SINGAPORE (Dec 7): ISR Capital, whose shares have been suspended by the Singapore Exchange, intends to commission a third valuation report to support its proposed acquisition of a rare earth concession in Madagascar, says executive chairman Chen Tong in an announcement on Wednesday morning.
The company had earlier issued two reports both of which value the concession at more than US$1 billion (S$1.4 billion). This drew a series of queries from SGX. ISR had on Nov 28 earlier said it will respond to the queries by Dec 2, but before it could do so, its shares were suspended by SGX on Nov 27.
This follows the company’s own request for a trading halt on Nov 24 when within two hours, it crashed 55% to 12.7 Singaporean cents, after having gained more than 4,000% year to date.
ISR is planning to acquire a 60% stake in the concession for S$40 million by issuing new shares at 10 cents each. The same stake changed hands for just 3.7 million euros (S$5.6 million) last November.
Among other queries, SGX had pointed out that the second valuation report had significant portions that are the same as the first. SGX also pointed out that the second report was done by the consultant without an actual site visit and that it cost the company just US$5,000.
The company’s investor relations firm has yet to respond to queries if by commissioning a third report, it means there are issues with the two earlier reports.
SGX last week said that it is making it a “priority to complete our review of the trading of ISR shares and provide the market the necessary clarity to lift the suspension.” The exchange today has yet to comment if when this might be.
In a response to queries, the exchange on Wednesday said it was ISR’s “decision to commission a third valuation report because the earlier ones did not comply with our listing requirements.” (Updated at 6.30pm)
Over the past week, two of the company’s independent directors Krishna Sivasubramaniam and Levin Lee Keng Weng, have quit. This leaves the board with just one independent director, Kwok Wei Woon — one short of SGX’s listing rules for mainboard companies.
The remaining three board members are Chen, executive director David Rigoll and CEO Quah Su Yin.
“As the newly-appointed Executive Chairman of the Company, I am aware of speculative media reports surrounding ISR Capital,” says Chen in today’s statement.
Chen, originally from China but who took up Singapore citizenship in 2013, became ISR’s executive chairman on Nov 18.
He was part of a group of four investors who took up a S$12 million placement in ISR at 8.5 Singaporean cents each. Chen is committing a total of S$4 million, with half of that already invested.
“Despite these reports, I have full faith that the company practises the highest levels of corporate governance and ethics. “I am completely committed to ensuring ISR Capital’s successful acquisition of the Madagascar project and to enhance shareholder value through the responsible extraction of valuable rare earth oxides,” he adds.
In his Wednesday statement, Chen also touted his experience in the mining industry. He also referred to an MOU with Shenzhen-listed state-owned enterprise China Nonferrous Metal Industry’s Foreign Engineering and Construction Co (NFC).
Under terms of the MOU announced on Nov 28, NFC “has declared its interest” in providing technical expertise to ISR in developing the Madagascar concession.
On Dec 1, the company issued a statement in CEO Quah’s name noting that the company has been linked to the three penny stocks that crashed in October 2013: LionGold, Blumont Group and Asiasons Capital, now known as Attilan.
Three individuals have been charged for their role in manipulating the share prices of these three companies: Goh Hin Calm and John Soh, the alleged mastermind, as well as his partner, Quah Su Ling. CEO Quah acknowledges that she is the sister of Su-Ling, but stated that other than this personal relationship, there are no other links with ISR.
According to the prosecutors, Soh allegedly manipulated the shares of the three companies using dozens of trading accounts in the names of other individuals and corporate entities. One of the accounts is under the name of Chan Sing En, listed on ISR’s website as the CEO of its subsidiary, Dynamic Return (Singapore).