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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
42. Subsequent events (cont’d)
Further, Pala has also entered into share purchase agreement with Mellford Pte. Ltd. and Sword Investments Private
Limited, who are affiliates of the Tecity group and thereby affiliates of MSC, to purchase from them 49,481,600 issued
common shares.
Upon completion of these transactions Pala will own 121,148,267 common shares representing 44.1% of the AMR’s
outstanding share capital and 50.3% on a fully diluted basis after Pala has exercised the Warrants in full. MSC’s shareholding
in AMR would be diluted to 11.4% first and then upon exercise of Warrants by Pala to 10.1%.
(b) On 9 March 2012, the Company announced that it has entered into a strategic alliance agreement (“SAA”) with Optima
Synergy Resources Limited (“OSRL”) that would allow the latter to immediately subscribe up to 479,833,766 shares
of USD0.01 each equivalent to 23% equity interest in Bemban Corporation Limited (“BCL”), the penultimate holding
company of PT Koba Tin (“PT Koba”).
Among others, the objectives and purposes of the SAA are as follows:
(i) Facilitating greater local Indonesian participation in PT Koba by way of increased equity ownership and management
through an Indonesian affiliate company of OSRL;
(ii) Securing the PT Koba Contract of Work (“CoW”) extension or new mining permits over the existing CoW area for 10
years up to 31 March 2023 through joint effort of OSRL and MSC;
(iii) Enabling BCL and operating companies to expand their businesses through performance improvement and value
enhancement as well as through acquisition of additional mining permits for long term sustainable operations in
Indonesia.
Upon renewal of PT Koba CoW, OSRL will be able to increase up to 50% equity interest in BCL through subscription of
additional 1,126,566,234 shares of USD0.01 each subject to fulfillment of certain conditions precedent stipulated in the
SAA including MSC obtaining shareholders’ approval at an extraordinary general meeting (EGM) to be convened upon
at a later date.
(c) On 26 March 2012, the Board of Directors of Malaysia Smelting Corporation Berhad announced that in line with the
prevailing provisions of the State’s Minerals Enactment (Perak) 2003 {Enakmen Mineral. (Perak) 2003} (referred to as 2003
Enactment), the Company’s wholly-owned subsidiary, Rahman Hydraulic Tin Sdn. Bhd. (“RHT”) has agreed to pay royalty
to the State Government of Perak (“State Government”) at a higher rate of 5% on sales of tin-in-concentrates from the
current rate of 2.5% payable under the existing terms of the current mining leases over Lot No.6173 (ML004), Lot No.7430
(ML005), Lot No.6175 (ML006), Lot No.6147 (ML007) and Lot No.2206 (ML008) for a total area of approximately 600.996
hectares (collectively referred to as Current Mining Leases) in Wilayah Klian Intan, Mukim Pengkalan Hulu, Daerah Hulu
Perak, State of Perak Darul Ridzuan which were originally issued under the old Enactment which had subsequently been
replaced by the 2003 Enactment. With this agreement to pay a higher royalty effective from March 2012, the Board is
pleased that the State Government has approved the renewal of the Current Mining Leases for a longer period up to 28
September 2030 pursuant to the 2003 Enactment.
The extension of the Current Mining Leases to 2030 will enable RHT to undertake the necessary additional investments
to optimize its long term production level. This is expected to result in an increase in future earnings and thus, the overall
valuation of RHT. Apart from contributing an additional revenue to the State Government from higher royalty, the longer
mine life is also expected to benefit the community and all other stakeholders under the principles and objectives of
sustainable development.
43. Authorisation of financial statements for issue
The financial statements for the year ended 31 December 2011 were authorised for issue in accordance with a resolution of
the directors on 26 March 2012.
MALAYSIA SMELTING CORPORATION (43072-A) • ANNUAL REPORT 2011 173