OSRL to increase shares in Koba Tin under conditions

By Harry Roy Gunawan

Indonesian investment company Optima Synergy Resources Limited (OSRL) recently stated it plans to increase its stake at Bemban Corporation Limited (BCL), a wholly owned subsidiary of MYX listed Malaysia Smelting Corporation Berhad (MSC) and 75 percent shareholder of Indonesian tin miner PT Koba Tin, from the current 50 percent to 60 percent by way of single subscription of shares under the condition that Koba Tin could acquire the approval for its Contract of Work (CoW) extension.

"The provision in the SAA for MSC at its absolute discretion to reverse and cancel the transaction in the event of non-occurrence of extension of CoW shall subsist for the entire 60 percent equity in BCL," MSC said in a statement submitted to Malaysia Exchange.

Koba Tin's CoW permit for tin mining operations in Bangka Island, covering an area of 41,680 hectares, is due to expire on March 31, 2013, making it an exemplary case of CoW permit expiration and extension in Indonesia.

The share acquirement proposal is part of the addendum to the previously signed strategic alliance agreement between MSC and OSRL as announced on March 9, 2012.

OSRL?s proposed consideration, the company said, will be a way of injecting of relevant tin mining asset comprising its 75 percent interest in an Indonesian company, PT Mitra Pondasi (PTMP), for an agreed valuation of US$ 2.8 million based on discounted cashflow on the 1,500 tons of tin resources of PTMP.

PTMP, established on July 7, 2007, has two Production Operation IUP located in the Bangka Regency. Drilling undertaken to-date has indicated an estimated tin resource of 1,500 tons (JORC), nine development works are expected to commence in the second half of 2012 with an estimated monthly output of 50 tons of tin-in-concentrates.

"The final computation for the share transactions will be based on Koba Tin?s unaudited financial results for the period ending June 30, 2012. Its net asset value measured at less than US$ 2.49 million will be earmarked as retained earnings dividend and will be treated and distributed as dividend proportionately to its existing shareholders, namely MSC and PT Timah Tbk," MSC said, adding that upon completion of the transaction, with a reduced effective interest of 30 percent, MSC will equity account the results of PT Koba.

"However this is not expected to have material effect on the net assets and gearing for the MSC Group and the earnings per share of the MSC Group for the financial year ending 31 December 2012."

Editing by Er Audy Zandri