Southsea Gold is 75%-owned by Datuk Lo Fui Ming who is also Bahvest's founder and largest shareholder with a 16.09% stake.

KUALA LUMPUR (May 8): Sabah-based Bahvest Resources Bhd said its gold production will be halted if its wholly-owned unit Wullersdorf Resources Sdn Bhd is required to remove operations from Southsea Gold Sdn Bhd's mining land.

“In the absence of a tenancy agreement or a lease or licence to occupy Southsea Gold’s mining land, Wullersdorf would have to eventually remove its operations from Southsea Gold’s mining land. This will bring gold production to a halt.

“The cost for moving the operations is prohibitive as there may not be a suitable site on Wullersdorf’s 317.7 sub-lease mining land to place the factory, crusher plant and operations,” it said in a bourse filing on Monday (May 8).

Last week, Wullersdorf was hit with a RM20.4 million claim for alleged wrongful occupation and trespass on Southsea Gold's mining lease land. Note that Wullersdorf has conducted gold mining activities on a piece of land in Tawau, Sabah since 2017, which it subleased within a larger mining land lease belonging to Southsea Gold.

Southsea Gold had demanded Wullersdorf remove all its structures, namely the crusher plant, factory, workers' camp and all other structures unlawfully located on Southsea Gold's leased mining land.

Southsea Gold is 75%-owned by Datuk Lo Fui Ming, Bahvest's founder and largest shareholder, who holds 16.09% of the group. Lo was one of the three directors in Bahvest that a group of minority shareholders plan to remove at the upcoming EGM.

The five shareholders — Marlex Trading Ltd, Innosabah Capital Holdings Sdn Bhd, Datuk Freddy Lim Nyuk Sang, Yong Fen Yoo and Chong Tzu Khen — are also seeking to remove Bahvest's executive director Lo Teck Yong, as well as non-executive chairman Datuk Seri Dr Md Kamal Bilal from the board.

They are seeking to remove these three directors and replace them with Tzu Khen, Law Ngia Meng, and Chong Mee Fah @ Frederick Chong.

RM20.4 mil claim will impact group’s cash flow, profitability

According to Bahvest, the RM20.4 million compensation sought, which is still subject to negotiation, would have a significant impact on the group's cash flow and profitability.

It said it was in constant discussion with Southsea Gold to resolve the issue and minimise the financial impact on the group.

“Should the discussion and negotiation between the parties fail to resolve the matter and/or reduce the demanded amount, Wullersdorf/Bahvest will suffer a RM20.4 million payout as compensation to Southsea Gold on the back of a net assets of RM123.07 million as of Dec 31, 2022 (unaudited),” Bahvest added.

Bahvest also mentioned that it could not estimate the impact to the group’s business and prospects until the matter is resolved. “And any amicable resolution if the matter is difficult given the uncertainty of whom will be in the management after the extraordinary general meeting (EGM)”.

EGM

Separately, Bahvest announced that it will convene an EGM on June 13 at 10am to move resolutions to remove and replace the three directors.

The notice of EGM will be issued and circulated in the week beginning May 15, while the venue will be confirmed at a later date.

In a statement, Bahvest said the EGM is to provide fair and adequate notice for all eligible shareholders to attend the meeting.

“The directors facing removal will also be seeking the grounds or basis for their proposed removal and will be making representations as to why they should not be removed from office at the EGM in the interest of natural justice and directors’ rights under Section 207 of the Companies Act 2016,” it said.

For the cumulative nine months ended Dec 31, 2022 (9MFY2023), the group’s net profit tumbled to RM602,000 from RM3.89 million a year earlier, amid bad weather that disrupted its gold mining operations, although production rose 6% year-on-year to 423.87kg in 9MFY2023.

Revenue, meanwhile, increased to RM108.34 million from RM97.29 million in 9MFY2022.

Bahvest’s share price fell 19.15% or 4.5 sen to close at 19 sen on Monday, giving it a market capitalisation of RM230.65 million. Trading volume swelled to 69.55 million, exceeding its 200-day average volume of 2.72 million — making it the sixth active stock on Bursa.

The counter plunged 52.5% from a high of 40 sen on April 28, and 42.42% from 33 sen on Jan 3.