KUALA LUMPUR (Oct 11): Lion Diversified Holdings Bhd (LDHB) has proposed to give Lion Tin Sdn Bhd (LTSB) the right to mine a total of 800 acres of land in Kuala Langat in return for a mining tribute payable to LDHB’s wholly-owned subsidiary, Banting Resources Sdn Bhd (BRSB).

LTSB is a private vehicle controlled by Tan Sri William Cheng Heng Jem and his nephew, Tan Sri Cheng Yong Kim.

Heng Jem is the chairman of The Lion Group and the largest shareholder of LDHB with a 26.19% stake, while Yong Kim is the managing director of Lion Industries Corp Bhd and deputy chairman of The Lion Group.

A contract-to-work agreement was signed today between BRSB and LTSB which saw the latter being granted the sole and exclusive right to conduct mining activities and process minerals mined from six plots of land.

The mining tribute will involve 10% of the revenue net of royalty from each type of mineral mined, processed and sold, LDHB said in the filing with Bursa Malaysia this evening.

“The proposed award of contract will facilitate the mining activities and consequentially, provide a medium to long-term source of revenue and profit through the receipt of the Mining Tributes, which are based on the value of the minerals extracted from the land,” LDHB said.

BRSB would be able to realise potential earnings from the mining activities without incurring material operational and capital costs such as an 18-month implementation period, approximate working capital of RM20 million and approximate capital expenditure of RM113 million, it added.

The proposal is subject to approval from LDHB's shareholders, the group said.

LDHB is a Practice Note 17 company that has yet to formulate its regularisation plan. Its shareholders include Lion Industries Corp Bhd and William Cheng Sdn Bhd.

Shares in LDHB closed down 0.5 sen today at 4.5 sen, leaving the group with a market capitalisation of RM62.65 million.