LionGold placement called off on stock price volatility

LionGold Corp said the trading restrictions imposed on its shares put it at a “significant disadvantage” as they hinder its efforts to acquire undervalued assets.

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LionGold placement called off on stock price volatility

Jasmine Ng
12 October 2013

LionGold Corp said the trading restrictions imposed on its shares put it at a “significant disadvantage” as they hinder its efforts to acquire undervalued assets.

The company yesterday called off its proposed placement of up to 180 million new shares at about $1.11 each, and up to 135 million new warrants at two cents each, to the placement subscribers, citing the share price’s volatility. The termination was mutually agreed upon, it said. The proposed subscribers include Platinum Partners PPLO fund, Carnegie Hall Group and Spring Road Advisors.

This is the second deal LionGold has terminated since its shares, along with those of Asiasons Capital and Blumont Group, were declared designated securities.

Singapore Exchange (SGX) prohibits investors from short-selling the stocks and requires them to make cash payment upfront for transactions.

“This (further downward pressure on share price) has resulted in a significant disadvantage relative to other resource and mining companies, given the abundance of opportunities to acquire undervalued producing gold mining assets . . . ,” LionGold CEO Nicholas Ng Yick Hing said in a statement yesterday.

Until SGX suspended their trading last week because of big price falls, LionGold, Asiasons and Blumont had strong run-ups in their stock prices this year. The regulator was concerned that there could be circumstances that would result in the market not being fully informed.

Mr Ng said: “We would like to emphasise that the company’s ongoing operations are unrelated to the recent trading restrictions imposed on LionGold’s shares.”

The stock fell 3.1 cents, or 16.8 per cent, to 15.4 cents at the close of trading yesterday. LionGold said it was now trading below its book value.

For the quarter ended September, the company’s unit, Castlemaine Goldfields’ Ballarat Mine, produced a record 13,845 ounces of gold at an all-in cost of A$1,055 (S$1,245) an ounce. This represents a 47 per cent increase in gold production compared with the preceding quarter.

LionGold also acquired all the common shares it did not already own in Canada-based gold exploration company Acadian Mining, bringing its holding to 100 per cent. It said it now holds 7.0 million ounces of gold resources, with 900,000 ounces of gold classified as reserves.

Meanwhile, LionGold director Md Wira Dani Abdul Daim’s direct and deemed stake in the company has fallen to 5.63 per cent from 6.22 per cent after a market sale on Thursday of about 5,539,000 shares for $1,048,532, working out to about 18.9 cents apiece. Director Ng Su Ling’s deemed stake was further trimmed to 0.19 per cent from 0.27 per cent after a market sale of 742,493 shares for $140,702.

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