24/04/2017 - 16:00

Moly Mines delisted with $63m in the bank

24/04/2017 - 16:00

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Nearly 4,000 shareholders in West Perth company Moly Mines have effectively become stranded in the $63 million cashbox after a stand-off between its board and the ASX ended in a delisting of its stock.

Moly’s core asset prior to its suspension three years ago was the Spinifex Ridge iron ore mine in the Pilbara.

Nearly 4,000 shareholders in West Perth company Moly Mines have effectively become stranded in the $63 million cashbox after a stand-off between its board and the ASX ended in a delisting of its stock.

Moly’s shares have been suspended from trading for the past three years while the company tried to find a new line of business.

The long suspension meant that, in accordance with its rules, the ASX was able to remove Moly from its official list.

This comes nearly five months after the ASX told Moly it would not accept the readmission of its shares, even if Moly completed its planned acquisition of mining group Gulf Alumina.

The problem for the ASX rested with Moly’s 53.8 per cent shareholder, China’s Hanlong Mining, and the past activities of people previously involved with Hanlong.

Most notably, former Hanlong Mining boss Hui Xiao was handed an eight-year prison sentence by a Sydney court early this year for insider trading with regards to two Perth resources companies.

Xiao, also known as Steven Xiao and Jiayi Xiao, was sentenced to a total of eight years and three months imprisonment, after he pleaded guilty to 102 illegal trades in financial products related to Sundance Resources and Bannerman Resources in July 2011, while he was managing director of Hanlong.

In July 2011, Hanlong made a $1.65 billion acquisition bid for Sundance, and a $145 million takeover bid for Bannerman.

Neither bid was successful.

After removal of its stock from the ASX, Moly said it would continue to operate as an unlisted public company in accordance with the Corporations Act.

The delisting means shareholders will need to find a willing buyer if they want to conduct an off-market sale, just as they have been required for the past three years.

Moly said its board would look to significantly reduce administration costs and overheads after the delisting.

It spent $3.7 million on administration costs in the year to December 2016, including $944,000 paid to its chief executive and its directors.

It also spent $1.6 million on project assessment expenses and $976,000 servicing its $14 million debt to Hanlong.

Moly’s core asset prior to its suspension three years ago was the Spinifex Ridge iron ore mine in the Pilbara.

Its directors include chairman Nelson Chen, who is a director of Hanlong (Australia) Resources, and Gou Qing Lou, the managing director of Hanlong Group. 

The ultimate parent of the various Hanlong entities is private Chinese company Sichuan Hanlong Group.

 

 

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