“We are still on our way to becoming Asia’s BHP Billiton" : Ekuinas last stand?

For anyone not familiar with BHP Biliton, a company with a history of over 100 years , and a current market cap of AUD  175 Billion
see http://www.bloomberg.com/quote/BHP:AU


Published: Wednesday October 9, 2013 MYT 12:00:00 AM
Updated: Wednesday October 9, 2013 MYT 7:12:54 AM

New shareholder fails to lift Blumont; Asiasons and LionGold also fall



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SINGAPORE: The share prices of the three Singapore-listed companies with Malaysian major shareholders – Blumont Group Ltd, Asiasons Capital Ltd and LionGold Corp Ltd – continued to fall, even after the announcement that Alex Molyneux, the former chief executive officer of SouthGobi Resources Ltd, would acquire 135 million shares or a 5.2% stake in Blumont at 40 Singapore cents (RM1.02) per share, and become chairman of the company.
In the first few minutes of trade, Blumont’s share price reacted positively by rising more than 100% to 30 cents. However, it was soon downhill all the way, and the stock ended the day flat at 13 cents.
In the last two days, Blumont had erased S$4.9bil (RM12.55bil) from its market capitalisation after restrictions were placed on the stock.
Shares of Asiasons and LionGold, meanwhile, fell 3.4 cents and six cents, respectively, to 11.6 cents and 19 cents.
During a press conference held yesterday, Molyneux said that the company’s share price was not for the company to look into.
He said that he had invested in Blumont as it presented a “huge opportunity at the price where it is trading today” and explained that the company’s strategy going forward was not going to change.
“We are still on our way to becoming Asia’s BHP Billiton,” he said.
On the question of the valuation of Blumont – which was trading at a price-earnings ratio of nearly 600 times before its plunge – Molyneux said that the value of mining companies came “from creating resources”.
“Resources in the ground is like having gold bullions in your safe, discounted of course to its extraction cost. Mineral companies have value before they have revenue,” he said, adding that major mining companies were valued this way abroad.
Separately, Blumont executive director James Wong said: “Blumont is not under any investigation by the authorities and there’s no reason why there should be one.”
When asked about the events over the last few days, Wong said he did not know the reasons behind the sharp sell-off of Blumont shares.
“We have been in constant communication with the authorities,” he said.
On the sidelines of the press conference, Jett Capital Advisors partner Stephen Silver said he was surprised by the continued designation of Blumont. New York-based Jett Capital had arranged the funding for some of Blumont’s overseas acquisitions.
The Singapore Exchange Ltd (SGX) had declared Blumont, Asiasons and LionGold as designated securities last Friday.
The exact basis for such a move is still not clear, but SGX officials have pointed to its rules, which state that the exchange can designate a security “if, in its opinion, there has been manipulation of the security, excessive speculation in the security, or it is otherwise desirable in the interests of markets established or operated by SGX”.
“We believe all investors should be on an even playing field. By designating stocks, investors are now not allowed to trade on the same terms as a week ago,” said Silver.
Meanwhile, the acquisition price of Blumont shares is subject to adjustment. The final acquisition price will be the volume weighted average price of the group’s shares between the date of the agreement and the closing of the transaction, subject to a floor price of 20 cents per share and ceiling price of 60 cents per share. Closing is expected to take place within 30 days.
Molyneux and Pacific Advisers have agreed that acquired shares would be held for at least 24 months from the completion of the transaction.
In a statement released on Monday, Blumont said that Molyneux would immediately become a consultant and chairman-designate of the group and would formally assume the role as chairman upon the completion of the share purchase transaction.
Last week, Blumont had scrapped a deal to buy Australia’s Cokal Ltd for S$146mil the same day it announced the deal, as the shares had plunged on Oct 4, affecting the commercial terms discussed. Molyneux is a key stakeholder and chairman of two Blumont investee companies: Azarga Resources Ltd and Celsius Coal Ltd.
In Azarga, now Asia’s largest uranium company, he is co-founder and chairman and remains its largest shareholder.
Celsius is a coking coal development company with assets in the Kyrgyz Republic.
Molyneux also serves on the boards of Ivanhoe Energy Inc and Goldrock Mines Corp. From April 2009 to September 2012, Molyneux had served as president, CEO and director of SouthGobi Resources.

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