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Tuesday, October 8, 2013

Notion Vtec to ride on silver price through Australian silver mining firm (Star)

Notion VTec Bhd sees investment in Australia's Alcyone Resources Ltd – a company involved in mining for silver – as a move to diversify its investments and also due to more upside for silver’s price.

As silver spot prices trade at a low range, Notion VTec believed "the odds are in our favour" to diversify its investments.

Executive chairman Thoo Chow Fah said on Tuesday the company was allocating investments where it made sense.

He said there was more opportunity for silver to double its value than gold as it was also industrial precious metal.

"We did not purposely look for a silver mining company neither are we investing at a whim, this is an investment for our future as the revenue per head in this (diversification) model is more profitable than our current model," he said at an investment briefing.

Thoo emphasised that the company was not losing its focus on the core machinery and manufacturing business but rather expanding its options.

Alcyone is the only pure silver mining company in Australia, which although recorded losses in its books due to amortisation of its equipment, still has positive cashflow.

Its 700,000 ounce silver production capacity in 2012 was already at a breakeven level for its mining operations.

This year, with Notion Vtec's investment of RM14.7mil, Alcyone would be able to produce up to 1.2 million ounces of silver.

Notion VTec subscribed for a major 19.9% stake in the ASX-listed company for A$4.875mil (RM14.7mil) which places Notion VTec as a cornerstone strategic investor.

The investment will be used to upgrade Alcyone's equipment including crushers, power grid line and sodium cyanide supply and mixing plant in order to ramp up production capacity. Notion VTec also has a six-month option to subscribe for interest-bearing promissory notes which allows it to increase its stake in Alcyone by an additional 10% for A$2.5mil (RM7.5mil), subject to Alcyone's shareholders' approval.

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