SUSPENDED stock Magnus Energy : 41S 0% has inked several agreements to enter the nickel extraction and supply business in Sulawesi, Indonesia, the Catalist-listed company said in a Thursday (Jun 30) bourse filing.

 

MEG Harta Indonesia (MHI), a wholly-owned unit of Magnus, on Jun 14 entered an agreement for the provision of the extraction and supply of nickel ore from mining sites in Kolaka in Sulawesi. MHI and another Indonesian private company, dubbed &ldquo Company A&rdquo , are buyers. The sellers are an entity owned by the Sulawesi regional government and 2 Indonesian private companies.

 

Magnus said that it is unable to disclose the identities of the parties for reasons of confidentiality, and also because it does not have the relevant consent from them.

 

The sellers have agreed to sell an initial quantity of 20,000 metric tonnes (MT) of nickel ore &ndash with a possible addition or subtraction of 10 per cent, Magnus said. The buyers &ndash MHI and Company A &ndash have the option to increase the purchase quantity as the number of shipments grow.

 

MHI also entered another agreement on Jun 13 with Company A, for joint sales and transportation of nickel ore. Company A holds the licence to transport and sell the nickel ore. MHI will be responsible for sourcing the nickel ore and making it ready for shipment, bearing the cost of renting the jetty and loading the nickel ore to the barge or vessel. Both will cooperate for 12 months from the date of signing the agreement.

 

In addition, Company A entered an agreement, dated Nov 15, 2021, to sell the nickel ore extracted from Kolaka to a third-party smelting company. The agreement is for the sale of nickel ore up till Jan 15, 2023.

 

Magnus&rsquo management is planning for and confident that MHI will complete around 15 shipments of nickel ore to the smelter. Each shipment of cargo is expected to comprise 7,500 MT of nickel ore to be transported by barge to the smelter.

 

With these agreements and the required licences, MHI would be able to supply nickel ore of a more sought-after grade to the smelter, located in south-east Sulawesi, at Indonesia&rsquo s monthly mineral ore benchmark price, Magnus said.

 

&ldquo Accordingly, the board is of the view that the entry of the agreements is beneficial to the company and is a crucial step towards enhancing and demonstrating the business viability of the group,&rdquo the company added.

 

Funding for the Kolaka project will be internally sourced from Magnus&rsquo available working capital. The business is expected to contribute positively to the group&rsquo s cash flow, but not expected to have a material impact on earnings per share for the current financial year.

 

MAGNUS Energy Group is seeking an extension of around two months to Dec 11 to submit its proposal for its shares to resume trading, said the firm in a regulatory update on Wednesday.

 

Its shares have been suspended from trading since August 2019, following the release of an external report by Provenance Capital, which was hired by the firm to review selected transactions from 2013 to 2017. The probe had been opened after queries were raised by its former executive managing director, Charles Madhavan.

 

The request for an extension comes because its appointed internal auditor, Nexia TS Risk Advisory, tasked with reviewing the findings of the Provenance report, can release the first draft of its findings and recommendations only around Nov 6. Nexia plans to commence the fieldwork on the Provenance report on Oct 19, and expects to take around two weeks to complete the review.

 

The group will then require approximately one month to implement the recommendations by Nexia, said Magnus.

 

The auditor is at the moment finalising the internal audit report for the company' s annual report for the financial year ended June 30. That will be released no later than Oct 15.

 

Magnus said: " As the review of the issues raised in the Provenance report is an essential step in addressing the concerns that led to the suspension of the company' s shares and would have a material impact on any proposal to be submitted by the company for a resumption of trading, the company is seeking an extension of time of up to Dec 11 to fulfil all the requirements set out by the SGX-ST in relation to the submission of the resumption proposal."