OREANDA-NEWS. February 29, 2016. Over 70% of top metals & mining companies have a presence in Singapore, which has also become a clearing centre for over 90% of globally-traded iron ore swaps. 

The aim of minerals exploration is to discover a new mineral deposit and quantify the amount and quality of the mineral in order to assess if it can be profitably extracted. As noted in the Investor’s Guide to the Minerals Industry (click here), the key sources of risk and reward are exploration, technical, financial, environmental, social, political, and sovereign issues. The profitability of the mining industry is a function of the difference between revenue and costs. The price of many mineral commodities is volatile and can be subject to large variations. If revenue is tied to short-term market pricing, there is a risk associated with falling commodity prices and a reward associated with rising prices.

The SPDR® Gold Shares ETF has gained 10.0% in the month to date in addition to being the most active of the SGX-listed ETFs in the month to date.

The 16 SGX-listed mining plays have average a 1.1 % gain in the month to date, this has brought the year to date decline to 12.9%. The three largest capitalized mining plays are Falcon Energy Group, Geo Energy Resources and GCCP Resources. Together these three stocks have averaged a 2.1% gain in the month to date.

The table below details the 16 mining plays, and is sorted according to market capitalisation. Click on each stock to visit its profile page on SGX StockFacts.

Source: SGX, Bloomberg & SGX StockFacts (data as of 24 February 2016)

Please note that the table above does not include Golden Energy & Resources, formerly known as United Fiber System. Last year the company acquired PT Golden Energy Mines Tbk in a reverse takeover transaction. The company is hence now engaged in the exploration, mining and marketing of thermal coal. The Company sources the thermal coal from its coal mining concession areas in South Kalimantan, Central Kalimantan and Jambi in Indonesia. Golden Energy & Resources is yet to request a lifting of its suspension that it requested on 23 April 2015.

Source: SGX, Bloomberg & SGX StockFacts (data as of 24 February 2016)

Within the sector, some companies can establish long-term contracts with guaranteed minimum pricing to alleviate uncertainty arising from fluctuations in commodity prices. Such contracts generally restrict the opportunity for substantial extra profits if commodity prices rise sharply. Consequently, many mining companies have little control over the revenue they receive – they are “price takers”. In addition to the written guide, investors can access a series of basic “Introduction to Minerals Industry” web clips - to view them please click here.