KUALA LUMPUR (May 29): Bahvest Resources Bhd’s founder and managing director-cum-chief executive officer Datuk Lo Fui Ming said he and his son, Bahvest executive director Lo Tek Yong, are “seriously considering” resigning as directors of the Sabah-based gold mining company after many hurdles, including poison pen letter, boardroom tussles, authorities’ raid and halted mining production.

Fui Ming expressed this in his written representation released on Monday (May 29) ahead of Bahvest’s extraordinary general meeting (EGM), which was scheduled for June 13 after a group of shareholders holding more than 10% of its shares sought to remove him, Tek Yong and non-executive chairman Datuk Seri Dr Md Kamal Bilal from the board.

“In view of all the recent developments, Tek Yong and I are seriously considering resigning as directors and focusing on developing my own personal business at Southsea (Southsea Gold Sdn Bhd), which I have neglected till now,” Fui Ming said.

In his written representation, as provided under Section 207 of the Companies Act 2016 — a right to be heard for directors of public companies against removal, Fui Ming also said it is “unlikely” that he could resolve differences with Datuk Lim Nyuk Sang @ Freddy Lim, who is one of the shareholders that sought Fui Ming’s removal.

“Datuk Freddy Lim and I were business partners and friends for over 30 years, and I tried hard to work out our differences to keep Bahvest afloat,” Fui Ming said.

Fui Ming said Bahvest has appointed three directors, namely Chong Tzu Khen, Law Ngia Meng and Chong Mee Fah @ Frederick Chong, who were nominated by Lim and the other conveners as an “olive branch” to resolve their differences.

Last week, the Malaysian Anti-Corruption Commission (MACC) conducted a raid on Bahvest's wholly owned subsidiary Wullersdorf Resources Sdn Bhd’s gold mine and business premises in Tawau, Sabah.

“The persons who caused the raid by MACC have effectively caused the mining operations to stop since May 16 and cash flow to be severely impacted, putting the company in serious trouble, all of which are wholly unnecessary. Bahvest has suffered losses, and therefore losses in royalty to the Sabah state,” Fui Ming also wrote.

During the raid, key management personnel, namely Fui Ming, Tek Yong, Chong Khing Chung (Bahvest chief financial officer), Shahrol Azuan (Bahvest chief operating officer and chief metallurgist), and Brando Pang Tze Ching (Bahvest assistant general manager), were detained and remanded.

Fui Ming said Bahvest had “zero production” during the detainment from May 16 to 22 due to the absence of expert guidance. Despite their release now, he said things are not getting better for the group, which he said was en route to turning another profitable year based on its financial results for the third quarter ended Dec 31, 2022 (3QFY2023).

Based on Bahvest's 3QFY2023 announcement on Bursa Malaysia, the group posted a net profit of RM602,000 and a revenue of RM108.34 million for its cumulative nine-month period (9MFY2023).

On Sunday (May 28), Bahvest released its fourth quarter ended March 31, 2023 (4QFY2023) financials. The group posted a net loss of RM11.24 million despite a RM34.36 million revenue, due to a provision amounting to RM13 million. Thus, it experienced a loss per share of 0.91 sen, compared to an earnings per share of 0.69 sen previously.

For its FY2023, Bahvest recorded a net loss of RM10.64 million with a revenue of RM142.7 million.

“Even though now that we are released from remand, Bursa Malaysia has instructed a management committee be formed and that Shahrol, Brando and I cannot be involved in it.

"All the senior management of Bahvest have declined to be in the management committee following our remand due to the possibility of shouldering blame,” he said.

Fui Ming said the remand was prompted by allegations that he stole gold, which surfaced in a poison pen letter on April 28, two days after the notice of intention to move an EGM.

“As both Shahrol (who was also named in the poison pen letter) and I did not do any of the wrongdoings alleged, I ignored the letter and did not lodge a report with the police,” Fui Ming said.

“In the normal course of justice, a person is innocent until proven guilty. In my case and involving family members and senior management of Bahvest, we were paraded before the media and everybody assumed we were guilty.”

Following the shareholders’ disagreement, it was reported that Bahvest on May 3 had received a letter of demand seeking RM20.4 million from Southsea Gold (75% owned by Fui Ming) for alleged wrongful occupation and trespass into Southsea Gold’s lease land.

The RM13 million provision that caused Bahvest to post a net loss in 4QFY2023 was a non-refundable deposit paid to initiate negotiations regarding a final compensation amount for the wrongful occupation of Southsea Gold's land from September 2017 to April 2023, as well as for a potential tenancy to allow Wullersdorf to continue its operations on the land.

“I invite you to visit the mining site in Bukit Mantri, Sabah for an immediate first-hand understanding of why the crushers, processing equipment and living quarters are placed on Southsea Gold’s mining lease land,” Fui Ming said.

“They will see for themselves that the hill where Wullersdorf’s mineral ore and gold deposits are, must be levelled to make it suitable for the erection of infrastructure to house equipment and as living quarters.

“In other words, there would be delays to the commencement of the mining operations in addition to Wullersdorf losing valuable land rich in mineral ore for the purpose of putting up these infrastructure,” he said.

Fui Ming also said there are absolutely zero mining operations that have taken place on Southsea’s mining lease land.

“I was confident of arriving at an amicable resolution with Southsea and this was proven as Southsea did not enforce compensation for the wrongful occupation without a tenancy or lease until the notice of intention to move an EGM was served on April 26,” he said.

Fui Ming defended that he had carried out his duty as a director of Bahvest, adhered to good practices and abided by the law.

“Up until now, I am still trying to keep Bahvest operational and ensure that employees are paid, as about 1,500 people, especially those in Balung Cocos, Tawau, depend on the company for livelihood.” he said.

Fui Ming added that he had plans to grow Bahvest into a Main Market company as well as reward loyal employees who toiled to make the gold mine the success it is today via Employee Share Option Scheme.

“This would have increased the value for shareholders as the operations are finally stable after years of hard work, including two in the pandemic,” he said.

Trading in the shares of Bahvest was halted from 9am to 10am on Monday. Last Friday (May 26), the company said it is unable to submit its 4QFY2023 results by May 31, due to the recent raid by MACC, which Bahvest said had raided its accounting records.

At the time of writing, the counter has dropped two sen or 8.89% to 20.5 sen, valuing the group at RM248.63 million. The stock has tumbled 43.06% over the past month.

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