With gold price reaching an all time high, the demand for the precious metal is estimated to continue in the upward trajectory, Malaysia not shy with its own gold deposits is seeing more interested parties venturing mining in gold rich states, Yong Tai Berhad predominantly involved in development has gone into an agreement to mine gold in an area covering 100 hectares located at Bukit Kenderak, Hulu Jerai, Daerah Lipis, Pahang Darul Makmur.
The mining lease currently co-owned by Y.A.M Tengku Fahad Mua’adzam Shah ibni Almarhum Sultan Haji Ahmad Shah Al-Musta’in Billah and Amazing Logic Sdn Bhd, will now include Yong Tai for exploration works.
This comes as the developer seeks to diversify away from its property development and tourism business, which has been severely affected by the COVID-19 pandemic. Eyeing the brownfield project as a viable option for the company to offer a faster return at a lower cost by using existing infrastructure.
The mining agreement is valid for 4 years for the initial term and that the Group could apply for an extension of the mining lease for additional period of five years if the gold deposits in the land are not exhausted. Although the mining area was in operations over the last five years with proven gold mined, Yong Tai believes given a better exploration database and detailed geological models, this will be a reduced risk venture with a huge discount on capital costs.
With average gold price of around RM225,000 per kg, YTB is set to record a revenue of RM4.5 million per month if the mining activities run at the estimated average capacity of 20kg.
As consideration for the rights granted to the Group to carry out mining operation and upon satisfactory completion of the exploration works on the land, the Group would pay RM30 million of a base fee to the Owner over four (4) years, assuming the monthly gold production is at 20kg of gold per month. For all gold extracted in excess of the 20kg monthly production, 7.5% of the gross value extracted during the applicable month would be paid as an excess fee to Mining Lease owner.