SHARES of BlackGold Natural Resources rose 12.5 per cent on Friday, after the Catalist-listed company proposed to acquire Tengri Coal and Energy (TEC) for a tentative S$1 billion - to be adjusted following an independent valuation.

 

TEC owns the entire issued and paid-up share capital of Tengri Petrochemicals (TPL), which in turns owns the share capital of Tsaidam Energy.

 

TPL holds licences to mine coal deposits, and Tsaidam Energy holds licences for the construction of power plants in Mongolia.

 

The counter hit an intraday high of 2.2 Singapore cents before easing to close at 1.8 Singapore cents, with 74.2 million shares having changed hands. That gives BlackGold a market capitalisation of S$16.3 million.

 

Data from ShareInvestor showed no married deals.

 

The company had requested a trading halt on Tuesday morning and lifted the halt on Friday before market open.

 

The independent valuation of TEC will take into account its power plant licence, offtake agreements, and mineral resources.

 

BlackGold intends to pay for the acquisition by issuing shares to TEC' s owners, which will result in a reverse takeover of BlackGold.

 

BlackGold is an Indonesian coal miner. For FY2020, it reported a 13 per cent fall in sales to US$9.6 million. It reported a loss of US$4 million, against a loss of US$1.5 million in FY2019.

 

BlackGold did not provide details about the vendor of TEC, MGL Development.

 

Both BlackGold and MGL have agreed, however, that BlackGold will have an indicative ascribed value of S$202.5 million. This will be adjusted following an independent valuation.

 

As at Dec 31, BlackGold' s net asset value provided in its financial statements was a negative US$9.9 million.

 

BlackGold said the proposed acquisition will expand its geographical footprint beyond South-east Asia and enable it to vertically integrate its coal supply chain from mining to electricity power supply.

 

Philip Soh, chairman of BlackGold, said: " Mongolia has attractive growth profiles that provide a good pipeline of organic opportunities in the mining and energy industry, which significantly enhances our future growth prospects.

 

" While continuing our resource-related activities in Indonesia, this acquisition is consistent with our strategy of pursuing growth, allowing us to create new value propositions to meet the growing demand of energy in our targeted markets."

 

 

 

 

BlackGold Natural Resources Limited (&ldquo BlackGold&rdquo or the &ldquo Company&rdquo , and together with its subsidiaries, the &ldquo Group&rdquo ) is pleased to announce that it has signed a non-binding term sheet with MGL Development Pte. Ltd. (&ldquo MGL&rdquo ) in relation to a proposed acquisition of the entire issued and paid-up share capital of Tengri Coal and Energy Pte. Limited (&ldquo TEC&rdquo , and together with its subsidiaries, the " TEC Group" ) by the Company. 

 

MGL is the shareholder of TEC, which owns the entire issued and paid-up share capital of Tengri Petrochemicals LLC (" TPL" ). TPL in turn owns the entire issued and paid-up share capital of Tsaidam Energy LLC (" Tsaidam Energy" ). 

 

TPL is a limited liability company incorporated in Mongolia and holds mining licences issued to mine coal deposits in Bayan soum, Tuv province, Mongolia. Tsaidam Energy is a limited liability company incorporated in Mongolia and holds licences for the construction of power plants and energy facilities in Mongolia. 

 

The purchase price of S$1 billion shall be adjusted based on the valuation of the TEC Group and assets held by the TEC Group (including its power plant licence, offtake agreements and indicated and inferred mineral resources) as set out in an independent valuation report to be commissioned by BlackGold. The purchase price shall be satisfied by the allotment and issue by the Company to MGL (or its nominees) of new ordinary shares in the capital of the Company at an issue price based on a prescribed formula. 

 

Under the term sheet, it is also agreed that BlackGold shall have an indicative ascribed value of US$150 million (i.e. S$202.5 million), to be adjusted based on the valuation of the Company and assets held by the Company as set out in a separate independent valuation report to be commissioned by BlackGold.

 

Both independent valuation reports will be prepared by an international reputable independent firm of professional valuers that will be appointed by BlackGold.  

 

Aligned with the Group&rsquo s strategy to expand its business through mergers and acquisitions, the proposed acquisition will enable the Group to diversify and expand its geographical footprint beyond Southeast Asia. In addition, it will allow the Group to vertically integrate its coal supply chain from mining to electricity power supply.

 

As the TEC Group may be eligible for a mainboard listing on the SGX-ST, the Company intends to seek a transfer of its listing from the Catalist Board to the mainboard of the SGX-ST, concurrent with the completion of the proposed acquisition.

 

Mongolia&rsquo s GDP Expected to Grow by 5.1% in 2021(1) 

 

Over the past three decades, Mongolia has transformed itself with political and economic reforms, tripling its GDP per capita since 1991.(2) Vast quantities of untapped mineral resources in Mongolia have made the country attractive for foreign investments, boosting the country' s economic growth over the years. 

 

According to Mongolia&rsquo s Energy Ministry, around 80% of the electrical supply is produced domestically and 20% is imported.(3) 

 

Coal is the primary source of electricity generation in Mongolia, accounting for an estimated 85% of the total electricity generation in the country. Since 1990, the energy consumption in Mongolia has increased 124.62% to reach 7.3 terawatt hour in 2018.(4) 

 

In February 2021, the Mongolia government announced a comprehensive plan to spent USD$3.5 billion to protect the health of its people and revive the economy.(5)

 

Commenting on the Group&rsquo s proposed acquisition, Mr. Philip Soh, Chairman of BlackGold, said, &ldquo This is a transformational acquisition for BlackGold and it will enable us to establish a strong business platform and gain market access in one of the world&rsquo s most resource-rich country. 

 

 

 

Speaking on behalf of TEC Group, Mr. Philip Moynagh, CEO of the Energy business, said, &ldquo The TEC Group has developed and integrated a huge list of assets into a compelling energy business. The assets include over half a billion tonnes of coal, licences and designs for state of the art power plants, licences and designs for thousands of kilometers of transmission infrastructure, offtake agreements for the generated electricity, construction and debt agreements with Chinese state owned enterprises, and equity agreements with a US investment company. The first 600MW project, a US$860 million Capital expenditure project, is now ready for groundbreaking.