Mongolia Energy, the controversial coal miner controlled by tycoons Cheng Yu-tung and Simon Lo Lin-shing, saw its share price plunge 12.2 per cent yesterday after posting a HK$4.83 billion net loss for the year.
The loss, much wider than the HK$310.75 million it lost the previous financial year, was due to the booking of HK$4.02 billion of impairment losses on property, plant and equipment. It reflects the value of future revenues the firm will lose due to its failure to obtain a water permit for its planned coal processing plant.
Mongolia Energy said the failure forced it to switch the planned plant's site from Mongolia to Xinjiang, where its sole customer, Bayi Iron and Steel, is located. But the plant would not be ready for at least a year.
It is liaising with the Xinjiang government over land-use rights and has made a preliminary application to build the plant. As an interim solution, it has engaged a mainland coal trader with a washing plant in Xinjiang to do the processing for it.
Mongolia Energy rose to fame in 2007 when it paid HK$1.2 billion to then controlling shareholder Liu Chenglin for mining rights to an area equivalent to one-third the size of Hong Kong.
It grew from a penny stock to fetch up to HK$18 a share in 2008 - more than 2,400 times its 2007 earnings - after announcing that it had at least eight letters of intent and memoranda of understanding from potential business partners, despite not having a production plan. The names of some of the would-be partners suspiciously resembled major mainland state firms. Its share price ended yesterday at 36 HK cents.