PETALING JAYA: Bahvest Resources Bhd has been embroiled in a boardroom battle-cum-legal dispute for the last few weeks, and may finally have found a way to save the canary in the gold mine.
The good news saw Bahvest’s share price climb 13.04% or two sen in this morning’s trade to 13 sen at 11.28am.
Over the last five trading days, the counter had plunged 41% or nine sen from 22 sen last Friday amid the turmoil.
Its CEO Lo Fui Ming, meanwhile, has disposed of a 9.3% stake in the company, reducing his interest to 3.89%, thus ceasing to be a substantial shareholder.
In a local bourse filing yesterday, the group announced that a temporary resolution had been reached between Southsea Gold Sdn Bhd and its wholly-owned subsidiary Wullersdorf Resources Sdn Bhd.
Wullersdorf will first pay a non-refundable deposit of RM13 million in two tranches, and then negotiate a final sum as compensation over the wrongful occupation of Southsea Gold’s land from September 2017 to April 2023.
There is a possibility that Wullersdorf may be allowed to continue to operate on Southsea Gold’s land following the negotiations.
On May 2, Bahvest had received a letter of demand from Southsea Gold, seeking RM20.4 million for the aforementioned alleged actions.
Its board of directors then held an emergency meeting on May 3, after which it resolved that they would seek an amicable resolution to the demands made.
“The company wishes to state that a permanent solution to this issue with Southsea Gold hinges on the outcome of the extraordinary general meeting (EGM) and a possible incoming new management,” it said.
Pending the negotiations, Wullersdorf has been given a 30-day extension to the deadline to vacate Southsea Gold’s land, giving them a total of 90 days from the date of the letter of demand.
Possible impact on production
The letter of demand is expected to have a substantial impact on Bahvest’s operations. It requires Wullersdorf to remove its mining factory, crusher plant and operations from Southsea Gold’s mining land.
“This will bring gold production to a halt. The cost for moving the operation is prohibitive as there may not be a suitable site on Wullersdorf’s 317.7-hectare sublease mining land to place the factory, crusher plant and operations,” it said.
Additionally, the payment demand of RM20.4 million, regardless of the outcome of the negotiations, is likely to have a substantial impact over the cash flow and profitability of both Wullersdorf and Bahvest.
For the financial year ended Dec 31, 2022 (FY2022), Bahvest’s revenue of RM108.3 million came entirely from gold mining operations. The group posted a net profit of RM602,000 during that reporting period.
“The possibility of incoming new management would certainly undo all goodwill between the respective companies,” said Bahvest.
At market close, Bahvest’s share price was up 13% or 1.5 sen to 13 sen, giving it a market capitalisation of RM155.42 million.