Gold miner Shen Yao Holdings plans to diversify into logistics by taking the majority stake in a company that provides parcel locker systems.
Shen Yao plans to raise $5.1 million by placing out new shares to third-party investors and then acquire a 51% stake in UB Technology, the target, in cash.
Citing a valuation by Chay Corporate Advisory, UB Technology, as at Sept 30 2022, is valued at $11.1 million and $11.9 million, with a base value of $11.5 million.
UB Technology is now owned by one Chen Xing via his entity CX Technologies says Shen Yao in its SGX filing on March 13.
According to Shen Yao, the diversification into an unrelated industry is because gold mining is a business that is expected to remain "uncertain" and "fraught with volatility".
It now owns stakes in Australia-based gold mines, which are facing a "challenging operating and cost environment" and expects to face headwinds in an increasingly uncertain economy and market.
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"The board is of the opinion that the proposed investment represents an opportunity for the group to diversify and enter into the technology and logistics business," says Shen Yao, which used to be called LionGold Corp - one of the three penny stocks manipulated by John Soh and Quah Su-Ling back in the early 2010s.
According to Shen Yao, which is now under control of group executive chairman and group CEO Yao Liang, UB Technology's offerings have been successfully implemented in Melbourne and the same system can be deployed in other regional cities.
Shen Yao plans to call an EGM for shareholders to vote on this proposed deal.
Shen Yao says UB Technology's patented "UBOXHUB" offers adequate parcel storage to space ratio, including parcel sanitisation and temperature control storage options.
In a separate announcement on the same day, Shen Yao says that its Balmaine gold mine, which it now fully owns via an entity Golden Point, will see its current major creditor become Golden Point's new controlling shareholder.
This new shareholder, Tomson, will take a 51% stake in Golden Point worth A$5 million as part of the settlement and restructuring of loans.
In addition, Tomson will lend up to A$10 million at a rate of 15%. The loan, to mature on Dec 31 2026, will be secured against the assets of the Balmaine mine.
Shen Yao shares, which were halted for trading prior to these announcements, last traded at 0.1 cent.
