Anchor Resources plunges in debut trading
Anchor Resources found itself caught in a downward spiral on
Friday when it made its debut trading on Catalist. The stock kicked off trading
at 18.2 Singapore cents, 27.2 per cent below its initial public offering (IPO)
price of 25 cents. The plunge saw it fall as low as 14.4 cents before closing
at 14.6 cents, down 41.6 per cent from the issue price. The intra-day high was
19.9 cents.
Comments
Mindy Tan, and Grace So
19 March 2016
Anchor Resources found itself caught in a downward spiral on Friday when it made its debut trading on Catalist. The stock kicked off trading at 18.2 Singapore cents, 27.2 per cent below its initial public offering (IPO) price of 25 cents. The plunge saw it fall as low as 14.4 cents before closing at 14.6 cents, down 41.6 per cent from the issue price. The intra-day high was 19.9 cents.
More than 55 million shares changed hands, making it the sixth most actively traded for the day. Anchor Resources' IPO of 28.8 million placement shares, which it launched on March 9, was fully subscribed.
The company is engaged in the business of exploration, mining and production of gold for sale in Malaysia. It holds concession rights to two key gold mining areas - Lubuk Mandi Mine and Bukit Panji Property in Terengganu, on the eastern gold belt of Peninsular Malaysia. The two mines have a combined area of approximately 275 hectares.
Media reports had on March 17 quoted Anchor Resources' managing director and founder Lim Chiau Woei as saying that the company expected to turn a profit by the end of the year. The company had posted full-year net losses for the past nine years.
On the same day, Anchor Resources clarified that the reported projections were "internal management performance targets for the sole purpose of internal assessment of management performance and do not represent a growth or profit forecast".
Anchor Resources would be using almost half of the IPO's S$4.6 million net proceeds to expand its gold-processing capacity, while the remaining proceeds would be used for other exploration and development works, as well as for general working capital.
There are 17 mining companies listed on SGX. Of these, only three are focused on gold mining in South-east Asia. Apart from Anchor Resources, the other two listed gold miners are Wilton Resources Corporation and CNMC Goldmine Holdings. Anchor Resources and CNMC Goldmine have mining and production facilities in Malaysia, while Wilton Resources is still in the midst of exploration works in Indonesia.
NRA research director Liu Jinshu said: "Anchor Resources' IPO value of S$69.9 million seems steep compared to CNMC's S$89.6 million market capitalisation, as the former has reported resources of only 114,000 ounces of gold valued at US$19.2 million when CNMC has 0.5 million ounces of gold. Hence, investors may have been spooked."
"Likely, Anchor Resources' technical report only covered part of the Lubuk Mandi Mine, with the Bukit Panji Property still in the exploration stage. Given this, the company may need to offer more geological information for investors to obtain a clearer valuation," said Mr Liu.
Anchor Resources' listing brought the number of companies on Catalist to 177, with a combined market cap of S$9 billion. It brought the number of mineral, oil and gas companies on SGX to 28 with a combined market capitalisation of S$2.3 billion.
CNMC closed at 22 Singapore cents on Friday while Wilton Resources last traded at 6.6 Singapore cents on Wednesday.