 60.8
Total All Meas/Ind/Inf 121b/122b/333 2,182 2.62 183.5
Note: Deposits incluae Mansons Loae, New Discovery, Ketubong ana Rixens, cut off 0.5g/t Au; kt = thousand tonnes, kozs = thousand
ounces; 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 in Manson`s Lode, New
Discovery and Rixen`s deposits. 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 the
primary mineral resource to enable it to be converted to ore reserves. CNMC plans to evaluate the primary
mineral resource in the future, on completion of additional resource drilling.
F-12
BEHRE DOLBEAR
Table 2.2
Sokor Gold Ore Reserves - June 2010
Deposit Type Category Tonnage Gold Grade Contained Au
JORC Code kt Au g/t kozs
Manson`s Lode Backfill Proved 106 1.65 5.6
Manson`s Lode Oxide Proved 36 6.11 7.0
Sub-Total All Proved 142 2.77 12.6
New Discovery Alluvial Proved 24 1.05 0.8
New Discovery Oxide Proved 39 8.32 10.5
Sub-Total All Subtotal 63 5.60 11.3
Rixen`s Oxide Probable 785 1.84 46.4
Sub-Total Oxide Subtotal 785 1.84 46.4
Total All Proved 204 3.64 23.9
Total All Probable 785 1.84 46.4
Total 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 as
waste 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 a
waste 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
through additional drilling, mainly in the Rixen`s deposit. CNMC also plans to treat primary resources which is
planned to be converted to ore reserves on successful completion of metallurgical testwork demonstrating that
the 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 are
likely 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, Manson`s Lode, New Discovery and Rixen`s using
open pit mining of ore and waste based on conventional open pit mining methods with hydraulic excavators and
dump trucks. The planned Manson`s Lode and New Discovery pits are located within a radius of approximately
1km from the treatment plant, while the planned Rixen`s 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 oxidised
zone to strong in the primary rock types in the hanging and footwall of the fault/shear zones that contain the
majority of the mineralisation.
A mining study has been carried out by Central South University ('CSU) Irom Changsha, China. All
optimisation parameters were supplied by CSU or derived in consultation with CSU and are consistent with a
nominal 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 by
CNMC 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 total
oxide 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 cubic metre ('m
3
) hydraulic excavators
and 20t rear-dump trucks. The mining contract will initially be carried out by 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 the mining operation.
F-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 10m high benches using 115 millimetre ('mm) drill
holes and use of emulsion explosives due to the likely presence of water. Grade control in the pit will be
conducted 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. Geotechnical
assessment has not been carried out in any detail but the footwall slope angles of the planned pits are reasonably
conservative; the hangingwall pit slopes angles are between 45-50q and while the planned pits are relatively
shallow, 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 the
pit rim are planned to be bunded to protect against inflow in the event of high rainfall events.
Processing
CNMC engaged Changchun Gold Research Institute ('CGRI) to carry out process testwork in 2008 and
subsequently to design a process for recovery of gold and silver from Sokor ores. A vat leaching plant was
constructed on the site in early 2010 and operations commenced in July 2010. About 6,000t of ore had been
processed 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 increase
from 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 was
processed and 554ozs of gold were recovered, equivalent to approximately 74% recovery from a head grade
estimated at 3.9g/t Au.
Process testwork has indicated that the oxidised ore in Manson`s Lode and Rixen`s deposits is amenable to heap
leaching. 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 a
heap 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 approval
was obtained in January 2010.
Environmental approvals for the project include submission of an Environmental Impact Assessment in January
2008 and a supplementary EIA report in March 2009 with approval received in June 2009. An Environmental
Management 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 occurring
Irom November to January. The Kelantan State`s average annual rainIall is in the range 2,032 - 2,540mm. The
nearest meteorological station is 40km east of Sokor and at a lower elevation; this station`s highest recorded
annual rainfall is 2,752mm and its lowest is 1,543mm.
F-14
BEHRE DOLBEAR
The main environmental risk areas of the project as proposed, relate to the potential for offsite water
contamination 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 cyanide
within the heap leach structures whilst the heaps are being detoxified.
Specific drainage design elements, infrastructure layouts, erosion control structures and inclusion of a
stormwater (safety) dam are planned to mitigate the risk of offsite water contamination occurring.
CNMC has identified the key potential environmental impacts arising from the project`s operations and their
associated mitigation measures which are being implemented. The project has an Environmental Management
Plan 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 mine
development will bring.
CNMC has already made substantial efforts to integrate its project activities with the local communities and is
assisting them in social and economic development programmes. The CNMC Group has a corporate policy on
Social Responsibility and has been participating in community development projects which include emergency
relief, poverty alleviation and education.
Life of Mine (~LOM) Production Schedule
The production schedule shown in Table 2.3 is based on the production forecasts in the CNMC report for the
period 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
extensions at Rixen`s pit.
Under the mine plan for the first initial period to 2012, ore production increases from an initial rate of 84,000tpa
of ore in 2011 up to 705,000tpa of ore in 2012. The waste to ore stripping ratio over this period averages
approximately 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.
Plant operation to date has been at about 1,000 tonnes per month ('tpm). CNMC plans to commission an oxide
heap leaching plant in the fourth quarter of 2011 and a CIL plant to process primary ore in 2013. Production is
largely dependent on operation of the heap leaching process, which BDA considers could be affected by
monsoonal rainfall. BDA also notes that a gold recovery of 80% has been assumed on primary ore, on which no
testwork has yet been completed.
For the extended mine life to 2014 an additional ore mine inventory of 2.0Mt has been assumed with an overall
ore and waste mining rate of around 3.3Mtpa. Ore production is forecast at 600,000tpa of ore to the heap leach
pads at Rixen`s 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 is approximately 2.3:1. While the
initial mining is based on ore reserves estimated from a mine plan developed by CSU, the extended production
schedule is based on more conceptual mine plans. The overall mine production schedule provides a general
guide to the planned production but further work is required to confirm the parameters, resources and reserves
used to prepare the mine plan.
F-15
BEHRE DOLBEAR
Table 2.3
Sokor Gold Operation - Projected Production Schedule
Item Unit 2010 2011 2012
Sub-total
2010-2012 2013 2014
Total
2010-2014
Ore Mined kt 6.0 84.0 705.0 795.0 913.0 1,090.0 2,798.0
Waste Mined kt 6.0 180.6 1,035.1 1,221.7 1,851.8 2,854.6 5,928.1
Material Mined kt 12.0 264.6 1,740.1 2,016.7 2,764.8 3,944.6 8,726.1
Strip Ratio W:O 1.0 2.2 1.5 1.5 2.0 2.6 2.1
Ore Treatment Destination
Vat/Pond Leach kt
6.0 22.0 40.0 68.0 43.0 0.0 111.0
Heap Leach kt
0.0 62.0 665.0 727.0 640.0 600.0 1,967.0
CIL Leach kt
0.0 0.0 0.0 0.0 230.0 490.0 720.0
Ore Treated kt 6.0 84.0 705.0 795.0 913.0 1,090.0 2,798.0
Ore Grade g/t Au 3.91 3.51 2.21 2.36 2.43 2.31 2.36
Au Recovery % 74 70 70 70 73 74 73
Au Production ozs 550 6,000 31,500 38,100 50,000 58,100 146,200
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 0.92
Site Infrastructure Costs 0.26
Total 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 be
US$8.14M. These forecast costs are summarised in Table 2.5.
Table 2.5
Sokor Gold Project Forecast of Future Capital Expenditure 2011-2012
Item Total Capital
US$M
Expanding production capacity of plant 0.20
Multi-lift heap leaching system 1.50
CIL plant design and construction (500t/d) 3.50
Exploration Expenses 2.00
Contractor`s Indirect Costs 0.20
Project Contingency 0.74
Total 8.14
The heap leach costs are spent primarily in 2011 and the CIL costs in 2012. The mine plan is to use 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. There may be some capital costs within the mine, not identified
in Table 2.5, such as the establishment cost of the Rixen mining area and mobilisation cost for the contractor as
CNMC 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 from
2010 to 2012; process plant and mine operating costs comprise 37% and 26% of the total respectively. Other
costs include administration and realisation costs and royalties. Cash cost of gold produced is projected to
F-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 of
waste mined. Ore mining includes the mining of the ore and grade control; waste mining includes both the
initial mining and the subsequent reclamation of waste. It is planned to use a contractor to carry out the mining
operation 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 costs
have been estimated at US$8/t, US$10/t and US$20/t respectively. These cost estimates are considered by BDA
to be of a preliminary nature and likely to be accurate to 50%.
Table 2.6
Projected Operating Costs for the Sokor Gold Project
Item Unit 2010 2011 2012
Sub-total
2010-2012 2013 2014
Total
2010-2014
Production
Ore Treated kt 6 84.0 705 795 913 1,090 2,798
Gold Production kozs 0.55 6.0 31.5 38.1 50.0 58.1 146.2
Costs
Mining US$k 54 540 3,690 4,284 5,679 7,913 17,876
Processing US$k 60 716 5,320 6,096 10,150 14,600 30,846
Administration US$k 240 540 540 1,320 660 660 2,640
Realisation US$k 40 109 577 696 915 1,063 2,674
Total Operating Costs US$k 394 1,905 10,127 12,396 17,404 24,236 54,036
Royalties US$k 58 670 3,529 4,257 5,200 6,042 15,499
Total Cash Cost US$k 452 2,575 13,656 16,653 22,604 30,278 69,535
Unit Costs
Mining US$/t 9.0 6.4 5.2 5.4 6.2 7.3 6.4
Processing * US$/t 10.0 8.5 7.5 7.7 11.1 13.4 11.0
Administration US$/t 40.0 6.4 0.8 1.7 0.7 0.6 0.9
Total Cash Cost US$/oz 816 431 433 438 452 521 475
*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 the
period 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%.
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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 based
on interpretation and on samples from drilling which, even at close drill hole spacing, remain a very small
sample of the whole orebody. There is always a potential error in the projection of drill hole data when
estimating the tonnes and grade of the surrounding rock. Even with close-spaced drilling, significant variations
may 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 r15% and,
depending on the status of the estimate, several areas may be nearer to r20-30%. Mining project revenues are
subject to variations in metal prices and exchange rates.
In reviewing CNMC`s Sokor gold project, 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. In
Section 3.2, BDA has considered factors which may ameliorate some of these risks.
Risk Component Comments
Resources/Reserves
Medium Risk
The geology and mineralisation controls at Sokor are reasonably well
understood. Manson`s Lode and New Discovery deposits are well deIined. The
Ketubong and Rixen`s deposits are more widely drilled and the geology less well
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,
particularly in Ketubong and Rixen`s where the number oI drill holes used in the
estimation is relatively small.
The currently defined oxide ore reserve is sufficient for a two year mine life at
the production rate planned by CNMC. The production schedule for the period
2013 to 2014 assumes the proving up of Inferred oxide resources and potential
oxide resources Irom Rixen`s deposit 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 require
successful completion of metallurgical testwork that demonstrates suitability for
processing through a CIL plant.
Open Pit Mining
Low/Medium Risk
The mining rate increases significantly over the proposed LOM, probably
requiring equipment additions each year; a contractor should be able to meet
these requirements, but at a cost. There is some risk that the operation may be
constrained 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 of
localised wall failures, but the use of conservative wall angles on the footwall of
each 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 double
handling; careful scheduling may minimise double handling and reduce costs.
Additional technical risks relate to the topography and rainfall. The impact of
high rainfall needs to be taken into account in terms of pit and dump stabilities.
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BEHRE DOLBEAR
Risk Component Comments
Processing
Medium Risk
Testwork indicates that oxidised ore is amenable to heap leaching with a forecast
gold recovery of 80%. Testwork is yet to be completed on primary ore, however
the 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 be
via a heap leach plant. BDA has reservations concerning the viability of a heap
leach operation in a tropical monsoonal environment given the need to control
the water balance in such a plant.
Services and Utilities
Low/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 the
operation. Water supply from local streams is considered adequate.
Tenement and Title
Low Risk
The granted mining tenements, together with Government mining approval are
the over-riding legal documents for the ongoing exploration and development of
the Sokor project, and appear to provide a sound basis for exploration and the
proposed project expansion.
Social Issues
Low Risk
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 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 from
the proposed heap leach area, the TSF, the plant area and mining areas. The
inclusion of 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 being detoxified.
Production
Medium/High Risk
The proposed mining schedules are considered preliminary. The mine schedule
for the initial period from 2010 to 2012 allows for the mining of the majority of
the 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 projected
ounces relating to a wet climate heap leaching operation is likely to be
challenging.
Capital Cost
High 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 has
been provided for the mobilisation of Chinese contractors to site.
The capital cost of the proposed CIL plant is preliminary as CIL comminution
and leaching testwork has not yet been undertaken. Costs may be higher than
projected if the ore is harder than projected or longer residence times are required
in the leaching circuit.
Operating Cost
High Risk
Mine operating costs have been estimated by CSU but no details have been
provided 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 mining
tenements 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 no
outstanding difficulties.
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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:
x 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 the
geological database forms an appropriate and reasonable basis for resource and reserve estimation.
x Additional exploration and resource deIinition is critical Ior expanding the project`s resource base. CNMC
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 to
infill and extend resource drilling on New Discovery, Ketubong and Rixen`s together with drill testing of
other targets within the Sokor Block.
x The surrounding exploration licence remains prospective for location of additional gold resources.
x The proposed wall angles are reasonably conservative and the pits relatively shallow, but failures may still
occur, particularly in the weathered zones. It is intended to establish drainage channels around the pit
perimeter to reduce the quantity of water entering the pit and damaging the walls.
x The project has obtained the necessary mining and environmental approvals from the state government.
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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 have
been held with technical and management staff on site, and in Singapore. The drilling undertaken to date has
been reviewed, and drill core from several holes inspected. The location of the various prospects, planned
mining areas, plant site and TSF site have been reviewed. Resources, reserves, mining, processing and waste
disposal plans and environmental and social issues have been reviewed and discussed. The principal technical
reports and documents reviewed are listed below:
CNMC Technical Data
x Rixen Geology Report and Drill Logs, Asia Mining Sdn. Bhd., 1991
x Sokor Metallurgical Testwork, Asia Mining Sdn. Bhd., 1991
x Metallurgical Testwork, Changchun Institute, 2008
x EIA report, CNMC Goldmine Limited, January 2008
x EIA Supplementary Report, CNMC Goldmine Limited, March 2009
x EMP Report, Goldmine Limited, February 2010
x EMP Supplementary Report, March 2010
x Trench and Drill Hole Assay Database, CNMC Goldmine Limited, June 2010
x Geological Cross Sections for Manson`s Lode, New Discovery, Ketubong and Rixen`s Deposits, CNMC
Goldmine Limited, June 2010
x Geology Map oI Manson`s Lode, New Discovery and Ketubong Deposits, Scale 1:1000, CNMC Goldmine
Limited, June 2010
x Geology Map of Rixen`s Deposit, Scale 1:5000, CNMC Goldmine Limited, June 2010
x Description Report for Gold Exploration Project (2007-2010) in Sokor District, Kelantan State, Malaysia,
CNMC Goldmine Limited, June 2010
General Data
x Australasian Code for Reporting of Identified Mineral Resources and Ore Reserves - Report of the Joint
Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and
Minerals Council of Australia, December 2004.
x The Chinese 1999 Classification of Resources/Reserves for Solid Fuels and Mineral Commodities (GB/T
17766-1999).
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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 is
approximately 80km southwest of Kota Bharu, the state capital. Access is by sealed road to Kampong Bukit
Pauh, 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 Kuala
Lumpur 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 Kelantan
averages 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 other
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. These interests are summarised in
Table 5.1 below.
Table 5.1
Assets and Interests
Country/Asset CNMC Interest
%
Development
Status
Expiry Date Area
km
2
Type of Mineral
Deposit
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 10km
2
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 62.8km
2
, with the exact area depending on
availability of and access to land surrounding the Sokor Block. An application for a renewal of this 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 gross
revenue 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. 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 in parallel with gold production and aims to complete a feasibility
study on an expanded project by the first half of 2012.
Management 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 Industrial
Development Authority for Pioneer 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 Certificate and has not
fulfilled the relevant conditions, tax exemption under the Pioneer Tax Status does not apply to CMNM at
present.
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BEHRE DOLBEAR
BDA has not undertaken any due diligence review of the ownership or tenement status for the project. CNMC
has 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
and approvals Ior CMNM`s mining operation are in good standing.
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. The
earliest, significant exploration, including trenching and development of a number of shafts and adits, was
carried out by DuII Development Company Limited ('DuII) in the early 1900s.
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.
Eastern Mining and Metals Company ('EMM) carried out exploration including drilling at Ulu Sokor between
1966 and 1970. EMM completed a drilling programme of 104 holes totalling 2,963m and reported primary base
metal mineralisation of 227,000t with gold grades ranging from 1.94 - 3.33g/t Au and oxide mineralisation of
156,000t with gold grades ranging from 2.85 - 5.34g/t Au.
Asia Mining Sdn. Bhd. ('AM) conducted mapping, soil sampling, rock chip sampling and drilling between
1989 and 1991. AM completed a drilling programme consisting of 55 holes totalling 2,705m. AM carried out
metallurgical testwork and operated a heap leach facility during the period 1995-96. The operation processed
around 40,000t of near-surface gossan ore Irom Manson`s Lode area and produced approximately 3,200ozs of
gold. 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`s area totalling 4.1Mt at 1.2g/t Au at a cut-off grade of 0.5g/t
Au.
TRA Mining (Malaysia) Sdn. Bhd. ('TRA) conducted geological mapping, rock chip and stream sediment
sampling and RC drilling between 1997 and 1998. The RC drilling consisted of 33 holes totalling 2,630m and
was carried out on the Manson`s Lode and New Discovery areas.
CNMC obtained AM reports on the geology of the Rixen`s area and the metallurgical testwork carried out on
samples Irom Manson`s Lode, New Discovery and Rixen`s. 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, including Manson`s Lode, New
Discovery, Ketubong and Rixen`s. In these Iour areas, CNMC has completed geological mapping, soil sampling
and Induced Polarisation ('IP) geophysical surveys over selected areas within the Sokor Block, excavated 27
surface trenches, and completed 190 diamond drill holes totalling 10,566m.
CNMC has defined gold resources in three deposits, Manson`s Lode, New Discovery and Ketubong. Resources
consist of shallow oxide gold mineralisation and deeper primary gold mineralisation associated with sulphide
mineralisation, including pyrite and chalcopyrite. In the Rixen`s area, CNMC has located potential Ior low
grade, bulk mineable gold mineralisation within acid volcanic rocks; trenching and drilling in this area is at an
early stage although CNMC has defined an oxide resource.
CNMC has commenced treating oxide gold ore using a vat leach process. Revenue from this operation, together
with funds from proposed capital raisings will be used to continue exploration in the Rixen`s area and elsewhere
in the concession. At a later date CNMC plans to expand exploration to include the EL which surrounds the
Sokor Block. CNMC plans to complete a detailed feasibility study during the first half of 2012, based on an
expanded 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 be
sourced from the New Discovery and Manson`s Lode deposits. Production will be expanded during 2011 to
84,000tpa by constructing a heap leach Iacility to treat ore Irom Rixen`s deposit and 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 an
initial batch of 500t of ore. The ore was a mix of approximately 400t of New Discovery ore and 100t of
Manson`s Lode ore. 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 approximately
76%. Between July and December 2010 CNMC completed five gold pours for a production of 554ozs at an
estimated gold recovery of 74% and is continuing ramp up of plant throughput.
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BEHRE DOLBEAR
CNMC plans to increase production to 84,000tpa during 2011 by commissioning a heap leach facility to treat
oxide ore from Rixen`s deposit. Rixen`s deposit requires infill drilling of the resource to assist with the pit
design and production scheduling. Manson`s Lode deposit has deIined Measured oxide resources which require
additional metallurgical testing to establish whether the iron-rich, gold-bearing gossan ore (after massive
sulphide) is amenable to vat leaching or whether it is more suitable to conventional heap leaching.
Mine site facilities presently include a crushing Iacility and run oI mine ('ROM) stockpile, three leach vats,
pregnant solution, barren solution and clean water ponds, eight carbon adsorption columns and a gold recovery
plant 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
mass spectrometry ('AAS). There are also oIIice and staII accommodation Iacilities. Site power is provided by
diesel generators; water supply is sourced from a local river.
Mining equipment includes excavators and trucks which are leased by CNMC. Mining is relatively
straightforward 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 ('G4S), a British company, Ior site and gold transport security.
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 state
government. The current mining approval limits production to a maximum of 300,000tpa; this condition will be
relaxed on submission to the government of the feasibility study for the expanded oxide and primary ore project
and approval of a detailed mine plan scheduled for completion in 2012.
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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 divided
structurally into three main belts, the Eastern, Central and Western. The main tectonic trend of these belts is
north-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 and
limestone, and felsic to intermediate volcanic rocks. The metasediments and volcanic rocks are intruded by Late
Triassic 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 zones
featuring 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 the
middle of the Central Belt and is associated with the intersection of two major north-south trending structures
with 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 facies
and appear to form an asymmetric anticline with shallow easterly dips in the eastern part of the concession and
steeper 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. The
eastern part is dominated by calcareous and argillaceous sediments interbedded with carbonate rocks which dip
eastwards at 10-40. The western part of the concession is dominated by tuffaceous volcanics interbedded with
minor calcareous phyllites and carbonate rocks. The acid to intermediate volcanic rocks consist of volcanic
breccias 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 the
middle of the concession and can be traced on the Landsat image for more than 10km. Field evidence suggests
these structures dip east at 40-60. North-northeast and northwest trending secondary faults with variable dips
ranging from 10-70 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 10 west of north in the central and northern parts of the concession and
changes to 10 east of north towards the southern part around New Discovery deposit. This fault and similar
north-south trending structures appear to form brecciated shear zones with widths ranging from a few metres up
to 35m. Minor fault splays are developed along the main fault zone. The main fault zone is intensely sheared
and typically contains disseminated pyrite and occasional, small lenses of semi-massive sulphide, mainly pyrite
with 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.
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BEHRE DOLBEAR
6.3 Deposit Geology and Mineralisation
Gold mineralisation at Ulu Sokor is both lithologically and structurally controlled. In the southern section of the
concession, CNMC has defined three deposits, Manson`s Lode, New Discovery and Ketubong. New Discovery
and Ketubong are located on the same mineralised zone covering a strike length of over 1,000m. Manson`s
Lode to the east of New Discovery extends over a strike of around 400m (Figure 2).
A Iourth area oI gold mineralisation, the Rixen`s deposit has been located approximately 3km north oI
Ketubong. Based on soil sampling results, gold mineralisation in this area extends over a strike length of more
than 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 the
structures. 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 gold
deposits range in thickness from a few metres up to 35m. Mineralisation generally dips to the east at relatively
shallow angles of 10-30 (Figures 3 and 4).
Field evidence suggests that quartz porphyry dykes could be the causative feeder intrusions for gold
mineralisation, 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 is
generally fine grained. This conclusion is supported by extremely consistent assay results between duplicate
check 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 the
width 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.
The depth to the base oI oxidation varies between the Iour deposits. In Manson`s Lode it ranges Irom 2m to
35m, averaging 13m and in New Discovery it ranges from 2m to 17m, averaging 7m. Oxidation in Ketubong
generally penetrates to a depth oI less than 3m whereas at Rixen`s in the acid volcanic rocks, oxidation
penetrates 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 indicates
that 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 distinguish
transitional material from primary mineralisation; this may be important for future evaluation of the primary
mineralisation for an expanded mining operation and CIL processing. Metallurgical recovery for transitional
mineralisation could be significantly different to recovery for primary mineralisation and therefore selection of
separate representative transitional and primary samples may be necessary for future metallurgical testwork.
Manson`s Lode Deposit
Manson`s Lode consists oI a surIace gossan aIter sulphides partially replacing a silicified limestone unit which is
intercalated with phyllitic sediments. The mineralised zone extends over a strike length of 450m, trending 060,
and is marked by old surface workings and a number of shallow shafts that have been excavated to depths of up
to 30m. Manson`s Lode has been deIined by 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 mineralisation
is shallow (10-15) to the southeast. Trench mapping by CNMC suggests that the mineralisation is associated
with a breccia zone. A quartz porphyry dyke which is exposed to the southeast oI Manson`s Lode may be a
causative intrusion for the base metal-gold mineralisation. The dyke contains pyrite mineralisation as
disseminations and veinlets, with rock chips returning gold grades of 0.5-0.7g/t Au. Most of the surface area has
been disturbed by previous mining activity and hence the relationship between the different rock types is not
clear.
F-26
Mansons Lode Deposit Section A-A
New Discovery Deposit Section B-B
5.40 @ 0.94g/t
1.20 @ 0.69g/t
2.75 @ 6.09g/t
7.10 @ 2.15g/t
3.60 @ 1.75g/t
10.22 @ 2.12g/t
8.72 @ 12.87g/t
4.40 @ 3.10g/t
1.50 @ 0.58g/t
3.65 @ 14.87g/t
5.60 @ 0.84g/t
3.00 @ 6.94g/t
4.60 @ 5.20g/t
4.05 @ 0.63g/t
7.04 @ 4.76g/t
8.55 @ 5.89g/t
5.00 @ 4.72g/t
8.30 @ 4.88g/t
3.00 @ 5.74g/t
1.77 @ 1.48g/t
ZKM6-5
ZKN4-9
ZKN4-8
ZKN4-7
ZKN4-3
ZKN4-2
ZKN4-1
ZKN4-4
ZKN4-5 ZKN4-6
ZKM6-1 ZKM6-2 ZKM5-3
ZKM6-4
6
1
6
3
5
0
0
N
4
4
3
8
0
0
E
4
4
3
8
5
0
E
4
4
3
9
0
0
E
4
4
3
9
5
0
E
4
4
4
0
0
0
E
4
4
4
0
5
0
E
4
4
4
1
0
0
E
6
1
6
3
4
5
0
N
100
80
60
40
100
50
0
Legend
Legend
Topsoil and Backfilling
Topsoil and Backfilling
Topsoil
Phyllite
Phyllite
Breccia
Breccia
Carbonate Rocks
Carbonate Rocks
Oxide Ore Mineralisation >0.5g/t Au
Backfill Mineralisation >0.5g/t Au
Backfill Mineralisation >0.5g/t Au
Primary Mineralisation >0.5g/t Au
GEOLOGICAL SECTIONS
Figure 3
50 0
Metres
50 0
Metres
Sokor Gold Project
BDA - 088 (02)
F-27
4
4
3
4
5
0
E
4
4
4
0
0
0
E
4
4
4
0
5
0
E
4
4
4
1
0
0
E
50
100
200
150
00
4
4
3
5
0
0
E
ZKH7-1
ZKR5-2
ZKK8-1
Z
K
R
5
-
1
Rixens Deposit Section D-D
5.80 @ 4.68g/t
3.81 @ 3.29g/t
2.55 @ 7.43g/t
1.50 @ 0.53g/t
13.57m @ 0.69g/t
4.60m @ 0.52g/t
9.12m @ 3.35g/t
Ketubong Deposit Section C-C
Legend
Legend
Topsoil and Eluvium
Topsoil and Eluvium
Silicified Phyllite
Phyllite
Breccia
Carbonate Rocks
Tuff
GEOLOGICAL SECTIONS
Figure 4
CNMC Goldmine Limited Sokor Gold Project
BDA - 088 (02)
50 0
Metres
50 0
Metres
F-28
BEHRE DOLBEAR
Mineralisation consists of a mix of primary semi-massive to massive sulphide mineralisation partially and
irregularly 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 low
grade to process at that time.
Sulphide mineralisation consists of pyrite, pyrrhotite, galena, sphalerite with minor chalcopyrite and
arsenopyrite. The mineralisation has been strongly oxidised with the formation of massive gossan although
sulphides are still present at surface in some places. Drill hole gold grades in the oxide gossan and primary
mineralisation range from 1-8g/t Au, averaging around 4.3g/t Au. Backfill material generally averages around
1.8g/t Au. Silver is present but mineral species are not reported by CNMC. Silver grade averages around 92g/t
Ag 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 oI Manson`s Lode. Gold
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 exposures
indicate mineralised widths of 7-35m, trending 010 with a dip of around 30 to the east. In the north, the
mineralised zone appears to be displaced to the west by a northwest trending fault. The deposit has been drilled
down dip to a depth of 200m from surface and generally remains open at depth. The mineralisation continues
north 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 disseminated
pyrite 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 and
carbonate 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 during
processing 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 of
1,700ppm Cu but typically copper is in the range 50-400ppm. BDA notes that silver and base metal assays were
only determined for the early drill holes; later drill holes were only assayed for gold.
Ketubong Deposit
The Ketubong prospect is located approximately 600m to the northwest oI Manson`s Lode and immediately
north of New Discovery. Ketubong represents the continuation northwards of the north-south trending and
easterly dipping mineralisation present in New Discovery; mineralisation dips to the east at around 20-30.
The deposit has been delineated by trenching and drilling over a strike length of 680m and by gold-in-soil and IP
anomalies which are open to the north. Mineralisation is contained in highly folded phyllite and intercalated
limestone over widths of 2-40m, based on trench exposures. Based on trench mapping, gold is associated with
disseminated-stockwork quartz-sulphide mineralisation and more massive sulphide consisting predominantly of
pyrite 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 by
10 drill holes totalling 1,743m; additional drilling is required to adequately test the potential of the primary
mineralisation. 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/t
Au. Silver and base metal grades are generally very low. Copper ranges up to 370ppm and zinc 120ppm.
Rixen`s Deposit
Rixen`s deposit is located 3km north oI Ketubong and approximately 5km Irom the process plant. Gold
mineralisation is contained within acid volcanic rocks to the west of the Ketubong-Rixen fault. The deposit was
defined 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 a
strike of 500m.
To date a total of nine holes have been drilled for a total of 904m. A 15-30m thick tabular zone of gold
mineralisation dipping 5-10 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.
F-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 New
Discovery and Ketubong, extending to a depth of 40-50m.
Rixen`s deposit appears to have potential for a substantial low grade gold resource. The deposit requires infill
drilling to confirm continuity of grade and thickness in the area already drilled and step-out drilling along strike
and 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 core
samples 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`s 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 Discovery
deposit; also soil sampling indicates potential along strike to the south of the deposit. Soil and IP data suggest
potential for a strike extension to the Ketubong deposit north to the Sungai Liang area.
Current drilling at the Rixen`s deposit has Iocussed 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 potential
for 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 holes
into 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 may be potential Ior replacement massive sulphide mineralisation similar to the Manson`s Lode
deposit. 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 mapping
and rock chip sampling. Areas include south and east oI Manson`s Lode and east oI the Ketubong-Rixen fault in
the northern part of the concession. The area south oI Manson`s Lode is considered by CNMC to have potential
for replacement style base metal-gold mineralisation similar to Manson`s Lode deposit. The northern area east
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 62.8km
2
surrounding the Sokor Block. CNMC
has not completed any exploration in the licence area to date. The area covers a prospective section of the
Central Belt. Known gold occurrences in the area include the presence of alluvial gold in a number of the rivers
and hard rock gold mineralisation in the Sungai Tapis area to the northwest of the Sokor Block. The Sungai
Tapis 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-southwest
trending 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 Block
contains evidence from satellite imagery of three circular structures that could indicate buried intrusive bodies
and also one exposed intrusion. This geological setting is regarded as prospective for gold and base metal
mineralisation.
F-30
BEHRE DOLBEAR
Future Exploration Programme
CNMC plans to increase the resource base of the project by initially drill testing potential extensions to the
known deposits oI New Discovery, Ketubong and Rixen`s and by converting existing InIerred resources to
Measured and Indicated resources. CNMC plans to drill an additional 10,000m of diamond drilling to achieve
this objective. This programme is scheduled to commence during the first quarter of 2011. An additional
programme of 2,500m of RC drilling is planned to Iocus exclusively on inIilling the Rixen`s deposit.
In conjunction with the resource drilling programme, CNMC plans to conduct additional metallurgical testwork
programmes to assess the amenability oI the Rixen`s and Manson`s Lode oxide resources to heap leaching and to
test primary resources from all four deposits for carbon-in-leach processing. Testwork will also be carried out
on samples of base metal sulphides to investigate the potential of using a flotation process to recover base metals
and silver Irom the Manson`s Lode deposit.
Conclusions
The geology and mineralisation controls at Sokor are reasonably well understood, with mineralisation being
both structurally and lithologically controlled. The Mansons Loae ana New Discovery aeposits are well
aefinea, Mansons Loae appears not to have potential for extensions whereas New Discovery remains open at
depth and warrants additional drill testing. The Ketubong ana Rixens aeposits have been more widely drilled
and the geology is generally less-well defined. Both deposits require additional drilling to fully define
resources. Rixens aeposit appears to have consiaerable potential for aaaitional 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 of
CNMC 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 additional
10,000m of diamond drilling ana an aaaitional programme of 2,500m of RC arilling to infill the Rixens aeposit.
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 areas
and 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 surrounding
exploration licence also has not been subjected to any systematic investigation. These areas are prospective for
gold and base metal mineralisation and CNMC plans to expand its exploration programme in the future to
assess these areas and also in the surrounding exploration licence.
F-31
BEHRE DOLBEAR
7.0 GEOLOGICAL DATA
CNMC has completed geological mapping, soil sampling and IP geological surveys over a significant portion of
the 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 basis
for 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
The Iour deposits, Manson`s Lode, New Discovery, Ketubong and Rixen`s have been evaluated by a total oI 27
surface trenches and a total of 10,791m of diamond core drilling. Trenches were excavated by a backhoe to a
depth of 3-4m at spacing varying from 50m to 100m. Diamond drilling was completed on all four deposits with
a mix of inclined and vertical drill holes with drill sections orientated normal to the strike of the mineralisation.
The flattest drill hole angle was -60. Drill holes were collared with PQ size core, reducing to HQ when
competent 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 the
resource estimation. Core recovery in subsequent programmes was satisfactory with most holes in excess of
90% core recovery.
Manson`s Lode was defined by 120 drill holes totalling 4,904m and drilled on a 20m x 20m grid over a strike
length of 450m. The three northernmost sections were drilled on a 20m x 25m grid with drill holes spaced at
25m 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 1,743m over a strike length oI 680m. Rixen`s deposit has been drilled by nine holes totalling
904m 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; this
local detailed survey has been tied into the Malaysian National Grid ('MNG) using a number of MNG survey
control points. This survey work was carried out using electronic distance measurement ('EDM) equipment
operated by qualified and experienced surveyors. All soil sampling, IP survey, trenches and drill hole collars
have been located using EDM equipment. This survey provided adequate data to produce a digital terrain
model ('DTM) Ior resource estimation and inIrastructure layout.
All drill holes have been surveyed using down hole survey equipment. Holes were surveyed at 50m intervals
down 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 data
including core recovery, RQD (rock quality designator) and fracture frequency measurements. All drill core is
photographed using a digital camera. All potentially mineralised core is marked up for sampling. BDA notes
that logging defined only two oxidation zones, oxide and primary. Drill core examined by BDA during the site
visit indicated the presence of a partially oxidised transitional zone between oxide and primary; BDA
recommends 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 potentially
mineralised 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 drill
core 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 labelling
and recording of the samples, and the transport and dispatch for sample preparation and analysis. Sample
security procedures instigated by CNMC included secure storage of all drill core on site or at Tanah Merah
office on completion of each drill hole. Sampling of core was supervised by the Chief or Senior geologists at all
times. Core samples are placed in calico bags, labelled and dispatched by air freight from Kota Bharu to Perth
F-32
BEHRE DOLBEAR
for sample preparation and analysis. BDA considers sample security procedures are satisfactory and meet
normal industry standards.
Sample preparation is undertaken at ALS Group ('ALS) laboratory in Perth, Australia. Sample weights range
from 1-3kg. Samples are dried, crushed to 6mm and the whole sample pulverized to 85% passing 75 microns. A
pulp sample of 200 grams ('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 AAS
finish, with a detection limit of 0.01g/t Au. Ag, Cu, Pb and Zn are analysed by four acid digest and ICP Atomic
Emission Spectrometry ('ICPAES) using the ALS method 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. On
investigation 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 10
different internal laboratory standards were routinely inserted by ALS. These standard samples returned
acceptable results with no significant bias or long term drift of standard results. BDA recommends that CNMC
inserts 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 sent to Standard and ReIerence Laboratories ('SRL) in Perth.
Results of check assays by SRL using the same fire assay method as ALS gave an 8% lower mean grade
compared with ALS and lower variance. This mean positive bias for ALS analyses was influenced mainly by
differences between the two laboratories for results of eight samples greater than 12g/t Au. Sample variance of
ALS 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 an
appropriate 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 the
water immersion method, weighing in air and water. Samples were dried before measurement. A total of 169
samples of oxide and primary mineralisation have been tested from the four deposits. Average bulk densities for
unconsolidated 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 for
the main mineralised lithologies are shown in Table 7.1.
Table 7.1
Dry Bulk Density Values
Domain - Rock Type Bulk Density Value (t/m
3
)
Oxidised phyllite/gossan Manson`s Lode, New Discovery and Ketubong (36 core samples) 2.20
Oxidised tuII in Rixen`s deposit (30 core samples) 2.70
BackIill material in Manson`s Lode deposit (25 pits) 1.85
Alluvial material in New Discovery deposit (16 pits) 1.85
Primary semi massive sulphide in Manson`s Lode deposit (48 core samples) 3.82
Primary 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 project
staff, and review of geological logs and drill core, BDA considers that the geological investigations have been
thorough and the drilling, logging, sampling and assaying procedures adopted are appropriate and in
accordance with industry standards. BDA recommends that future geological logging of the oxidation profile
includes identification of partially oxidised transitional rock.
F-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 out
additional inter-laboratory checks particularly of higher grade samples. Bulk density determination procedures
appear generally appropriate. Overall, in BDAs opinion, the geological aatabase forms an appropriate and
reasonable basis for resource and reserve estimation.
F-34
BEHRE DOLBEAR
8.0 RESOURCE AND RESERVE ESTIMATION
BDA has reviewed CNMC`s resource and reserve estimates Ior each of the deposits. BDA reviewed the
database and estimation methodology for each estimate and assessed the resources and reserves in terms of
CNMC`s Iorecast mine production, mine liIe and Iuture growth potential.
CNMC reports its resources and reserves under the 1999 Chinese Code. BDA has made an assessment of
CNMC`s reported resources and reserves in terms of the comparable resource/reserve categories under the
Australian JORC Code. The two codes are different. The JORC Code is a non-prescriptive code, in that 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. The Chinese Code
is 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 ranges
of 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 geoscientific
data are reliably known. An Indicated Resource is one which has been sampled by drill holes or other sampling
procedures 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 cannot
be predicted with confidence and where geoscientific data may not be known with a reasonable level of
reliability.
An ore reserve is defined in the Australasian JORC Code as that part of a Measured or Indicated Resource which
could be mined and from which valuable or useful minerals could be recovered economically under conditions
reasonably 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 ore
reserves 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 overall
resource 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 transferred
into a reserve category.
8.2 Mineral Resource Estimation
Geological Modelling
The geological models and resource estimates Ior the Manson`s Lode, New Discovery, Ketubong and Rixen`s
deposits are based on trench and drill hole data which was available at the end of May 2010. At that time,
drilling was ongoing at Rixen`s deposit and drill hole assay samples were outstanding Ior one hole in the
Ketubong deposit.
The geology for each deposit has been interpreted on cross sections and in plan. Section spacing Ior Manson`s
Lode and New Discovery is 20m which aligns with the drill hole spacing; Ketubong and Rixen`s deposits are
more widely drilled with section spacing of 50m and 100m respectively. A cut-off grade of 0.5g/t Au was used
to 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 geological
logging. Backfill represents low grade material that was mined and discarded during previous mining operations
oI Manson`s Lode deposit. Alluvial material is associated with the drainage channel oI the Sungai Liang that
cuts through the New Discovery deposit. All four deposits contain in-situ oxide mineralisation; the base of oxide
F-35
BEHRE DOLBEAR
is defined by the first appearance of sulphide minerals based on visual examination of the core during geological
logging.
Mansons Loae
Manson`s Lode is defined by eight surface trenches and 120 diamond drill holes totalling 4,904m over a strike
length of 450m. Resource sections are spaced at 20m except for the three northernmost sections where spacing
increases to 25m. Drill holes along sections are drilled at 20m spacing. Manson`s Lode consists of a tabular
dipping body of semi-massive to massive sulphide mineralisation associated with replacement of a limestone
unit. Gold and base metal grades tend to be highly variable within the replacement body. Completely oxidised
massive gossan mineralisation grades into primary mineralisation containing base metals, gold and silver; the
dominant base metals are galena and sphalerite, with minor chalcopyrite. Overlying and adjacent to oxide
mineralisation 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 a
strike length of 200m. Resource sections are spaced at 20m and drill holes along sections spaced at between
20m in the oxide mineralisation and 40m in the primary. New Discovery consists of shear and fault-related
mineralisation which appears genetically linked to the base metal mineralisation at Manson`s Lode; 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 10-30. The grade and thickness of mineralisation between sections exhibits reasonable
continuity.
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 the
gold grade and thickness between sections is generally poor; the deposit requires additional drilling to
demonstrate continuity of the mineralisation along strike and down dip.
Rixens
Rixen`s deposit is 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 geometry
with 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 be
low 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 in
conjunction with the Chinese Code. The estimation methodology is similar to a conventional cross sectional
estimation method as used in Australia and elsewhere around the world.
Resource parameters used by CNMC were as follows:
x a gold cut-off grade of 0.5g/t Au was used to define the mineralisation envelopes for the four deposits
x a minimum thickness of mineralisation was set at 1m and maximum internal waste at 2m
x a minimum block (polygon) grade was set at 1.0g/t Au
x top cuts were applied to statistically anomalous trench and drill hole samples and log probability plots were
used to define the cut points; on average, the top 4% of the trench and drill hole samples were affected by the
top cutting and the weighted average sample grades were reduced by 14% for trench samples and by 6% for
drill hole samples
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BEHRE DOLBEAR
x mineralisation volumes were estimated by measuring the area of each mineralisation type on each section and
multiplying by the section spacing; average section grades for each section were calculated by weighting the
length of each drill intercept with its grade and sectional average grades were weighted by section volumes to
obtain a weighted average grade for each mineralisation type in each deposit
x 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 the
geological 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 the
gold mineral resources attributable to CNMC is 81%.
BDA has reviewed the resource estimation methodology and procedures and considers them generally
reasonable and appropriate except for the following aspects:
x 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 be
vulnerable to over-estimation of the grade, particularly with gold deposits, due to the variability of gold
grades 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 there
remains the possibility that the estimation methodology may have over-estimated the gold grade particularly
in Ketubong and Rixen`s deposits where the number of drill holes used in the estimation is small and
therefore each drill hole has more influence over the weighted average resource grade.
x The Rixen`s deposit contains 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 Inferred
resources. The Indicated resource has been categorised as such because of the apparent fairly simple and
continuous 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
recommends that CNMC carries out inIill drilling at Rixen`s deposit to conIirm continuity oI the grade and
thickness of the mineralisation.
x BDA recommends that CNMC considers using a computer-based estimation methodology for its next
resource estimation update. This would entail creating a three dimensional block model of each deposit and
applying geostatistical methods for the resource estimation. BDA believes that this would provide CNMC
with a more robust global estimate of the gold resources at Sokor.
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Table 8.1
Sokor Gold Mineral Resources 0.5g/t Au Cut-Off - June 2010
Deposit Type Category Category Tonnage Gold Grade Contained Au
JORC Code Chinese Code kt Au g/t kozs
Manson`s Lode Backfill Measured 121b 101 1.73 5.6
Backfill Inferred 333 29 1.86 1.7
Oxide Measured 121b 34 6.41 7.0
Oxide Inferred 333 39 4.57 5.7
Primary Measured 121b 108 3.67 12.8
Primary Inferred 333 122 4.07 16.0
Subtotal 433 3.50 48.8
New Discovery Alluvial Measured 121b 22 1.10 0.8
Alluvial Inferred 333 13 0.82 0.3
Oxide Measured 121b 37 8.74 10.5
Primary Measured 121b 325 3.30 34.5
Subtotal 452 3.55 51.4
Ketubong Oxide Inferred 333 7 2.21 0.6
Primary Indicated 122b 56 2.50 4.5
Subtotal 229 2.64 19.5
Rixen`s Oxide Indicated 122b 747 1.93 46.4
Primary Indicated 122b 32 0.55 0.6
Subtotal 1,068 1.85 63.8
All Backfill Meas/Indicated 121b/122b 101 1.73 5.6
Inferred 333 29 1.86 1.7
All Alluvial Meas/Indicated 121b/122b 22 1.10 0.8
Inferred 333 13 0.82 0.3
All Oxide Meas/Indicated 121b/122b 818 2.42 63.9
Inferred 333 338 2.26 24.6
All Bck/All/Ox Meas/Indicated 121b/122b 941 2.32 70.3
Bck/All/Ox Inferred 333 380 2.18 26.6
All Primary Meas/Indicated 121b/122b 521 3.12 52.4
All Total Meas/Ind 121b/122b 1,462 2.61 122.7
All Total Inferred 333 720 2.63 60.8
All 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 Manson`s Lode deposit estimated within the 0.5g/t Au
cut-off mineralisation envelope which was used to define gold resources. Resources are estimated using a silver
cut-off of 40g/t Ag or a 1% combined lead and zinc cut-off. The base metal mineral resources of lead and zinc
and associated silver resources are shown in Table 8.2.
Table 8.2
Manson`s Lode Deposit, Lead, Zinc and Silver Resources (0.5g/t Au Mineralisation Envelope) - June 2010
Type Category Tonnage Grade Grade Grade Lead Zinc Silver
JORC Code kt % Pb % Zn Ag g/t t t ozs
Backfill Measured 115 1.0 0.2 43 1,200 200 161,000
Backfill Inferred 26 1.3 0.3 41 300 100 35,000
Oxide Measured 34 4.5 1.4 208 1,500 500 227,000
Oxide Inferred 28 2.4 0.8 119 700 200 109,000
Primary Measured 108 2.1 3.2 90 2,300 3,500 314,000
Primary Inferred 113 2.8 3.9 114 3,200 4,400 414,000
All Measured 258 1.7 1.6 85 5,000 4,200 701,000
All Inferred 168 2.5 2.8 103 4,200 4,700 558,000
All Meas/Inf 426 2.2 2.1 92 9,200 8,900 1,259,000
Note: cut off 40g/t Ag or 1% Pb+Zn within the 0.5g/t Au mineralisation envelope
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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 sufficient
level 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 reserve
category.
To date ore reserves have been estimated only for backfill, alluvial and oxide ore in Manson`s Lode, New
Discovery and Rixen`s deposits. Optimised open pit designs for the three deposits are shown in Figures 5 and 6.
CNMC used the following reserve parameters:
x 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
x mining dilution was set at 5% and mining recovery 100%
x the economic cut-off grade was defined as 0.5g/t Au, the same cut-off that defined the mineralisation
envelope (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 2010
Deposit Type Category Tonnage Gold Grade Contained Au
JORC Code kt Au g/t kozs
Manson`s Lode Backfill Proved 106 1.65 5.6
Manson`s Lode Oxide Proved 36 6.11 7.0
Sub-Total All Proved 142 2.77 12.6
New Discovery Alluvial Proved 24 1.05 0.8
New Discovery Oxide Proved 39 8.32 10.5
Sub-Total All Subtotal 63 5.60 11.3
Rixen`s Oxide Probable 785 1.84 46.4
Sub-Total Oxide Subtotal 785 1.84 46.4
Total All Proved 204 3.64 23.9
Total All Probable 785 1.84 46.4
Total 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 and
Indicated primary resource. These resources have been included in CNMC`s production schedule Irom 2012
onwards with the assumption that the Inferred oxide resources will be converted to ore reserves on completion of
additional drilling and that the Measured and Indicated primary resources will be converted to ore reserves
through the completion of successful metallurgical testwork that indicates that the material is suitable for
processing in a CIL plant. BDA considers that it is a reasonable assumption that at least a major portion of these
resources will be converted to ore reserves on completion oI CNMC`s planned work programmes.
There is also a reasonable expectation that additional resources will be defined within the Sokor Block and in the
surrounding exploration licence, however this will require further systematic exploration and an increase in the
amount 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; ore
reserves 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 locate
additional gold resources, however this will require a higher rate of drilling than CNMC has completed in the
past.
F-39
120
140
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laboratory
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New Discovery
Open Pit
Mansons Lode
Open Pit
Diversion Ditch
Underground
Mining
Crusher
Station
Ore
Bin
Accommodation
Accommodation
Ponds
Vat Leach
Process Plant'
Lab.
Sed.
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Security
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Sewage
Initial
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Site
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6 163 500 N
6 163 000 N
Road & Tracks
LEGEND
River/Sungai
MANSON'S LODE AND NEW DISCOVERY
OPEN PITS AND VAT LEACH SITE PLAN
Figure 5
250 0
Metres
BDA - 088 (02)
Sokor Gold Project
F-40
80
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P
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Leaching Pad
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Waste Rock
Waste Rock
Leaching Residual
Barren/Flood
Pond
Pregnant
Pond (A)
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Road & Tracks
LEGEND
River/Sungai
Licence Boundary
6 167 000 N
6 167 500 N
6 166 500 N
444000 444200 443800 443600 443400
4
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RIXEN'S OPEN PIT AND
HEAP LEACH SITE PLAN'
Figure 6
250 0
Metres
BDA - 088 (02)
Sokor Gold Project
F-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. The
mine plan has extraction of ore from three separate pits, Manson`s Lode, New Discovery and Rixen`s. The
planned Manson`s Lode and New Discovery pits are located within a radius of approximately 1km from the
treatment plant, while the planned Rixen`s 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 oxidised
zone to strong in the primary rock types in the hanging and footwall of the fault/shear zones that contain the
majority of the mineralisation.
The project mine plan for the period 2011 to 2012 proposes an ore production rate increasing from 84,000tpa in
2011 up to 705,000tpa in 2012. Ore will be treated through the vat leach for New Manson`s Lode and New
Discovery deposits at a rate of approximately 60,000tpa, or stacked onto the heap leach pads at Rixen`s at a
maximum 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:
x Geotechnical - no geotechnical report has been prepared for the pit slope assessment. CSU has assumed final
pit slopes of 48-50 for the hangingwall of all of the orebodies and 26-42 for the footwall.
x Mining Losses and Dilution - a nominal dilution allowance of 5% has been included in the estimates with
mining recovery assumed to be 100%; given the planned bench height of 5-10m and the general width of the
ore zone from 6-8m, BDA anticipates that mining dilution is likely to be higher.
x Mining Costs - a unit cost of US$2.65/t has been estimated for ore mining and US$0.88/t for waste removal
and 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 1.8m
3
hydraulic
excavators, and supported by the normal ancillary equipment.
x Processing Costs - a unit cost of US$10/t has been estimated for vat leaching of ore from Manson`s Lode and
New Discovery deposits and US$8/t for heap leaching of ore from Rixen`s.
x Ore Type- mine planning has incorporated both oxide ore and primary ore in the open pit optimisation study
assuming a recovery of 80%. The recovery for oxide ore, based on testwork, is 70% for vat and heap
leaching; 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 were
supplied by CSU or derived in consultation with CNMC and were consistent with a nominal 300-600ktpa on-site
mineral 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 limit
determination was done by DMINE software. The open-pit limit was determined using the cut off stripping ratio
based on the parameters provided. CNMC used a gold price of US$1,200 for the pit optimisation; a cut off grade
of 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 50 in weathered rock and 65 in fresh
rock. CSU indicated that the overall inter-ramp angle (the slope from crest to crest in areas with no ramp)
averaged 23-30, but this is likely to be in the footwall section of the pit with the hangingwall slope angle
planned at 48-50.
In Manson`s Lode, the initial open pit is also planned to provide access for underground mining of over 40,000t
of 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
F-42
BEHRE DOLBEAR
area is to be backfilled with waste rock obtained in stripping operations to maintain stability. The remainder of
the Manson`s Lode 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 Manson`s Lode, New
Discovery and Rixen`s are shown in Table 9.1. The resource tonnages include Measured primary resources and
Inferred oxide resources. The Ore Reserves only include the oxide ore component of the pits and exclude
primary material and Inferred oxide resources.
Table 9.1
Sokor Optimised Pits - Contained Resources and Ore Reserves
Deposit Units Contained Resources Ore Reserve
Manson`s Lode
Ore Tonnage kt 319 142
Grade - Au g/t 4.1 2.8
Contained Au kozs 41.5 12.7
New Discovery
Ore Tonnage kt 437 63
Rixen`s
Ore Tonnage kt 1,120 785
Mining operations are planned to be conducted by contractors using 1.8m
3
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 the
mining 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 the
use of the rigid frame dump trucks; the use of all wheel drive articulated trucks may suit the ground conditions
better than rigid trucks.
Most of the material will be drilled and blasted with 5m-10m high benches. CSU proposes a drill pattern of 4m
x 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 footwall
slope angles of the planned pits are reasonably conservative; the hangingwall pit slopes angles are between 45-
50q; 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 diesel
powered pumps. Water will be pumped to sedimentation ponds and then reused or discharged after settling and
neutralisation. Perimeter drains will be established at each pit to prevent the inflow of run-off water from
rainfall. 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 initial
period from 2010 to 2012 based on ore reserves. The ore reserve is based on a cut off grade of 0.5g/t Au and the
waste to ore stripping ratio over the period is approximately 1.6:1. Under the mine plan ore production
commences at an initial rate of 84,000tpa in 2011 increasing to 705,000tpa in 2012. Total material movement
ranges 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 further
equipment 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.
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BEHRE DOLBEAR
Table 9.2
Sokor Gold Operation - Projected Mining Production Schedule
Item Unit 2010 2011 2012
Sub-total
2010-2012 2013 2014
Total
2010-2014
Ore Mined kt 6.0 84.0 705.0 795.0 913.0 1,090.0 2,798.0
Waste Mined kt 6.0 180.6 1,035.1 1,221.7 1,851.8 2,854.6 5,928.1
Total Material Mined kt 12.0 264.6 1,740.1 2,016.7 2,764.8 3,944.6 8,726.1
Strip Ratio w:o 1.05 2.2 1.5 1.5 2.0 2.6 2.1
Pond Leach kt
6.0 22.0 40.0 68.0 43.0 0.0 111.0
Heap Leach kt
0.0 62.0 665.0 727.0 640.0 600.0 1,967.0
CIL Leach kt
0.0 0.0 0.0 0.0 230.0 490.0 720.0
CNMC has prepared an extension of production for two years (2013-2014) based on primary ore, Inferred
resources and possible extensions at Rixen`s pit. For the extended mine life an extra production of 2.0Mt of ore
mine inventory has been assumed at an overall mining rate around 3.3Mtpa. Ore production is forecast at
600,000tpa of ore to the heap leach pads at Rixen`s 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 is
approximately 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 additional resources at Rixens
and 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 pits
are reasonably conservative; the hangingwall pit slope angles are between 45-50q, 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 around
the open pits to minimise the effects to the operation. The mining equipment is considered generally appropriate
to 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.
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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 by
the 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`s; gold recoveries ranging from 54-86% were obtained on leach feed crushed to -
3mm. When the material was crushed to Iiner than 180 microns ('m), gold recoveries increased to 97-99%.
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. Table
10.1 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 Percolation
Au Ag Au Ag NaCN Lime
1 Liang Gossan with secondary quartz 19.9 7.28 94.8 53.7 2.54 6.43 Good
2 Liang Gossan. 2.73 176 87.1 7.1 1.22 2.33 Good
3 New Disc. Gossanous bands 11.6 3.17 93.8 58.9 2.68 4.83 Good
4 Rixen`s Clay-silica with vein quartz 0.65 1.76 87.8 20.0 0.83 2.07 Good
5 Rixen`s Clay-silica with vein quartz 2.74 3.05 83.8 38.9 0.89 2.04 Good
7 Rixen`s Silicified breccias 1.68 1.86 64.1 32.2 1.07 2.05 Good
8 New Found Metasediment at dyke contact 8.80 2.33 71.2 51.2 1.71 3.86 Good
9 Manson`s Oxide/sulphide transition 3.86 94.6 60.1 23.7 3.48 5.78 Good
10 Liang Gossan with quartz 6.59 144 95.2 9.4 2.76 5.24 Good
Note: 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
Manson`s Lode and New Discovery areas; the primary sample contained 400kg oI primary and partial primary
ore material Irom Manson`s Lode and primary material Irom Ketubong. Unfortunately, the two samples were
combined 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, oxidised
sulphides or in the gangue minerals, between grains of these minerals, and in fractures. Gold grains appeared to
be pre-dominantly Iiner than 75 microns ('m) and about 30 Iiner than 10m.
A gravity concentration test using an unspeciIied method at a particle size oI 80 Iiner than ('p
80
) 74m
produced 6% gold recovery. A 24 hour cyanide leaching test at a p
80
of 74m 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 oI sodium cyanide ('NaCN), and 7-35 day
leaching time. A test was carried out at optimised conditions of 30mm top size, pH11, 800g/t NaCN and 30 days
leaching 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:
x heap leaching oI Rixen`s oxide ore
x gravity gold recovery and heap leaching oI Manson`s Lode back Iill ore
x mineralogical analysis on polymetallic Manson`s Lode ore for selection of a process route
x mineralogical and leaching testwork on primary ore from New Discovery and Ketubong.
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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:
x a 50 tonnes per hour ('tph) crushing plant which includes a jaw crusher, a secondary impact crusher and a
10mm vibrating screen to split the secondary crusher product into plus and minus 10mm material
x three concrete leaching vats each with a capacity of 1,500t of ore
x pregnant, barren and raw water ponds
x eight activated carbon columns set up in two trains of four columns
x a gold room comprising an acid wash tank and an elution column each with a capacity of 1t of carbon
x a 1,000kg carbon/day diesel-fired carbon regeneration furnace
x a pressurised electrowinning cell.
Crushed ore is trucked about 150m to the leaching vats and loaded into the vats using excavators. Barren
solution is pumped into the vat to saturate the ore and allow it to soak. The pregnant solution is then drained
from the vat into the pregnant solution pond. Pregnant solution is pumped through the carbon columns, an
estimated 97% of the contained gold is captured on the carbon and the solution discharging from the columns is
recirculated 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 the
adsorption 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 a
multi-lift heap leaching system and for construction of a carbon-in-leach plant with an initial capacity of 500
tonnes per day. BDA has not been supplied with any details of the design of these plants. Given that testwork
remains to be carried out on primary ore samples from deposits on which CIL processing is proposed, the
projected gold recovery and operating costs should be considered conceptual. The projected 80% gold recovery
for 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 rainfall
environment 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 crusher
product 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, equivalent
to a gold content of 76.3ozs. Based on an assayed vat feed of 500t assaying 6.1g/t Au, gold recovery was equal
to 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 metal
accounting.
At the time oI BDA`s site visit in July 2010, excavators were transIerring the ore initially loaded into Vat 1 into
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. On
this 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 the
pregnant solution and potentially causing the vats to overtop.
Performance to date is summarised in Table 10.2.
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Table 10.2
CNMC Plant Production Summary- July-December 2010
Gold Pour No Date Ore Tonnage
t
Au Recovered
ozs
Head Grade
g/t
Au Recovery
%
1 Jul 2010 500 76 6.2 76
2 Aug 2010 800 106 5.4 76
3 Sep 2010 1,000 58 2.4 75
4 Nov 2010 2,000 165 3.5 73
5 Dec 2010 1,600 149 3.9 74
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 oxide
samples. 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. CNMC
plans 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 heap
leach in a high rainfall environment such as Sokor.
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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 and
is within about 35km of the Thai border to the northwest. Access from Kota Bharu is via the main highway to
the town of Tanah Merah, about 40km to the south, and thence via local sealed roads for around 32km to
Kampong Bukit Pauh village, where an 18km four-wheel-drive lightly trafficked logging track provides access
to 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 November to January. The states`s average
rainfall is in the range 2,032-2,540mm per annum. During BDA`s visit to the site, project personnel indicated
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 maintenance
facility 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 are
provided.
Conclusions
The infrastructure provided is generally adequate and appropriate to support an operation of the style planned
for Sokor.
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12.0 ENVIRONMENTAL AND COMMUNITY ISSUES
BDA has reviewed those environmental aspects and social/community issues which are considered a material
part of the project and which may have implications for project feasibility, costs and timing. The issues
discussed below cover the main environmental and social risk areas identiIied Irom BDA`s review oI the
project`s Environmental Impact Assessment 2008, 2009 and Environmental Management Plan 2010.
12.1 Environmental Issues
Environmental Impact Assessment
Management 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 Environment
('DOE). The EIA approval was received in June 2009 with approval 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 in
parallel with gold production and aims to complete a feasibility study on an expanded project by the first half of
2012.
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 and
communication of potential project-related impacts, including the anticipated scope, magnitude, extent and
duration, have been completed in conformance with the Kelantan State permitting process, including the DOE
requirements, and requirements under the Environmental Quality Act 1974. The information supplied under the
Supplementary EIA was in response to further information requests from the DOE and the Kelantan State
Minerals and Geoscience Department.
The EIA reports were prepared by Puncak Moriah Engineering Sdn. Bhd., whilst the EMP document was
prepared 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 the
project site and at a lower elevation. The highest 24-hour mean temperature of 28.0C was recorded in May and
the lowest was 24.6C recorded in December. The highest mean maximum is 35.1C recorded in April and the
lowest is 28.5C recorded in December, whilst the highest mean minimum is 24.1C recorded in May and the
lowest is 20.7C in February.
Kelantan has a tropical monsoonal climate, the wettest months occurring from November to January. The
States`s average annual rainIall is in the range 2,032 - 2,540mm. The above station`s recorded highest annual
recorded rainIall is 2,752mm and the lowest is 1,543mm. During BDA`s visit to the site, project personnel
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 maintenance
work and certain public holidays.
Environmental Protection and Mitigation Measures
CNMC has identified the key potential environmental impacts arising from the project`s operations and their
associated mitigation measures which are being implemented. These potential impacts and CNMC mitigation
measures include:
x Site clearing impacting on downstream water quality - mitigation measures include the use of silt traps and
runoff barriers, retention of vegetation, vegetation removal to follow natural contours to maximise effects of
silt traps.
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x 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 dust
emissions, and provision of personal protection equipment to provide protection from dust and noise.
x 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-site in a designated Iill` area, properly designed spoil piles surrounded by soil containment berms,
and biodegradable waste to be left in-situ to decompose naturally.
x Wastewater generation and disposal impacting on water quality - mitigation measures include provision of
suitable sanitation facilities and potable water supply, solid waste to be recycled, and composted or disposed
in secure areas designed in accordance with Department of Environment of Malaysia guidelines.
x Chemicals and hazardous material use impacting on water quality - mitigation measures include prevention
of 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 handle
all acids and hazard chemicals resulting from the operations, and provision of proper safe and secure storage
facilities located away from incompatible substances that may generate heat, fire, gas or explosion.
x Traffic associated with the project impacting on air quality, noise, and road safety - mitigation measures
include provision of sufficient width to access roads, limiting speed of vehicles, restricting entry to active
mining areas to project vehicles only.
x Mine closure impacting on water quality, employment opportunities, development opportunities, loss of
environmental values - mitigation measures include developing an appropriate Mine Closure and
Rehabilitation Plan which includes appropriate systems for handling site storm water runoff, compacting and
sealing 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 other
sectors 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 baseline
monitoring for environmental assessment purposes. In general, ambient air quality and noise levels in areas
sampled 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 area
from 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 for
Malaysia and complying with Standard B of the Malaysian Environmental Quality (Sewage & Industrial
Effluents) Regulations, 1979.
Water Management
Given the project area`s known high rainIall, water management is a signiIicant management issue for the
project 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 operations
will be discharged to nearby surface waters. All process water from the plant area is to be channelled to the
proposed tailings storage facility while any excess water from the TSF is recycled to the plant`s processing
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 also
been 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 a
sedimentation 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.
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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 surface
water. Surface runoff from the workshop area and other vehicle service areas are to be channelled to an
oil/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-site
facilities 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 a
multi-lift heap leaching system and development of a carbon-in-leach plant. BDA has not been supplied with
any details of the design of these plants, any expansion details on proposed plant process ponds, nor any site
water balance data. BDA believes it is prudent that any heap leach system, besides provisioning for process
ponds (barren and pregnant solution ponds), provides a stormwater (safety) pond with sufficient capacity to
accommodate the local maximum rainfall event. Such a pond will need to accommodate runoff from the entire
process plant area, including the process ponds and heap leach area. A cyanide detoxification system will likely
be necessary to handle increased rainfall on the heap leach area during the monsoon period and to provide for
decommissioning of the heap leach structures and make safe the process solutions once the heap leach system is
closed. The EMP contains limited details on three possible cyanide detoxification methods, however, the
information 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 the
potential 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 the
vat 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 and
reporting 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 other
specific 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 the
two communities within 25km of the project. The activities in which the respondents are generally involved are
rubber tapping, farming and fishing.
There is a possibility that the Sokor project may encroach into fishing areas, which may impact on local revenue
and 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 Taku
Forest Reserve. The land use within a 3km to 10km radius of the project site is forest. The nearest housing and
agricultural land area adjacent to the Sokor project is RPT KESEDAR Peralla 2, which is located to the northeast
and approximately 18km from the site. The nearest existing facilities are Klinik Desa Peralla, Sekolah
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Menengah Kebangsaan Bukit Durian, Sekolah Rendah and a mosque, which is located approximately 25km
northeast 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 the
communities surveyed, the residents expressed the desire to seek work at the site for both skilled and unskilled
work opportunities.
Sustainable Development
assisting them in social and economic development programmes. Its is providing the local community with new
employment opportunities, training and skills development for those staff employed in CNMC`s mining
activities and has broadened the economic and commercial base for local businesses, contributing to economic
growth 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
mining. CNMC`s proposed mitigation measure is to ensure that the workIorce that has been employed will be
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, and
poverty 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 site
contaminated water run-off from the heap leach area, the TSF, the plant area and mining areas. The inclusion
of 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 being
detoxified.
The project has an Environmental Management Plan which is approved by the Government agency and if
implemented appropriately, should minimise the risk of environmental pollution. CNMC has identified the key
potential environmental impacts arising from the profects operations ana their associatea mitigation measures
which are being implemented.
assisting them in social and economic development programmes. The CNMC Group has a corporate policy on
Social Responsibility and has been participating in community development projects which include emergency
relief, poverty alleviation and education.
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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 the
period 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
possible extensions at Rixen`s pit.
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 of
ore in 2012. The waste to ore stripping ratio over this period is approximately 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 prior to 2012.
For the extended mine life an additional ore inventory of 2.0Mt has been assumed at a mining rate around
3.3Mtpa of total material. Ore production is Iorecast at 600,000tpa oI ore to the heap leach pads at Rixen`s 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 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 planned
throughput of 84,000t for 2011 will require further ramp up and commissioning of additional plant during that
year. CNMC plans to commence heap leaching operations on oxidised Rixen`s 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 to
increase 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 from
the heap leach operation whilst the vat leach capacity remains at around 60,000tpa.
Table 13.1
Sokor Gold Operation - Projected Production Schedule
Item Unit 2010 2011 2012
Sub-total
2010-2012 2013 2014
Total
2010-2014
Ore Mined kt 6.0 84.0 705.0 795.0 913.0 1,090.0 2,798.0
Waste Mined kt 6.0 180.6 1,035.1 1,221.7 1,851.8 2,854.6 5,928.1
Material Mined kt 12.0 264.6 1,740.1 2,016.7 2,764.8 3,944.6 8,726.1
Strip Ratio W:O 1.0 2.2 1.5 1.5 2.0 2.6 2.1
Vat/Pond Leach kt
6.0 22.0 40.0 68.0 43.0 0.0 111.0
Heap Leach kt
0.0 62.0 665.0 727.0 640.0 600.0 1,967.0
CIL Leach kt
0.0 0.0 0.0 0.0 230.0 490.0 720.0
Ore Treated kt 6.0 84.0 705.0 795.0 913.0 1,090.0 2,798.0
Ore Grade g/t Au 3.91 3.51 2.21 2.36 2.43 2.31 2.36
Au Recovery % 74 70 70 70 73 74 73
Au Production ozs 550 6,000 31,500, 38,100 50,000 58,100 146,200
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 heap
leach 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 extended
production schedule is based on a more conceptual mine plan. The overall mine production schedule provides a
general guide to production but further work is required to better define the parameters used to prepare the
plan. Metallurgical performance depends on successful operation of a heap leach in a wet tropical climate and
on achievement of good gold recovery from primary ore on which testwork has yet to be carried out. The
proposed ramp-up in tonnage processed may also be difficult to achieve.
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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 0.92
Site Infrastructure Costs 0.26
Total 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 will
need to be some establishment costs in accessing the Rixen`s 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
CNMC has estimated the Iuture mine expansion capital cost Ior construction oI the heap leach Iacility at Rixen`s
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 to
process oxidised ore. A total of US$3.5M has been allowed for the cost of construction of a CIL plant to process
primary ore types. Testwork has yet to be completed on this material and the plant design is therefore
preliminary and subject to modification. The proposed capital cost is therefore provisional and subject to
change.
Table 14.2
Sokor Gold Project Future Mine Expansion Capital Expenditure
Item Total Capital
US$M
Expanding production capacity of plant 0.20
Multi-lift heap leaching system 1.50
CIL plant design and construction (500t/d) 3.50
Exploration Expenses 2.00
Contractor`s Indirect Costs 0.20
Project Contingency 0.74
Total 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 2011
and 2012 respectively. No detailed engineering estimates have been reviewed and BDA considers that these cost
estimates should be regarded as conceptual.
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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 from
2010 to 2012; process plant and mine operating costs comprise 37% and 26% of the total respectively. Other
costs include administration and realisation costs and royalties. Cash cost of gold produced is projected to
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 of
waste mined. Ore mining includes the mining of the ore and the associated geological control of mining; waste
mining 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 to
indicate 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/t
processed. CNMC has proposed operating costs of US$8/t for heap leaching, US$10/t for vat leaching and
US$20/t for CIL processing of ore. BDA considers that these cost estimates are likely to be of a preliminary
nature and notes that they assume that costs are variable with tonnage. A proportion of processing costs are
likely to be fixed, implying that unit operating costs will be higher while processes are ramping up to full
production. CNMC has not supplied actual operating costs for the period from July to December 2010. BDA
considers 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$660k for the
period when the CIL plant will be operating in 2013-2014. A royalty is payable to KSG equal to 5% of gross
revenue and an additional tribute equal to 3% of gross revenue is payable to KSEDC.
Until the planned operations are better defined, cost estimations will remain provisional. Overall BDA considers
the operating costs are likely to be accurate to 50%.
Table 15.1
Operating Costs for the Sokor Gold Project
Item Unit 2010 2011 2012
Sub-total
2010-2012 2013 2014
Total
2010-2014
Production
Ore Treated kt 6 84 705 795 913 1,090 2,798
Gold Production kozs 0.55 6.0 31.5 38.1 50.0 58.1 146.2
Costs
Mining US$k 54 540 3,690 4,284 5,679 7,913 17,876
Processing US$k 60 716 5,320 6,096 10,150 14,600 30,846
Administration US$k 240 540 540 1,320 660 660 2,640
Realisation US$k 40 109 577 696 915 1,063 2,674
Total Operating Costs US$k 394 1,905 10,127 12,396 17,404 24,236 54,036
Royalties US$k 58 670 3,529 4,257 5,200 6,042 15,499
Total Cash Cost US$k 452 2,575 13,656 16,653 22,604 30,278 69,535
Unit Costs
Mining US$/t 9.0 6.4 5.2 5.4 6.2 7.3 6.4
Processing * US$/t 10.0 8.5 7.5 7.7 11.1 13.4 11.0
Administration US$/t 40.0 6.4 0.8 1.7 0.7 0.6 0.9
Total Cash Cost US$/oz 816 431 433 438 452 521 475
*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 considered
scoping study estimates at best, accurate to within 50%. This is likely to remain the case until the development
plans are better defined and engineered. In BDAs opinion the unit operating costs appear low for the small
scale of operation, although it is recognised that labour costs are likely to be low.
F-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 John
McIntyre, 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 in
mineral evaluations, due diligence assessments, independent expert reports and strategic planning as well as
technical 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 Persons
for the purposes of this report. Mr Hancock and Mr Brech are qualified geologists and a fellow and member
respectively of the Australasian Institute of Mining and Metallurgy and have in excess of five years of relevant
experience 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 of
relevant experience in gold and precious metal deposits mineralization and mining. Mr Hancock, Mr Brech and
Mr McIntyre are professionally qualified and have the experience to act as Competent Persons under JORC, and
Qualified 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 BDA
and 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 a
mining engineer who has been involved in the mining industry for more than 30 years, with operational and
management experience in base metals, gold and coal. He has been involved in numerous mining projects and
operations, 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 with
over 35 years experience in exploration and mining projects in Australia, Southeast Asia and Africa. He has
extensive 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 and
feasibility studies in Southeast Asia and Australia.
Mr Ian White (BSc. (Hon.), MSc. DIC, MAusIMM) is a Senior Associate of BDA with more than 25 years
experience in the Australian mining industry. He has held senior management positions in operating mines, and
has been involved in plant design and optimisation, process design testwork, feasibility studies and plant
commissioning 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 of
commodities including gold, copper, iron ore and base metals.
Mr Peter Ingham (BSc. (Mining), MSc. DIC, GDipAppFin (Sec Inst), CEng, FAusIMM, MIMM)) is General
Manager Mining for BDA and is a graduate mining engineer with more than 25 years in the mining industry in
Europe, 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 including
geotechnical, 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 of
BDA 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 has
completed assignments in Australia, Indonesia, Laos, Myanmar, Thailand, the Philippines, Africa and South
America.
F-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 and
referred to in this report. BDA has been advised that the information is complete as to material details and is not
misleading. A draft copy of this report has been provided to CNMC and PPCF for comment as to any errors of
fact, omissions or incorrect assumptions.
BDA has reviewed the data, reports and information provided and has used consultants with appropriate
experience 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 and
takes no responsibility for any loss or damage arising from the use of this report, or information, data, or
assumptions contained therein. With respect to the BDA report and use thereof, CNMC agrees to indemnify and
hold 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, statute
or common law and will reimburse them on a current basis for any legal or other expenses incurred by them in
connection 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 technical
issues and associated risks of the proposed project development and in relation to 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
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 document or used Ior any purpose without BDA`s written consent to
the form and context in which it appears.
Yours faithfully
BEHRE DOLBEAR AUSTRALIA PTY LTD
Malcolm C Hancock
Executive 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 reimbursable
expenses. The fee is not contingent on the conclusions of this report.
F-57
BEHRE DOLBEAR
APPENDIX 1
AUSTRALASIAN CODE FOR REPORTING EXPLORATION RESULTS,
MINERAL RESOURCES AND ORE RESERVES
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 by
the 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, in
that 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. Some
guidelines do exist (e.g. the Australian Guidelines for the Estimation of Coal Resources and Reserves) however
they 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, physical
characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on
detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from
locations 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 on
detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from
locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or
inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for
continuity to be assumed.
Inferred Mineral Resource is that part of Mineral Resource for which tonnage, densities, shape, physical
characteristics, grade and mineral content can be estimated with a low level of confidence. It is inferred from
geological 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 holes
which 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 and
studies have been carried out, and include consideration of and modification by realistically assumed mining,
metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments
demonstrate 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, a
Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the
material 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, social
and governmental factors. These assessments demonstrate at the time of reporting that extraction could
reasonably be justified.
A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but has adequate reliability
to provide the basis of mining studies.
F-59
BEHRE DOLBEAR
APPENDIX 2
CHINESE RESOURCES AND RESERVES REPORTING STANDARD 1999
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
account oI a deposit`s economics or the level oI mining studies that had been carried out on it. The 1999 code
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 Reserves
include mining recovery factors (mining losses and dilution) whereas Basic Reserves do not include these factors
and hence are comparable to resources under the JORC code. Suffix (b), e.g. 121(b), is used to distinguish Basic
Reserves 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 on
Inferred Resources, and so 123 and 113 are invalid classifications. Also Extractable Reserves are not estimated
for 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 clearly
determine its status.
Unlike the old code, the new 1999 code does not specify drill hole spacing for each category. In the case of
gold, 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 the
controlling variables discussed above.
Table 1
Chinese Code to JORC Code Conversion Guidelines
Chinese
Category
111, 121 112, 122
111b, 121b
2M11, 2M21,
2S11, 2S21, 331
122b, 2M22,
2S22, 332
333 334
JORC Category Proved Reserve Probable
Reserve
Measured
Resource
Indicated
Resource
Inferred
Resource
Exploration
Potential
Figure 1 Chinese Resource/Reserve Classification Matrix (1999)
F-61
BEHRE DOLBEAR
APPENDIX 3
GLOSSARY
F-62
BEHRE DOLBEAR
APPENDIX 3 - GLOSSARY
Term/Abbreviation Description
AAS Atomic Absorption Spectrometry
Ag Silver
ALS ALS Group (Laboratory)
AM Asia Mining Sdn. Bhd.
Au Gold
BDA Behre Dolbear Australia Pty Limited
CGRI Changchun Gold Research Institute
Chinese Code Classification of Resources/Reserves for Solid Fuels and Mineral Commodities 1999
CIL Carbon in Leach
CMNM CMNM Mining Group Sdn. Bhd.
CNMC CNMC Goldmine Limited
CSU Central South University, Changska, China
Cu Copper
DOE Kelantan State Department of Environment
DTM Digital Terrain Model
Duff Duff Development Company Limited
EDM Electronic Distance Measurement
EIA Environmental Impact Assessment
EL Exploration Licence
EMM Eastern Mining and Metals Company
EMP Environmental Management Plan
EPCM Engineering, Procurement and Construction Management
G4S G4S Limited
g/t Grams per Tonne
ha Hectare
JORC Code Joint Ore Reserve Committee (Australian Mineral Resource and Ore Reserve) Code
km Kilometre
km
2
Square Kilometre
KSEDC Kelantan State Economic Development Corporation
KSG Kelantan State Government
ktpa Thousand Tonnes Per Annum
ICPAES ICP Atomic Emission Spectrometry
IP Induced Polarisation (Geophysical Survey)
L Litre
LME London Metal Exchange
LOM Life of Mine
m Metre
Pm Micron (10
-6
)
M Million
m
3
Cubic Metre
mg Milligrams
mg/L Milligrams per Litre
MIDA Malaysian Industrial Development Authority
mm Millimetre
MNG Malaysian National Grid (Survey)
NaCN Sodium Cyanide
OK Ordinary Kriging
oz Ounce
P
80
80% Passing (Screen Size)
Pb Lead
PPCF Prime Partners Corporate Finance Pte. Limited
ppm Parts Per Million
RC Reverse Circulation
ROM Run-of-Mine
SGX-ST Singapore Exchange Securities Trading Limited
SRL Standard and Reference Laboratories
t Tonne
tpa Tonnes Per Annum
TRA TRA Mining (Malaysia) Sdn. Bhd.
TSF Tailings Storage Facility
US$ US Dollar
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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 words
and expressions shall have the following meanings:
Adoption Date : The date on which the CNMC Performance Share Plan is
adopted by the Company in general meeting
Articles : The articles of association the Company, as may be
amended, 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 his
immediate family is a beneficiary or, in the case
of a discretionary trust, is a discretionary
object; and
(iii) any corporation in which he and his immediate
family (directly or indirectly) have interests in
voting shares of an aggregate of not less than
30% of the total votes attached to all voting
shares
(b) in relation to a substantial shareholder or controlling
shareholder of a corporation (being a corporation)
any other corporation which is its subsidiary or
holding company or is a subsidiary of such holding
company or one in the equity of which it and/or such
other company or companies taken together (directly
or indirectly) have interests in voting shares of an
aggregate of not less than 30% of the total votes
attached to all voting shares
Associated Company : A company in which at least 20% but not more than 50% of
its shares are held by the Company and over which the
Company has control
Associated Company Employees : Any director and/or confirmed employee of an Associated
Company selected by the Awards Committee to participate
in the CNMC Performance Share Plan in accordance with
the 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 is
granted pursuant to Rule 5
Award Letter : A letter in such form as the Awards Committee shall
approve confirming an Award granted to a Participant by the
Awards Committee
Awards Committee : A committee comprising directors of the Company, duly
authorised, appointed and nominated by the Board to
administer the CNMC Performance Share Plan, which shall
be the remuneration committee of the Company from time
to 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 of
the 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 be
amended, varied or supplemented from time to time
Company : CNMC Goldmine Holdings Limited
Control : The capacity to dominate decision-making, directly or
indirectly, in relation to the financial and operating policies of
the Company
Controlling Shareholder : A person who (a) holds directly or indirectly 15% or more of
the aggregate of the votes attached to all the voting Shares
in 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 Group
Executive Director) selected by the Awards Committee to
participate in the CNMC Performance Share Plan in
accordance with Rule 4
Group Executive Director : A director of the Company and/or any of its subsidiaries, as
the case may be, who performs an executive function within
the Company and/or the relevant subsidiaries, as the case
may be
Group Non-Executive Director : A director of the Company and/or any of its subsidiaries, as
the case may be, who is not a Group Executive Director,
including independent directors
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New Shares : The new Shares which may be allotted and issued from
time to time pursuant to the vesting of the Awards granted
under 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 the
five (5) immediately preceding Trading Days; or
(b) if the Awards Committee is of the opinion that the
Market 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 the
Auditors (acting only as experts and not as
arbitrators) to be in their opinion, fair and reasonable
Participant : A person who has been granted an Award pursuant to the
CNMC Performance Share Plan
Performance Condition : The performance condition prescribed by the Awards
Committee to be fulfilled by a Participant within the relevant
Performance Period
Performance Period : The performance target(s) prescribed by the Awards
Committee to be fulfilled by a Participant for any particular
period under the CNMC Performance Share Plan
Record Date : In relation to any dividends, right allotment or other
distributions, the date as at the close of business (or such
other time as may have been notified by the Company) on
which the Shareholders must be registered with the
Company or with CDP, as the case may be, in order to
participate in such dividends, rights, allotments or other
distributions
Release : In relation to an Award, the release at the end of the
Performance Period relating to the Award of all or some of
the Shares to which that Award relates in accordance with
Rule 7 and, to the extent that any Shares which are the
subject of the Award are not released pursuant to Rule 7,
the Award in relation to those Shares shall lapse
accordingly, and Released shall be construed accordingly
Release Schedule : In relation to an Award, a schedule in such form as the
Awards Committee shall approve, setting out the extent to
which Shares which are the subject of that Award shall be
Released on the Performance Condition being satisfied
(whether fully or partially) or exceeded or not being
satisfied, as the case may be, at the end of the
Performance Period
Released Award : An award which has been released in accordance with Rule
7
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Retention Period : In relation to an Award, such period commencing on the
Vesting Date in relation to that Award as may be determined
by the Awards Committee on the Award Date
SGX-ST : Singapore Exchange Securities Trading Limited
Shareholders : Registered holders of the Shares in the Register of
Members of the Company, except that where the registered
holder is CDP, the term Shareholders shall, in relation to
such Shares, mean the Depositors whose Securities
Accounts 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 the
Companies Act) in one or more voting shares of a company
and the total votes attached to that share, or those shares,
is not less than 5% of the total votes attached to all the
voting 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 Released
Award, the absolute entitlement to all or some of the Shares
which 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 Released
Award, the date (as determined by the Awards Committee
and notified to the relevant Participant) on which those
Shares 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 meanings
ascribed to them respectively in Section 130A of the Companies Act. The term associate shall
have the meaning ascribed to it in the section headed, Definitions and Interpretation, of the Catalist
Rules.
2.3 Words importing the singular number shall, where applicable, include the plural and vice versa and
words importing the masculine gender shall, where applicable, include the feminine and neuter
genders 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 Singapore
time, unless otherwise stated.
2.5 Any reference in the CNMC Performance Share Plan to any enactment is a reference to that
enactment as for the time being amended or re-enacted. Any word defined under the Companies
Act or any statutory modification thereof and not otherwise defined in the CNMC Performance
Share Plan and used in the CNMC Performance Share Plan shall, where applicable, have the
meaning assigned to it under the Companies Act or any statutory modification thereof, as the case
may be.
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3. OBJECTIVES OF THE CNMC PERFORMANCE SHARE PLAN
The purpose of the CNMC Performance Share Plan is to provide an opportunity for Group
Employees, who have met the Performance Conditions to be remunerated not just through cash
bonuses but also by an equity stake in the Company.
The CNMC Performance Share Plan is primarily a share incentive scheme. It recognises the fact
that the services of such Group Employee are important to the success and continued well-being
of the Group. Implementation of the CNMC Performance Share Plan will enable the Company to
give recognition to the contributions made by such Group Employees. At the same time, it will give
such Group Employees an opportunity to have a direct interest in the Company and will also help
to achieve the following positive objectives:
(a) to motivate each Participant to optimise his performance standards and efficiency and to
maintain a high level of contribution to the Group;
(b) to retain key employees and Group Executive Directors whose contributions are essential to
the long-term growth and profitability of the Group;
(c) to instill loyalty to and a stronger identification by the Participants with the long-term
prosperity of the Company;
(d) to attract potential employees with relevant skills to contribute to the Group and to create
value 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-based
incentive scheme which the Group may adopt, the Group is equipped with a set of flexible
remuneration 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 the
absolute 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 bankrupts
and have not entered into a composition with their respective creditors, shall be eligible to
participate in the CNMC Performance Share Plan at the absolute discretion of the Awards
Committee.
(b) Associated Company Employees (including the directors of the Associated Company) who
have attained the age of twenty-one (21) years on or prior to the relevant Award Date and
are not undischarged bankrupts and have not entered into a composition with their
respective creditors, shall be eligible to participate in the CNMC Performance Share Plan at
the absolute discretion of the Awards Committee.
(c) Directors and employees of the Companys parent company and its subsidiaries who have
attained the age of twenty-one (21) years on or prior to the relevant Award Date and are not
undischarged bankrupts and have not entered into a composition with their respective
creditors, shall be eligible to participate in the CNMC Performance Share Plan at the
absolute discretion of the Awards Committee.
4.2 Controlling Shareholders and their Associates shall, if each such person meets the eligibility
criteria in Rule 4.1, be eligible to participate in the CNMC Performance Share Plan, provided that
separate approval of independent Shareholders is obtained for each such Participant in respect of
his participation and the actual number of Shares comprised in the Awards and the terms thereof.
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4.3 Save as prescribed by Rules 853 of the Catalist Rules, there shall be no restriction on the eligibility
of any Participant to participate in any other share option or share incentive scheme, whether or
not 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 on
which the Shares may be listed or quoted, the terms of eligibility for participation in the CNMC
Performance Share Plan may be amended from time to time at the absolute discretion of the
Awards Committee.
4.5 Group Non-Executive Directors are not eligible to participate in the CNMC Performance Share
Plan.
5. GRANT OF AWARDS
5.1 Except as provided in Rule 8, the Awards Committee may grant Awards to the Participants, as the
Awards Committee may select, in its absolute discretion, at any time during the period when the
CNMC Performance Share Plan is in force, except that the Awards Committee shall not grant any
Awards during the period commencing two (2) weeks before the announcement of the Companys
financial statements for each of the first three quarters of its financial year, or one (1) month before
the announcement of the Companys 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 an
announcement on any matter of an exceptional nature involving unpublished price sensitive
information is made, Awards may only be granted on or after the second Market Day on which
such announcement is made.
5.2 The number of Shares which are the subject of each Award to be granted to a Participant in
accordance with the CNMC Performance Share Plan shall be determined at the absolute discretion
of 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 and
development of the Group, the extent of effort with which the Performance Condition may be
achieved within the Performance Period and the maximum entitlement of the Shares that can be
awarded to a Participant under the CNMC Performance Share Plan and any other share-based
incentive 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 Performance
Condition in respect of any Award if anything happens which causes the Awards Committee to
conclude that a changed Performance Period and/or Performance Condition would be a fairer
measure of performance and would be no less difficult to satisfy or the Performance Period and/or
Performance Conditions should be waived, and shall notify the Participants of such change or
waiver.
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5.5 As soon as reasonably practicable after an Award is finalised by the Awards Committee, the
Awards Committee shall send to each Participant an Award Letter confirming the Award and
specifying 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, prior
to the allotment and/or transfer to the Participant of the Shares to which the Released Award
relates, shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or
in part, except with the prior approval of the Awards Committee and if a Participant shall do, suffer
or permit any such act or thing as a result of which he would or might be deprived of any rights
under an Award or Released Award without the prior approval of the Awards Committee, that
Award 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, to
the extent not yet Released, immediately lapse without any claim whatsoever against the
Company:
(a) in the event of misconduct on the part of the Participant as determined by the Awards
Committee in its discretion;
(b) in the event of the bankruptcy of the Participant or the happening of any other event which
results 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 or
Associated 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 the
Company 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 employed
as of the date the notice of termination of employment is tendered by or is given to him, unless
such notice is withdrawn prior to its effective date.
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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 Awards
Committee);
(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 may
be, ceasing to be a company within the Group or the undertaking or part of the
undertaking of such company being transferred otherwise than to another company
within 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 or
declare that an Award has lapsed and the Participant shall have no claim against the Company. If
the Awards Committee preserves all or any part of an Award, it shall decide as soon as reasonably
practicable following such event either to vest some or all of the Shares which are the subject of
any Award or to preserve all or part of any Award until the end of each vesting period subject to
the provisions of the CNMC Performance Share Plan. In exercising its discretion, the Awards
Committee will have regard to all circumstances on a case-by-case basis including (but not limited
to) the contributions made by that Participant and the extent to which the Performance Condition
has 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 Awards
Committee shall review the Performance Condition specified in respect of each Award and
determine at its discretion whether it has been satisfied and, if so, the extent to which it has
been satisfied and provided that the relevant Participant continues to be a Group Employee
or Associated Company Employee (as the case may be) from the Award Date up to the end
of the Performance Period, shall Release to that Participant all or part (as determined by the
Awards Committee at its discretion in the case where the Awards Committee has
determined that there has been partial satisfaction of the Performance Condition) of the
Shares to which his Award relates in accordance with the Release Schedule specified in
respect 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 Condition
has not been satisfied or (subject to Rule 6) if the relevant Participant does not continue to
be a Group Employee or Associated Company Employee (as the case may be) from the
Award Date up to the end of the relevant Performance Period, that Award shall lapse and be
of no value and the provisions of Rules 7.2 to 7.4 shall be of no effect.
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The Awards Committee shall have the discretion to determine whether the Performance
Condition has 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 results of the Company or the Group, to take into account such factors as the
Awards Committee may determine to be relevant, including changes in accounting methods,
taxes and extraordinary events, and further the right to amend the Performance Condition if
the Awards Committee decides that a changed performance target would be a fairer
measure of performance.
(b) Shares which are the subject of a Released Award shall be vested to a Participant on the
Vesting Date, which shall be a Trading Day falling as soon as practicable after the review by
the Awards Committee referred to in Rule 7.1(a) and, on the Vesting Date, the Awards
Committee will procure the allotment or transfer to each Participant of the number of Shares
so determined.
7.2 Release of Award
(a) Subject to the prevailing legislation and rules, guidelines and measures applicable to the
Company and the Catalist Rules, the Awards Committee may determine in its sole discretion
to 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 to
be fully paid or credited upon their issue and allotment;
(ii) delivering existing Shares to the Participant, whether such existing Shares are
acquired 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 allotment
and/or transfer.
(b) In determining whether to issue New Shares or to purchase existing Shares for delivery to
Participants or the payment of the aggregate Market Value in cash to the Participant upon
vesting of their Awards, the Awards Committee will take into account factors such as (but not
limited to) the number of Shares to be delivered, the prevailing market price of the Shares
and the cost to the Company of issuing New Shares or purchasing existing Shares or the
amount of cash available to the Group.
(c) Subject to:
(i) such consents or other actions required by any competent authority under any
regulations or enactments for the time being in force as may be necessary (including
any approvals required from the SGX-ST); and
(ii) compliance with these Rules and the Articles, the Company shall, as soon as
practicable after the vesting of an Award but in any event within ten (10) Market Days
after the vesting of an Award, allot the New Shares (if applicable) and despatch the
relevant share certificates to CDP by ordinary post or such other mode of delivery as
the Awards Committee may deem fit.
(d) The Company shall, if necessary, as soon as practicable after such allotment referred to in
Rule 7.2, apply to the SGX-ST or any other stock exchange on which the Shares are quoted
or 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 CDP
to the credit of the securities account of the Participant maintained with CDP, the securities
sub-account with a CDP Depository Agent or the CPF investment account maintained with a
CPF agent bank.
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7.3 Ranking of Shares
New Shares allotted and issued and existing shares procured by the Company for transfer, upon
the release of an Award shall be subject to all provisions of the Articles and the Memorandum of
Association of the Company (including provisions relating to liquidation) and shall be eligible for all
entitlements, including dividends or other distributions declared or recommended in respect of the
then existing Shares, the Record Date for which is on or after the relevant Vesting Date of the
Award, 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 or
partly, in the form of cash rather than Shares, in which event the Participant shall receive on the
Vesting Date, in lieu of all or part of the Shares which would otherwise have been allotted or
transferred 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 an
Award shall not be transferred, charged, assigned, pledged or otherwise disposed of, in whole or in
part, during the Retention Period, except to the extent set out in the Award Letter or with the prior
approval of the Awards Committee. The Company may take steps that it considers necessary or
appropriate to enforce or give effect to this disposal restriction including specifying in the Award
Letter the conditions which are to be attached to an Award for the purpose of enforcing this
disposal 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 the
Awards on any date, when added to the nominal amount of New Shares issued and issuable in
respect 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 day
preceding that date.
The number of existing Shares purchased from the market which may be delivered pursuant to
Awards granted under the CNMC Performance Share Plan, and the amount of cash which may be
paid upon the release of such Awards in lieu of the Shares, will not be subject to any limit, as such
methods 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 Associates
shall not exceed 25% of the total number of Shares which may be granted under the CNMC
Performance Share Plan;
(b) The aggregate number of Shares available to each Controlling Shareholder or his
Associates shall not exceed 10% of the total number of Shares which may be granted under
the CNMC Performance Share Plan; and
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(c) Directors and employees of the Companys parent company and subsidiaries are eligible to
participate in the CNMC Performance Share Plan provided that (i) each grant to such
Participant, if the number of Awards to be granted together with Awards already granted to
such person under the CNMC Performance Share Plan, represents 5% or more of the total
number 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 and
employees of the aforesaid category, shall be approved by the independent Shareholders in
a separate resolution.
9. ADJUSTMENT EVENTS
9.1 If a variation in the issued ordinary share capital of the Company (whether by way of a
capitalisation of profits or reserves or rights issue or reduction (including any reduction arising by
reason of the Company purchasing or acquiring its issued Shares), subdivision, consolidation or
distribution, 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 yet
Vested; and/or
(b) the class and/or number of Shares in respect of which future Awards may be granted under
the 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 a
Shareholder does not receive.
9.2 Unless the Awards Committee considers an adjustment to be appropriate, the issue of securities
as consideration for a private placement of securities or in connection with an acquisition of any
assets or upon the exercise of any options or conversion of any loan stock or any other securities
convertible into Shares or subscription rights of any warrants, or the cancellation of issued Shares
purchased or acquired by the Company by way of a market purchase of such Shares undertaken
by the Company on the SGX-ST during the period when a share purchase mandate granted by
Shareholders (including any renewal of such mandate) is in force, shall not normally be regarded
as a circumstance requiring adjustment.
9.3 Notwithstanding the provisions of Rule 9.1, no such adjustment shall be made (a) if as a result, the
Participant receives a benefit that a Shareholder does not receive; (b) unless the Awards
Committee 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 the
adjustments (other than adjustments in relation to a capital issue) are fair and reasonable in their
opinion.
9.4 Upon any adjustment required to be made pursuant to this Rule 9, the Company shall notify the
Participant (or his duly appointed personal representatives where applicable) in writing and deliver
to him (or his duly appointed personal representatives where applicable) a statement setting forth
the nominal amount (if any), class and/or number of Shares thereafter to be issued or transferred
on the Vesting of an Award. Any adjustment shall take effect upon such written notification being
given.
10. ADMINISTRATION OF THE CNMC PERFORMANCE SHARE PLAN
10.1 The CNMC Performance Share Plan shall be administered by the Awards Committee in its
absolute discretion with such powers and duties as are conferred on it by the Board provided that
no member of the Awards Committee shall participate in any deliberation or decision in respect of
Awards granted or to be granted to him.
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10.2 The Awards Committee shall have the power, from time to time, to make and vary such
arrangements, guidelines and/or regulations (not being inconsistent with the CNMC Performance
Share Plan) for the implementation and administration of the CNMC Performance Share Plan, to
give effect to the provisions of the CNMC Performance Share Plan and/or to enhance the benefit of
the 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 dispute
and uncertainty as to the interpretation of the CNMC Performance Share Plan, any rule, regulation
or procedure thereunder or any rights under the CNMC Performance Share Plan shall be
determined by the Awards Committee.
10.3 Neither the CNMC Performance Share Plan nor the grant of Awards under the CNMC Performance
Share Plan shall impose on the Company or the Awards Committee or any of its members any
liability 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 Awards
Committee 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 of
the CNMC Performance Share Plan.
10.4 Any decision or determination of the Awards Committee made pursuant to any provision of the
CNMC 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 disputes
as to the interpretation of the CNMC Performance Share Plan or any rule, regulation or procedure
hereunder or as to any rights under the CNMC Performance Share Plan). The Awards Committee
shall 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 the
principal place of business of the Company or such other addresses (including electronic mail
addresses) or facsimile number, and marked for the attention of the Awards Committee, as may be
notified 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 made
between the Company and the Participant shall be given or made by the Awards Committee (or
such person(s) as it may from time to time direct) on behalf of the Company and shall be delivered
to him by hand or sent to him at his home address, or facsimile number according to the records of
the Company or the last known address or facsimile number of the Participant or to the
Participants electronic mail address notified by him to the Company for the purpose of
communication by electronic means.
11.3 Any notice or other communication from a Participant to the Company shall be irrevocable, and
shall not be effective until received by the Company. Any other notice or communication from the
Company to a Participant shall be deemed to be received by that Participant, when left at the
address specified in Rule 11.2 or, if sent by post, on the day following the date of posting or, if sent
by electronic mail or facsimile transmission, on the day of despatch.
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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 at
any 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 granted
prior to such modification or alteration except with the consent in writing of such number of
Participants who, if their Awards were Released to them upon the Performance Conditions
for their Awards being satisfied in full, would become entitled to not less than three-quarters
of all the Shares which would fall to be Vested upon Release of all outstanding Awards upon
the 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 to
the prior approval of the Shareholders in general meeting; and
(c) no modification or alteration shall be made without compliance with the Catalist Rules and
such other regulatory authorities as may be necessary.
For the purposes of Rule 12.1(a), the opinion of the Awards Committee as to whether any
modification 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 right
of the Awards Committee under any other provision of the CNMC Performance Share Plan to
amend or adjust any Award.
12.2 Notwithstanding anything to the contrary contained in Rule 12.1, the Awards Committee may at
any 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 or
desirable, in the opinion of the Awards Committee, to cause the CNMC Performance Share Plan to
comply with, or take into account, any statutory provision (or any amendment or modification
thereto, including amendment of or modification to the Companies Act) or the provision or the
regulations 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 given
to 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 the
Shares, a Participant shall be entitled to Awards if he has met the Performance Conditions which
falls within the period commencing on the date on which such offer for a take-over of the Company
is made or, if such offer is conditional, the date on which such offer becomes or is declared
unconditional, 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, at
the recommendation of the offeror and with the approvals of the Awards Committee, such
expiry date is extended to a later date (in either case, being a date falling not later than the
expiry 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 of
compulsory 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, the
Participant shall be obliged to fulfil such Performance Conditions until the expiry of such specified
date or the expiry date of the Performance Period, whichever is earlier, before an Award can be
vested.
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13.2 If under any applicable laws, the court sanctions a compromise or arrangement proposed for the
purposes of, or in connection with, a scheme for the reconstruction of the Company or its
amalgamation with another company or companies, each Participant shall be entitled
notwithstanding Rule 6 but subject to Rule 13.5, to any Awards so determined by the Awards
Committee to be vested in him during the period commencing on the date upon which the
compromise 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 so
long as, in the absolute determination by the Awards Committee, the Participant has met the
Performance Conditions prior to the date that the members voluntary winding-up shall be deemed
to 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 referred
to in Rule 13.2 or the winding-up referred to in Rule 13.4, arrangements are made (which are
confirmed in writing by the Auditors, acting only as experts and not as arbitrators, to be fair and
reasonable) for the compensation of Participants whether by the payment of cash or by any other
form 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 contract
of employment between the Company or any subsidiary or any Associated Company (as the
case may be) and any Participant and the rights and obligations of any individual under the
terms of the office or employment with such company within the Group or Associated
Company (as the case may be) shall not be affected by his participation in the CNMC
Performance Share Plan or any right which he may have to participate in it and the CNMC
Performance Share Plan shall afford such an individual no additional rights to compensation
or damages in consequence of the termination of such office or employment for any reason
whatsoever.
(b) The CNMC Performance Share Plan shall not confer on any person any legal or equitable
rights (other than those constituting the CNMC Performance Share Plan themselves) against
the Company and/or any subsidiary and/or any Associated Company directly or indirectly or
give rise to any cause of action at law or in equity against the Company or any subsidiary or
any 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 Awards
Committee, subject to a maximum period of 10 years commencing on the Adoption Date, provided
always that the CNMC Performance Share Plan may continue beyond the above stipulated period
with the approval of the Shareholders by ordinary resolution in general meeting and of any relevant
authorities which may then be required.
15.2 The CNMC Performance Share Plan may be terminated at any time at the discretion of the Awards
Committee or, by resolution of the Company in general meeting, subject to all relevant approvals
which may be required and if the CNMC Performance Share Plan is so terminated, no further
Awards shall be granted by the Awards Committee hereunder.
15.3 The expiry or termination of the CNMC Performance Share Plan shall not affect Awards which
have been granted prior to such expiry or termination, whether such Awards have been Released
(whether fully or partially) or not.
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16. TAXES
All taxes (including income tax) arising from the grant or Release of any Award granted to any
Participant 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 issue
and allotment or transfer of any Shares pursuant to the Release of any Award in CDPs name, the
deposit of share certificate(s) with CDP, the Participants securities account with CDP, or the
Participants 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 in
the CNMC Performance Share Plan to be payable by the Participants, all fees, costs and expenses
incurred by the Company in relation to the CNMC Performance Share Plan including but not limited
to the fees, costs and expenses relating to the issue and allotment, or transfer, of Shares pursuant
to 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 shall
not under any circumstances be held liable for any costs, losses, expenses and damages
whatsoever and howsoever arising in any event, including but not limited to the Companys delay in
issuing, or procuring the transfer of, the Shares or applying for or procuring the listing of new
Shares 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 so
long as the CNMC Performance Share Plan continues in operation:
(a) the names of the members of the Awards Committee administering the CNMC Performance
Share 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 received
Shares pursuant to the Vesting of Awards granted under the CNMC Performance
Share Plan which, in aggregate, represent 5% or more of the aggregate of the total
number 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 Participant
under the CNMC Performance Share Plan during the financial year under review;
(iii) the aggregate number of Shares comprised in Awards granted to such Participant
under the CNMC Performance Share Plan since the commencement of the CNMC
Performance Share Plan to the end of the financial year under review;
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(iv) the aggregate number of Shares comprised in Awards granted to such Participants
under the CNMC Performance Share Plan which have Vested since the
commencement of the CNMC Performance Share Plan to the end of the financial year
under review and in respect thereof, the proportion of New Shares issued upon the
Release of the Vested Awards granted under the Performance Share Plan; and
(v) the aggregate number of Shares comprised in Awards granted to such Participant
under the CNMC Performance Share Plan which have not yet Vested, as at the end of
the financial year under review;
(c) (i) the names and number of terms of Awards granted to each director or employee of
the Companys parent company and its subsidiaries who receives 5% or more of the
total number of Shares comprised in Awards available to all directors and employees
of the Companys parent company and its subsidiaries under the CNMC Performance
Share Plan, during the financial year under review; and
(ii) the aggregate number of Shares comprised in Awards to the directors and employees
of the Companys parent company and its subsidiaries which have Vested for the
financial year under review, and since the commencement of the CNMC Performance
Share 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 Awards
Committee 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, the
laws of Singapore. The Participants, by accepting grants of Awards in accordance with the CNMC
Performance Share Plan, and the Company submit to the exclusive jurisdiction of the courts of
Singapore.
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 of
the CNMC Performance Share Plan or any Award by the virtue of the Contracts (Rights of Third
Parties) 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 any
resolution relating to the CNMC Performance Share Plan (other than a resolution relating to the
participation of, or grant of Awards to, directors and employees of the companys parent company
and its subsidiaries).
23.2 The following categories of persons must abstain from voting on any resolution relating to the
participation of, or grant of Awards to, directors and employees of the Companys parent company
and its subsidiaries:
(i) the Companys parent company (and its associates who are also Shareholders); and
(ii) directors and employees of the Companys parent company and its subsidiaries, who are
also Shareholders and are eligible to participate in the CNMC Performance Share Plan.
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You are invited to apply and subscribe for the Placement Shares at the Placement Price for each
Placement Share subject to the following terms and conditions:
1. YOUR APPLICATION MUST BE MADE IN LOTS OF 1,000 PLACEMENT SHARES OR
INTEGRAL MULTIPLES THEREOF. YOUR APPLICATION FOR ANY OTHER NUMBER OF
SHARES WILL BE REJECTED.
2. Your application for the Placement Shares may only be made by way of printed Placement Shares
Application 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 for
Placement Shares in your own name, you should not submit any other application for
Placement Shares for any other person. Such separate applications shall be deemed to be
multiple applications and may be rejected at the discretion of our Company, the Manager
and Sponsor and the Joint Placement Agents.
Joint applications for the Placement Shares shall be rejected. If you submit or procure
submissions of multiple share applications for Placement Shares, you may be deemed to
have 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. Multiple
applications or those appearing to be or suspected of being multiple applications may be
rejected 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, undischarged
bankrupts, sole proprietorships, partnerships, chops or non-corporate bodies, joint Securities
Account holders of CDP and from applicants whose addresses (as furnished in their Application
Forms) bear post office box numbers. No person acting or purporting to act on behalf of a
deceased person is allowed to apply under the Securities Account with CDP in the deceaseds
name at the time of application.
6. We will not recognise the existence of a trust. Any application by a trustee or trustees must be
made in his/her/their own name(s) and without qualification or, where the application is made by
way of an Application Form by a nominee, in the name(s) of an approved nominee company or
companies after complying with paragraph 7 below.
7. WE WILL NOT ACCEPT APPLICATIONS FROM NOMINEES EXCEPT THOSE MADE BY
APPROVED NOMINEE COMPANIES ONLY. Approved nominee companies are defined as banks,
merchant banks, finance companies, insurance companies, licensed securities dealers in
Singapore and nominee companies controlled by them. Applications made by persons acting as
nominees other than approved nominee companies shall be rejected.
8. IF YOU ARE NOT AN APPROVED NOMINEE COMPANY, YOU MUST MAINTAIN A SECURITIES
ACCOUNT WITH CDP IN YOUR OWN NAME AT THE TIME OF YOUR APPLICATION. If you do
not 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 to
provide your Securities Account number or provide an incorrect Securities Account number in
Section B of the Application Form, your application is liable to be rejected. Subject to paragraph 8
below, 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 those
particulars in your Securities Account as maintained with CDP. If you possess more than one
individual 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 registered
with CDP, you must inform CDP of your updated address promptly, failing which the
notification letter on successful allotment and/or allocation and other correspondence from
CDP will be sent to your address last registered with CDP.
10. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents reserve
the right to reject any application which does not conform strictly to the instructions set out
in the Application Form and in this Offer Document or with the terms and conditions of this
Offer Document or, in the case of an application by way of an Application Form, which is
illegible, incomplete, incorrectly completed or which is accompanied by an improperly
drawn remittance or improper form of remittance or remittances which are not honoured
upon first presentation.
11. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents further
reserve the right to treat as valid any applications not completed or submitted or effected in
all respects in accordance with the instructions set out in the Application Forms or the
terms and conditions of this Offer Document, and also to present for payment or other
processes all remittances at any time after receipt and to have full access to all information
relating to, or deriving from, such remittances or the processing thereof.
12. Our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents reserve the
right to reject or to accept, in whole or in part, or to scale down or to ballot any application, without
assigning any reason therefor, and no enquiry and/or correspondence on the decision of our
Company, 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 be
given to the desirability of allotting the Placement Shares to a reasonable number of applicants
with 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 only
to CDP. It is expected that CDP will send to you, at your own risk, within 15 Market Days after the
close of the Application List, a statement of account stating that your Securities Account has been
credited with the number of Placement Shares allotted and/or allocated to you, if your application
is successful. This will be the only acknowledgement of application monies received and is not an
acknowledgement by our Company, the Vendors, the Manager and Sponsor and Joint Placement
Agents. You irrevocably authorise CDP to complete and sign on your behalf, as renouncee, any
documents 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 (Relevant
Document) pursuant to the SFA or any applicable legislation in force from time to time prior to the
close of the Placement, and the Placement Shares have not been issued and/or transferred, we
will (as required by law), at our Companys 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 Relevant
Document 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 7
days from the lodgement of the Relevant Document.
Where you have notified us within 14 days from the date of lodgement of the Relevant Document
of your wish to exercise your option under paragraphs 14(i) and (ii) above to withdraw your
application, we shall pay to you all monies paid by you on account of your application for the
Placement Shares without interest or any share or revenue or other benefit arising therefrom and
at your own risk, within 7 days from the receipt of such notification.
AND ACCEPTANCE
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In the event that at any time at the time of the lodgement of the Relevant Document, the
Placement 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 Relevant
Document 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 7
days from the lodgement of the Relevant Document.
Any applicant who wishes to exercise his option under paragraph 14(iii) above to return the
Placement Shares issued and/or transferred to him shall, within 14 days from the date of
lodgement of the Relevant Document, notify us of this and return all documents, if any, purporting
to be evidence of title of those Placement Shares, whereupon the Company (and on behalf of the
Vendors) shall, subject to the SFA, within 7 days from the receipt of such notification and
documents, pay to him all monies paid by him for the Placement Shares without interest or any
share of revenue or other benefit arising therefrom and at his own risk, and the Placement Shares
issued and/or transferred to him shall be void.
Additional terms and instructions applicable upon the lodgement of the supplementary or
replacement Offer Document, including instructions on how you can exercise the option to
withdraw, 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 of
Placement Shares allotted to you pursuant to your application, to us, the Vendors, the Manager
and Sponsor and Joint Placement Agents and, any other parties so authorised by the foregoing
persons.
16. Any reference to you or the applicant in this section shall include a person applying for the
Placement 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 Offer
Document, you:
(i) irrevocably offer, agree and undertake to subscribe for and/or purchase the number of
Placement Shares specified in your application (or such smaller number for which the
application is accepted) at the Placement Price for each Placement Share and agree that
you will accept such Placement Shares as may be allotted and/or allocated to you, in each
case on the terms of, and subject to the conditions set out in this Offer Document and the
Memorandum and Articles of Association of our Company for application;
(ii) agree that the aggregate Placement Price for the Placement Shares applied for is due and
payable to the Company upon application;
(iii) warrant the truth and accuracy of the information contained, and representations and
declarations made, in your application, and acknowledge and agree that such information,
representations and declarations will be relied on by our Company, the Vendors, the
Manager and Sponsor and Joint Placement Agents in determining whether to accept your
application 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 to
your application, you have complied with all such laws and none of our Company, the
Vendors, the Manager and Sponsor and the Joint Placement Agents will infringe any such
laws as a result of the acceptance of your application.
AND ACCEPTANCE
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18. Our acceptance of applications will be conditional upon, inter alia, our Company, the Vendors, the
Manager 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 existing
Shares and the Placement Shares on a when-issued basis on Catalist;
(ii) the Management Agreement and the Placement Agreement referred to in the section
entitled General and Statutory Information Management and Placement Arrangements of
this Offer Document have become unconditional and have not been terminated or cancelled
prior 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 allotted
and/or allocated.
19. In the event that a 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, 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 cancelled
and our Company (and on behalf of the Vendors) shall refund (at your own risk) all monies
paid on account of your application for the Placement Shares (without interest or any share
of revenue or other benefit arising therefrom) to you within 14 days of the date of the Stop
Order; or
(ii) in the case where the Placement Shares have already been issued and/or transferred but
trading has not commenced, the issue and/or transfer of the Placement Shares shall (as
required 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 paid
on account of your application for the Placement Shares (without interest or any share of
revenue 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 Placement
Shares 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 the
Placement Shares if the Placement Shares have been issued and/or transferred and listed for
quotation 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 which
the Placement is open, we will publicly announce the same through a SGXNET announcement to
be posted on the Internet at the SGX-ST website http://www.sgx.com and through a paid
advertisement 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 in
Appendix I of this Offer Document.
AND ACCEPTANCE
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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 of
this Offer Document including but not limited to the terms and conditions appearing below as well as the
Memorandum and Articles of Association of our Company.
1. Your application for the Placement Shares must be made using the BLUE Application Forms
accompanying and forming part of this Offer Document. ONLY ONE APPLICATION should be
enclosed in each envelope.
We draw your attention to the detailed instructions contained in the Application Forms and this
Offer Document for the completion of the Application Forms which must be carefully followed. Our
Company, the Vendors, the Manager and Sponsor and Joint Placement Agents reserve the
right to reject applications which do not conform strictly to the instructions set out in the
Application Forms and this Offer Document or to the terms and conditions of this Offer
Document or which are illegible, incomplete, incorrectly completed or which are
accompanied 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 using
BLOCK 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 space
that 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 your
identity card (if you have such identification document) or in your passport and, in the case of a
corporation, 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 name
and capacity in which he signs the Application Form. If you are a corporation completing the
Application Form, you are required to affix your Common Seal (if any) in accordance with your
Memorandum and Articles of Association or equivalent constitutive documents of the corporation. If
you are a corporate applicant and your application is successful, a copy of your Memorandum and
Articles of Association or equivalent constitutive documents must be lodged with the Share
Registrar. Our Company the Vendors, the Manager and Sponsor and Joint Placement Agents
reserves the right to require you to produce documentary proof of identification for verification
purposes.
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 Form
with 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, on
page 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 unincorporated
and wherever incorporated or constituted) will be required to declare whether you are a citizen or
permanent resident of Singapore or a corporation in which citizens or permanent residents of
Singapore or any body corporate constituted under any statute of Singapore having an interest in
the aggregate of more than 50 per cent. of the issued share capital of or interests in such
corporations. If you are an approved nominee company, you are required to declare whether the
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 citizens
or permanent residents of Singapore or any body corporate whether incorporated or
unincorporated and wherever incorporated or constituted under any statute of Singapore have an
interest in the aggregate of more than 50 per cent. of the issued share capital of or interests in
such corporation.
7. Your application must be accompanied by a remittance in Singapore currency for the full amount
payable, in respect of the number of Placement Shares applied for, in the form of a BANKERS
DRAFT or CASHIERS ORDER drawn on a bank in Singapore, made out in favour of CNMC
SHARE ISSUE ACCOUNT crossed A/C PAYEE ONLY, with your name, CDP Securities
Account Number and address written clearly on the reverse side. Applications not accompanied
by any payment or accompanied by any other form of payment will not be accepted. We will
reject remittances bearing NOT TRANSFERABLE or NON TRANSFERABLE crossings. No
acknowledgement or receipt will be issued by our Company or the Sponsor for applications and
application monies received.
The completed and signed BLUE Placement Shares Application Form and the correct remittance
in full in respect of the number of Placement Shares applied for (in accordance with the terms and
conditions 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 sealed
envelope must be DESPATCHED BY ORDINARY POST OR DELIVERED BY HAND at your own
risk to Boardroom Corporate & Advisory Services Pte. Ltd., 50 Raffles Place, #32-01 Singapore
Land Tower, Singapore 048623 to arrive by 12.00 a.m. on 25 October 2011 or such other time
as our Company and the Vendors may, in consultation with the Manager and Sponsor and
the Joint Placement Agents, decide. Local Urgent Mail or Registered Post must NOT be
used. ONLY ONE APPLICATION should be enclosed in each envelope. No acknowledgment or
receipt 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 the
application monies, as the case may be, will be refunded (without interest or any share of revenue
or other benefit arising therefrom) to you by ordinary post at your own risk within 14 Market Days
after the close of the Application List, provided that the remittance accompanying such application
which has been presented for payment or other processes has been honoured and application
monies have been received in the designated share issue account. In the event that the Placement
is cancelled by us following the termination of the Management Agreement and/or the Placement
Agreement or the Placement does not proceed for any reason, the application monies received will
be refunded (without interest or any share of revenue or any other benefit arising therefrom) to you
by ordinary post or telegraphic transfer at your own risk within 5 Market Days of the termination of
the Placement. In the event that the Placement is cancelled by us following the issuance of a Stop
Order by the Authority or any other competent authority, the application monies received will be
refunded (without interest or any share of revenue or other benefit arising therefrom) to you by
ordinary 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 improperly
drawn remittance or improper form of remittance or which are not honoured upon their first
presentation are liable to be rejected.
11. Capitalised terms used in the Application Forms and defined in this Offer Document shall bear the
meanings assigned to them in this Offer Document.
AND ACCEPTANCE
I-6
12. You irrevocably agree and acknowledge that your application is subject to acts of god and other
events beyond the control of our Company, the Vendors, the Manager and Sponsor and the Joint
Placement Agents and/or any other party involved in the Placement, and if, in any such event, our
Company and/or the Sponsor does not receive your Application Form, you shall have no claim
whatsoever against our Company the Vendors, the Manager and Sponsor and the Joint Placement
Agents and/or any other party involved in the Placement for the Placement Shares applied for or
for 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 and
agreeing to close the Application List at 12.00 noon on 25 October 2011 or such other time
or date as our Company and the Vendors may, in consultation with the Manager and
Sponsor and the Joint Placement Agents, decide and by completing and delivering the
Application Form, you agree that:
(a) your application is irrevocable; and
(b) your remittance will be honoured on first presentation and that any application monies
returnable may be held pending clearance of your payment without interest or any
share of revenue or other benefit arising therefrom;
(ii) neither our Company, the Vendors, the Manager and Sponsor and Joint Placement Agents
nor any other party involved in the Placement shall be liable for any delays, failures or
inaccuracies in the recording, storage or in the transmission or delivery of data relating to
your application to us or CDP due to breakdowns or failure of transmission, delivery or
communication facilities or any risks referred to in paragraph 12 above or to any cause
beyond their respective controls;
(iii) all applications, acceptances and contracts resulting therefrom under the Placement shall be
governed by and construed in accordance with the laws of Singapore and that you
irrevocably 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 not
rejected, acceptance of your application shall be constituted by written notification and not
otherwise, notwithstanding any remittance being presented for payment by or on behalf of
our Company;
(v) you will not be entitled to exercise any remedy of rescission for misrepresentation at any
time after acceptance of your application;
(vi) in making your application, reliance is placed solely on the information contained in this
Offer Document and that none of our Company, the Vendors, the Manager and Sponsor and
Joint Placement Agents or other authorised operators involved in the Placement shall have
any 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 amount
to our Share Registrar, CDP, SCCS, SGX-ST, our Company, the Manager and Sponsor, the
Joint Placement Agents or other authorised operators; and
(viii) you irrevocably agree and undertake to subscribe for the number of Placement Shares
applied for as stated in the Application Form or any smaller number of such Placement
Shares that may be allotted and/or allocated to you in respect of your application. In the
event that our Company decides to allot and/or allocate any smaller number of Placement
Shares or not to allot any Placement Shares to you, you agree to accept such decision as
final.
AND ACCEPTANCE
I-7
Sokor Block
investment costs
competitive prices
communities
Government
Use of Proceeds
Working Capital
Placement
Prospects
Price Outlook
2011 and US$1,600/oz in 2012
growth
Price of gold

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
989,000 tonnes
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
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18 October 2011)
adviser(s).

CNMC IPO Prospectus

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OFFER DOCUMENT DATED 18 OCTOBER 2011

155,749 138,905 8,146

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