KUALA LUMPUR: Copper miner Malaco Mining Sdn Bhd is expected to be the white knight to inject a new income stream into Octagon Consolidated Bhd to turn the loss-making firm around.
According to sources familiar with the two companies, Malaco Mining, which already has a joint development agreement to operate a copper mine in Mount Watson, Australia, with Octagaon, intends to acquire a substantial stake in the paint coating manufacturing firm.
It is learnt that negotiations are already at an advanced stage.
When contacted, Malaco Mining’s managing director Datuk Sia Hok Kiang declined to comment on the matter.
“There will be an announcement once we have any concrete plan,” he told The Edge Financial Daily over the phone.
Nonetheless, Sia indicates his intention to list his mining business on Bursa Malaysia.
He also revealed that Malaco had bought into a 220,000-acre (89,030ha) copper mine called Leichhardt in Queensland, Australia, last year.
“It is a brownfield project. Within one year of test operations, we have produced 1,000 tonnes of copper, which is worth about RM24 million,” he said.
Octagon’s core business is paint coatings for consumer electrical and electronics products. The company, which slid into PN17 status in June 2012, submitted its regularisation plan to Bursa Malaysia in June.
Apart from raising fresh capital, the regularisation plan has also proposed a diversification into mining by partnering with Malaco. However, there is no mention of Malaco taking a substantial stake in Octagon.
The stock exchange has yet to grant its approval to the regularisation plan.
Octagon has been in the red since financial year ended Oct 31, 2009 (FY09). As at July 31, the company’s accumulated losses swelled to RM266.5 million and its short-term debts were at RM128.4 million.
Its net loss widened to RM18 million for the nine months ended July 31 from RM11 million in the previous corresponding period. The group said this is mainly due to interests on its outstanding loans.
Octagon shares has been suspended since November last year.
This article first appeared in The Edge Financial Daily, on November 10, 2014.