Boustead Singapore

[valuestalker]

Boustead latest announcement:

The Board of Directors of Boustead Singapore Limited (the "Company") wishes to
announce that the Company’s 100% owned subsidiary, Boustead Projects Pte Ltd, has
incorporated a wholly owned subsidiary in Singapore known as BP-BBD Pte. Ltd.
(“BP-BBD”).

Wondering what is BBD, could it be Bombardier inc?
Not speculating, just guessing for the sake of guessing.

Anw, vested.

[Musicwhiz]

Wondering what is BBD, could it be Bombardier inc?
Not speculating, just guessing for the sake of guessing.

Anw, vested.

Well, the last one was pretty obvious - SDV haha. I guess we shall have to wait and see. Methinks there should be another DB&L contract coming up pretty soon. Hopefully, it will push Boustead's leasehold property floor area to >100,000 sqm.

(Vested)

[Musicwhiz]

(Vested)

Business Times - 23 Jan 2012

Boustead takes strategic 8.6% stake in OM Hldgs

Could be precursor to involvement in OM's US$500m smelting project in Sarawak

By VEN SREENIVASAN

(Singapore)

MAINBOARD-LISTED Boustead Singapore has clinched a critical claw-hold in the resources sector through the purchase of an 8.6 per cent stake in Sydney-listed manganese producer OM Holdings (OMH).

The A$17.5 million (S$23.3 million) that Boustead is paying for the 50 million new OMH shares also marks the first step in the Singapore company's participation in the Australian company's ambitious plans to expand downstream into ferro-manganese alloy smelting in Malaysia. The purchase price of 35 Australian cents per share represents a discount of 8.8 per cent to the 15-day and 5.2 per cent to the 30-day volume-weighted average price of OMH's shares on the Australian Stock Exchange (ASX).

OMH, controlled by its Singaporean founder and executive chairman Low Ngee Tong, is one of the top manganese ore producers globally.

On Jan 17, it provided financial guidance to the ASX that although its 2011 financial year would be positive in EBITDA terms, it could post an operating loss after tax of approximately A$12 million after expensing various non-recurring items. On a proforma basis, net loss attributable to Boustead's 8.6 per cent subscription shares would be S$1.4 million.

Still, OMH has been a fast- growing and profitable company which enjoys strong demand for its manganese from markets like China and India. Established 13 years ago and listed on ASX in March 1998, the company's stock has been a constituent of the S&P/ASX 200 index since 2008.

It controls 100 per cent of the Bootu Creek Manganese Mine, located 110km north of Tennant Creek in the Northern Territory. Just over a year ago, it also bought into Tshipi Borwa manganese mine in South Africa.

Recently, it announced plans to invest some US$500 million to build up a vast ferro alloy smelting operation in Sarawak, beside the massive 1,800MW-capacity Bakun Hydroelectric Dam. It has inked an 80:20 joint venture with KL-listed CMS Bhd to set up the joint-venture operation on a 202 hectare site in the Salamaju Industrial Park in Sarawak. The 600,000 tonne ferro alloy plant has signed a deal to tap 500MW of power supply for 20 years from 2013 at a long-term sustainable competitive tariff.

Manganese is the key ingredient in steelmaking, adding tensile strength to the metal. It is also an important chemical component for 200-series stainless steelmaking. Some 90 per cent of the world's high-grade manganese ore is mined in South Africa, with other major sources being Australia and Gabon. The industry has undergone integration in recent years, resulting in the emergence of larger and more dominant players like BHP Billiton, Eramet and Assmang.

Boustead is already an established player in engineering, power and project management. The purchase of the OMH stake appears to be a bid to inject new recurrent income streams to smoothen out its 'lumpy' project-based revenues.

Company CEO and executive chairman FF Wong is also a firm believer in the resources sector.

'Despite the recent pullback in prices for some of the natural resources such as manganese, I firmly believe their demand will continue to be strong and prices will recover in future,' Mr Wong told BT. 'The Chinese and Indian economies, which drive global resource demand, are still growing at high single-digits. As an established global engineering company, we have a lot of expertise which can be deployed in the development of these natural resources, especially in our region. OMH's Sarawak ferro-manganese project makes a lot of sense to us.'

Boustead's investment in OMH could be a precursor to its involvement in OMH's US$500 million smelting project in Sarawak. Boustead's strong financial position (no debt, and a cash balance of some S$200 million) and strong reputation could also ease the way for OMH to raise funding for the massive project, whose other shareholders include the Sarawak state government.

Mr Low told BT that the Sarawak project - which would make OMH one of the top three integrated manganese operations globally - has the advantage of being close to both its manganese sources and a market of 60 per cent of the world's crude steel production base in East Asia.

'It is an excellent place to be in terms of logistics,' Mr Low said. 'The smelter project is a best alternative for steelmakers in the region who realise they cannot be over-reliant on Chinese supply, as well as to secure domestic supply of this essential additive for steelmaking.'

He added that the tie-up with Boustead was synergistically beneficial for both companies.

'In time, we will look into jointly investing in more energy- related industries, with Boustead as the builder and OMH a consumer of energy.'

[greengiraffe]

For details of the Sarawak smelting plant, please google OM Sarawak or search for detail KLSE announcements released by Cahya Mata Sarawak since Jul 2011.

OMH has been quoted as projecting that the turnover of the plant at full capacity is around US$1bn and an aim to secure orders totalling 60% of plant capacity by 2012.

The Japanese partner (2nd largest steel producer in Japan) has under-written 1/6 of the proposed plant capacity and is looking at taking a 30 - 40% stake in the plant.

The major advantage of the plant lies in the cheap and secured energy costs (hydro electric from the infamous Bakun Dam in Sarawak) that is estimated to be less than half that of existing competitors.

[buddy]

Some questions : Does this deal need Om shareholder approval as it is done at deep discount. What do u think will be P&L impact. Lastly a minority stake in a cyclical company is hardly reassuring for a company where we are looking for recurring revenues. Lastly if the reason they are buying a stake in OMH for Sarawak plant - then why not they take a stake in the plant like Japanese partner.

[freedom]

I don't think Boustead is trying to take a stake in the Sarawak plant, Boustead probably is looking at to be a EPC contractor for works in Sarawak plant.

yes, it requires OM shareholders' approval.

[greengiraffe]

1. placement in OM will be completed after OM shareholder meeting in Feb
2. non controlling stake will not contribute much to boustead accounting earnings (no equity accounting) and hence dependent on dividends for cashflow. Based on current state and commodity pricing, unlikely to see much dividends as well.
3. Stake in OM is a step for bigger things - BT speculated smelting plant
4. Be patient. Until the initial stake in OM is completed, the next stage of taking a direct stake in OM Sarawak cannot proceed
5. As a shrewed and extremely conservative company under FF, there is absolutely no reason to buy a non controlling, non equity accounting insignificant stake in a cyclical company for a relatively sizable outlay. In Boustead's history, an investment of this size has not be done. Rationale behind it is very significant.
6. If you bother to find out via all publicly announced info on OMH, Cahya Mata Sarawak levels, the present OMH placement is targeted at kick starting the smelting plant. Without which, OMH will face significant difficulties with a depressed operating environment to proceed with a highly lucrative investments. Hence taking the step to resolve liquidity crunch faced by OMH will paved way for progressive rollout of smelting project that media is clearly hinting Boustead is heading towards.
7. The smelting plant will add significant value to OMH and reduced the operating leverage (cyclical risks) of the miner/trader's - ie business risks profile.
8. All said, as with all mega projects. Until we tie down customers (which is targeted at min 60% of the total capacity) and initial teething problems, all projections remain on paper. Stable cashflow is likely at the earliest in 2015/16 (within 1 - 2 years of plant commencement)

---

I don't think Boustead is trying to take a stake in the Sarawak plant, Boustead probably is looking at to be a EPC contractor for works in Sarawak plant.

yes, it requires OM shareholders' approval.

Everything that is required for the construction of the plant has already been secured - there is nothing that Boustead will be involved in except for $$$$$

http://www.cmsb.com.my/index.php?option=...Itemid=150


Joint Venture between Samalaju Industries Sdn Bhd and OM Materials (S) Pte Ltd
Annual Report
Reference No CMS-11024-F98E7

Company Name: CAHYA MATA SARAWAK BERHAD
Stock Name: CMSB
Date Announced: 24/10/2011

Type: Reply to query

Reply to Bursa Malaysia's Query Letter - Reference ID: TE-111021-40725
Subject: JOINT VENTURE BETWEEN SAMALAJU INDUSTRIES SDN BHD AND OM MATERIALS (S) PTE LTD
Description: JOINT VENTURE BETWEEN SAMALAJU INDUSTRIES SDN BHD AND OM MATERIALS (S) PTE LTD
Query Letter content:
We refer to the Company's announcement dated 20 October 2011, in respect of the
aforesaid matter.

In this connection, kindly furnish Bursa Malaysia Securities Berhad ("Bursa
Securities") with the following additional information for public release:-

1. The reasons for the increase in the estimated cost to USD500 million.
2. The breakdown of the estimated cost.
3. Whether any Raw Material Suppy Agreement has been entered into, including
the duration for the supply. If no, to state the expected date of the agreement
to be entered into.
4. The expected timeframe to conclude negotiations with the off-takers.


Please furnish Bursa Securities with your reply within one (1) market day from
the date hereof.


Yours faithfully



HENG TECK HENG
Head, Issuers
Listing Division
Regulation
IJ/TEK
c.c:- General Manager and Head, Market Surveillance, Securities Commission
(via fax)
Announcement Details/Table Section :
We refer to the Company’s announcement dated 20 October 2011 (Ref: CM-111020-45595) in relation to the above and Bursa Malaysia Securities Berhad’s ("Bursa Securities") letter dated 21 October 2011 (Ref: TE-111021-40725) for additional information on the abovementioned matter.

The additional information requested is as follows:

1. The reason for the increase in the estimated cost to USD500million is shown below:

i. Additional Engineering, Procurement, Construction Management and Indirect Costs ("EPCM") USD9.2 million
ii. Insurance USD2 million
iii. Last Mile Electricity Connection USD3.8 million
iv. Conveyor Belt USD35 million
Total USD50 million

2. The break down of the estimated cost is shown below:
Items Estimated Cost (USD)
Building investment 137,384,400
Plant and Equipment 220,302,400
Consultancy fee 2,513,000
Engineering Design fee 3,300,000
EPCM and Indirect costs 25,000,000
Insurance 2,000,000
Last Mile Electricity Connection 3,800,000
Conveyor Belt 35,000,000
Land and land clearing cost 37,000,000
Contingency cost 33,700,200
Total Estimated Cost 500,000,000

3. Whether any Raw Material Supply Agreement has been entered into, including the duration for the supply. If no, state the expected date of the agreement to be entered into.

The parties are still negotiating on the terms of the Raw Material Supply Agreement, including the duration for the supply. Barring unforeseen circumstances, it is anticipated that the Raw Material Supply Agreement will be concluded by the first quarter of 2012.

4. The expected timeframe to conclude negotiations with the off-takers.

Barring unforeseen circumstances, it is anticipated that negotiations with off-takers will be concluded by the second quarter of 2012.

This announcement is dated 24 October 2011.

[Nick]

Mr F F Wong was the Independent Director of OM Holdings from 5 June 2008 till 12 Dec 2011 so he should be intimate with the Company and the Management's plan for the future.

http://www.omholdingsltd.com/news_announ...o%2067.pdf - [ASX Announcement 12 Dec 2011]

(Not Vested)

[mrEngineer]

Thanks greengiraffe for the jv clarification. I think the justification of Boustead purchase lies within the last 2 paragraphs of the news report. There are definite synergies for Boustead and OMH in regard technical expertise learning and future expansions. I am not sure how is OMH stock price performing now but if FF Wong has established a good relationship with Low, stock price is attractive, good partnership in the future with ability and certainty to scale up operations being one of top manganese producer in the world, this deal will not stop just at Sarawak plant. My 2 cents.

[greengiraffe]

OMH share price is easily available on asx website.

With any mega projects, teething problems are inevitable and hence real cash inflow is likely to flow after 2015/16 at the earliest not withstanding all the necessary steps undertaken to secure offtake for capacity.

Bakun Dam was conceptualised way back to the early 1990s. Energy generation is only commencing recently and hence the heavy industry that is sinking roots in Sarawak now.