NEW CAPITAL MARKET FOR RESOURCE INDUSTRY: HONG KONG

Written on the 10 June 2010

NEW CAPITAL MARKET FOR RESOURCE INDUSTRY: HONG KONG

BACK in October 2009, we alerted you to proposed changes that the Hong Kong Securities Exchange (HKSE) flagged to relax the eligibility criteria for mineral companies seeking admission.

The recent finalisation of these changes (due to commence this month) is a real win for exploration companies looking for access to the very active Hong Kong markets.

While the HKSE has been willing to consider applications from mineral companies on a case-by-case basis for some time, this ad hoc approach left the landscape full of uncertainty for new applicants. In contrast, the new rules provide clear guidance to issuers participating in the natural resources industry.

Previous rules required mineral companies to meet onerous financial tests on admission based around a combination of profit, market capitalisation and revenue and also required a 3 year operating history. To list under the new relaxed rules, mineral companies must:

• have as their major activity (representing 25 per cent or more of the total assets,  revenue or operating expenses), the exploration for and/or extraction of natural resources;
• have adequate reserves (which are at  least ‘indicated’ or ‘contingent’)  identified under a reporting standard  and which have been substantiated by a competent person;
• either be in production, or be able to  map out the path to production with an indicative timeframe and costs;
• have sufficient working capital for 125 per cent of their budgeted needs for  the next 12 months;
• (in lieu of meeting financial track record requirements), be able to demonstrate  that its board and senior management  have sufficient experience (of at least  five years each) relevant to their  activities; and
• demonstrate possession of adequate  exploration and/or extraction rights  through either control of, or significant  influence over, resource assets  or exploration/extraction rights or by  having adequate agreements with  others possessing these rights.

The new rules also stipulate that resources, reserves and exploration results are to be reported in compliance with an acceptable code (such as a JORC type code or the Petroleum Resources Management System). This brings the HKSE disclosure regime into line with domestic requirements, representing an advantage to Australian applicants by effectively reducing compliance costs and offering convenience for those operating across multiple jurisdictions.

Andrew Vigar of Mining Associates (see profile below), an active participant in the mining industry in both Australia and Hong Kong directly engaged (along with us) with the HKSE prior to the release of the new rules and explains that: “It should be remembered that the HKSE is a major market and the small exploration companies that raise $5 million or $10 million on the ASX or TSX would in any case be swamped in a market that requires a market cap of $100M to get even minimal attention.

“We would suggest that this is a market that provides another option to companies that have strong management and a viable project requiring in excess of $100 million in capital for mine construction or expansion.”

Robert Friedland (chairman of Ivanhoe Mines) stated in his keynote address at Mines and Money Hong Kong 2010 that ‘Hong Kong will become the largest mining finance market in the world’.

With the introduction of these rule changes, the HKSE has positioned itself as a cornerstone market for miners (particularly those based in Queensland) seeking to bank roll the development of projects to take them to commercial production.


Latest News

2017 BRISBANE TOP COMPANIES REVEALED

WHILE Queensland is regarded as an economy in transition with the winding down of the mining boom, the 2017 top 50...

2017 BRISBANE TOP COMPANIES 1-10

FROM insurance and banking to travel, gambling, retail, property and pizza, these "heavyweights" have ha...

2017 BRISBANE TOP COMPANIES 11-20

RETAIL, property, an airline, cars, real estate, software services, energy, agriculture, veterinary services bathr...

2017 BRISBANE TOP COMPANIES 21-30

JEWELLERS Michael Hill International listed in 2016 with a half-billion dollar market capitalisation and a new CEO...

Related News

FURNITURE DISRUPTOR SET TO SHARE HIS ONE OF A KIND BUSINESS MODEL

IT'S no secret that Australians love homemaking. Their ceaseless quest to create the perfect place to call hom...

WEEDING OUT THE ASX'S BURGEONING CANNABIS TREND: 8 COMPANIES TO WATCH

A NICHE is budding on the ASX in the form of medical cannabis, an industry which has been on the country's rad...

FRESH CLASS ACTION TO REVEAL ANOTHER SIDE OF SLATER AND GORDON DOWNFALL

ACA LAWYERS has issued a formal letter of demand to Andrew Grech (pictured), managing director of Slater and Gordo...

STARSHIPS WERE MEANT TO DELIVER DOMINO'S PIZZA

NICKI Minaj may have been off the mark when she declared 'starships were meant to fly'. However, she m...

BOOK YOUR FUNCTION SPACE HERE

 

 

 

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter