foong chong lek - singapore exchange session - listing as a form of raising capital for exploration...

Presentation to Asian Mining Indaba

Foong Chong Lek

Listings – Mineral, Oil & Gas

Associate Director

31 October 2012

SGX The Asian Gateway SGX The Asian Gateway

Contents

1

Overview of Singapore and SGX 1 02

Access the Wealth Management Hub of Asia 2 08

IPO Market Performance 3 13

Page

The Listing Choice in Asia

Strong Valuations & Liquidity 4 16

SGX Mineral, Oil & Gas Sector 5 18

Case Studies: Sakari, CNMC and Liongold 6 22

Efficiency to Meet Your Needs 7 31


Wealth hub with largest institutional investor base in Asia

– >US$1.8 trillion assets under management

Asian logistics centre and maritime hub

– World’s largest bunker port and 2nd largest container port

Trading centre for commodities

– 300 global trading companies

– 90 top global traders globally/regionally headquartered here

World’s 4th largest foreign exchange trading centre

– >US$330 billion average daily volume in 2010

Home to global companies

– Asia Pacific headquarters to >1/3 of Fortune 500 companies

2 The Listing Choice in Asia

Singapore: A Global Financial Centre

World’s Best Place for Doing Business


Non-Singapore

40%

Singapore

60%

UK 76%

Non-UK 24%

SGX – A Truly International Exchange

The Listing Choice in Asia 3

London Stock Exchange New York Stock Exchange Hong Kong Stock Exchange Tokyo Stock Exchange

Singapore Exchange

Southeast Asia

19% India

1%

Greater China

68%

Japan & Korea, 3%

Australia, 3%

Europe, 3%

US, 2%

Others, 1%

Country of Origin for Overseas Companies

Source: Bloomberg & Singapore Exchange , Aug 2012

775 Listed Companies,

Market Capitalisation

US$720 billion

US 93%

Non-US 7%

China 98%

Non-China 2%

Japan 100%

Non-Japan 0%


Diversity of Industries


Breakdown by Number Breakdown by Market Capitalization

Source: Bloomberg, by ICB Classification, Jul 2012

Financials 14%

Industrials 36%

Consumer Services

10%

Consumer Goods

15%

Telecoms 1%

Oil & Gas 4%

Basic Materials

7%

Technology 9%

Healthcare 3%

Utilities 1%

Financials 39%

Industrials 20%

Consumer Services

13%

Consumer Goods

9%

Telecoms 9%

Oil & Gas 5%

Basic Materials

1%

Technology 1%

Healthcare 2%

Utilities 1%

SGX The Asian Gateway SGX The Asian Gateway 5

Marine and Oil

& Gas Services

Asia’s largest cluster of listed companies (44 companies)

Market Cap: US$50 billion

Financials Sector listings includes three of the world’s six strongest banks (37 companies)


Real Estate Asia’s broadest range of REITs covering Asian assets (71 companies)


Infrastructure

Innovative Business Trusts offering access to Asian infrastructure investments (11

companies)


Healthcare

Full range of companies from pharmaceuticals, healthcare services to medical

devices technology (26 companies)


Resources&

Commodities

Growth sector including world’s largest palm oil company (34 companies)



Top Sectors on SGX

Source: Bloomberg & Singapore Exchange, Jun 2012


Trading Asia in One Place


Equity Derivatives China and India Asian companies

listed in US Commodities Bonds

Asia’s most

international

listing venue

775 listed

companies

Asia’s leading

ETF venue

Single point

access to Asian

markets

Covering 80% of

Asia’s equity

markets

Only exchange

outside China to

offer futures for

exposure to

China’s 50 largest

companies.

Futures contracts

on India’s largest

companies

ETFs

Bonds

Large Asian

companies traded

on newsflow in

Asian time zone

as ADRs

Trading:

Rubber

Fuel oil

Copper

Zinc

Aluminium

OTC Clearing:

Rubber

Coal

Iron Ore

Freight

Energy

Asia’s bond

centre

1446 bonds

30 countries

10 currencies,

including RMB


Fund-raising in Singapore Proven in Bull & Bear Markets

Deep Market for Capital Raising


0.3 1.1 1.1

2.2

3.9 5.3 5.7

1.4 2.3

5.0

8.3

1.5 1.4 1.4 1.3

1.8

2.7

2.8

10.5

2.9

15.2

3.5

5.0

1.7

0

2

4

6

8

10

12

14

16

18

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012/08

Fu

nd

s R

ais

ed

(U

S$b

illio

n)

Secondary Fundraising

IPO Fundraising

SGX The Asian Gateway

Access

Wealth Management Hub of Asia



Over US$1.8 trillion AUM1

– Institutional Funds >US$1,100 billion

– Private Wealth Management >US$400 billion

– Temasek and GIC >US$300 billion

Over 2,500 investment professionals

AUM in Hong Kong about US$1.3 trillion2

World's largest wealth management centre by 20133

Singapore: Wealth Management Hub of Asia

9

Sources:

1 MAS 2010 Survey report, industry sources, Temasek and GIC annual reports 2011

2 HK SFC 2010 Survey report

3 PWC Global Private Banking and Wealth Management Survey 2011



Aberdeen Asset Management

Artisan Partners

Blackrock Fund Management

Blackrock Asset Management

Capital Group Investment

Capital Research

Credit Sussie Asset Management

DBS Asset Management

Deutsche Asset Management

Fidelity International

Hartford Investments

Invesco Asset Management

JF Asset Management

JP Morgan

Global Investors in Singapore

10

JP Morgan

Legg Mason International

Legg Mason Global

Lion Group Investor

Lion Group Global Investment

Morgan Stanley Investment Management

Nomura Asset Management

Och-Ziff Capital

Prudential Financial

Schroder Investment Management

Temasek Holdings

UBS Strategy Fund Management

UOB Asset Management

Vanguard Group

Source: Bloomberg (Jan 2012)

The Listing Choice in Asia The Listing Choice in Asia


Active Retail Investors’ Participation

Company

Amount

Raised

(US$mn)

Public

Offer Size

(US$mn)

Retail

(Public Offer only)

Subscription Rate

Retail Subscription

Amount (US$mn)

HUTCHINSON PORT HOLDINGS 5,500 187 2x 281

MAPLETREE COMMERCIAL TRUST 709 96 5X 525

GLOBAL LOGISTIC PROP LIMITED * 2,111 154 11x 1,689

MAPLETREE INDUSTRIAL TRUST * 655 76 28x 2,108

SABANA SHARI'AH COMPLIANT REIT 491 60 12x 739

CACHE LOGISTICS TRUST 304 26 20x 525

SRI TRANG AGRO-INDUSTRY PUBLIC

COMPANY LIMITED** 264 19 1x 21

TIGER AIRWAYS HOLDINGS LIMITED 198 13 23x 306

SHENG SIONG GROUP 86 4 6X 21

BUMITAMA AGRI LIMITED 176 9 40x 367


Singapore retail investors can subscribe for IPOs via 2,000 ATMs

Note: * Both of these listed during the same week of 18 Oct 2010

** Thai-listed and subsequent dual primary listing SGX; currently at premium to offer price

Source: Company announcements


South & Southeast Asia:

– 11,000 Indonesian citizens have custodian accounts with our depository

– 170,000 Malaysian citizens have custodian accounts with our depository

– 14,000 Indian citizens* have custodian accounts with our depository

China:

– QDII funds can invest in Singapore given MOU between MAS and CSRC for examples ChinaAMC

Global Selective Fund, China International Fund Management Co Ltd and ICBC Credit Suisse Asset

Management Co., Ltd

– Prominent Chinese investors in Singapore include Alibaba and Bosera, China Investment Corporation,

Sinochem, Petrochina and Huaneng

– Chinese citizen may remit up to US$50,000 overseas annually, per State Administration of Foreign

Exchange rules and may freely open trading and banking accounts in Singapore

– 23,000 Chinese citizens have custodian accounts with our depository

Asian Investors in Singapore


* Indian resident investors are allowed to invest up to US$200,000 outside India

Note: Bosera is the discretionary manager of certain equity portfolio of the National Council for Social Security Fund of the PRC


IPO Market Performance



21 out of 24 IPOs this year opened up from

their offer price, with opening premiums

ranging between 5% and 55%

These 22 IPOs closed with a weighted

average return of 11% on their first trading

day.

Post IPO, the YTD weighted average return

stands at a healthy 17%

As an IPO destination in 2012, SGX offers

one of the world’s best performing and

stable stock markets, with the STI gained

13.8% till end-Sep 2012, ahead of Nikkei

225, Hang Seng Index, S&P/ASX 200 Index.

The STI is also the least volatile over the

last year.

Strong SGX IPO & Market Performance in 2012

14

Source : Bloomberg and SGX, 19 Oct 2012

* Sign up now at www.sgx.com/mygateway to receive our investment

updates & economic calendars

http://www.sgx.com/mygateway


Civmec (oil & gas support)

Listed on SGX on 13 April 2012

Business is heavy construction and engineering for offshore oil & gas, mining, others

Raised US$32mn with IPO market capitalisation of US$160mn

Opened at a premium of 48% (Issue price of S$0.40)

As of 26 July 2012, trading at a premium of 175%

Turnover of 200% of IPO market cap

Recent IPO Performance

Geo Energy Resources

Listed on SGX on 19 October 2012

Coal mine owner and operator, based in Kalimantan, Indonesia

Raised US$77million with IPO market capitalisation of US$307million

Attracted subscription monies of S$272 million, which is 2.9 times available shares

Issue price of S$0.325, closed 1st day of trading at S$0.435, a 34% premium

Turnover of S$150mn trades, which is 1.5 times float and 39% of IPO market cap



Strong Valuations and Liquidity

Obtain the right value for your business



Source: Morgan Stanley Research - Asia Macro Report May 2012

Consensus 2012 Estimate PE shows Singapore (13.2x)

has higher valuation than HK (8.4x)


The PE comparison

from July 2009 to April

2012,

PE of MSCI HK

declined from

23.9x to 9.2x while

PE of MSCI

Singapore was down

from

16.1x to 12.7x. Source: Bloomberg, 15 May 2012


SGX Mineral, Oil & Gas Sector



SGX Minerals Sector


Minerals Cluster

Sakari Resources

Liongold

CNMC Goldmine Holdings

Abterra

Growing cluster with turnover velocity of 159%



Market Minerals Annual TOV

Australia 82%

Canada 131%

Hong Kong 33%

London 54%

Singapore 159%

Turnover Velocity: SGX vs Other Major Markets

20

Note: For the period 1 Jun 2011 – 31 May 2012

Sample for Australia, Canada, Hong Kong and London based on ICB Sector classification

Source: Bloomberg, SGX data

High relative annual turnover velocity shows market demand and investor interest



Go further with SGX’s higher turnover velocity

21

Coal

Miners

Top 3 TOV* Market Cap

(US$ bn)

Sakari

(SGX)

144% 2.1

Hidili

(HKEx)

120% 0.6

Shougang

(HKEx)

98% 1.6

Gold

Explorers**

Top 3 TOV* Market Cap

(US$ mn)

LionGold

(SGX)

349% 628

CNMC

(SGX) ***

318% 125

G-Resource

(HKEx)

49% 924

Driven by scarcity value and investor interest, SGX resource stocks have higher turnover velocity (TOV) vs HKEx

Source: Bloomberg

Note: * TOV is the value of equity traded for the period 1 Jun 2011 – 31 May 2012 divided by the average market capitalisation.

** Gold explorer defined as those gold exploration companies without significant revenue or profit

*** CNMC IPO on Catalist was on 28 October 2011. The figure is for the 7 months of trading on IPO market cap base.



Case Study

Sakari Resources (formerly known as Straits Asia

Resources)



Sakari Resources (SAR, formerly known as Straits Asia Resources) listed on the

SGX Mainboard in Nov 2006

SAR is a spin-off of ASX-listed Straits Resources Ltd’s (SRL) Indonesia coal assets

SAR enjoyed a valuation uplift

Sale of 60% SRL’s wholly owned sub SBI (owns 47% of SAR) to PTT in Mar 2009

VGO completed by PTT in Oct 2012, at 27.5% premium

Case Study: Sakari Resources

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

Straits Asia Resources (SGX) Straits Resource Limited (ASX) FTSE STI S&P ASX 200

23

Rebased to N

ov ‘06 p

rices


Spin off to SGX can unlock value


Better Liquidity on SGX

Name

Total 12 month traded value

(US$ bn) Average Market

Cap (US$ bn) Turnover Velocity

(12 months) # of Analysts

Covering 2

Sakari Resources Ltd (SGX)3 3.35 2.27 147% 13

Bumi plc (LSE) 4 0.48 3.50 14% 3

Note: 1. Bumi plc completed the transactions to acquire stakes in Pt Bumi Resources and PT Berau on 4 March 2011

2. Bloomberg and Reuters 7 March 2012.

3. Sakari covered by BofA, CreditSuisse, Goldman, Macquarie, Standard Chartered, Nomura, UBS, CIMB, DMG, EVA, IIFL, OCBC, OSK

4. Bumi plc covered by Nomura, Religare and Liberum

Source: Bloomberg, Reuters

Sakari (SGX) vs Bumi plc (LSE) from 4 March 2011- 3 Mar 2012 1



Better Valuation on SGX

Note: 1. Bumi plc is still loss making has not reported full year results yet. Thus we are using EV / Reserve and EV / Resource as metrics

2. Enterprise Value = Market Cap + Net Debt, used market cap on 3 Mar ‘12 and the latest financial statements. For Sakari, this is Full

Year 2011 announcement on 14 Feb 2012, while for Bumi plc this is Half Year 2011 announcement on 17 August 2011.

3. Attributed to Bumi plc which owns 29% of PT Bumi Resources and 85% of PT Berau.

4. Reserves are economically mineable. In the above table are the sum of Proven and Probable Reserves.

5. Resources are measured and/or indicated at high and/or reasonable levels of confidence, including Reserves. In the above table this

is the sum of Measured and Indicated Resources.

Source: Bloomberg, Company Prospectus, Annual Reports, Company Announcements

Sakari (SGX) vs Bumi plc (LSE) 1

Name Enterprise

Value 2 (US$bn)

Attributed3 Reserves 4

(mn Tons)

Attributed Resources5

(mn Ton) EV / Reserves (US$ / Ton)

EV / Resources (US$ / Ton)

Sakari Resources Ltd (SGX) 2.5

116

972

22.1

2.6

Bumi plc (LSE) 3.4

543

2,553

6.2

1.3



Case Study

CNMC Goldmine Holdings Ltd



S$0.30

S$0.35

S$0.40

S$0.45

S$0.50

S$0.55

S$0.60

CNMC Share Price Since IPO

Closing Price

Gold exploration and mining in Sokor, Kelantan, Malaysia

IPO on 28 October 2011 with IPO market cap of S$161mn (issue price S$0.40)

Share price at close of first day of trading was up 24%

Turnover on first day of trading was 30% of IPO market cap

In the 7 months since listing, turnover is 318% of IPO market cap. No PE as loss

making and free float of 35% (Bloomberg)

IPO resource base of 148koz . Increase to 302koz (Nov ‘11), then 407koz (Apr ‘12)

Case Study: CNMC Goldmine IPO


Global top performing IPO debut by a gold mine in 2011

Valuation uplifts on IPO debut


Formation

– CNMC (HK) incorporated on 28 Oct 2006

– 21 Nov 2007 & 20 Jun 2009 subscription of shares by key directors / founders

Pre-IPO round (28 Oct 2009 – 15 Nov 2010):

– entered into several convertible loans with pre-IPO investors

– Total S$6.35 mn

– Allotment of shares on 9 July 2010 and 14 Oct 2011

Restructuring

– CNMC (HK) acquired by CNMC Goldmine Holdings Ltd (to be listed) on 9 Oct 2011

– IPO on 28 Oct 2011

– Pre-IPO investors received ~S$13.6 mn value of shares at IPO price of S$0.40

– Absolute return of 2.1x, or a discount of ~53% to IPO price

Key Milestones (based on prospectus)



Case Study

LionGold



S$0.35

S$0.45

S$0.55

S$0.65

S$0.75

S$0.85

Jul '10 Oct '10 Jan '11 Apr '11 Jul '11

LionGold Share Price Market Cap increase of over US$200mn

Acquired concessions (US$35mn)

Listed on SGX in 2005 as Asia Tiger, then subsequently changed name twice

Acquired gold concessions in Mali in Dec 2010 for US$35mn

Market capitalisation jumped by over US$200mn (Jun ‘12: US$670mn, price S$1.00)

Annual turnover velocity of 350%, no PE, free float of 73% (Bloomberg)

Acquired Signature Metals (Mar ‘12), bid for Castlemaine (Apr ‘12), Brimstone (Jun

‘12) and Republic Gold (Jun ‘12)

Concessions include those in Ghana, Mali and Mongolia

Case Study: LionGold


Latent market demand for Minerals companies


SGX


Your Exchange in Asia


SGX Securities Markets


Exchange-regulated

& supervised

Exchange-regulated,

Sponsor-supervised

Established Companies Fast-Growing Companies

Exchange Sponsors

Established branding

Access to a wider range of

institutional investors

More product types

Faster time to market

Easier corporate actions

Regulatory Approach

Target Companies

IPO Review & Post-IPO Supervision

Key Benefits

Mainboard Catalist


Short review process: 6-8 weeks

No restrictions on cornerstone and pre-IPO investors

partaking in public offer

No requirement on public tranche offering allocation

No minimum profit requirement

No restrictions on paid-up capital

Minimum public float of between 12-25%

For secondary fund raising, issuers may issue up to 50% of

issued capital under the share issue mandate

Prospectus only need be in English

Market Oriented Regulatory Framework



Quantitative Criteria

34

(a) Minimum pre-tax profit of at least S$30 mn for latest financial year; OR

(b) Profitable in latest financial year with operating track record of 3 years and

market capitalisation of at least S$150 mn; OR

(c) Positive operating revenue in the latest financial year and a market

capitalisation of at least S$300 mn

AND must have minimum IPO share price of S$0.50

Mineral, Oil & Gas (MOG) explorers with adequate resource yet without financial

track record can gain admission via the MOG listing rules

(a) No quantitative requirement (Sponsor prescribes in-house criteria)

Mineral, Oil & Gas (MOG) explorers with adequate resource yet without financial

track record can gain admission via the MOG listing rules

Mainboard

Quantitative

Criteria

Catalist

Quantitative

Criteria



Criteria for Admission

– No revenue or profit requirements

– For minerals companies, established “indicated resources”

– For oil & gas companies, established "contingent resources”

– For Mainboard, market cap of at least S$300mn

Qualified Person's Report

– Not older than 6 months before date of lodgment

– Qualified Person professionally qualified, with at least 5 years relevant experience, and a

member/licensee of a self-regulatory professional organisation

Accepted Technical Standard: JORC, NI43101-PERC, SPE-PRMS

– Valuation: VALMIN

Other requirements (see rules):

– Working Capital Requirement of 18 months from date of lodgment

– For Mainboard, an independent director with appropriate industry experience & expertise

Summary of Mineral Oil & Gas Listing Rules


Principal activity is exploration for or extraction of minerals, oil or gas (MOG)


SGX organises investor education

seminars

– Relevant topics in Minerals, or Oil & Gas

– Target audience is Investors (retail &

professional), analysts, media, remisiers,

regulators, bankers, etc.

– Short sessions, free attendance, usually

held at SGX Auditorium

Noteworthy sessions and speakers

– Peter Stoker, Chairman of JORC, on

“Intro to Minerals Industry”

– Barney Guarnera, Chairman of Behre

Dolbear on “Gold Exploration & Mining”

– Other topics: Coal Exploration & Mining,

Valuation of Minerals Companies, etc.

– More than 2,600 attendees

Investor Education to Build the Ecosystem



Fast Time-to-Market - Equity Issue Timeline


Trading

Commences Pre-consult SGX & MAS

Concurrent Review

6-8 weeks 2 weeks 1 - 2 weeks

Lodgment and

Public Exposure

on OPERA

Registration

& Launch

Mainboard Timeline

Trading

Commences Notification to SGX

4 weeks 2 weeks 1 - 2 weeks

Lodgment and

Public Exposure

on Catalodge

Registration

& Launch

Catalist Timeline


The Straits Times Index (STI) attracts an estimated US$23 billion from tracker funds

(based on industry estimate of 9% of free float), and inclusion into STI would invite

liquidity from such funds

Secondary listings can be included in the benchmark Straits Times Index (STI)

An issuer can be fast tracked into STI at close of first trading day if its market cap

exceeds 2% of that of FTSE ST All-Share Index

Half yearly review for otherwise new admission into STI

Key criteria for STI inclusion:

Largest 30 companies by market capitalisation

More than 15% free float (across all fungible markets)

At least 0.05% turnover (median daily trade per month)

Index Inclusion



Asia’s lowest trading costs with no stamp duty and no sales tax

In Hong Kong, a US$10 billion company with 100% annual turnover velocity will

cost its investors US$20 million in stamp duties. No such stamp duties are

charged in Singapore.

Lower Trading Costs for Investors


Cost of securities trading

0

2

4

6

8

10

12

Singapore Hong Kong

Tax

Broker Commission

Exchange Fees

To

tal

Fee

s (

bp

s)


Support and Partnering as a Listed Company

40

BOARD EXCELLENCE

Board Effectiveness Service

(Heidrick & Struggles)

Board Management Tool

(NASDAQ – Directors Desk)

Board D&O Survey

(AON)

Corporate Governance Education

Programs

(Singapore Institute of Directors)

CORPORATE ACTIONS

Dividend Distribution

(CDP)

Capital Raising

(CDP - Rights issue/bonus issue/stock

splits/share buyback/private placement)

Shareholding Services

(CDP)

Proxy and Poll Voting

(Broadridge)

INVESTOR OUTREACH

Company Research

(S&P - SERI Plus)

Corporate Intelligence

(NASDAQ- CI)

Investor Relations Website Hosting

(NASDAQ – Web360)

Media Solutions

(NASDAQ - Audio/Video;

Xpress Holdings – Print/Bind)

Corporate News Distribution

(NASDAQ – GlobeNewsWire)

Investor Road Shows

(SGX, UBS & DBS)



Summary of How You Can Benefit

41

Listing of your company on SGX – get the most of profiling and liquidity 1

Conduct Investor Education to raise your profile 2

Be available to serve as an Independent Director 3

Base your equity research analysts in Singapore 4

Base your professional services (geology, mining engineering, valuation) 5


This presentation is being made available to certain authorized recipients for their general information only.

While SGX and its affiliates have taken reasonable care to ensure the accuracy and completeness of the information provided in this presentation, they will not be liable for any loss or damage of

any kind (whether direct, indirect or consequential losses or other economic loss of any kind) suffered due to any omission, error, inaccuracy, incompleteness, or otherwise, any reliance on such

information. Neither SGX nor any of its affiliates shall be liable for the content of information provided by or quoted from third parties. Examples provided are for illustrative purposes only. The

information in this presentation is subject to change without notice.

Any recirculation, transmission or distribution of this presentation or any part thereof by any third party requires the prior written permission of SGX. SGX and its affiliates disclaim all responsibility

and liability arising in connection with any unauthorised recirculation, transmission or distribution of this presentation or any part thereof.

© SGX Ltd, November 2010

www.sgx.com

Thank You

42

Singapore Exchange • London • Tokyo • Beijing

2 Shenton Way, #19-00 SGX Centre 1, Singapore 068804

Main: (65) 6236 8888 Fax: (65) 6535 6994


For more information, please contact:

Foong Chong Lek

Listings – Mineral, Oil & Gas

[email protected]

(65) 6236 8280

foong chong lek - singapore exchange session - listing as a form of raising capital for exploration...

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