Blumont, Asiasons and LionGold

Blumont, Asiasons and LionGold: The latest edition of The Edge magazine sheds more light on the ongoing saga involving the now famous trio of stocks – Blumont, Asiasons Capital and LionGold – which have dominated trading headlines over the past week. The Edge draws interesting links between the three companies. For instance, Blumont has held small stakes in Asiasons and LionGold since 2003. All three companies are led by the same prominent Malaysian individuals, and are further interconnected via share crossholdings with other SGX listed firms, namely Innopac, ISR Capital, IPCO and Magnus Energy. In the wake of the recent turmoil, Blumont last week brought in a new Chairman, Mr Alexander Molyneux, who will spearhead the group’s continued expansion of its portfolio of resource assets. Noting that the low commodities prices will provide ample acquisition opportunities for Blumont, Molyneux believes Blumont is on its way “to becoming Asia’s BHP Billiton”, and envisions the group as “an owner of operating interests in steel supply-chain raw materials, coking coal and iron ore”. While Molyneux concedes that raising capital via equity may be tougher now given Blumont’s depressed share price, he believes that all of the plans that have been announced by the group are achievable. Separately, LionGold guides that its existing projects will likely generate sufficient cash to continue with operations, but warns that things would not get any better until SGX lifts its trading restrictions on the stock. On valuations, LionGold notes that the enterprise value for its resources stands at US$20/oz versus peers in Asia which are trading at above US$100/oz, and claims that its shares are way undervalued. Other market watchers however, have a different view, and suggest that SGX should have been more proactive by querying the trio of counters much earlier, before their share prices became ‘so inflated’. Criticisms were also leveled on the exchange’s decision for restricting trading on the three counters, thereby creating an uneven playing field for investors.