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Did a stop-work order trigger the sharp fall in CNMC Goldmine? | The Edge Markets
SINGAPORE (July 22): Shares in CNMC Goldmine Holdings plunged nearly 12% on Friday after the group made an after-market announcement on Thursday that it had received a temporary stop-work order from a Kelantan government agency.
In the past month, shares in CNMC Goldmine have been climbing steadily. On July 17, the stock peaked at 61 cents in tandem with a rally in gold prices driven by concerns over the impact of the UK’s withdrawal from the European Union on the global economy.
Since then, the stock has corrected but appeared to show more weakness in the days before the company called a trading halt on Tuesday. Company officials say that they requested the trading halt as soon as they were able to confirm the stop-work order had been issued.
CEO Chris Lim tells thedgemarkets.com he only knew about the stop-work order at noon on Tuesday while he was on his way to catch a flight back to Singapore from Kuala Lumpur.
He was in Kuala Lumpur to attend a meeting with officials of Pulai Mining and the Kelantan State Economic Development Corp (KSEDC), which is a partner in CNMC Goldmine’s 81%-held operating subsidiary, CNMN Mining Group.
CNMC Goldmine announced on June 28 that it had signed a letter of intent to acquire a 51% stake in Pulai Mining which holds a gold exploration and mining concession in Kelantan.
“I left the meeting early. At 12, I received a call from the KSEDC’s chairman asking if I had received a stop-work letter from (the Kelantan State Land and Mines Office),” says Lim. “I said no and immediately told my staff in Kelantan to check.”
It turned out that the Kelantan State Lands and Mines Office was in the process of sending the company a letter requesting it to stop operations temporarily at its gold mine in Sokor, Lim says.
As soon as a translation of the letter in English was sighted and after discussions with its sponsors, PrimePartners Corporate Finance, the company announced the trading halt at 2.20 pm, he says.
The next day, company chairman Lin Xiang Xiong, who is also Lim’s father, flew to Kota Bharu to find out why the stop-work order was issued.
The stop-work order is in relation to the company’s application for large scale operation status, which will allow it to mine unlimited amounts of ores in its concession.
Company officials say that they will be meeting officials from the state land and mines office soon to help them in their review of whether CNMC Goldmine meets requirements to be granted large scale operation status.
The company had applied to upgrade its operation scale as part of its bid to extend its concession life which expires in 2018 by 21 years.
CNMC Goldmine currently has the capacity to process one million tonnes of ores a year.
Company officials must have been relieved that the stop-work order came from the land and mines office which issues exploration and mining licenses and not from the environment or health departments.
Year to date, shares of CNMC Goldmine are still up 120%. As at 1.55 pm, it was trading at 41 cents.: 'via Blog this'
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