OREANDA-NEWS. March 21, 2016. Currently the price of Gold is trading above US\\$1,250 per ounce which is almost a 20% price gain since the end of 2015. Organisations of all sizes are involved in the minerals industry, from very large multinational public companies and state owned corporations that are involved in mining many commodities, through to small public and private companies exploiting a single deposit, as well as companies purely involved in exploration. Of the 17 Mining stocks currently listed for trading on Singapore Exchange (SGX), three are focused on Gold Mining within the ASEAN region. This includes todays debutant Anchor Resources.  

As noted by the World Gold Council (WGC) a greater number of countries have emerged as substantial gold producers over recent decades, which means mine supply has become less geographically concentrated and therefore, overall, more stable. In its interactive gold mining map, the WGC maintain that gold production volume for ASEAN countries totalled 145 tonnes in 2014. Gold mining according to the WGC is intrinsically a long-term industry given the length of time it takes to develop gold mining projects and bring them to production, often up to a decade or longer, means mining companies cannot easily respond to immediate market conditions.

The aim of gold exploration is to discover a new deposit and quantify the amount and quality of the gold in order to assess if it can be profitably extracted. If exploration drilling is successful, the next step which is completion of detailed drilling to define the size, shape, quality, and quantity of the gold deposit can be expensive. For some companies, particularly junior exploration companies, additional fundraising may be required to finance this stage of exploration.

The Region’s Gold Miners

There are almost 110 Gold Miners listed across Asia Pacific. Complimenting their endowment of a diverse range of mineral commodities  - the majority of these listings are in Australia, followed by China. However there are also listings in Hong Kong, Philippines, Singapore, India, Indonesia and New Zealand. On a market capitalisation basis, the value of the nine China listings comes to S\\$40 billion while the value of the 86 Australia listings comes to S\\$23 billion.

Number of Gold Miners in Asia Pacific & Respective Market Cap in S\\$M 

Source: SGX & Bloomberg, please note this includes stocks that are categorised by GICS ® to Gold Mining and segment product revenue to Gold Mining in Annual reports.  

The large comparative market capitalisations of China and Australia Gold Miners illustrated above is primarily due to the five largest listed Gold Miners of the region making up approximately two-thirds of the combined market capitalisation. This includes the likes of Zijin Mining Group and Newcrest Mining.

Based on current market values, Anchor Resources has joined Wilton Resources Corporation and CNMC Goldmine Holdings  to be within the top two-fifths of the largest listed Gold Miners across the Asia Pacific. Together the three stocks, Anchor Resources, Wilton Resources Corporation and CNMC Goldmine Holdings have a combined market capitalisation of S\\$290 million.

Recent Performances

In the year thus far, the three best performers in terms of average returns among the region’s Gold Miners have been Australia (+33.4%), Philippines (+30.0%) and Singapore (+17.7%).

Average YTD Returns of Asia Pacific Gold Miners

Source: SGX & Bloomberg (data as of 17 March 2016)

On a price-to-book (P/B) basis, India maintains the maintain the median highest price-book (P/B) ratio at 10.8 which is based on one of its two Gold Miner stocks. This is followed by China, Singapore, Australia, Philippines, Indonesia, New Zealand and Hong Kong.  While a P/B ratio can give an overview of the valuation of a stock to its net assets, gold can be buried deep below the surface and be very difficult to explore for, because there is no indication on the surface that they exist – hence Industry Codes of Practice in the form of independent valuations can be carried out to assess the probability of a deposit’s commercial extraction.

Median P/B of Asia Pacific Gold Miners

Source: SGX & Bloomberg (data as of 17 March 2016)

Please note India P/B of 10.8 is derived from Midwest Gold

Industry Codes of Practice

The SGX Listing Rules recognise a number of national industry reporting standards that contain specific information which must be included in a public report and guidance to both the company and investors on what is expected. Typically these reports will include the technical basis on which statements of reserves, resources or exploration results are made.

The three industry codes recognised by the SGX Listing Rules are:

  • Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code)
  • National Instrument NI 43-101 Standards of Disclosure for Mineral Projects (NI 43-101*) from Canada
  • Pan European Reserves and Resources Reporting Committee Code for the Reporting of Exploration Results, Mineral Resources and Pre Reserves (The PERC Code)

Reports that deal with technical assessments and valuations of mineral properties are required by the SGX Listing Rules to be prepared in accordance with the VALMIN Code. These reports must be prepared by an Independent qualified Person (IQP) and the same principles based approach applicable to the reporting Codes applies, but the principle of Independence is an additional requirement of the VALMIN Code. The IQP must also visit the property being valued.

Valuation of mineral properties is not a straightforward matter, and for properties not yet in production, investors should expect to see several alternative methods of valuation adopted. The VALMIN Code imposes obligations on the company commissioning the independent report to provide all the relevant information (whether confidential or not) to the IQP. An example of an IQP can be found in Appendix E of the Anchor Resources offer document – please click here,

Anchor Resources

Anchor Resources has listed on SGX today and commenced trading today at 18.2 cents per share following on from a placement of 28,800,000 shares at S\\$0.25 per share. This means a total of S\\$7.2 million was raised in the Initial Public Offering (IPO) stage. Please click here for the offer document.

Anchor Resources is engaged in the business of exploration, mining and production of gold for sale in Malaysia. Headquartered in Malaysia, the Group has concession rights to the Lubuk Mandi Mine and the Bukit Panji Property, both located in Terengganu, Malaysia.

Located at the Eastern gold belt in Peninsular Malaysia, the Lubuk Mandi Mine is approximately 17 kilometres south of Kuala Terengganu and spans across an area of approximately 221.53 hectares. The Bukit Panji Property is approximately four kilometres north of the Lubuk Mandi Mine and has an area of approximately 53.53 hectares.

The Group is currently focused on the production of gold from tailings material at the Lubuk Mandi Mine. It has on-site processing facilities with a current processing capacity of approximately 350,000 tonnes per annum that can be increased to 600,000 tonnes per annum. Its processing facilities utilise the gold treatment and extraction method of flotation, CIL, electrowinning and smelting to produce gold.

The other two listed Gold Miners on SGX are Wilton Resources Corporation and CNMC Goldmine Holdings. Both Anchor Resources and CNMC Goldmine have mining and production facilities in Malaysia while Wilton Resources is conducting exploration activities in Indonesia and yet to commence Gold production. Combined market capitalisation of the three Gold Miners is approximately S\\$300 million. 

Wilton Resources Corporation

Wilton Resources Corporation is engaged in the business of exploration and mining of gold, and production of gold dore.  The Group’s concession blocks, collectively termed the “Ciemas Gold Project”, are located in West Java province of Indonesia, and cover a total area of 3,078.5 hectares.

As at 30 June 2015, the Ciemas Gold Project contains JORC Code 2012 Edition compliant estimated total Mineral Resources amounting to approximately 39,000 kg of gold (around 1,250,000 troy ounces). Besides seeking to develop these gold deposits, the Group is concurrently planning the exploration of other mineralised areas of the Ciemas Gold Project to build sustainable value for its stakeholders.

In its latest Annual Report, Wilton Resources Corporation noted that the Group is developing a pilot production plant where mining of ore to be processed is scheduled to commence by the fourth quarter of the financial year ending 30 June 2016, and production is scheduled to commence in the first quarter of the financial year ending 30 June 2017; and that the Group will start with the pilot production plant having a capacity of 100 tonnes of ore per day – for more details please click here.

CNMC Goldmine Holdings

CNMC Goldmine Holdings is headquartered in Singapore, the company started operations in 2006 and is principally involved in the exploration and mining of gold and the processing of mined ore into gold dores.

CNMC is currently focused on developing the Sokor Gold Field Project located in the State of Kelantan, Malaysia. Spanning an area of 10km2, the project has identified four gold deposit regions, namely Manson’s Lode, New Discovery, Sg. Ketubong and Rixen.

As of December 2014, the Sokor Gold Field Project had JORC-compliant gold resources (inclusive of ore reserves) of 10.81 million tonnes at a grade of 1.5 g/t in the Measured, Indicated and Inferred categories for a total of 506,000 ounces. The project achieved its first gold pour on July 21, 2010. As at July 18, 2014, it had produced more than one metric tonnes of Gold Bullion. For the company’s recently reported full year results, please click here.

Singapore’s Mining Plays

Anchor Resources listing on SGX today has also taken the number of mining plays listing for trading on SGX to 17. The 16 pre-exiting SGX-listed mining plays have averaged a 1.2 % gain in the month to date, bringing the year to date decline to 10.9%. In the year to date, the three best performing miners o have been GCCP Resources (+22.4%), CNMC Goldmine Holdings (+21.7%) and Wilton Resources Corporation (+13.8%). Together, these three stocks have averaged a 19.3% gain in the year-to-date.

Eight of these 16 stocks also represent 43% of the SGX Mineral, Oil & Gas Index. The Index has gained 3.9% in the month to date, which has trimmed its year to date decline to -8.3%.  Coinciding with swings in underlying commodity prices, the SGX Mineral, Oil & Gas Index is one of the most volatile indices, with a 30 day historical volatility at 39%. This means the SGX Mineral, Oil & Gas index has been almost twice as volatile as the STI over the past 30 sessions.  The eight mining stocks that are a part of the SGX Mineral, Oil & Gas index are Geo Energy Resources, Falcon Energy Group, GCCP Resources, CNMC Goldmine Holdings, Resources Prima Group, Alliance Mineral Assets, Sincap Group and Magnus Energy Group.

The table below details the 16 mining plays as of the close yesterday, 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 17 March 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 17 March 2016)

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.

Please note that companies listed on Catalist may carry higher investment risk when compared with larger or more established companies listed on the Mainboard of the SGX-ST. In particular, companies may list on Catalist without a track record of profitability and there is no assurance that there will be a liquid market in the shares or units of shares traded on Catalist. All three SGX-listed Gold Miners are listed on Catalist -  the listing of Anchor Resources brings the total number of companies on Catalist to 177, with a combined market capitalisation of S\\$9 billion.

More Facts on Gold

Want to find out more about risks and opportunities in gold mining?  Watch investor education web clips “Introduction to Gold Exploration, Mining & Processing”, presented by a global top mining expert  Click here to watch!