CNMC Goldmine Holdings, which operates in Kelantan, says local authorities have raised the royalty rates miners in the state have to pay for their production.
The company says it received a circular from the Kelantan State Land and Mines Office stating that with effect from Jan 1, it is to pay a 15% royalty rate on gold, up from 10% now, and 12% to be paid on silver, also up from 10%.
The rate on other minerals lead and zinc will remain the same.
CNMC, citing its Malaysian legal advisors, says that any variation to royalty rates imposed by a State Authority is generally required to be supported by publication in the official gazette in order for it to take legal effect.
"No official gazette publication was attached to the circular effectively revising the royalty rates to the new rates stated above.
"As at the date of this announcement, the company has not been served with such published official gazette.
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"The company is currently assessing the implications of the circular together with its legal advisers.
CNMC says it is also working closely with all relevant stakeholders, including its joint venture partner, Kelantan State Economic Development Corporation, and the Kelantan Mining Association, to make representations and submit an appeal against the proposed increases in the royalty rate payable.
CNMC Goldmine shares closed at $1.42 on May 13, down 3.73%. At its peak just over two months ago, CNMC shares were changing hands at more than $2.
