Singapore Daily Bulletin – 04/01/13

Gold Starts To Flow At Kelantan Plant
CNMC Goldmine Holdings announced yesterday that it has produced 740.82 ounces of gold dore bars at its new heap leach facilities. These semi-pure bars, which need further refining, were minted at its inaugural gold pour conducted last Sunday in Malaysia’s Kelantan state. The launch of the new heap leach facilities, delayed since its initial expected start date in 4Q11, had received approval from the Malaysian authorities on 6 November 2012. Operations started shortly after, the firm said. Chief executive officer, Chris Lim said: Production at CNMC’s facilities will go into full swing when the monsoon season ends next month. This would add about one million tonnes of processing capacity each year to the firm’s current 60,000 tonnes. Lim added: “However, the company’s more immediate plans are to expand its gold-extraction facilities, do more exploration work and increase its extraction of silver, lead and zinc to grow its revenue.” CNMC sells almost its entire output to local licensed gold buyers to minimise foreign exchange risk and for quicker cash flow.

Significance: The development shows that CNMC’s growth strategy is moving in the right direction and going forward CNMC will reap increased efficiencies in subsequent runs. Additionally, CNMC is likely to report higher resources later in the year, given efforts put into exploration following the completion of the construction of the heap leach.

Wheelock Increased Stake In Undervalued SC Global
Wheelock Properties increased its stake in SC Global Developments yesterday, paying $1.82 per share for 700,000 shares as it maintained its view that the property developer is undervalued. The move, which raised Wheelock’s stake by 0.17 percent to 16.77 percent, comes after its purchase of 2.098 million shares at between $1.815 and $1.82 on Wednesday. Tan Bee Kim, senior executive director Wheelock Properties (Singapore) Limited, said: “SC Global shares at the current price represent an attractive discount to value.” This coincides with the view maintained SC Global, which said last month, at $1.82, the share price represented a discount of some 40 to 50 percent of revalued net asset value, “and we would be unable to buy property assets directly at anything like these prices.” Simon Cheong, SC Global chief executive office, said on Sunday that he will not raise his $1.80 per share offer price to take the company private. The offer lapses on 16 January 2013.

Significance: An analyst cautioned that minority shareholders should not follow in Wheelock’s footsteps because if the company is taken private, Wheelock would still have some influence over the company, but minority shareholders would not. SC Global free float as at 3 January 2013 was 19.259 percent (excluding treasury shares).

Second Chance 1Q13 Earnings Falls 9.7 percent
Second Chance Properties reported net profit for 1Q13, of $3.35 million, down 9.7 percent from the $3.71 million it recorded a year ago. Second Chance’s bottom line was hit by a 27.7 percent drop in profit contribution at its properties business segment because of a $730,000 revaluation gain on properties held for sale recorded in the year ago period. This was partially offset by a $463,000 gain on fair valuation of securities held for trading for the quarter. Weaker gross profit margins at its gold business and a fall in sales also led to the profit decline. Revenue at Second Chance was flat at $9.39 million as better takings by is apparel business and securities arm overcame the turnover declines at its gold and properties. Second Chance said revenue improved 3.8 percent to $2.77 million from $2.67 million at its apparel business because it opened new shops in Malaysia. Securities’ turnover was $720,000, up 20 percent year on year. However, property – making up 60 percent of profit – saw rental revenue shrink 1.6 percent to $2.53 million from $2.57 million on the premise of rental income loss of around $0.13 million arising from sale of seven properties during FY12 which was partially offset by increased rental income of $0.09 million from a few lease renewals.

Significance: Second Chance expects its gold business to remain profitable in the current year amid volatile gold prices. As for its property business segment, it expects rental income for FY13 to remain stable at around the year ago period level.