SGX Market Updates

Industrial Mining Stocks Made a Solid Start to 2017


PUBLISHED ON |

30 March 2017

  • SGX lists four stocks focused on mining Industrial Minerals – Lithium & Tantalite, Phosphate, Limestone and Marble. Mining activities of these stocks span Australia, China and Malaysia. These minerals have diverse industrial applications – from agri-business to construction to health supplements.

  • Three of the four stocks have generated gains in 2017 YTD, with Lithium & Tantalite miner Alliance Mineral Assets the strongest performer of the four. The other two gainers were Marble miner Terratech Group and Limestone miner, GCCP Resources. The median YTD return of the four stocks was 22.3%.

  • Like the Coal and Gold mining companies, these four stocks are bound by additional SGX reporting requirements. Prior to listing, an offer document must establish the existence of adequate mineral resources, and under continuing reporting obligations, a company must announce any material changes to ore reserves or mineral resources.




Singapore lists a group of 11 stocks that are focused on mining exploration and production. The 11 stocks can be further grouped into Coal (discussed here), Gold (discussed here) and Industrial Minerals.

The four industrial mining companies are Alliance Mineral Assets (mines Lithium & Tantalite), AsiaPhos (mines Phosphate), GCCP Resources (mines Limestone) and Terratech Group (mines Marble). While listed in Singapore, the mining activities of the four stocks are located across the Asia Pacific.

The four companies were listed between 2013 and 2015, thereby making up more than a third of the 11 mining stocks currently listed in Singapore. Unlike the Gold and Coal listings, all of these Industrial Mineral plays were brought to the market through an Initial Public Offering.



Singapore’s Mining Stocks

Source: www.sgx.com/research
Note stocks in bold were brought to market by IPO, stocks not in bold were brought to market by RTO.



The four Industrial Mineral stocks have a combined market capitalisation of S$372 million which represents approximately 15% of the combined market capitalisation of the above illustrated 11 mining stocks.

Since CNMC Goldmine’s debut in 2011 the combined capitalisation of all mining stocks listed in Singapore has grown 12-fold. Singapore Mining Stocks now offer investors more choices to suite different risk & returns profiles. 



Singapore-listed Mining Stocks Market Capitalisation

Source: www.sgx.com/research (data as of 24 March 2017)



Recent Performance and Results of the Four Industrial Mineral Stocks

Of the four Industrial Mineral stocks, Alliance Mineral Assets has been the strongest performer in the year to date generating a total return of 334.1%. 

Mining stocks can be volatile due to the different stages of the exploration, discovery and production cycle. Mining exploration and production companies may undergo long periods of time without economic realisation, and may return to the market for several rounds of fund raising for further project development. Hence, a specific risk for these companies are that a mining stock may not progress to the next stage of development or to a stage where they are able to generate revenue.

While the average return of the four Industrial Mineral stocks was 91.5%, the less skewed median return of the four stocks in the year thus far was 23.3%.



Alliance Mineral Assets

Alliance Mineral Assets is a mining company headquartered in Perth, Western Australia. The company’s major asset is the Bald Hill Project which covers an area of 59,000 hectares and includes of four mining leases, eight prospecting licenses and eight exploration licenses.

Alliance’s Joint Venture partner has completed 193 Resource RC drill holes since December 28, 2016. Drilling has found numerous high grade Lithium and Tantalum intercepts, including clearly defined near surface spodumene pegmatites, which are rocks that contain a mineral type of lithium, located 800m from process plant site.  A feasibility study scheduled for completion within five weeks with the aim of commissioning of the spodumene concentrator in October 2017.  More details can be found here.

Lithium belongs to the group of alkali metals - the lightest of all metals and the least dense solid element. Demand for the soft, silvery white metal is driven by lithium-ion batteries used in electric vehicles, energy storage systems and mobile phones.

To read a recent market update about the recent performance of Alliance Mineral Assets, click here. To read the recent kopi-C: the Company brew profile of Alliance Mineral Assets, click here.

The table below details the four industrial mineral stocks sorted by market capitalisation. Click on each stock name to see its profile on StockFacts.

Name SGX
Code
Market Cap
S$M
Total
Return
YTD
%
Total
Return
1 Year
%
Mineral Recent QP/IQP Reports
Alliance Mineral Assets 40F 190 334.1 448.6 Lithium & Tantalite Click here
AsiaPhos 5WV 87 -14.4 -10.8 Phosphate Click here
GCCP Resources 41T 55 9.3 -67.4 Lime Stone In AR, Click here
Terratech Group 40I 40 37.2 15.7 Marble In AR, Click here
Average   91.5 96.5

Source: SGX, Bloomberg & SGX StockFacts (data as of 29 March 2017)




AsiaPhos

AsiaPhos has the rights to explore and mine phosphate, which is a non-renewable natural resource. The company maintains that Phosphate is the most widely used chemical fertilisers for plants and crops, with fertilisers representing approximately 80% of annual phosphate consumption.

With a view to enhancing the value of the natural resource and extending its product range, AsiaPhos adopts a vertically-integrated strategy to process and refine raw phosphate rocks and produce downstream phosphate-based chemical products which will include P4, phosphoric acid, STPP and SHMP and other phosphate chemicals.

For FY2016, AsiaPhos reported total revenue of S$34.3 million compared to S$44.5 million a year ago. The net attributable loss was S$1.7 million compared to net profit of S$ 2.2 million a year ago. The group's net asset value per share as at 31 December 2016 was 10.10 cents, from 10.71 cents the year before. Last week, AsiaPhos completed a Follow-on Equity Offering to the amount of S$4.2 million.



GCCP Resources

GCCP Resources is principally engaged in the business of quarrying and the processing of calcium carbonate by crushing the quarried calcium carbonate into varying particle sizes as required by its  customers. Its business operations are principally located in Simpang Pulai, Ipoh, Perak, Malaysia.

For FY2016 the Group reported a total comprehensive loss for the year attributable to owners of the company of MYR 10.3 million compared to a loss of MYR 19.0 million a year ago. The Group reported an increase in revenue to MYR12.2 million in FY2016 compared to MYR3.0 million in FY2015, on the back of an improved sales of crushed stones from the Gridland Quarry. More details can be found here.



Terratech Group

Terratech Group engages in the exploration, development, quarrying, extraction, removal, and sale of marble and other stones in Malaysia. The company operates the Kelantan Marble Quarry comprising four hills located at Mukim Ulu Nenggiri, Jajahan Gua Musang, Kelantan.

For the nine months ending 31 December 2016, the company reported revenue of S$8.8million compared to S$8.4 million a year ago. Loss after income tax was S$3.0 million against a loss of  S$2.3 million a year ago. Purchases of property, plant and equipment was S$0.448 million against S$0.500 million a year ago. For the quarter ending March 31, 2017, the company expects use of cash for production activities of S$0.445 million.



Additional Reporting Requirements for Mining Stocks

The SGX Listing Rules for mining plays recognise international best practices in reporting standards - specifically JORC and NI43-101. Typically these reports will include the technical basis on which statements of reserves, resources or exploration results are made.

Like the Coal and Gold mining companies, these four stocks are bound by additional SGX reporting requirements. Prior to listing, an offer document must establish the existence of adequate mineral resources, and under continuing reporting obligations, a company must announce any material changes to ore reserves or mineral resources.

Some of the reporting requirements for mining companies require the input of a Qualified Person (QP) or an Independent Qualified Person (IQP) as tabled below.

Reporting Event Type of Report Required
(IQP/QP) IQP
Initial Listing  
Material changes in reserves or resources  
Reporting of new material reserves or resources for the first time  
Announcement of a material change in existing reserves or resources  
Major Acquisition or Disposal under Chapter 10  
Annual Report  

Source: SGX Investor’s Guide to the Minerals Industry (click here)



The minimum credentials to be a QP and IQP can be found in the SGX Investor’s Guide to the Minerals industry which also contains more information on the minerals industry. The guide can be accessed vis the following link.







This article is provided by SGX My Gateway.



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