EXECUTION OF A SHAREHOLDERS AGREEMENT AMONGST IRIS CORPORATION BHD (“THE COMPANY” ) AND TWO OTHERS TO FORM A JOINT VENTURE COMPANY FOR THE PROPOSED ACQUISITION OF ASSETS IN FEATHERSTON RESOURCES LIMITED (“FRL”) FOR A TOTAL INVESTMENT AMOUNT OF AUSTRALIAN DOLLARS THIRTEEN MILLION (AUD13,000,000) EQUIVALENT TO RINGGIT MALAYSIA (RM39,372,900)
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1. INTRODUCTION
The Board of Directors of IRIS Corporation Berhad (“ICB” or “the Company”) wishes to inform that the Company had on 2nd May, 2014 entered into a Shareholders Agreement (“Agreement”) with Burleigh Nominees Limited (agent for and on behalf of Helaint Pty Ltd ATF Manolas Group Family Trust (“GMT”) and Burleigh Nominees Limited (agent for and on behalf of Asini Investment Corporation Pty ATF Plakidis Group Family Trust (“PPT”) for the formation of a New Zealand incorporated joint venture company called Plaman Resources Limited (“PRL”). The objective of PRL is to acquire out of voluntary administration the Assets (hereinafter defined) of Featherston Resources Limited (“FRL). The principal asset comprises of a Mining Permit on an area with 6 million tonnes reserves of JORC compliant black and white diatomite and an Exploration Permit with probable reserves of 50 million tonnes of diatomite (“Assets”). The deposits are located in the Central Otego region of New Zealand.
The Company proposes to invest a total sum of AUD13Million in PRL. The invested sum will be utilized for the acquisition of the Assets to the amount of AUD4.8 Million (equivalent to RM14,537,700) and for all subsequent working capital funding including both operational and marketing expenses of PRL. The completion of the exercise is subject to and conditional upon the terms and conditions set out in the conditional Shareholders Agreement therein. Completion shall take place upon the acceptance of the Deed of Company Arrangement (DOCA) proposed to the Administrators for the consideration of FRL's creditors and the Assets being extended and acquired by PRL.
Burleigh Nominees Limitedis a nominee company incorporated in the Isle of Man having its registered place of address at Trust Burleigh Manor, Peel Road, Douglas, Isle of Man, IM1 5EP and holds the shares for and behalf of GMT and PPT respectively.
2. INFORMATION ON FEATHERSTON RESOURCES LIMITED (“FRL”)
FRL went into Voluntary Administration and Receivership on December 2013. Plaman Group Pty Limited, an investment group based in Sydney, Australia with core expertise in private investments invited the Company to venture into the formation of PRL to acquire the Assets of FRL subject to and conditional upon the successful Acquisition Bid by PRL (the “Acquisition Bid”) to the amount of AUS4.8 Million pursuant to the laws and regulations of Australia and New Zealand to facilitate a successful bid for FRL.
Diatomite is the fossilised remains of up to 100,000 different varieties of microscopic water-borne algae called diatoms, impregnated with silica. FRL’s diatomite deposits consists mainly of freshwater Black Diatomite, which contains up to 40% carbon (in the form of organic Fluvic and Humic acids) in addition to up to 75% plant available silica. Hence it is very suitable for agriculture as a fertilizer and soil conditioner. It has trace elements important to soil and plant health. It is used as a base to create natural and organic fertiliser that are nontoxic, remediate soils and unlock marginal land. It improves plant resistance to disease, pests. It has high plant availability compared to silica from other mineral sources.
The current price of diatomite in the international market is around USD200 to USD300 per tonne based on FOB value. In Malaysia, the main application of the silica-rich diatomite will be mainly in oil palm plantations, and for rice and sugar cultivation. For oil palm in particular, it improves resistance to Ganoderma, a disease caused by fungus.
Diatomite is mined via open pit quarrying and can be exported in its untreated form.
On the completion of the Acquisition Bid by PRL, PRL shall have an issued and paid up capital of 1000 ordinary shares wherein the Company will have the legal and beneficial ownership of 700 shares representing 70% equity interest and the balance 30% ordinary shares will remain with GMT and PPT as Shareholders proportionately. The shareholding shall be as below:-
FRL shall pursuant to the Agreement, carry out the business of (i) exploration and development of the Reserves and analysing the feasibility of mining activity on the Reserves (ii) prospecting on the Reserve for, and mining on the Reserve, diatomite and other minerals, (iii) carrying out any primary treatment operations on the minerals extracted, (iv) carrying out mining activities (v) undertaking agricultural trials of any diatomite extracted from the Reserves and evaluating its commercial saleability, (vi) marketing the extracted minerals to buyers.
4. RATIONALE FOR THE PROPOSED ACQUISITION OF FRL's ASSETS'
IRIS has the knowledge, the network and the capability to market diatomite for agricultural use and the reasons are as follows:
IRIS already has an Agro Division that utilizes a high technology fertigation farming method to produce high quality, high price fruits and vegetables. The business has been in operation since 2007 andt currently operates 5 commercial farms;
IRIS owns a “Waste to Fertilizer Plant “ in Weinan, People’s Republic of China that is capable of producing 23,000 tonnes of organic fertilizer per year. It has a distribution network to market its fertilizer in PRC; and
Malaysia has 5 million hectares of oil palm plantations. The potential requirement for the silica-rich fertilizer in this sector alone is estimated to be 1.35 million tonnes per year.
The Company, with FELDA as its largest shareholder, hopes to be able to sell the diatomite to FELDA’s related companies engaged in oil palm plantations. Further, IRIS has international operations in more than 20 countries throughout Asia and Africa. It can facilitate access to the fertilizer market in these countries.
5. EFFECTS OF THE PROPOSED ACQUISITION
The Proposed Acquisition will not have any material effect on the Company’s earnings per share, net assets per share, gearing, share capital and substantial shareholder’s shareholding and structure of ICB at year ending 31stMarch 2015. Upon the Agreement becoming unconditional on the success of the Acquisition Bid, Plaman Resources Limited duly incorporated in New Zealand will become the subsidiary of the ICB Group.
6. SOURCE OF FUND
The Proposed Acquisition will be financed through internally generated funds and bank borrowings .
7. DIRECTORS AND MAJOR SHAREHOLDERS’INTEREST
None of the directors, major shareholders, and persons connected with the directors or major shareholders of the Company or any of its other subsidiaries have any interest, direct or indirect, in this
8. APPROVAL REQUIRED
The Proposed Acquisition is not subject to the approval of the shareholders of ICB.
9. DIRECTORS’ STATEMENT
Having considered all aspects of the Acquisition under the Agreement, the Board of Directors of ICB is of the opinion that the formation of the joint venture company and its subscription of 70% equity interest therein is in the best interest of the ICB Group.
10. DOCUMENT FOR INSPECTION
The Agreement shall be available for inspection at the registered office of ICB during office hours at Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, and 59200 Kuala Lumpur for a period of three (3) months from the date of this announcement .
11. HIGHEST PERCENTAGE RATIO
Pursuant to Chapter 10 under Rule 10.06 (1) of ACE MLR, the highest percentage ratio that is applicable to this project is 8.61%
This announcement is dated 5th May 2014.
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