SINGAPORE (May 26): Since 2013, the Singapore Exchange has allowed non-producing mining companies to list on the Mainboard if their market values are at least $300 million based on the issue price and post-invitation issued share capital.
Mining companies need not have revenue or profit, but they must have established the presence of minerals according to international standards and practices. They must also disclose their plans, milestones and capital expenditure to advance to the production stage.
Many of the mining companies that have sought listings in Singapore are Indonesia-based coal players. They include Golden Energy and Resources — the largest Singapore mining stock by market capitalisation — which listed via the RTO of United Fiber System; as well as BlackGold Natural Resources via the RTO of NH Ceramics; and Resources Prima Group via the RTO of Sky One. A fourth Indonesian coal producer, Geo Energy Resources, listed via IPO.
However, stock manipulation scandals involving companies that had promoted themselves as mining plays could have also deterred investors from becoming more involved with the whole sector. Last year, shares in ISR Capital soared as much as 40-fold as the company made plans to acquire a 60% stake in a rare-earth concession in Madagascar. On Nov 24, the day John Soh Chee Wen was arrested, shares in ISR suddenly lost more than half their value. Trading was halted by the company, and later suspended by SGX.The stock traded at a peak of 33 cents, valuing the company at well over $500 million.
So, is this a good time to get into locally listed mining stocks? Which ones offer value? Find out more in the May 29 issue of The Edge Singapore which is on sale now.
