Real Gold Mining to price shares at top end amid strong demand
Tim LeeMaster and Wong Ka-chun
Real Gold Mining was expected to price its shares at the top of the indicative range and raise HK$1.03 billion in its initial public offering after the retail tranche of the sale was 67 times oversubscribed, market sources said.
The institutional tranche of the offering was covered four times at HK$6.25 a share, the top of an indicative price range that went as low as HK$4.35, one of the sources said. The range values the company at between seven and 10 times expected earnings this year.
About 80 per cent of the investors who have met the company on a week-long roadshow have agreed to buy the shares, which will be priced this morning.
The company is selling 165 million shares, 36.8 per cent of which are old shares.
Citi and Macquarie Capital are arranging the transaction, the largest flotation in Hong Kong since the listing of Renhe Commercial Holdings, an operator of underground shopping centres, which raised HK$3.39 billion in October last year.
Real Gold plans to acquire mines in Xinjiang province with some of the proceeds of the share offering. The rest will be used for exploration and capital expenditure, including ore-processing plants.
Daily ore-processing capacity will increase to 2,580 tonnes by the end of the year from 1,790 tonnes last year, and ore throughput is expected to reach 780,000 tonnes a year by the end of next year from 210,000 tonnes last year.
Real Gold forecasts net profit for the full year of not less than 100.5 million yuan (HK$114.03 million). In the first 10 months of last year, it reported net profit of 66.14 million yuan, compared with a loss of 3.83 million yuan a year earlier.
US investment bank Goldman Sachs raised its three-month gold price forecast last week to US$1,000 an ounce from US$700 and the six-month target to US$950 from US$785 as investors seek a safe haven amid the economic uncertainty.
Retail tranche of public offering was 67 times oversubscribed
The amount the offering will raise if the shares are priced at the top end, in HK$: $1.03b