Hot Stock Iris rises 7% after diatomite JV that may net billions in sales

by **Cals** Tue 06 May 2014, 17:27

Hot Stock Iris rises 7% after diatomite JV that may net billions in sales

Business & Markets 2014

Written by Ho Wah Foon of theedgemalaysia.com

Tuesday, 06 May 2014 13:44

KUALA LUMPUR (May 6): Iris Corporation Bhd’s shares rose in active trades in morning session after the company announced a joint venture in mining and exploration of Diatomite that could potentially bring in sales of about RM3 billion or more.

At 12.30 pm noon break, the share of the company – in which the single largest shareholder is FELDA – rose 3 sen or 7.3% to 44 sen per unit on some trades of 26.98 million shares. It was the third most active stock.

Its warrant rose in tandem. Iris-WB gained 3 sen or 11% to 30.5 sen per unit on trades of 10.38 million units.

Yesterday, IRIS announced it had entered into a shareholders agreement with two groups, represented by Burleigh Nominees Limited, to form a joint venture to buy a mining permit on an area with 6 million tonnes of diatomite reserves and an exploration permit with probable reserves of 50 million tonnes of diatomite.

The deposits, which could be used as fertiliser for oil palm plantations and rice and sugar cultivation, are located in Central Otego region of New Zealand.

“At the current market price for diatomite of around US$200 to US$300 per tonne, the deposit could potentially result in sales of between US$840 million (RM2.7 billion) to US1.3 billion (RM4.1 billion),” said TA Securities in a research report today.

Iris said total investment cost for the project is RM39.2 million.

TA said if there is successful exploration of a further 50 million tonnes, sales could rise by an additional RM22.8 billion and RM34.2 billion.

“We believe the diatomite will likely be marketed to FELDA’s related companies engaged in oil palm plantations. We maintain our 'buy' rating with target price at RM0.675/share.”