SINGAPORE (Nov 25): Malaysian gold miner Anchor Resources held its IPO in March 2016 at 25 cents. The share price has since plunged 97% to close at 0.8 cent on Nov 21 as it struggles to turn profitable on its gold mines in Terengganu. One of the mines was formerly owned by the state government.
At the current price level, the company is valued at $9.95 million. As at June 30, the group’s net asset value stood at 0.36 cent a share.
In a bid to diversify its revenue stream, the company bought granite business GGT Manufacturing from Anchor Resources’ controlling shareholder, managing director Lim Chiau Woei, in 2016. Anchor Resources paid for the $103 million acquisition by issuing 712.2 million new Anchor Resources shares to Lim at 14.5 cents each.
In April last year, Anchor Resources was reported to have inked an exclusive memorandum of understanding with businessman Mohd Sukri Ismail to tender for contracts to supply granite for Malaysian East Coast Rail Line projects. This was closely followed by a $75 million contract agreement to supply 3.6 million tonnes of granite to a construction firm in Brunei in August, through its subsidiary Stonetrade.
In March this year, Anchor Resources proposed to issue up to $10 million in unsecured redeemable equity-linked notes to two funds managed by Advance Capital Partners Asset Management. Under the terms of the agreement, there would be three tranches of notes issued, carrying an annual interest rate of 1% and conversion price of 10% off the volume-weighted average price on the business day preceding the date of the company’s receipt of the conversion notice. In September, the proposed issuance was cancelled.
On Aug 14, Anchor Resources reported that revenue for the half year ended June 30 surged from RM66,000 ($21,578) to RM1.96 million, as it sold more semi-processed gold concentrated ore. Costs increased as well, however, and the company reported wider losses of RM7.3 million, compared with RM6.5 million in the red in the year-earlier period. As for GGT Manufacturing, it sold RM250,000 worth of granite to Indonesia.
The company tried to put a positive note to its dismal half-year earnings. In its 2Q earnings statement dated Aug 14, Anchor Resources says it is “benefiting from the increased demand of gold worldwide”. In particular, its subsidiary Angka Alamjaya was noted to be increasing its tailing production to full capacity to take advantage of this increase in demand, with the next quarter and subsequent 12 months slated to generate better revenue for the group.
In an update announcement for 3QFY2019, Anchor Resources reported that it produced gold concentrated ore of 275 tonnes, with an average of 42.1g of gold per tonne of gold concentrated ore, bringing the total for the first nine months of the year to 1,094 tonnes.
