SGX says no directive to ISR Capital over queries on mining asset purchase

The Singapore Exchange (SGX) said on Sunday that no directive has been issued so far to ISR Capital regarding its S$3 million purchase of a Madagascar mining asset.

Queries by the regulator to ISR Capital are ongoing, which "reflect our concern that new information was disclosed very close to the completion date" of ISR's purchase of a 60 per cent stake in Tantalum Holding (Mauritius) (THM). THM fully owns Tantalum Rare Earth Malagasy SARLU (TREM), which holds an exploration licence for the mining concession.

The query process is to ascertain whether shareholders should be asked to ratify the transaction, an SGX spokesman told The Business Times.

The SGX spokesman added that shareholders should continue to monitor closely the company's disclosures which the board of directors will be held accountable for.

The company announced on Dec 31, the day the long-stop date for the acquisition was supposed to be according to a circular in October, that it had extended the long-stop to Jan 3.

The company also said in the announcement that it had agreed to waive a condition precedent for obtaining a mutually agreed upon cash flow budget and liquidity plan.

SGX then emailed the company on Jan 2, pointing out ISR had told shareholders in deal-related disclosures that the company would not waive conditions if doing so would be prejudicial to shareholders, and that the company would be unlikely to waive material conditions that may have an adverse impact on the company or the target.

Waiving the conditions would go against that guidance, and shareholder approval would need to be obtained again, SGX said.

SGX said in its email to ISR: "(P)lease seek shareholders' approval for the waiver as shareholders had approved on the basis that the company will not waive such material conditions ... kindly proceed to seek shareholders' approval for the waiver before proceeding with the payment to and for the acquisition. Accordingly, please promptly inform shareholders of this."

In its response on the night of Jan 2, ISR responded to say that shareholder approval is not required. Giving several reasons, ISR said the waiver did not prejudice shareholders, and will not have an adverse impact on the company or the target.

It went ahead to complete the acquisition on Jan 3.

ISR Capital said in another announcement on Saturday that the queries from SGX were not a directive. "These were queries from SGX which sought to understand the company's reasons for waiving the condition precedent relating to the 'cash flow budget and liquidity plan' and whether this was a waiver of a material condition precedent that required approval from shareholders."

It is also currently responding to more queries posed by SGX on Jan 3 and will announce its responses in due course.

ISR last closed on Jan 3 at 0.3 Singapore cent.

Yunita Ong

07 January 2019