Gold miner CNMC’s Catalist listing marks comeback of ‘IPO King’
‘IPO King’ Peter Choo Chee Kong has marked his comeback with the launch of the first initial public offering (IPO) of a gold-mining company in Singapore.
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By DOLLY CHIA
20 October 2011
‘IPO King’ Peter Choo Chee Kong has marked his comeback with the launch of the first initial public offering (IPO) of a gold-mining company in Singapore.
Malaysia-based CNMC Goldmine Holdings, a five-year-old company in which Mr. Choo is one of the major shareholders, is selling shares for a listing on the Catalist second board.
It is offering 41.1 million shares comprising 23.9 million new shares and 17.2 million vendor shares at 40 cents apiece in an all-placement issue. Mr. Choo’s stake in the company will be reduced by 2.16 per cent to 15.48 per cent after the placement.
The placement is expected to raise about $16.4 million, with $9.56 million going to the company and $6.88 million to its existing shareholders who have decided to sell some of their shares.
Its share capital following the IPO will be 404.7 million shares with a market capitalisation of $161.9 million.
‘CNMC’s listing marks a new and exciting chapter for the company. The IPO proceeds will enable us to focus on executing our expansion and growth strategies to achieve our company’s vision of being one of the pre-eminent gold and mineral producers in the Asia-Pacific region,’ said Chris Lim, chief executive of CNMC.
Net proceeds will be used for the expansion of gold extraction facilities by commissioning a heap leach facility and exploration activities to identify new gold mineralisation.
It will also undertake a feasibility study to construct a gold carbon-in-leach plant to increase its ore processing capacity.
CNMC has completed the construction of its ore processing facility with a processing capacity of up to 60,000 tonnes per annum. The company commenced its gold pour in July last year and has had 37 gold pours, producing 2,434 ounces of refined gold and 820 ounces of refined silver since then, it said.
The group’s mining rights at the Sokor Block, covering ten square kilometres, will expire on April 7, 2018.
According to BDA’s technical report, CNMC’s gold resources totalled 2.18 million tonnes with a grade of 2.62 grams per tonne (g/t) of gold, with contained gold of 183,500 ounces.
This includes an estimated gold reserve of 204,000 tonnes at a grade of 3.64 g/t of gold, and 785,000 tonnes at a grade of 1.84 g/t.
Mr. Lim claims that there is upside exploration potential within the Sokor block for other minerals as well. Having urban facilities within its proximity has also enabled the group to reduce the cost of transportation.
Risks outlined in its prospectus include technical uncertainties of its assumptions on reserve estimates and future cash flow, if the group fails to meet production estimates.
The group is also operating under negative working capital at the moment, although its production capacity has grown significantly since last year.
There is also a legal risk. The prospectus said that Mr. Choo and Kuan Cheng Tuck may not be able to fully devote their time to perform their respective roles as company directors if they are required to defend themselves against potential legal actions from an ongoing law suit initiated by Falmac Ltd against the former directors for breaches of their fiduciary duties. Both resigned from Falmac on August 29 this year.
Mr. Choo, once known as ‘Mr. IPO’ for his hand in bringing over 100 IPOs to the Singapore market over the years, first with DBS Bank and then with the firm he co-founded, Westcomb Financial Group. He helmed Westcomb from 2000 to 2006, then sold his stake in the group.
PrimePartners Corporate Finance is the issue manager and joint placement agent for CNMC’s IPO.