Malaysian firm to make US$72m from Inland Pomio logging

Kayu Mas (PNG) Ltd, which has a timber concession in Papua New Guinea (PNG) and is being acquired by Takaso Resources Bhd, has projected a net profit of US$72 million over nine years, reports the Sun Daily in Kuala Lumpur.

Kayu Mas executive chairman Datuk Abdul Manaf Hamid said the projected earnings from its timber concession of up to 42,000ha in PNG was based on the pricing of logs and sawn timber from that country.

"Logs from Papua New Guinea cost between US$120 and US$280 per cubic metre and we used US$160 as the base price. For sawn timber, it costs US$300 to US$900 per cubic metre and our base price is US350," he said, adding that the earnings could be higher.

The 42,000ha PNG concession is part of Inland Pomio Timber Rights Purchase Area which covers a gross area of 83,000ha, of which 11,000ha has been logged prior to 2009.

Abdul Manaf said Kayu Mas will contract out the extraction of logs at Inland Pomio and has shortlisted a number of companies from Malaysia and PNG for the job.

He was speaking to reporters at the signing of the heads of agreement for the acquisition of Kayu Mas by Takaso.

The two parties aim to enter into an agreement within three months and finalise the percentage of Kayu Mas to be acquired by Takaso, the price tag and financing for the deal.

Abdul Manaf said Takaso may acquire 100% of Kayu Mas if it so wishes, and the latter will procure its shareholders to sell such shares to Takaso.

Takaso chief financial officer Su Seong Yeen said it has also decided on a RM6.5 million working capital for the timber project.

"Takaso has been making losses and we have been looking for alternative businesses. We are looking for potential new projects for the group," she said.

She added that the condom and baby products manufacturer will still continue with its rubber business but seek diversification to expand its activities.