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  • Apr 17, 2014
  • Updated: 12:23pm

Citic Dameng gains 6.2pc on first day

PUBLISHED : Friday, 19 November, 2010, 12:00am
UPDATED : Friday, 19 November, 2010, 12:00am
 

Shares in Citic Dameng Holdings, the manganese mining and processing unit of Citic Resources Holdings, gained as much as 10 per cent on its market debut as risk appetite for resources stocks returned after a sharp sell-off.

It closed yesterday at HK$2.92 - 6.2 per cent higher than the offer price of HK$2.75, after a low of HK$2.69 soon after trading began.

Chairman Qiu Yiyong put the initial decline down to volatile conditions on international markets. He said he is confident of the stock's prospects.

'Recent poor performance of resource stocks is a short-term situation. As the supply of resources is getting increasingly tight, the industry's positive outlook has not changed.'

Citic Dameng, China's largest producer of manganese, which is used in steel smelting, raised HK$2.06 billion by selling 750 million new shares to fund expansion at its main production facilities in the Guangxi autonomous region and in Gabon, Central Africa.

It plans to raise its annual output capacity of electrolytic manganese metal - its main product - in Guangxi to 145,000 tonnes next year from 102,000 this year, and actual output by 30 per cent to 122,000 tonnes.

The proceeds will also partly fund its HK$576 million mine and ore processing and logistics facilities in Gabon, which will begin operation in the first quarter of next year.

Citic Dameng expects to extract 530,000 tonnes of ore next year from its Gabon mine, which will have an annual output capacity of 1.15 million tonnes. The mine will be more cost-efficient since its waste-ore ratio of 1.6 is lower than the average 10.5 at its Guangxi mines.

The company forecast net profit of no less than HK$200 million this year. It booked first-half profit of HK$50.7 million.

Last year's net profit slumped to HK$48.6 million from HK$239.2 million in 2008 as the average electrolytic manganese price dived 30 per cent amid the global economic downturn.

Kong Dan, chairman of ultimate shareholder Citic Group, confirmed - on the sidelines of Citic Dameng's listing debut ceremony - earlier media reports that the state-backed conglomerate is planning to list in Hong Kong, but said it has yet to decide on the fund-raising target.

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