Southern Alliance Mining (SAM) says that the temporary suspension of work orders issued by the Minerals and Geoscience Department and the Department of Environment on its 40%-owned joint operation, MCRE Resources (MCRE), have been lifted on Jan 15.

 

The suspension orders were issued based on eight issues relating to erosion and sedimentation control plan matters three issues involving deviations from approved work flows two issues relating to reporting requirements and one issue each pertaining to scheduled waste management.

 

The group says that the suspension of work orders were &ldquo entirely unrelated&rdquo to the water discolouration incident reported in the Sungai Perak in late 2025.

 

The incident occurred in October 2025, where the Department of Environment' s investigations into that incident focused on three mining operations in the upper reaches of Sungai Perak in Gerik as subjects of investigation.

Southern Alliance Mining (SAM) has reported a bigger loss of RM27.3 million ($8.36 million) for the full year ended July 31.

 

However, revenue for the full year grew 20% y-o-y to RM199.5 million. The group says that this growth was driven by a new revenue stream from bauxite sales during the financial year.

 

Gross profit for the FY2025 declined 66% y-o-y to RM3.1 million due to softer iron ore prices in the steel industry, which led to a substantial y-o-y decline in average realised selling price (ARSP) for iron ore products.

 

The year saw challenging pricing environments, with general decline in the ARSP across iron ore products in FY2025.

 

Despite this, the group says that iron ore concentrate sales volume rose by 22% y-o-y, crushed iron ore sales volume surged by 350% y-o-y, and iron ore tailings sales volume grew by 5% y-o-y. The increase in volume results from previous investments in underground mining at the Chaah Mine concession.

 

In the full year, the group recognised a total sum of RM26.1 million in non-cash impairment losses.

 

These impairment losses arose primarily from a RM18.9 million non-cash impairment loss on the group&rsquo s mining assets due to the slowdown in demand for iron ore products from the steel industry and lower price projections a RM5.0 million non-cash impairment loss relating to the investments in joint ventures following the non-renewal of exploration licences in Sabah, Malaysia, which were acquired as part of earlier portfolio expansion efforts and a RM2.2 million non-cash impairment loss on the investment in a joint venture with an iron ore mining site in the state of Pahang, Malaysia.

 

For illustrative purposes, SAM&rsquo s loss before tax would have been RM5.4 million instead of a loss before tax of RM31.5 million if these impairment losses were excluded.

 

SAM reported a positive operating cash flow of RM4.4 million in FY2025, and cash and bank balances as at end June stood at RM113.8 million.

 

Southern Alliance Mining is guiding for a higher net loss for the full year ended July 31, compared to the previous financial year.

 

This net loss is mainly due to lower average realised selling price as iron ore prices continue to soften and several non-cash impairment losses including in respect of the group&rsquo s mining assets arising from the slowdown in demand for iron ore from the steel industry.

 

Southern Alliance Mining also saw a non-cash impairment loss on the group&rsquo s investments in joint ventures, following the non-renewal of exploration licenses for projects in Sabah Malaysia, and a non-cash impairment loss on its investment in a JV with an iron ore mining site in Pahang.

 

Southern Alliance Mining (SAM) has issued a statement on the alleged involvement of its managing director Pek Kok Sam in a mining scandal in Sabah. The group and Pek &ldquo collectively strongly deny and refute the allegations, which are highly defamatory and factually incorrect&rdquo , the statement reads.

 

Pek has been identified as the financial backer of Albert Tei, who has been charged on Monday alongside assemblymen Yusof Yacob and Andi Suryady Bandy with bribery in exchange for helping to facilitate the approval of a mineral prospecting licence. The bribes were alleged to be over RM350,000.

 

Tei released covert videos showing state lawmakers engaged in bribe negotiations with him, implicating several prominent figures in Malaysia&rsquo s second-largest state.

 

On July 2, the Malaysian Anti-Corruption Commission (MACC) launched an investigation into Pek, who is accused of bankrolling efforts to secure lucrative mining concessions in Sabah.

 

SAM&rsquo s bourse filing on July 4 sets out three facts. It claims that the group formed joint ventures with partners Teguh Permata (TPSB) and Bumi Kinabalu Resources (BKRSB) who had already obtained prospecting licenses for exploration activities, after becoming aware that the Sabah state had issued these licences to various parties.

 

Next, SAM says that it appointed a legal counsel to undertake the acquisitions which were disclosed in its full year results for the FY2023. There, Tei was not mentioned as a director or shareholder or officer of any of the above mentioned entities.

 

&ldquo Payment of consideration for the acquisition of these companies by the company were made directly to the promoters of these respective companies. This is contrary to the allegations made in the articles,&rdquo the statement reads.

 

Finally, SAM says that it would like to reiterate that no funding to any party for the purposes of obtaining mineral licence by way of political corruption and/or bribery for any projects was provided by the group nor Pek.

 

SAM has issued a letter of demand for the defamatory statements and lodged a police report, and says that the group and Pek will fully cooperate with any investigative authorities if necessary.

Southern Alliance Mining  

On Apr 21, Southern Alliance Mining (SAM) managing director Pek Kok Sam acquired 105,600 shares at an average price of S$0.53 a share. This took his total interest in the Catalist-listed stock from 63.59 per cent to 63.61 per cent. His preceding acquisition was back in late 2024, with the bulk of shares bought at an average price of S$0.410 per share.

 

SAM is a high-grade iron ore producer based in Pahang. It is also diversifying into rare-earth mining and continuing gold exploration, emphasising adaptive growth strategies and responsible mining practices.

 

Pek oversees the group&rsquo s business operations, focusing on quality analysis and control, safety and environmental standards, and site management. He is also a co-founder of SAM. The group&rsquo s primary mining asset, the Chaah Mine, is an open pit mine covering 225.7 hectares with established infrastructure, including fixed crushing plants, mobile crushers, and beneficiation plants, capable of producing 60,000 tonnes of iron ore concentrates monthly. 

 

Back in March, SAM announced its first-half FY2025 (ended Jan 31) revenue declined by 23.8 per cent from H1 FY2024 to RM70.3 million. This decline was attributed to weaker realised iron ore prices, influenced by global economic uncertainties, and slowing demand from China&rsquo s steel industry. Despite the impact on revenue from softer iron ore prices, SAM maintained that it had increased its iron ore sales volumes, reflecting sustained market demand.

 

On Apr 3, two years after SAM initially entered the rare-earth mining sector, it proposed further diversification into the sector by proposing the acquisition of a 40 per cent stake in MCRE Resources (MCRE). The total purchase consideration for the proposed MCRE acquisition is RM242.4 million. This amount includes RM219 million (approximately S$66.2 million) through the issuance of 147,982,380 new ordinary shares at S$0.4471, representing 23.2 per cent of the enlarged share capital.

 

Pek highlighted that the MCRE acquisition will position the group at the forefront of the rapidly growing global rare earth market. He added that the investment in MCRE&rsquo s operational Gerik Mine, which utilises environmentally friendly in-situ leaching technology, also underscores a commitment to sustainable resource development. In-situ leaching does not involve massive land clearing, unlike traditional open-pit mining, making it economical and eco-friendly.

 

Pek also noted that as global demand for rare earth metals continues to surge across critical industries &ndash from renewable energy to advanced electronics &ndash this acquisition strategically aligns the business with the future of technological innovation.

Hours after Donald Trump announced on &ldquo Liberation Day&rdquo steep tariffs on a slew of countries worldwide, Malaysian mining businessman Pek Kok Sam was in Singapore lamenting, like many others, the strong-arm tactics of the US president to get America&rsquo s trading partners to play ball with him.

 

&ldquo It&rsquo s harder to do business now with Trump back as president,&rdquo Pek, co-founder and managing director of Malaysia-based Southern Alliance Mining (SAM), told The Edge Singapore on the sidelines of a recent business event in the city-state. &ldquo Business sentiment across industries is fragile. There is cause for concern.&rdquo

 

Pek&rsquo s reaction echoes that of many business and political leaders worldwide as they mull the ramifications of Trump&rsquo s sweeping tariffs. These tariffs are stoking fears that hyperinflation will return and that the global economy will grind to a halt.

 

Beijing has already responded with its own tariffs on US goods entering China. In typical Trump style, the US president has threatened to impose additional import taxes on China if it does not withdraw its tariffs on US goods.

 

The showdown is fuelling the prospect of an all-out trade war between the world&rsquo s two largest economies and fanning concerns that the rest of the globe would be collateral damage.

 

On its part, Malaysia was slapped with a 24% tariff on its exports to the US. Prime Minister Anwar Ibrahim has said the country&rsquo s GDP growth forecast of 4.5%&ndash 5.5% for this year will need to be revised but stopped short of calling recession the worst-case scenario for Malaysia.

 

Under these circumstances, Pek is convinced that diversification has become all the more important for SAM, which has been mining iron ore from its flagship Chaah mine in Johor since 2008. Pek, who owns nearly two-thirds of SAM, has more than two decades of experience in mining and exploring for iron ore, tin and limestone.

 

SAM sells iron ore concentrates to steel mills and trading companies in China and Malaysia. These concentrates are refined iron ore with higher iron content and fewer impurities. They are a key ingredient for making steel.

 

SAM enjoyed several years of heady profits during China&rsquo s property market boom, which propelled demand for iron ore as steel mills went into overdrive to meet orders from developers and construction companies.

 

The iron ore producer&rsquo s earnings more than doubled to RM148 million ($45 million) for the financial year ended July 31, 2021, from RM62 million for the previous year. China&rsquo s housing market upturn peaked between late 2020 and early 2021.

 

All that unravelled shortly thereafter as China started reining in runaway property prices. Developers, many of which had borrowed heavily to buy land to build homes, found themselves struggling to service their loans and sell their projects as banks tightened credit, even to potential homebuyers.

 

Iron ore prices, in turn, plummeted and have stayed weak ever since. While demand from China fell, supply from major iron ore producers like Rio Tinto and BHP continued going up as their low production costs enabled them to remain profitable. This, however, kept overall selling prices low, eroding margins for smaller producers like SAM.

 

Catalist-quoted SAM incurred an RM10.3 million loss for the six months ended Jan 31 as revenue tumbled 24%. During that period, it produced more iron ore for sale but had no pricing power. It was also in the red for the last two financial years.

 

While SAM sought to diversify beyond iron ore in 2021, progress has been limited. That year, it formed a joint venture with the Sultan of Johor to explore for gold across 178 sq km of adjoining land in the state.

 

&ldquo This is a very large gold mine. We won&rsquo t be able to focus on it if we want to continue running other mining projects as exploration will be very time-consuming,&rdquo said Pek. By comparison, SAM&rsquo s iron ore Chaah mine spans 2.3 sq km. &ldquo We will hold off exploration at the gold mine for now.&rdquo

 

Rare earths

However, SAM is going full steam ahead with the mining and production of rare earth elements. It announced on April 3 that it would acquire a 40% stake in MCRE Resources for RM242.4 million.

 

Headquartered in Kuantan, the capital of Pahang state, MCRE is licensed to find and extract ion adsorption clay rare earth minerals from a 21.6 sq km mine in Perak. Such minerals contain heavy rare earth elements that are essential for clean energy, defence technology and electronics, among other things.

 

MCRE started mining and processing in 2022 and exported its first batch of rare earth carbonates in February the following year. It has since sold about 16,105 tons of such carbonates. It has an offtake agreement with China Rare Earth Group, an entity formed a few years ago from the merger of several Chinese state-owned enterprises.

 

MCRE has about 84.9 million tons of rare earth reserves, according to data certified by the JORC Code, an international rulebook that helps mining companies report how much metal or minerals they have in the ground.

 

MCRE relies on in-situ leaching, which dissolves valuable minerals in the ground into a solution and pumps it to the surface for collection and processing. This technique ensures minimal surface disturbance, costs less than conventional mining, and is safer for workers.

 

The rare earth miner generated an after-tax profit of RM32.5 million for the 12 months ended July 31, 2023. This rose to RM36.6 million the following year. For the half-year ended Jan 31, 2025, it made a profit of RM52.9 million and had RM53.3 million in cash.

 

SAM will issue nearly 148 million new shares at 44.71 cents each to fund the bulk of the RM242.4 million acquisition. The shares represent nearly a quarter of the company&rsquo s enlarged share capital. The remaining RM23.4 million will be funded using cash, to be paid over four years.

 

The price tag of RM242.4 million is about 23.3% less than the RM316.2 million independent valuation accorded for 40% of MCRE by SRK Consulting, a mining consultancy founded in Johannesburg, South Africa, in 1974.

 

The acquisition is an interested person transaction as Pek and several SAM executives are among MCRE&rsquo s eight shareholders. Pek is the second-largest owner, with a stake of 17.3%. The largest shareholder is Qingdao Joyful Investment, which owns 36% of MCRE.

 

The acquisition requires the approval of SAM&rsquo s shareholders, who will cast their votes at an EGM to be convened soon. SAM will appoint an independent financial adviser to assess the deal, which comes as China has imposed new export controls on several rare earth elements in response to Trump&rsquo s steep tariffs.

 

The export curbs by China, the world&rsquo s largest supplier of rare earth elements, are likely to hit US companies that make defence and communication equipment and advanced technologies.

 

Inorganic growth, other minerals

Given MCRE&rsquo s profitability, will SAM avoid a third straight year of loss with this acquisition?

 

On a pro forma basis, SAM would have generated earnings of RM0.016 per share if it had completed the acquisition on Aug 1, 2023, versus a loss per share of RM0.0091 without the deal. It incurred a loss of RM0.021 per share for the first half of its current financial year ending July 31.

 

More acquisitions could be in the works as the company wants to fast-track its return to profitability, according to Lim Wei Hung, SAM&rsquo s chief operating officer and a shareholder of MCRE.

&ldquo We will have to explore inorganic growth. These (targets) will be beyond Johor but within Peninsula Malaysia,&rdquo Lim said. &ldquo We are considering various other minerals. These are projects that do not require us to do intensive exploration work. Exploration will take time and burn cash.&rdquo

 

For this reason, SAM will postpone the proposed acquisition of all of Paramount Synergy, a firm majority-owned by Pek that is exploring rare earth minerals at an 18.6 sq km mine in Johor.

SAM first announced the proposed purchase of Paramount Synergy in April 2023. Earlier this month, it said it would not proceed with the deal for now as a lot more money and work is needed to get the greenfield project compliant with the JORC Code.

 

Besides rare earths, other minerals SAM is considering include bauxite and silica, Lim said. &ldquo It&rsquo s not only rare earths but also other mineralisation that we can convert into cash quickly.&rdquo

Bauxite is the main raw material used in the production of aluminium. Silica is highly versatile and can be found in glass, electronics, solar panels, rubber, and water filtration systems.

Fortunately for SAM, its balance sheet is still strong despite the downturn in its core iron ore business. This should help it bankroll its acquisition-driven expansion plans. As at Jan 31, the company had net cash of about RM102 million and retained earnings of RM277 million.

 

While it presses on with plans to diversify into other commodities, SAM is expected to keep ramping up iron ore production to drive revenue higher and generate cash flows, even if selling prices continue to stagnate.

 

The company has started underground mining at the Chaah mine after years of open-pit mining. Going deeper underground is expected to yield better-quality iron ore than surface mining.

&ldquo Iron ore production will continue to increase and ore grades should be higher,&rdquo said Pek.

In the future, part of your smartphone, laptop, tablet, electric car, or other high-tech devices could come from Southern Alliance Mining &rsquo s (SAM) work. The Malaysian mining company is expanding its operations from mining high-grade iron ore to extracting rare earth elements (REEs), a critical component of many advanced technologies and gold.

 

&ldquo No matter how big our resources and reserves of high-grade iron ore are, we will always be peanuts compared to even the junior miners in, say, Australia. To grow SAM, we have to move into other materials that are valuable and available in Malaysia. REEs are in very high demand and gold is of high value,&rdquo says its executive director and chief operating officer Lim Wei Hung.

 

To speed up its diversification, the firm is in the process of purchasing a 40% stake in MCRE Resources, which operates an ion adsorption clay rare-earth mine in Malaysia, and a 100% stake in Paramount Synergy, which has been appointed to carry out exploration for REEs in an area spanning 1,863ha in Johor, Malaysia.

 

At the same time, SAM is poised to be a leader in environmental, social and governance (ESG) practices, though it does not see its progress that way. &ldquo We&rsquo re doing things that boost our sustainability, benefit staff and people who live near our mining areas, and so on, but, to us, this is just about doing the right and smart thing. It&rsquo s so central that we don&rsquo t consider it ESG.&rdquo

 

For example, it picked MCRE and Paramount partly because they use in-situ leaching to mine REEs. This does not involve massive land clearing, unlike traditional open-pit mining, making it economical and eco-friendly. It will also launch an energy audit this year to help reduce its usage and is considering using solar power. Both are green steps that will reap savings, too.

 

&ldquo Even taking care of your mining areas&rsquo surrounding communities &mdash it&rsquo s not just the right thing to do because you are disturbing their lifestyle with your mining. It benefits you, too. In this industry, you need many workers. When you hire locals, you uplift them and build a stronger relationship. You avoid problems for yourself with the local communities.&rdquo

 

Thriving through diversity

In the next three to five years, the firm will also identify more areas for exploration and build up its land bank. This will give it more options. Lim explains: &ldquo When you have more resources, you have better and broader possibilities. Take refining. When it comes to refining materials, cost matters, and volume affects cost. We need volume.&rdquo

 

In an increasingly volatile world and business landscape, it is also engaging in cost mapping to manage its supply chains and risks. The Russia-Ukraine war is a sobering case in point. The ongoing conflict temporarily disrupted the two countries&rsquo considerable exports of ammonium nitrate, a crucial ingredient in the explosives that SAM uses for mining.  

 

&ldquo We have to ensure we are not caught off-guard by such shocks and trends. That includes studying governments&rsquo policies, especially for REEs, which are already becoming a geopolitical issue. What is China&rsquo s policy towards REEs? How is it going to affect us? What is our alternative supply of materials if something happens? We have to study all of this,&rdquo Lim elaborates.

 

&ldquo The good thing is that we have a wide range of people on our board. We have our engineers, accountants, lawyers and more. They provide insight and input from different perspectives. Any one person may focus too much on their area of expertise and miss certain things, so our diversity makes us stronger.&rdquo

 

SAM also has long-serving veterans in its management ranks who have proven their capability and commitment to the firm over the years. With them overseeing its day-to-day operations, the top management can focus on setting the company&rsquo s direction and developing its roadmap. &ldquo We&rsquo re also very fortunate to have reliable suppliers and supportive customers.&rdquo

 

Furthermore, with a lean organisation of only about 160 employees, operational information flows quickly from the ground to management, enabling fast, informed decisions. Lim adds: &ldquo By being honest and sticking to the right and best practices in our work, we have earned the Malaysian authorities&rsquo trust.&rdquo

 

Thinking of tomorrow

With over a decade in the company under his belt, Lim is also passing on his knowledge and mentoring employees to groom the next generation of leaders. &ldquo I truly believe that everyone has the potential to be a leader and we need to secure business continuity. You can&rsquo t rely on just one layer of people. You need a second- or third-tier that can step up if necessary.&rdquo

 

During operational meetings, he gives staff opportunities to clarify their thinking and shine. &ldquo I ask questions &mdash why do you want to do this or that, what are the things you must consider, what do we need to do? If you convince me, we proceed. If something happens, what caused it? What did we learn? What should we do in future? I give that kind of direction.&rdquo

 

His role model is the firm&rsquo s co-founder and managing director, Pek Kok Sam, who took him under his wing and supported him during a difficult time. When Lim joined SAM in 2013 as its chief financial officer, his main task was to shepherd its bid to list on the Singapore Exchange . When iron ore prices collapsed in 2014, however, all his efforts came to nought.

 

&ldquo We tried very hard to save the bid but failed. When we had to shelve it, it really felt like the end of the world, but my managing director got me to see it as only a setback. He motivated me to push through it and keep working. That had a big influence on how I manage my team. I want to be the type of leader that gives others courage and perseverance.&rdquo

 

When iron ore prices significantly recovered in 2019, Lim led SAM&rsquo s renewed attempt at the listing, putting together and submitting its application within four months. &ldquo It wasn&rsquo t easy, but we did it. When we got listed in 2020, it was like seeing the birth of your baby. Now, we are more determined than ever to ensure our baby grows up well.&rdquo

 

For Lim, this tenacity, resilience and mutual support will propel SAM forward. &ldquo When I look back, all the happy and sad moments made me who I am now &mdash a better, more understanding and stronger person and leader. I&rsquo m grateful for this and want to continue to learn from and teach others. It&rsquo s like that saying: if you want to go far, go together.&rdquo

Southern Alliance Mining has guided for a gross loss for 1HFY2025 ended Jan 31, 2025, compared to a gross profit reported in the same period a year ago. 

 

The group is also expecting to report a higher net loss for 1HFY2025, mainly due to a decrease in average realised selling price for iron ore concentrate, crushed iron or iron ore tailing for the reporting period, which was influenced by the slowdown in demand from China&rsquo s steel industry. 

 

The group expects to announce its results by March 17, 2025. 

Between Nov 18 and Nov 19, Southern Alliance Mining : QNS 0% managing director Pek Kok Sam acquired 127,400 shares at an average price of S$0.410 a share. This took his total interest in the Catalist-listed stock from 63.56 per cent to 63.59 per cent.

 

Southern Alliance Mining is a high-grade iron ore producer based in Pahang, Malaysia. Established in 2019, the group operates the Chaah Mine in Johor and focuses on mining and processing high-grade iron ore for various industrial applications. It is also diversifying into rare-earth mining and continuing gold exploration, emphasising adaptive growth strategies and responsible mining practices.

 

Pek has more than 20 years of experience in the mining and exploration of iron ore, tin and limestone. He began his career in limestone quarrying in Malaysia, his focus from 1993 to 2005. Currently, he oversees Southern Alliance Mining&rsquo s business operations, particularly quality control, safety, environment and site management. Additionally, he serves as a council member of the Malaysian Chamber of Mines.

 

Pek observed that during the group&rsquo s FY2024 (ended Jul 31), the iron-ore market was volatile due to China&rsquo s economic slowdown, but the business navigated these challenges by remaining agile and optimising operations. This was amid fluctuating prices and increasing demand for sustainable mining practices.

 

He also expects iron-ore prices to be influenced by Chinese government stimulus measures, with large-scale infrastructure investments and real estate market stabilisation efforts expected to drive a strong demand for steel, potentially increasing iron ore prices with a premium on high-quality ores to reduce carbon emissions.

 

In FY2024, Southern Alliance Mining shifted to full underground mining at the Chaah Mine, enhancing efficiency and reducing environmental impact. This change is also expected to boost extraction speed and competitiveness. Despite initial production dips, the group is optimistic about overcoming these challenges with ongoing training and optimisation, aligning with the rising demand for sustainable &ldquo green steel&rdquo . 

Southern Alliance Mining (SAM) is a Malaysia-based, producer of high-grade iron ore products, principally involved in the exploration, mining and processing of iron ore for subsequent sale. SAM sells iron ore concentrate of low level of impurities with Fe grade 62% to 65% to steel mills and trading companies in Malaysia and China, pipe coating materials that are crushed iron ore for subsea pipes, and iron ore tailings. SAM has also been granted the right to carry out exploration and mining operations at 5 potential iron ore mines located in Johor, Malaysia, and its primary mining asset, the Chaah Mine, is an open mine pit consisting of 2 mining leases and covers an aggregate area of 225.7 hectares.

 

1. Describe Southern Alliance Mining QNS 0.00% &rsquo s (SAM) main business.

 

SAM is a high-grade iron ore producer in Malaysia with over a 14-year track record in the exploration of minerals. The group has a monthly production capacity of about 60,000 tonnes of iron ore concentrates. In recent years, the group has enacted strategic initiatives such as joint ventures and the signing of MOUs to venture into gold and critical minerals such as rare earth elements (REEs) exploration, to diversify its operations.

 

2. Tell us more about REEs. What are they and why are they important?

 

REEs are a group of 17 elements that are vital for many modern technologies. They are used in the production of high-performance magnets, batteries and other critical components for green technologies like wind turbines and electric vehicles (EVs). REEs can also be found in smartphones, TVs, ceramics and glasses. As the world moves towards sustainable practices, the demand for REEs has risen sharply, making it a lucrative market.

 

3. How does SAM plan to penetrate this industry?

 

China is at the forefront of the REEs market, accounting for 60% of production and 90% of processing activities globally. However, new projects and deposits, such as those in Malaysia, coupled with supportive government policies, are contributing to a geographical diversification of the market.

 

According to Malaysia&rsquo s Prime Minister Anwar Ibrahim, the country&rsquo s rare earth industry is expected to contribute RM9.5 billion ($3.13 billion) to the country&rsquo s GDP in 2025 and generate 7,000 jobs. This growth prospect is underpinned by a fragmented market with various players, including Lynas Rare Earths. Malaysia is also enhancing its REEs mining and production capabilities, underscored by only allowing the export of rare-earth raw materials that have been processed in Malaysia.

 

With two acquisitions scheduled to be completed in 2H2024, SAM is well-positioned to foray into the rare earths industry, focusing on the mining method of in-situ leaching (ISL) that is known for its minimal environmental impact to extract REEs. The two target companies &mdash MCRE Resources Sdn Bhd and Paramount Synergy Sdn Bhd &mdash also have substantial deposits of REEs and MCRE is also a pioneer in implementing advanced Chinese mining methods.

 

4. How do advanced mining methods make the mining process more environmentally friendly?

 

The mining method mentioned here refers to the employment of ISL, a minimally invasive method that injects a leaching solution into the ore body to dissolve the REEs, allowing for extraction with minimal surface disturbances.

 

This method is particularly favoured for deposits where traditional mining methods would cause significant ecological impact. The environmental benefits brought about by this method would reduce surface disruption, minimising the need for deforestation and soil removal. Furthermore, as ISL uses a closed-loop system to recirculate the leaching solution, it significantly reduces water consumption and pollution.

 

5. What are some market opportunities and how is SAM leveraging them?

 

Critical Minerals: The REEs market is experiencing a significant surge, projected to expand from US$11 billion ($15 billion) in 2023 to US$34.3 billion by 2032, growing at a CAGR of 13.1%. These elements, particularly neodymium and dysprosium, are indispensable in manufacturing high-performance magnets for wind turbine generators, EV motors and consumer electronics such as headphones and smartphones.

 

Gold: Prices have seen a steady climb since 4Q2023, with prices trading close to US$2,200 per ounce in March. While gold is expected to maintain its upward trajectory, market analysts predict significant volatility, suggesting that we may see prices oscillate at historically high levels.

 

Iron Ore: The global outlook for the high-grade iron ore market is mixed. Bearish analysts say the anticipated demand surge, driven by China&rsquo s economic recovery, has yet to materialise. Coupled with new iron ore supply entering the market and current inventories remaining ample, iron ore prices tumbled from a January high of US$140 per tonne to US$107.20 per tonne in March. Conversely, bullish analysts draw attention to strong financial performances by key industry players as well as China&rsquo s iron ore imports, which have increased 8.1% y-o-y in the first two months of 2024, signalling that the market may see brighter days ahead.

 

6. Given the presence of big players like Lynas already operating in Malaysia, what are some of MCRE or Paramount&rsquo s competitive advantages that set them apart?

 

The REEs found in the mines of SAM&rsquo s target companies are ion adsorption clay REEs, which differ from normal rare earth ores. The extraction method for ion adsorption clay REEs is more cost-effective and incorporates a simplified processing approach, resulting in products with higher market value.

 

Environmentally, the current technique adopted by MCRE and the nature of the ore offer substantial benefits such as minimal habitat disruption, reduced waste generation, and lower energy consumption.

 

7. Could you share more about SAM&rsquo s target companies MCRE and Paramount? Are they operational and will they immediately start contributing to SAM&rsquo s financials after the completion of the acquisitions?

 

MCRE is the first Malaysian company to utilise an advanced mining method in Malaysia, marking a significant step forward in the local mining industry. It is headquartered in Kuantan, with its primary mining operations based in Perak, focusing on the exploration, mining, processing, and sale of lanthanide minerals and non-radioactive REEs. MCRE boasts a substantial mining area of 2,161ha with an estimated 33,000 tonnes of rare earth oxide. MCRE is an operational mine and once the acquisition is finalised, SAM will be able to start recognising 40% of its economic interest in the mining, processing and sale of REEs.

 

Paramount owns a 100% interest in a substantial area of identified mineralised zones in Johor, amounting to 1,863ha. Paramount is engaged in the exploration, mining, processing and sale of ion adsorption clay rare earth minerals in Malaysia. It is currently in the exploration phase of its activities and 1,200 holes have been drilled to date. The acquisition is not expected to contribute to SAM&rsquo s financials in the immediate term. Upon the finalisation of the acquisition, SAM will commit the requisite resources to develop the mine into an economically viable project that contributes positively to SAM&rsquo s revenues and earnings.

 

8. For SAM&rsquo s joint venture in gold exploration, could you share the rationale behind entering this market? What is the status of the project?

 

SAM&rsquo s strategic decision to venture into gold aligns with the industry trends of robust demand and sustained price increases. SAM&rsquo s entry into gold represents a diversification of its minerals portfolio, which could provide a hedge against the cyclical nature of commodity markets and contribute to a more stable revenue base and earnings. SAM will soon provide updates on the progress of its gold exploration project at its Tenggaroh Mine, Mersing, which consists of six prospecting licenses covering an area of 17,768ha. The group is currently implementing a 20-drill hole programme on the back of significant gold mineralisation results from the sample obtained.

 

9. Can you elaborate more about SAM&rsquo s recent financial performance?

 

Given that SAM&rsquo s main operations are still the mining, processing and sale of iron ore, the group&rsquo s financials will be significantly tied to the price of iron ore. Iron ore prices soared during 2020&ndash 2021, leading to strong revenues and earnings. However, due to the weakness in the Chinese economy from 2022&ndash 2023, prices of iron ore have declined significantly and remained volatile. Management of SAM remains optimistic that the worst might be over despite volatile iron ore prices due to the uneven recovery of the Chinese economy. SAM recorded RM92.2 million in revenue for 1H2024, a 76.6% increase compared to 1H2023. If prices of iron ore remain stable or even surprise on the upside as some analysts have projected, management expects SAM to return to the black.

 

In addition, the higher stripping ratio due to overburden removal in FY2022 and FY2023 posed significant challenges to SAM&rsquo s financial results. Consequently, SAM has recently switched to the underground mining method from the open mining method, which will enable us to minimise massive waste removal works. Currently, SAM is still in the transitional period, and underground infrastructure and development works are ongoing according to the planned phases (with some ores extracted). Once these works are completed for the respective phases, mining works will commence.

 

10. What are the mid- to long-term catalysts for SAM?

 

SAM will be providing quarterly updates on its gold exploration project. Additionally, the expected closing of its acquisitions of the REEs companies in 2H2024 will further diversify and fortify the group&rsquo s future revenues and earnings. Although a foray into these markets is not expected to significantly contribute to SAM&rsquo s financials in the immediate term, leveraging gold and REEs will enable SAM to diversify beyond iron ore, reducing risks and stabilising income sources. Additionally, following the MOUs and the expected closing of the acquisitions of the two target REE companies in 2H2024, SAM will represent the first company listed in Singapore with REE exposure. A gradual recovery in iron ore prices will also enable SAM to achieve a more robust financial performance.

 

Southern Alliance Mining has reported a net loss of RM0.8 million ($233,155.76) for the 2HFY2023 ended July 31, which is narrower than the net loss of RM7.0 million for the 1HFY2023 and narrower than the net loss of RM3.1 million in the 2HFY2022.

 

The lower net loss on a h-o-h basis was attributed to the higher revenue and gross profit instead of a gross loss in the 2HFY2023.

 

For the FY2023, the group reported a loss of RM7.8 million, down from its earnings of RM16.3 million in the FY2022. This was said to be due to the intense overburden removal activities, which stood in line with the group&rsquo s mining schedule.

 

Gross revenue for the 2HFY2023 fell by 10.3% y-o-y but rose by 37.8% h-o-h to RM71.9 million.

 

Gross profit for the period stood at RM2.0 million, up from the loss of RM5.5 million in the 2HFY2022 and up from the loss of RM2.8 million in the 1HFY2023.

 

For the 2HFY2023, the group also made a profit before tax of RM541,000, compared to the RM5.9 million loss in the year before and the RM10.2 million loss in the 1HFY2023.

 

Gross revenue for the FY2023 fell by 30.6% y-o-y to RM124.1 million mainly due to the lower production of iron ore concentrate from the intense overburden removal activities and the transition from open pit mining to underground mining. Iron ore concentrate also saw a lower average selling price (ASP) during the period.

 

For FY2023, the group saw a gross loss of RM833,000, down from a gross profit of RM28.0 million as the lower revenue outweighed the decrease in cost of sales. During the year, the group&rsquo s gross profit margin (GPM) fell to -0.7% from 15.7% in FY2022.

 

Loss per share stood at 1.59 sen for the year.

As at July 31, cash and cash equivalents stood at RM145.8 million.

 

No dividends were declared for the period, compared to the final dividend of 0.22 cents per share that was declared at the end of the FY2022.

 

In its Sept 26 press release, the group said that its dedicated exploration activities have resulted in a &ldquo significant increase in iron ore resources along with a promising indication of mineralization at the Tenggaroh gold prospect&rdquo .

 

In FY2023, the group collected 358 samples from the 31 trenches excavated and found that over 50% of the samples &ldquo s marked the presence of significant gold mineralization&rdquo in one of its lots.

 

&ldquo These positive developments are representative of early signs of success of the group&rsquo s planned drilling programme. In line with its expansion strategy, the group will look to add drilling machinery and additional manpower in the project area to support the growth of the Tenggaroh prospect,&rdquo says the group via its release.

 

At the group&rsquo s Chaah Mine, the group says it is confident of the mine&rsquo s prospects after having extracted around 80,000 tonnes of ore during the development stage at the mine&rsquo s northern extension zone.

 

&ldquo Going forward, [the group] intends to convert the Southern extension open pit mining zone to underground mining and is in the midst of evaluating the mine design,&rdquo says the group in its release.

&ldquo The group&rsquo s drilling and exploration work are rendering expected results. We are building a sustainable mining plan for our Chaah Mine to not only focus on increasing production reliability but also reducing our carbon footprint as we extract the extensive iron ore deposits. Furthermore, we&rsquo ve seen exciting developments at the Tenggaroh prospect as we have narrowed down the mineralisation target zones and aim to begin drilling in 2024,&rdquo says Dato&rsquo Sri Pek Kok Sam, the group&rsquo s managing director.

 

&ldquo We are monitoring global economic developments and their effect on iron ore and gold prices in order to capitalise on market opportunities in the future. We will continue to invest in our expansion and diversification strategy and focus on establishing sustainable revenue streams in order to unlock greater value for our shareholders moving forward,&rdquo he adds.

 

Southern Alliance Mining QNS 0.00% is guiding for a net loss for its FY2023 ended July 31 on the back of a decrease in revenue.

 

In a filing, the company says the decrease in the production of iron ore concentrate is a result of intense overburden removal activities in accordance with its mining schedule as well as the transition from open pit mining to underground mining.

 

As such, the lower sales volume of iron ore concentrate coupled with a lower average realised selling price for iron ore concentrate for FY2023 have resulted in a lower revenue for the company.

 

The company will be announcing its FY2023 results by Sept 26.

Southern Alliance Mining has announced a 10-year extension for its mining lease of Chaah Mine in the Malaysian state of Johor.

 

On July 12, the Director of Lands and Mines Office of Johor granted a 10-year extension for the mining lease of Chaah Mine, located at Lot 3533 Mukim Chaah Bahru, Daerah Batu Pahat, Johor.

 

The renewed mining lease came into immediate effect and will continue to July 11, 2033, superseding the previous mining lease granted in 2014. There are no other changes to the terms and conditions of the new mining lease.

 

Advertisement

 

The renewed mining lease will allow the company to continue dedicating its efforts on development of the Chaah Mine, says managing director Pek Kok Sam in an SGX filing on July 19.

 

He adds that Southern Alliance Mining is grateful to the mining leaseholder, DYMM Sultan Ibrahim Sultan Iskandar of Johor and the State Government of Johor, Malaysia for granting the extension for the mining lease.

 

Southern Alliance Mining (SAM) QNS 0.00% signed a memorandum of understanding (MOU) to acquire two rare earth mines in Perak and Johor Bahru in Malaysia, just two weeks after it said it was in advanced talks to buy the mines.

 

The signing of the MOU gives SAM a 40% stake in MCRE Resources Sdn Bhd (MCRE), which operates an iron absorption clay rare earth mine in Perak, and a 100% stake in Paramount Synergy Sdn Bhd (Paramount), which owns an iron absorption clay rare earth mine in Johor but is still in the exploration mining phase.

 

SAM is a producer of high-grade iron ore produced in Malaysia, and is listed on the Catalist Board of Singapore Exchange (SGX). It owns two other mines in Malaysia, an iron ore producing mine in Chaah, and a gold mine in Johor.

 

Speaking at the signing of the MOU on April 17, Lim Wei Hung, executive director and chief operating officer of SAM said that the acquisition of the two rare earth mines is &ldquo a significant step towards accomplishing our diversification goals&rdquo .

 

MCRE has 2,161 hectares of mine, and has 33,000 tonnes of rare earth oxide, according to its report in 2022. Paramount has 1,863 hectares of mine and has drilled 1,200 holes.

 

Lim clarifies that the rare earth materials extracted are non-radioactive rare earth elements (NR-REE), which was a point of contention among the public as many misunderstood rare earth materials to be radioactive.

 

Lim says that MCRE had obtained all its operating and mining licences, and commenced mining operations in 2022 with the application of the in-situ leaching method, whereby a liquid is injected into the ground to extract the rare earth mineral, instead of excavating the land. It exported its first batch of rare earth carbonate in February 2023.

 

&ldquo A major consideration for SAM was ensuring that the disruptive environmental impact as a result of its rare earth mining operations is minimised,&rdquo said Lim. &ldquo In this regard, MCRE has adopted the in-situ leaching method to extract NR-REE carbonates which does not involve massive open pit mining and therefore, helps to preserve the natural landscape with an overall low carbon emission footprint.&rdquo

 

According to SAM, MCRE is the first Malaysian company to have an exclusive right to utilise this mining method for rare earth from China in Malaysia.

 

Meanwhile, Paramount is currently in its exploration phase.

 

Southern Alliance Mining is in " advanced" talks to buy two mining companies in Malaysia, although there' s no certainty definitive agreements will be signed.

 

On April 3, the company was queried by the exchange for unusual trading patterns of its share price. Its answer then was that while it continuously looks for acquisitions, there' s no material agreements or contracts signed, and it is not aware of any information not previously announced that might " explain the trading" .

 

On March 16, the Malaysia-based iron miner announced a loss of RM10.2 million for half year ended Jan 31, versus earnings of RM27.4 million in the year earlier period.

 

Revenue in the same period was down 47% y-o-y to RM52.2 million.

 

The company will make the appropriate announcements should there be any material developments.

 

Southern Alliance Mining QNS 0.00% ' s share price surged by more than a fifth thus far today, drawing a query for unusual 1D1 2.14% trading activity from SGX.

 

Just on March 16, the Malaysia-based iron miner announced a loss of RM10.2 million for half year ended Jan 31, versus earnings of RM27.4 million in the year earlier period.

 

Revenue in the same period was down 47% y-o-y to RM52.2 million.

 

In its response after the market closed for the day, Southern Alliance says that there " no material agreements or contracts have been entered into" and that it is not aware of any information not previously announced that might " explain the trading" .

 

Southern Alliance closed the day at 80 cents, up 17.65%.

MALAYSIAN iron-ore producer Southern Alliance Mining has sunk into the red with a net loss of RM7 million (S$2.1 million) for its financial first half ended Jan 31.

 

The Catalist-listed company&rsquo s net profit in the year-ago period was RM19.6 million.

 

Revenue fell to RM52.2 million for the same period, down 47 per cent from RM98.5 million last year. 

 

Loss per share stood at 1.43 Malaysian sen, down from earnings per share of 3.96 sen in the year ago period.

 

The drop in revenue was mainly due to intense overburden removal activities that its Chaah Mine underwent during the period, which was required in accordance with the mining schedule, Southern Alliance Mining said in a regulatory filing on Thursday (Mar 16).

 

This had resulted in lower volumes of ore produced in the first half, it pointed out. 

 

The sales volumes of iron ore concentrate and tailings correspondingly fell. Compared to the year-ago period, the sales volume of iron ore concentrate fell 37.5 per cent, while that of iron ore tailings fell 83.7 per cent.

 

No dividend has been declared or recommended for the first half, as the dividend shall be guided by the results of the full financial year, the company stated.

Southern Alliance Mining QNS 0.00%   is guiding for a net loss for the 1HFY2023 ended Jan 31.

 

The net loss is mainly attributable to lower production in iron ore which came as a result of &ldquo intense overburden removal activities&rdquo based on the group&rsquo s mining schedule.

 

The net loss also came amid expected lower revenue for the six-month period. The decline in revenue stemmed from the lower sales volume of iron ore coupled with a lower average realised selling price (ASP) for iron ore concentrate and iron ore tailing for 1HFY2023.

 

The group will be announcing its results by March 17.