CST ponders Australian listing
China Sci-Tech Holdings (CST) may spin off its Lady Annie copper project in Queensland, Australia, on the Australian stock exchange because the company thinks its stock price is 'undervalued'.
The Australian Financial Review reported the possible A$700 million (HK$5.75 billion) spin-off earlier this week, saying proceeds would be used to buy other assets near the Lady Annie project.
A CST spokeswoman refused to confirm or comment specifically on the newspaper report, but said the company was studying different options to lift the group's market value.
'Our market capitalisation does not reflect the value of our projects' including the Lady Annie copper project and the Mina Justa copper project in Peru, she said.
She said the management was still discussing different options that might improve CST's share price, which has been hovering between 14.2 HK cents and 48.5 HK cents for the past 52 weeks. CST closed yesterday at 20.8 HK cents, up 1.46 per cent.
Total copper cathode production between November last year and March 2011 this year was 5,907 tonnes at the Lady Annie operations, which had brought in US$45.4 million in revenue. CST is planning to invest US$28 million in exploration activities to meet its 2011 target of 24,000 tonnes to 25,000 tonnes.
The Lady Annie mine is 100 per cent owned by CST, which owns 70 per cent of Mina Justa.
CST posted a pre-tax loss of HK$193.9 million in the six months to September last year, down from a HK$53.46 million gain a year earlier. The loss was mainly caused by investment losses caused during the financial crisis, and tightening measures introduced by the mainland government.
However, it had a strong cash position, boasting HK$1.95 billion in net cash as of September 30 last year.
Louis Tse Ming-kwong, a director at VC brokerage, said Australian investors were more familiar with the mining sector, which meant they might value it more highly than Hong Kong investors.
Despite fluctuating commodity prices and a strong US dollar, Tse said companies listing on the ASX might benefit from the Australian dollar's appreciation in the long run. The Australian dollar hit a 29-year high earlier this month.
HKEx has said it has no immediate plan to relax listing rules for mining companies.
However, the ASX has said it is looking at its listing regime and has not ruled out changes to make it easier for smaller mining companies to list.
- The value in Hong Kong dollars of one Australian dollar yesterday
- In October 2008, the Australian dollar fell below HK$5