Southern Alliance Mining makes Catalist debut at 4% above IPO price

MALAYSIA-BASED iron ore producer Southern Alliance Mining (SAM) debuted on the Singapore Exchange’s (SGX) Catalist board on Friday at S$0.26, up S$0.01 or 4 per cent from its S$0.25 initial public offering (IPO) price.

Its shares rose to 26.5 Singapore cents with 3.1 million shares traded as at 11.03am.

The company’s IPO comprised 56 million new shares and 20 million vendor shares, representing about 15.5 per cent of its enlarged post-IPO share capital of 489 million shares.

The firm on Thursday said its placement of 76 million shares at S$0.25 each was fully subscribed. Application monies received for these placement shares amounted to S$19 million.

The company has a market capitalisation of around S$122 million.

It will use net proceeds of S$11.9 million to further exploration activities, investment into mining equipment and infrastructure, and expansion through acquisitions, joint ventures and strategic alliances.

SAM intends to recommend dividends of at least 10 per cent of FY20 net profit, which will increase to at least 15 per cent for FY21 and 20 per cent for FY22.

The group’s mining operations are solely conducted at the Chaah Mine in Johor, Malaysia under its 60 per cent subsidiary Honest Sam Development. It also has three other exploration assets there, which will commence operations upon the listing of the company.

SAM was co-founded by chief executive officer Pek Kok Sam and non executive and non-independent chairman Teh Teck Tee.

Its key customers are steel mills located in Malaysia and China, and trading companies.

“Our iron ore products are sold not only to steel mills but also to the oil and gas industry as raw materials for sub-sea pipe coating,” said Mr Pek in an SGX media statement.

Despite the economic impact caused by the Covid-19 pandemic, “the demand and price for iron ore have remained stable”, he added.

“SAM is well-positioned to meet demand for high-quality iron ore products in the region upon the recovery of the steel and oil and gas industries industries as the stimulus measures are expected to drive demand,” Mr Pek said.

SAM’s listing brings the total number of Catalist-listed firms to 216, with a combined market capitalisation of about S$9 billion, SGX said.

Within the commodities sector, there are currently 33 companies listed on SGX with a total market cap of around S$38 billion.