CNMC Goldmine Holdings Limited

CNMC Goldmine Holdings Limited ("CNMC" or "the Company") is placing out 41m Placement Shares in its IPO on Catalist. The Company is selling 23.9m New Shares and 17.2m Vendor Shares at $0.40 each. There is no public tranche and the offer will end on 25 Oct 2011 at 12pm. The Company is principally engaged in the business of exploration and mining of gold and processing of mined gold ore and owns the mining rights to a plot in Malaysia.


The Company has no revenue in FY2008 and FY2009. In FY2010, its revenue was US$530,169 but its loss was US$1.93m. In Q1 2011, the Company continued to incur a loss of US$668,655 and the loss per share was US$0.17. I thought it was somewhat confusing to state that the NAV per share was US$0.50 on page 31 and the another figure of Singapore 1.64 cents on page 48. Accordingly, the NAV per share is Singapore 3.61 cents post IPO placement.


There is no PER ratio to start with as the Company had been incurring losses. The market cap based on the 40c IPO price was S$162 million.


According to the prospectus, you might be interested to know that there is currently a pending law suit from Falmac against 2 of its ex-directors, Choo Chee Keong and Kuan Cheng Tuck for a breach of fiduciary duties. If they are found to be in breach, then it is likely they will be barred from any directorship for a few years. There were also other disclosure pertaining to directors Lin Xiang Xiong and Lim Kuoh Yang regarding bankruptcy petition and traffic offence... (first time i see such a long comprehensive list on pages 170-173)...but none of the directors look like a mining expert to me.


The whole shareholding structure looks like a typical Pre-IPO deal which Choo Chee Keong is very familiar with , with many BVI companies and individuals coming in prior to its IPO. From the way it is initially set up, my guess is that the Company wanted to list in HK but subsequently decide to list here instead.


The independent valuation states that the Fair Market Value is reasonably stated as between S$87m to $118m. Personally i am no mining expert and i have no idea how to read the independent valuer's report nor value its reserves and I am not sure whether the valuer is worth its salt or not... As such, i will not comment on the valuation of this company. I believe the current balance sheet does not reflect the value of the potential production of the mine...which is why the Company is able to list at a huge premium to its NAV.


Anyway the entire share is being placed out, thus there is no public tranche. I am not sure how to value it, i am no fan of the IPO king and i will not touch it. Only time will tell if this Company is worth its gold.