ADV shifts focus from medicine to precious metals

JEDDAH — ADV Group, which has decided to quit its Sydney medical imagery business, plans to become an explorer in Saudi Arabia for base and precious metals.

By Habib Shaikh

Published: Mon 14 May 2007, 8:43 AM

Last updated: Sat 4 Apr 2015, 11:01 PM

Continuing its revitalisation after a lengthy suspension from trade for not lodging the June 2005 accounts, the company has struck an agreement to acquire the Bahrain-based and privately-held Vertex Group, which holds 10 base and precious metals prospects near the Red Sea coast.

Now the company is considering the issue of 342 million shares and 40 million 20c options to Vertex, plus $200,000 in cash, subject to approval of shareholders.

ADV Chairman Fletcher Quinn said that the switch of business lines followed a strategic review that had identified the "highly promising potential of the Saudi Arabian minerals ventures".

At Vertex's Jabal Sayid copper prospect, recent drilling returned promising results. The French minerals group BRGM looked at a high-grade underground development at the property for the government in the 1970s and 1980s. Limited development took place and a tonnage and grade estimate was conducted. But it cannot be stated under current Australian reporting standards.

Shares to be issued to Vertex will be subject to a two-year escrow. After the Vertex deal, ADV will have 616 million shares on issue, of which Vertex owners will hold 55.5 per cent.

According to Dr Mohamed A. Ramady, visiting associate professor of finance and economics at King Fahd University of Petroleum and Minerals, mining is an "untapped jewel" of the Saudi economy.

While Saudi Arabia has significant mineral resources like bauxite, phosphate, iron ore, zinc, copper and gold, it also has the world's largest tantalum reserves. This is a prime input in the manufacture of electronic circuit boards and capacitors which are used in electronic devices such as DVD's and cameras. A whole knowledge-based economy can be built just around this mineral resource alone.

Further exploration could reveal other significant mineral wealth. "The world can always find energy substitutes for oil, but there are finite limits to mineral resources. It is essential that for more meaningful economic diversification of the economy to take place, the mining sector should be given a higher priority in the Kingdom," Ramady said.

He added that unlike oil production, which tends to be concentrated in few geographic locations, mineral resources can be found in more locations depending on a country's geological structure, leading to more diverse job creation and economic growth in different parts of the country.

Ramady said that Saudi Arabia is blessed with a wide range of minerals in the western and southern regions of the country to complement the oil and gas reserves in the eastern province.

Ramady said: "What is more important in the short term for the private sector and the government is to take the necessary steps to start establishing the basic infrastructure for mining operations, railways, refineries and ports," he added.

He explained that it is costly and takes time to develop a mining infrastructure. Unlike oil production, it can also be dangerous — especially underground mining.

He said it is gratifying to note that the Saudi Mining Company (Maaden) recently announced that it was planning for a full privatisation of its operations during 2007, and has been actively encouraging foreign direct investment in this sector of the economy, especially from companies and countries with long experience in mining.

A new mining law has been passed, granting licensing concessions on a more investor-friendly basis, compatible with international concession agreements. Previously prohibited sectors such as gold mining have been eased. Meanwhile, bids have been received for building the necessary railway network to support the mining sector.

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