1. Introduction

The Board of Directors of MRB (“Board”) is pleased to announce that Minetech Construction Sdn Bhd [Registration No. 198901007269 (184572-W)] (“MCSB”), a wholly-owned subsidiary of the Company had on 13 August 2020 entered into a Memorandum of Understanding (“MOU”) with Borneo Oil & Gas Corporation Sdn Bhd (“BOG”) to establish joint collaboration to undertake mining works at Hutan Simpan Bukit Ibam, Mukim Keratong, Daerah Rompin, Pahang Darul Makmur (“Land”) (“Joint Collaboration”).

(BOG and MCSB shall, hereinafter be collectively be referred to as “the Parties”).

2. Information on the Mining Works at the Land

(i) By an Exclusive Agreement dated 21 May 2010 between Perbadanan Kemajuan Negeri Pahang (“PKNP”) and HDL Global Sdn Bhd (“HDL”), prospecting and mining rights were granted by PKNP to HDL to an area covering 1,200 hectares and known as Block A, SKC(H), 1/2001, Hutan Simpan Bukit Ibam, Mukim Keratong (“Prospecting Area”).

(ii) Pursuant to the Exclusive Production Sharing Agreement dated 11 March 2015 between BOG and HDL, BOG has been granted the sole and exclusive right to prospect, explore, mine, extract, process, sell and collect all revenue of sales with respect to all minerals and precious metals including gold (“Mining Works”) on the Prospecting Area and has since March 2015 been carrying out exploration works over the said area.

(iii) As at the date hereof, an area measuring approximately 187 hectares / 462 acres within the Prospecting Area has been issued with a mining lease under Mining Lease No. ML17/2009) (“the Mining Area”) on which BOG is currently carrying out the mining works. The Mining Area is divided into seven zones A, C, D, E, F, G and H, on which BOG has been conducting detailed exploration works. 

(iv) At the conclusion of the 1st preliminary exploration works on all the zones from A to G, an assessment of potential gold resources was compiled showing a potential gold reserves of 60,032 oz of AU or 1,866,943 gm of AU (“1st Assessment”). Since the completion of the 1st Assessment, detailed exploration on zone B has been completed and a report under the Australasian Code of Reporting of Exploration Results, Mineral Resources and Orde Reserves has been prepared and signed off. Under the report, Zone B contains gold resources of 1,600,000 metric tons of ores with an average grade of 0.42 g/t or about 22,200 oz / 621,917 gm of gold.

(v) Pursuant to the findings on Zone B, BOG now intends to proceed with excavation of Zone B, and mining of the ore.

3. Information on BOG

BOG is a company incorporated in Malaysia and having its business address at Level 17, Menara Hap Seng, Letter Box 63, No. 1 & 3 Jalan P Ramlee, 50250, Kuala Lumpur, Wilayah Persekutuan, Malaysia.

BOG is a subsidiary of Borneo Oil Berhad and is involved in the mining industry.

4. Information on MCSB

MCSB is a company incorporated in Malaysia and having its business address at D-G-5, Block D, Parklane Commercial Hub, No. 21, Jalan SS7/26, Kelana Jaya, 47301 Petaling Jaya, Selangor Darul Ehsan. MCSB is principally engaged in rock blasting, controlled blasting, civil engineering, construction and infrastructure development. MCSB is also involved in the business of mining and has the prerequisite equipment, expertise and personnel with experience in mining works.

5. Salient Terms of the MOU

(i) The Parties agree that the MOU shall constitute a non-binding agreement amongst them, and is only intended as an outline of their present understanding and intentions, and does not give rise to any legally enforceable rights or obligations for either of them except as otherwise stated in separate agreement(s).

(ii) The Parties entered into the MOU to lay out the general terms for the proposed Joint Collaboration, starting from the excavation of mining ore on Zone B and at a later stage, upon the completion of exploration by BOG of the other Zones A, C, D, E, F, G and H on the rest of Mining Area subject to the terms and conditions stipulated in the MOU or further agreements to be agreed upon.

(iii) The duties of BOG upon commencement of the Mining Works are as follows:-

• To continue exploration works to identify high-grade mining ore.

• To provide geological advice in terms of excavation and if needed be, to appoint independent geological advisor to provide the required duties as stipulated in the MOU.

• To conduct grade control analysis and if needed be, to appoint independent geological advisor to provide the required duties as stipulated in the MOU.

• To plan the mining scheme and related works with MCSB.

(iv) The duties of MCSB upon commencement of the Mining Works are as follows:-

• To provide machinery and equipment for the purpose of excavation.

• To provide qualified personnel to implement blasting activity.

• To undertake mine excavation works in accordance with agreed mining extraction program.

• To execute the mining scheme and related works based on BOG proposal.

• To haulage mining ore to the designated stockpile area based on BOG proposal.

• To carry out overburdened material to a designated dumping ground from BOG.

• To maintain all access road within the area of operation.

• Conduct all operations in strict adherence to all relevant laws and environment practices.

(v) The MOU is effective from the execution date of the MOU for a period of twelve (12) months (“Duration of MOU”) which shall commence within three (3) months from the execution date of the MOU, subject to the satisfactorily site investigation to be conducted by MCSB within ninety (90) days from the date of the MOU. The Duration of MOU may be extended subject to the mutual agreement from both Parties.

(vi) The relationship between the Parties is exclusive and the MOU shall preclude the Parties from being involved in a similar project, whether in competition or not, or entering into any such relationship or arrangement with other parties in establishing a similar project within the same jurisdiction as the Joint Collaboration or in competition with the Joint Collaboration.

(vii) The Parties may invite other parties to be involved in the Joint Collaboration subject to the mutual agreement of the Parties.

(viii) The Joint Collaboration covered by the MOU shall terminate upon completion of the Duration of MOU, unless extended or be terminated by the Parties with a written one (1) month notice from either side.

(ix) MCSB shall be granted the first right of refusal for producing and processing all minerals and precious metals including gold on the Prospecting Area subject to the consensus by the Parties.

6. Rationale of the MOU

The MOU will provide the Parties an opportunity to explore and establish collaboration particularly in the field of mining and other sectors based on the respective Parties’ experience and strength.

7. Risk Factors

The risks factors involved in the MOU at this juncture is minimal and in the event MRB enters into a definitive agreement for the implementation of the Joint Collaboration, Management of MRB Group would put in place adequate control measures and proper operational procedures to ensure the successful implementation of the project with its current business operations.

8. Financial Effects and Percentage Ratio

The effects on the total issued shares, substantial shareholders’ shareholdings, financial position in respect of the net assets and gearing ratio of MRB as well as earnings level of MRB cannot be determined at this juncture as formal agreements in relation to the Joint Collaboration has yet to be identified. Similarly, the highest percentage ratio applicable for the Joint Collaboration is not available at this juncture.

The above information will be announced immediately upon the signing of the formal agreements in relation to the Joint Collaboration.

9. Directors and/or Major Shareholders’ Interest and/or persons connected with them

None of the Directors and/or major shareholders of MRB and/or persons connected to them have any interest, direct or indirect, in the matter.

This announcement is dated 13 August 2020.