Borneo Oil buys quarry land in Sabah

KUALA LUMPUR: Borneo Oil Bhd is acquiring seven parcels of quarry land totalling 38.06ha in Lahad Datu, Sabah, for RM100.58 million cash.

In a filing with Bursa Malaysia yesterday, it said its wholly-owned subsidiary Borneo Oil & Gas Corp Sdn Bhd has entered into sublease agreements with the vendors and marble quarry operator agreements to operate the quarry lands.

The agreements, which will enable it to extract marble blocks for export and limestones (as a by-product) for limestonebased products, is in line with its expansion plan into limestone mining and related activities.

With the acquisitions, the company together with its existing landbank of limestone reserves held for long-term investment will become a substantial player in the supply of high-grade limestone resources, Borneo Oil said.

The company said Sabah is the only state in Malaysia without clinker production and imports over 1.5 million tons of clinker and cement yearly. The setting up of a clinker plant in Sabah is imminent and the main source of feedstock for the production of clinker is limestone.

The seven parcels of quarry land have reserves/resources of 24.54 million tonnes and the sub-lease agreements are for 30 years with an automatic renewal of a further 30 years.

Under the marble quarry operator agreements, Borneo Oil & Gas Corp will be the sole and exclusive operator to the quarry land for 30 years.

The annual production allowable for the seven parcels is 66,934 cubic metres, giving an estimated net income of RM10.04 million a year while the marble portion of the assets is expected to produce a yield of 1.7-9.1% a year.

The operator guarantees first two years minimum 1,000 cubic metres or guaranteed monthly compensation of RM150,000 and from the third year onwards, a minimum 2,000 cubic metres or guaranteed monthly compensation of RM300,000.

The company expects the acquisition to be completed within two months and to contribute to its overall earnings in the future.