LionGold Corp Ltd - Where are the S$22 mln proceeds from the sale of its environmental business?

21/10/2013 – LionGold Corp Ltd is known as Southeast Asia's largest listed gold miner.

But before it started investing in resources, its name was The Think Environmental Co Ltd, investing in renewable energy businesses.

But just like its acquisitions of gold mining assets, LionGold's disposal of associates and subsidiaries raise several questions that need to be asked.

In this report, we revisit its sale of a subsidiary and three other associate companies.

It all began on March 24, 2011, when LionGold sold its 60%-owned subsidiary, Flagship Ecosystems Investments Pte Ltd (FESI), and a 30%-associate Luoyang Sing-yu Energy Company Limited (LSECL) to Opulent Investments Ltd for an aggregate consideration of S$8.2 mln.

Out of that, S$5.2 mln was for a 60% stake in FESI and the remaining S$3 mln for a 30% stake in LSECL.

Opulent Investments Ltd, a company incorporated in the Marshall Islands, was wholly-owned by Mr Wan Nizamuddin Bin Wan Sulaiman, a Malaysian entrepreneur.

Mr Wan was introduced to LionGold by Ms Wong Choy Yin, the then-CFO and an executive director of LionGold.

Ms Wong resigned on August 31, 2012.

According to LionGold's 2011 annual report (page 32), the S$3 mln consideration for a 30%-stake in LSECL was received during FY2011.

But some things don't add up regarding the sale of 60%-owned subsidiary FESI.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. Where on its books can we find the remaining S$4 mln from the sale of a 60% stake in FESI?

On page 33 of the 2011 annual report, LionGold claims to have received only S$1.28 mln consideration from the sale of a 60% stake in FESI.

But according to its March 24, 2011 announcement, Opulent Investments Ltd had agreed to pay S$5.2 mln.

In that announcement (page 2), LionGold disclosed to have loaned S$3.9 mln to FESI.

Opulent Investments Ltd might have repaid that S$3.9 mln loan to LionGold, but we couldn't spot the cash inflow in the cash flow statement of LionGold for the year ended March 31, 2011.

Investors would much appreciate if the company could help trace the cash inflow of the remaining S$4 mln from the sale of a 60% stake in FESI.

Question

2. Did Opulent Investments Ltd ever exist?

We are confused because Opulent Investments Ltd doesn't exist in the Marshall Islands' Register of Companies (search for yourself here).

The only result that comes up is 'Opulent International Co., Ltd' which was incorporated on July 28, 2011 – four months after March 28, 2011 when Opulent Investments Ltd bought the stakes from LionGold.

Had it been the case that Opulent Investments Ltd was wound up, the Marshall Islands' Register of Companies would still contain its name and display 'Inactive/Dormant' entity status.

Interestingly, LionGold's announcement from March 24, 2011 didn't share the 'Company Registration Number' of Opulent Investments Ltd.

Please can LionGold advise these details about Opulent Investments Ltd?

(Total:6 questions)

We have sent these questions to the company’s Director - IR, Ms Lesley Bendig (lesley.bendig@liongoldcorp.com), and Manager - IR, Ms Pak Yudan (IR@liongoldcorp.com), to invite them for an on-camera interview, and/or seek their written response.

Sofar, we have not had a reply (which is why you are seeing this message).

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