LionGold still reeling from stock crash, files late annual report
Board chiefs lament ‘events that altered things considerably’ after FY2013
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Board chiefs lament ‘events that altered things considerably’ after FY2013
Anita Gabrielanitag
29 October 2014
Whiplashed since last October’s penny stock crash and hemmed in by an ongoing probe by Singapore’s white-collar crime buster, beleaguered LionGold filed its delayed 2014 annual report on Monday with a sullen note to shareholders - indeed, a stark contrast to the celebratory tone in its previous year’s report after a “dynamic” 2013.
In the latest report, the firm’s non-executive chairman Nik Ibrahim Kamil and executive deputy chairman Md Wira Dani Abdul Daim lamented that the share price crash, which “remains inexplicable to us” had “crudely interrupted” the hard work put in by the firm since it embarked on the gold mining business in 2011.
A probe by the Commercial Affairs Department (CAD) into possible breaches of securities laws had exacerbated matters and derailed some of its fund-raising plans.
Falling gold prices, which depressed profit margins, worsened the firm’s woes.
With that, the glory days of financial year 2013 when investors rushed to pile on LionGold’s shares as it undertook a buying spree of six gold companies and substantially bumped up its mining resources and reserves seem more than just a distant past.
“Events that occurred after the end of FY2013 have altered things considerably,” they added. That’s putting it mildly. At its peak last year, LionGold boasted of a market capitalisation of over S$1 billion. That has since dwindled to S$27 million on Tuesday just before LionGold requested a trading halt pending an announcement which is expected to be out on Wednesday.
Traders were unforgiving as they dumped the firm’s shares in the early hours before the halt, with the counter plunging 11 per cent to an all time low of 2.4 Singapore cents, extending the previous day’s 13 per cent losses after the firm’s auditors flagged two key concerns in its latest full-year financial results.
The junior goldminer suffered much bigger losses of S$174.39 million for the financial year ended March 2014 from S$8.2 million a year ago on the back of a 20 per cent rise in revenue to S$144.19 million.
The firm’s independent auditors, PricewaterhouseCoopers (PwC), issued a disclaimer in the firm’s FY2014 results where it reported a total loss after tax of S$189.1 million compared with a loss of S$11.2 million a year ago and net cash outflow of S$23.19 million from an inflow of S$31.4 million in 2013.
On the back of that and in spite of the firm’s funding initiatives, PwC said it did not have enough evidence to back up LionGold’s going concern assumption in preparing its financial statement.
Furthermore, in the absence of any details on the CAD probe, PwC also said that it was not able to ascertain the impact of the investigations on LionGold’s operations and the potential adjustments that may arise on its financial statements.
In April this year, the CAD served a notice on LionGold and a wholly owned unit - the crime buster did the same with seven other companies that also involved top executives - to cough up electronic data, equipment and information to probe into trading irregularities involving the battered shares of three firms - Asiasons Capital, Blumont Group and LionGold.
The uncertainty over the final outcome of the probe has seen a slew of boardroom departures from some of these firms, including LionGold and has also stonewalled some of their fund raising exercises.
On its part, LionGold said these setbacks had led the firm to “restrategise” by disposing of, streamlining and stabilising its mining assets.
“Besides rationalising and stabilising operations, the board is alive to the fact that attention must be paid not only to raising funds but also to the group’s debt obligations,” said Mr Nik Ibrahim and Mr Wira Dani in the annual report.