SGX Market Updates

SGX’s Three Gold Miners Report 1H2020 Earnings


PUBLISHED ON |

27 August 2020

  • SGX’s three gold mining plays – CNMC Goldmine, Wilton Resources and Anchor Resources – are in different stages of the gold exploration, development and production cycle.

  • The 1H2020 performances of the trio were impacted by COVID-19 lockdowns and travel restrictions, which curtailed operations. CNMC Goldmine swung to a 1H2020 net loss from a year-earlier net profit, but both Wilton Resources and Anchor Resources narrowed their net losses in 1H2020 y-o-y.

  • Gold has been on a general uptrend over the past few years, but COVID-19 has made the precious metals’ relevance as a hedge even more apparent, and accelerated its price performance. Bullion prices have jumped 17% over 1H2020, and gained an additional 10% in July. It surged to a fresh record, past the US$2,000/oz mark in early August.




SGX’s 3 gold mining plays – CNMC Goldmine, Wilton Resources and Anchor Resources – are in different stages of the gold exploration, development and production cycle.


CNMC Goldmine is engaged in the business of exploration, mining of gold and the processing of mined ore into gold dores.

  • The Group is currently focusing on the development of its flagship project – the Sokor Gold Field Project located in the State of Kelantan, Malaysia. The Group achieved its first gold pour on July 21, 2010. The Sokor Gold Field Project covers an area of 10km with 5 identified gold deposits namely, Manson's Lode, New Discovery, New Found, Sg Ketubong and Rixen.
  • As at 31 December 2019, the total Measured, Indicated and Inferred gold mineral resources at Sokor (above a 0.17 g/t gold cut-off grade at Rixen and for oxide rock at Ketubong, New Discovery and New Found and above a 0.5 g/t gold cut-off grade at Manson’s Lode and for transitional and fresh rock at Ketubong, New Discovery and New Found) amounted to 16,320 kt at 1.7 g/t gold for 900,000 ounces of contained gold (inclusive of material used to define Ore Reserves).

Wilton Resources is engaged in the exploration and mining of gold, and production of gold dore in Indonesia, a major gold producing country.

  • Rich in ore reserves and mineral resources, the Group’s Ciemas Gold Project, covering a total area of 3,078.5 hectares, is located in West Java, Indonesia.
  •  In the latest Independent Qualified Person’s Report (IQPR), it is estimated that the Ciemas Gold Project contains approximately 3,260 kt of ore reserves with an average grade of approximately 7.7 g/t of gold.
  • In terms of mineral resources, it is estimated that the Ciemas Gold Project has approximately 3,415 kt of measured and indicated mineral resources and 2,559 kt of inferred mineral resources, with an average grade of approximately 8.6 g/t and 6.5 g/t of gold respectively.
  • Besides seeking to develop gold deposits, the Group is exploring the potential of other mineralised areas of the Ciemas Gold Project to build sustainable value for its stakeholders.

Anchor Resources, together with its Malaysia subsidiaries, Angka Alamjaya Sdn Bhd (AASB), Angka Mining Sdn Bhd, Angka Marketing Pte Ltd and GGTM Sdn Bhd, are involved in the operations of gold mining and stone quarrying in Terengganu, Malaysia.

  • Its focus is on mining and production of gold at The Lubuk Mandi Mine and its processing facilities utilise the gold treatment and extraction method of flotation to produce gold from tailings material with gold recoveries.
  • In the dimension stone business sector, it has been granted a Dimension Stone Concession by Perbadanan Memajukan Iktisad Negeri Terengganu (PMINT) to extract dimension stone granite within a concession of 800 acres in Hulu Terengganu.

While gold stocks have a high correlation to physical gold, they are typically considered leveraged plays on the metal. In addition to bullion prices, there are also many other factors – such as corporate activity, currency, gold discovery, earnings power, operating efficiencies – that impact the price of gold stocks.

Mining companies may also often take up to 10 years or longer to develop their mining projects and bring them to production. While there are no upstream gold mining activities in Singapore, the city-state is home to downstream international gold refineries and bullion product manufacturing plants, with significant storage capacity through Singapore Freeport.

Gold has been on a general uptrend over the past few years, but COVID-19 has made the precious metals’ relevance as a hedge even more apparent, and accelerated its price performance. Bullion has always been recognised as a haven asset – one that gives investors protection and security during uncertain times. It also plays an important role in portfolio diversification.

Gold prices have jumped 17% over the first half of 2020, and gained an additional 10% in July. It surged to a fresh record, past the US$2,000/oz mark in early August, according to data from the World Gold Council (WGC).



CNMC Goldmine

  • In 1H2020, CNMC reported an attributable loss of US$0.90 million as revenue fell by nearly half from the same period last year to US$10.5 million, hit by an unrealised US$0.67 million foreign exchange loss stemming from the Malaysian ringgit’s depreciation against the US dollar in 1H2020.
  • Lower grade ore and a lull of seven consecutive weeks dented revenue, even though the Group fetched a higher average selling price of US$1,682.92/oz for its gold bars, compared to US$1,304.66 in 1H2019.
  • CNMC could not carry out any mining work between 18 March and 5 May as Malaysia had imposed a nationwide Movement Control Order (MCO) in an attempt to curb the COVID-19 outbreak.

CNMC GOLDMINE (US$ '000) 1H2020 1H2019 YoY Chg (%)
Revenue 10,471 20,383 -48.6
EBITDA 940.0 6,445 -85.4
Profit/Loss attributable to owners -903.2 2,213 NM



Wilton Resources

  • For 1H2020, Wilton sold a total of 3.1 kg of gold dore at an average price approximately US$ 1,662/oz of gold, and reported reported revenue of Rp 2.5 billion, as compared to nil in the previous period
  • Gross profit for the period was Rp 0.6 billion, compared to nil in the previous period

WILTON RESOURCES (Rp mln) 1H2020 1H2019 YoY Chg (%)
Revenue 2,498 0 NM
Gross profit 643 0 NM
Loss attributable to owners -136,745 -175,984 NM



Anchor Resources

  • Anchor reported revenue of RM0.05 million in 1H2020, reflecting a decline of 97.5%, as AASB did not record any sales for semi-processed gold concentrated ore.
  • The tailing processing plant stopped operating due to scheduled maintenance and subsequently, the Malaysian government’s implementation of MCO due to the COVID-19 pandemic.
  • The Group incurred net loss of RM6.03 million in 1H2020, compared to a loss of RM7.29 million in the previous period.

ANCHOR RESOURCES (RM '000) 1H2020 1H2019 YoY Chg (%)
Revenue 49 1,955 -97.5
Loss for the financial period -6,032 -7,290 NM



Outlook


CNMC Goldmine
  • With both China and Malaysia imposing travel restrictions to contain the virus, almost all of CNMC’s underground mining workers have not been able to return after travelling to Hubei province early this year for Chinese New Year holidays.
  • The official greenlight was given for some of them to fly back recently; upon arrival in Malaysia in the coming weeks, they will have to be quarantined for 14 days before they can travel to the Sokor gold project in Kelantan.
  • Underground mining is one of the Group’s growth engines going forward given its potential to yield high-grade gold ore.
  • Open-pit mining currently accounts for all of its gold output. The immediate focus for its open-pit operation at Sokor is a particular near surface zone it recently discovered that contains higher quality gold ore
  • Beyond gold, CNMC intends to produce feldspar on its own after its existing production agreement with a third-party contractor expires this year.
    • Doing so in-house is expected to yield higher profit margins over the long term.
    • Feldspar is a mineral used for making glass and ceramics.
  • We hope to ramp up gold production in the near term even as we push ahead with plans to monetise other minerals including silver, lead and zinc.
  • Barring unforeseen circumstances, the Group is counting on these growth strategies to bolster its fortunes in the months ahead.

 Click here for full results release.



Wilton Resources
  • The Group is working on completing the installation of the processing equipment and components for the 500-tonne processing facility.
    • The travel restrictions between China and Indonesia due to COVID-19 have delayed its Chinese contractor’s return to Indonesia to continue construction of the processing facility.
    • Work on site have also been affected and delayed due to the various measures by government to curb spread of COVID-19.
    • Wilton is exploring fund-raising options to finance the final stages of the infrastructure, civil works and other supporting infrastructure for the processing facility.
    • Gold production will commence upon completion of the facility.
  • Volatility of the US dollar-Indonesian rupiah exchange rate will continue to have an impact on the Group’s financial results.
  • On 6 March 2020, Wilton announced it will change its financial year end from 30 June to 31 December.
    • This announcement is in relation to the financial results for the six-month period ended 30 June 2020.
    • Financial results for the year ending 31 December 2020 will cover 18 months and will be released on or before 1 March 2021.

 Click here for full results release.



Anchor Resources
  • Anchor has entered into a deed of settlement with the holders of the Group’s Non-Guaranteed Bond I, Non-Guaranteed Bond II and Exchangeable Bond through the issuance of up to 249,200,000 new shares in the capital of the company and disposal of Angka Alamjaya Sdn Bhd (AASB), which is its subsidiary involved in gold mining. An extraordinary general meeting will be convened to seek the approval of the shareholders for the proposed settlement.
  • Lubuk Mandi Gold Mine
    • The Group planned to transfer AASB’s shares to a group of bondholders as settlement of the amount outstanding under the respective bonds.
    • It has also decided to dispose of its balance shareholding in AASB for a consideration of S$645,000, and exit the gold mining business.
    • It will continue to manage the AASB gold mining business on a transition period for a service fee of 4.5% on AASB’s revenue for one year, starting from the completion date of the bonds’ settlement.
  • Bukit Chetai Granite Mine
    • Workers in GGTM’s contractor for the mining operations are still currently unable to return to Malaysia due COVID-19 travel restrictions imposed by government. As such, there will be no material development at the Bukit Chetai granite mine until the workers return.
  • East Coast Rail Link
    • The Package A of East Coast Rail Link (ECRL) is expected to commence in 2H2020, after an approval to start construction works was granted to Malaysia Rail Link Sdn Bhd, the project owner of ECRL, by the Malaysian Land Public Transport Agency on 14 May 2020.
    • Anchor is working with the site owner and ECRL site manager to prepare for tenders for the project, as well as machinery and infrastructure to supply quarry aggregates of 20mm and ballast to the Pengkalan Berangan’s ECRL stations in Terengganu.
  • Pulau Muara Besar Refinery
    • The timeline to supply the quarry aggregates to Brunei’s Pulau Muara Besar Refinery project was delayed due to COVID-19 as Brunei has imposed travel restrictions affecting workers from China at the project site. Management will continue to communicate with SIVLI Sdn Bhd in Brunei on developments of the Pulau Muara Besar Refinery project

 Click here for full results release.






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