KUALA LUMPUR (May 23): Technology and business solution provider Aldrich Resources Bhd has proposed to diversify its existing business to include exploration of minerals, mining and mining-related businesses, as well as money lending business.

The group is presently involved in the business of providing computerised maintenance management systems and fintech solutions, as well as corporate secretarial and share registration services.

In February, Aldrich had subscribed for 2.5 million new shares, equivalent to 96.15% of the enlarged issued share capital of a money lending company, Proficient Premium Sdn Bhd, for RM250,000 cash.

In a filing with Bursa Malaysia on Tuesday (May 23), Aldrich said it acknowledges the declining revenue and profitability of the group’s businesses in recent years and expects the proposed diversification to help expand its revenue base and improve its financial performance.

Aldrich's wholly-owned subsidiary Aldrich Minerals Sdn Bhd had in January 2022 entered into a mineral production sharing agreement with Northern Dolomite Sdn Bhd and Tekad Mulia Sdn Bhd to combine their resources and experiences to carry out a mining production project.

"As at May 22, two new mining processing equipment have been installed at the Dolomite mining project site located at Cuping, Perlis. Production commenced in May 2022 with an expected monthly production of 10,000 tonnes of dolomite ores, which is expected to generate an annual revenue of RM7.2 million for the financial year ending June 30, 2023," said Aldrich.

Additionally, the group had in May 2020 entered into a memorandum of understanding with local mining operator Enrich Mining Sdn Bhd to jointly explore mining targets for precious metals and develop mining operation at the Gossan Hill area in Jeli, Kelantan, known as “KK Hill”, and manage the gold mining operations located in Jeli.

"Enrich's preliminary estimates show that the gold reserves in the KK Hill area is approximately 100,000 ounces, valued at US$198.1 million (RM901.36 million based on a spot price of US$1,981 per ounce).

"Subject to the issuance of the proprietary mining licence and favourable test results of the soil sample analysis, Aldrich expects to engage a competent person and competent valuer to assess the viability of the Enrich mining project in KK Hill, and ultimately enter into a definitive agreement with Enrich to pursue the project," said Aldrich.

It estimates that the Dolomite and Enrich mining projects may contribute above 25% of the group’s net profit for FY2023 and further into the future.

Meanwhile, Aldrich said it intends to vary the utilisation of proceeds raised from a private placement amounting to RM9.6 million that was completed in January last year. It has resolved to vary the balance of the unutilised amount of RM7.44 million towards the money lending and mining businesses.

It is also proposing to establish an employees’ share option scheme (ESOS) involving up to 30% of the total issued shares for the group's directors and employees in recognition of their contribution to the company and to enable them to participate in the company’s future growth.

Assuming an exercise price of 2.3 sen — being not more than 10% discount from the five-day volume weighted average market price of Aldrich shares up to May 22 of 2.5 sen — the proposed ESOS will result in the company's share capital increasing to 1.45 billion shares worth RM32.99 million from 1.11 billion shares worth RM25.31 million.

M&A Securities Sdn Bhd has been appointed as the principal adviser for the proposals. Barring any unforeseen circumstances, the proposals are expected to be completed in the second half of 2023.

Aldrich shares closed unchanged at 2.5 sen, giving it a market capitalisation of RM23.2 million.