Gunung Capital Bhd : MEMORANDUM OF UNDERSTANDING

Gunung is pleased to announce that its 100% owned subsidiary Gunung Resources Sdn Bhd ('GRSB') has today, entered into a Memorandum of Understanding ('MOU') with Jendala Padu Sdn Bhd ('JPSB'), for the purpose of developing Quantitative & Qualitative Strategies to Improve the Yield of Biological Assets of the Pandan Land Bintulu Palm Oil Estate (hereinafter referred to as the 'Project') with a view that the conclusions and solutions derived from the MOU shall provide the basis for a project management contract to manage the Pandan Land Bintulu Palm Oil Estate on a long term basis.

1. BACKGROUND OF JPSB AND THE PROJECT

JPSB, incorporated in Malaysia as a private limited Company on 8 January 2004, is a general trader in food supply and cultivation, milling, operation, harvesting, sale and other ancillary activities relating to palm oil plantation. JPSB entered into a lease agreement on 27 January 2016 with AML Enterprises Sdn Bhd, and JP Nominees Holdings Sdn Bhd to lease both a palm oil estate and the biological assets attached to the estate until 31 March 2040. The palm oil estate comprises of Lot No. 4, 6 & 14 District of Pandan Land, Bintulu, Sarawak measuring approximately 13,308 acres. JPSB has an existing paid-up capital of RM5,000,000.

2. SALIENT TERMS OF THE MOU

GRSB and JPSB will develop a functional working relationship in which each party will share information related to the Project, and each party will lend their respective expertise to Project.

Coordination between GRSB and JPSB will be conducted between the JPSB Site Office and GRSB project management team allocated to the Project. The designated individuals at JPSB and GRSB will be responsible for meeting obligations under the MOU.

The strategies developed under the MOU to improve the yield of biological assets may also include commodity hedging strategies and other financial instruments to protect yields against commodity price fluctuations.

Upon the successful completion of the MOU, the conclusions and solutions derived shall provide the basis for terms and targets of a formal project management arrangement to manage the Pandan Land Bintulu Palm Oil Estate on a long term basis.

Each party shall be responsible for the confidentiality of any intellectual property shared between both parties.

3. DURATION OF THE MOU

The MOU will expire within three (3) months from the date of signing the MOU.

Each party shall have the right to withdraw from participation in the MOU upon completing a clear strategy to improve the yield of the biological assets, via a seven (7) day notice, for any reason without further obligation to the other party.

4. FINANCIAL EFFECTS OF THE MOU

The MOU will not give rise to any financial obligation by one party to the other. Each party will bear its own cost and expenses in relation to this MOU.

The MOU will not have any effect on the share capital and substantial shareholders' shareholdings of GUNUNG. The MOU is not expected to have any material immediate effect on the earnings per share, net assets per share and gearing of GUNUNG for the financial year ending 31 December 2019.

5. RATIONALE OF THE MOU

Upon the successful completion of the MOU, the conclusions and solutions derived shall provide the basis for terms and targets of a formal project management arrangement to manage the Pandan Land Bintulu Palm Oil Estate on a long term basis. GUNUNG is seeking to apply its existing project management experience and resources from its management of land transportation asset revenue-contracts, and small hydropower development in Perak, to other industries with long term income stream prospects.

6. DIRECTORS' AND MAJOR SHAREHOLDERS' INTERESTS

None of the directors and/or major shareholders of GUNUNG and/or persons connected with them have any interest, whether direct or indirect, in the MOU.

7. APPROVAL REQUIRED

The MOU is not subject to the approval of the shareholders of GUNUNG or any regulatory authority.

8. OCUMENTS AVAILABLE FOR INSPECTION

The MOU is available for inspection at the registered office of GUNUNG at 11B, Level 2, Persiaran, Greentown 9, Pusat Perdagangan, Greentown, 30450, Ipoh, Perak Darul Ridzuan, during normal business hours from Monday to Friday (except public holiday) for a period of three (3) months from the date of this announcement.

This announcement is dated 9 January 2019.