Green consciousness triumphs as Perak rare earth MOU is scrapped

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Eleven days – that’s all it took for people power to pressure the Perak government and a ‘Hong Kong’ firm to terminate their MOU for a rare earth exploration project in Bukit Merah.

The MOU was inked by the Perak State Development Corporation and CVM Minerals Ltd. The aastocks.com website provides details of CVM’s shareholders and directors. CVM Minerals Ltd is a 29.53 per cent associate company of Ho Wah Genting Bhd.

Perak Mentri Besar Zambry denied any knowledge of the MOU. The PSDC said yesterday that the MoU was only to allow CVM Minerals to conduct feasibility studies on mining for rare earths in the area.

But in an announcement on 18 April, CVM Minerals had said:

On 18 April 2011, CVM Metal Recycle Sdn Bhd, a company in which the Company holds 60% of its issued and paid-up share capital, has submitted an application for rare earth exploration licence to Perak state’s Land & Mineral Office with respect to the Project. The exploration licence application was sought for the approval to explore the proposed concession area which is about 250 hectares (617.763 acres). Pursuant to the Memorandum of Understanding, the Company and PKNP envisaged that in the event the relevant licences, permits or approvals are granted or if there is a likelihood of relevant licences, permits or approvals being granted by the relevant authorities for the purposes of the Project, the Company and PKNP may further enter into an agreement setting out the terms and conditions of their participation in the Project in an appropriate form of cooperation including but not limited to the formation of the Joint Venture with the Company as a major shareholder.

People in Bukit Merah are still coming to terms with Mitsubishi Chemical’s Asian Rare Earth (ARE) facility, which was linked to seven leukaemia deaths.

This episode also throws the spotlight on CVM’s just completed magnesium smelter plant in the Kamunting area which is capable of producing 30000 tonnes of magnesium ingots a year. The company has acquired the mining rights to extract dolomite limestone, the raw material for the smelter, from the Dolomite Hills near Sungai Siput, 40km away from the plant.

And now let’s see what happens with Lynas in Gebeng.

The 18 April announcement about the signing of the MOU:

CVM Minerals Limited
南亞礦業有限公司
(Incorporated in Hong Kong with limited liability)
(Stock Code: 705)

MEMORANDUM OF UNDERSTANDING IN RELATION TO THE FORMATION OF A JOINT VENTURE WITH PERBADANAN KEMAJUAN NEGERI PERAK AND
RARE EARTH EXPLORATION PROJECT

This announcement is made pursuant to Rule 13.09 of the Listing Rules.
On 18 April 2011, the Company entered into the Memorandum of Understanding with PKNP in relation to the entering into or establishment of a Joint Venture in Malaysia for the purposes of the
Project. The signing of the Memorandum of Understanding indicated the mutual understanding and intention of the Company and PKNP to further explore the potential possibility of investment in the Project and is not legally binding.

As at the date of this announcement, no legally binding agreement has been entered into between the Company and PKNP in relation to the formation of the Joint Venture. The Company will comply with the relevant requirement under the Listing Rules if it decides to proceed with the transactions contemplated under the Memorandum of Understanding.

It should be noted that the formation of the Joint Venture is still subject to, among other things, the signing of the joint venture agreement. Accordingly, as the formation of the Joint Venture may or may not proceed, shareholders of the Company and potential investors are advised to exercise caution when dealing in the Shares.

This announcement is made by CVM Minerals Limited (the “Company”) pursuant to Rule 13.09 of the Rules (the “Listing Rule”) Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).

MEMORANDUM OF UNDERSTANDING

On 18 April 2011, the Company entered into the memorandum of understanding (the “Memorandum of Understanding”) with Perbadanan Kemajuan Negeri Perak (“PKNP”) in relation to the entering into or establishment of a joint venture (the “Joint Venture”) in Malaysia for the purposes of the exploration and mining of rare earth and other potential minerals and activities related thereto over the land (the “Land”) situated at Bukit Merah, Perak Darul Ridzuan, Malaysia (the “Project”).

PKNP is a corporate body, which is the development arm of the State Government of the State of Perak, Malaysia. As at the date of this announcement, PKNP is interested in 135,300,000 shares of the Company (the “Shares”), representing approximately 4.73% of the entire issued share capital of the Company. Save for the aforesaid, to the best of the knowledge, information and belief having made all reasonable enquiries by directors of the Company (the “Directors”), PKNP and its ultimate beneficial owner(s) are third parties independent of the Company and connected persons (as defined in the Listing Rules) of the Company.

On 18 April 2011, CVM Metal Recycle Sdn Bhd, a company in which the Company holds 60% of its issued and paid-up share capital, has submitted an application for rare earth exploration licence to Perak state’s Land & Mineral Office with respect to the Project. The exploration licence application was sought for the approval to explore the proposed concession area which is about 250 hectares (617.763 acres). Pursuant to the Memorandum of Understanding, the Company and PKNP envisaged that in the event the relevant licences, permits or approvals are granted or if there is a likelihood of relevant licences, permits or approvals being granted by the relevant authorities for the purposes of the Project, the Company and PKNP may further enter into an agreement setting out the terms and conditions of their participation in the Project in an appropriate form of cooperation including but not limited to the formation of the Joint Venture with the Company as a major shareholder.

Information on the Land and Reasons for the Project

Perak Darul Ridzuan is a state in Malaysia which is abundant with natural resources especially minerals and Bukit Merah is a small town located about 7 kilometers southwest of Ipoh, the capital city of Perak state. Bukit Merah is under the Northern Corridor Economic region for Human Capital, Agriculture, Manufacturing, Tourism and Infrastructure, and is a town in the area of Belanja which itself is one of the major towns in Batu Gajah District. The population of Belanja is approximately 26,211 which consist mainly of Malays, Chinese and Indians. The land size of Belanja is about 11,137 hectares. In the early nineties, two rare earth processing plants had operated at Bukit Merah to produce mixed rare earth products.

The board of Directors (the “Board”) is of the view that due to the steadily increase in demand for rare earth, the low export quota set by the government of the People’s Republic of China and the tremendous increase in prices of the minerals, there are good potentials to venture into the rare earth mining industry in the Perak state. The Board also considered that the terms and conditions of the Memorandum of Understanding are fair and reasonable and in the interests of the Company and its shareholders as a whole.

Termination

The Memorandum of Understanding will be terminated upon the occurrence of any of the following events, whichever is the earliest:
(i) the execution of the joint venture agreement between the Company and PKNP;
(ii) a written document from the relevant authorities declining the issuance of the relevant licence, permit or approval after all appeals thereto have been exhausted by both of the Company and PKNP; or
(iii) the expiry of a period of six(6) months commencing from the date of the Memorandum of Understanding or such other period as may be mutually agreed by the Company and PKNP.

GENERAL

The signing of the Memorandum of Understanding indicated the mutual understanding and intention of the Company and PKNP to further explore the potential possibility of investment in the Project and is not legally binding.

As at the date of this announcement, no legally binding agreement has been entered into between the Company and PKNP in relation to the formation of the Joint Venture. The Company will comply with the relevant requirement under the Listing Rules if it decides to proceed with the transactions contemplated under the Memorandum of Understanding.

It should be noted that the formation of the Joint Venture is still subject to, among other things, the signing of the joint venture agreement. Accordingly, as the formation of the Joint Venture may or may not proceed, shareholders of the Company and potential investors are advised to exercise caution when dealing in the Shares.

By Order of the Board CVM Minerals Limited
GOH SIN HUAT
Executive Chairman
Hong Kong, 18 April 2011

As at the date of this announcement, the Executive Directors of the Company are Mr. Goh Sin Huat, Mr. Chong Wee Chong, Mr. Lim Ooi Hong and Mr. Leung Wai Kwan, and the Independent Non-executive Directors of the Company are Ms. Wong Choi Kay, Mr. Chong Lee Chang and Mr. Lam Cheung Shu.

The 29 April announcement about the termination of the MOU:

CVM Minerals Limited
南亞礦業有限公司
(Incorporated in Hong Kong with limited liability)
(Stock Code: 705)
TERMINATION OF MEMORANDUM OF UNDERSTANDING IN RELATION TO THE FORMATION OF A JOINT VENTURE WITH PERBADANAN KEMAJUAN NEGERI PERAK AND RARE EARTH EXPLORATION PROJECT

The Company would like to inform that it has on 29 April 2011 withdrawn the application for the rare earth exploration permit submitted on 18 April 2011 and after further deliberation, PKNP and
the Company have mutually agreed to terminate the non legally binding MOU dated 18 April 2011 effective 29 April 2011.

This announcement is made by the Company pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

Reference is made to the announcement of the Company dated 18 April 2011 in relation to the Memorandum of Understanding with PKNP regarding the entering into or establishment of a Joint Venture in Malaysia for the purposes of the Project (the “Announcement”). Unless otherwise stated, capitalised terms used in this announcement shall have the same meanings as defined in the Announcement.

Upon being notified by the State Government of Perak (“State”) through PKNP that the State has no intention to issue any permit or licence for the mining of rare earth mineral and therefore the Company will no longer pursue this Project or any feasibility study in relation to this Project.

The Company would like to inform that it has on 29 April 2011 withdrawn the application for the rare earth exploration permit submitted on 18 April 2011 and after further deliberation, PKNP and
the Company have mutually agreed to terminate the non legally binding MOU dated 18 April 2011 effective 29 April 2011.

By Order of the Board
CVM Minerals Limited
GOH SIN HUAT
Executive Chairman
Hong Kong, 29 April 2011

As at the date of this announcement, the Executive Directors of the Company are Mr. Goh Sin Huat, Mr. Chong Wee Chong, Mr. Lim Ooi Hong and Mr. Leung Wai Kwan, and the Independent Non-executive Directors of the Company are Ms. Wong Choi Kay, Mr. Chong Lee Chang and Mr. Lam Cheung Shu.

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Ramsay

Zambry is smart to make a u-turn after seeing the blunder of his Pahang counter-part.

Sean

I didn’t realise just how energy-intensive magnesium smelting was until I followed the link in your article. The CVM page says the plant will produce 83t per day by the Pidgeon process. Wikipedia says that process requires about 40MWh per tonne giving a rough consumption of around 300MW for the process at that plant alone. Are my numbers wrong, or is Perak also building a new power station to power this plant? A typical Malaysian power station produces only hundreds of MW to 1 or 2GW. Malaysia has fabulous mineral wealth which can be readily converted to cash by mining… Read more »

Andrew I

“What I gotta do to make you love me?”

Certainly not this:

http://thestar.com.my/news/story.asp?file=/2011/4/30/nation/20110430194839&sec=nation

Andrew I

You know, it’s funny that no politician has actually figured out what makes the Chinese tick. It’s not money, it’s pride.

Pride is the driving force that makes the Chinese succeed. Money is the end, not the means to an end. That probably explains their love/hate relationship with gambling.

It’s little wonder they say no to a nerd and a pornstar.

Wei Siong

You should tell this to CSL, who is gambling heavily on mca future in the cabinet.

semuanya OK kot

Aluminium smelting takes the most energy, and is the reason for the Bakun Dam. Both the plant and dam mean vast destruction of our ultimate security – nature. The plant will produce vast amounts of poisons. The dam was completed by China. The plant is for China. Does the word colonisation come to mind?

LBJ

At least Zambry practices plausible deniability. He can and did quickly aborted the unpopular decision. I give him an A for that.

Najib was stupid to push the 1 Malaysia email. He should not have done that. It blew up in his face. It is hard for him to pull back.

Jong

LBJ,
I give you an “A” for the comment! Congrats, fully agree with you. LOL!!!

Andrew I

So, what’s the lesson here? A two party system is definitely better than one.

Isn’t it nice that politicians are listening to us, the rakyat, for a CHANGE?

Yang

Its only an MOU. Many MOU that were signed between governments never materialize and could be rescinded even without the other side consent once it lapse. Try the Trengannu case and see whether it can be rescinded or not. I bet it won’t