Hot Stock: BlackGold rallies 37.5% after proposed acquisition of energy group

SHARES of BlackGold Natural Resources rose 18.8 per cent on Friday, after the Catalist-listed firm proposed to acquire Tengri Coal and Energy (TEC) for S$1 billion.

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, up 0.6 cent or 37.5 per cent. The last time the counter closed near this level was on Jan 26. At Friday’s close, it had eased to 1.8 cents, up 0.2 cent or 12.5 per cent, with 74.2 million shares having changed hands.

Data from ShareInvestor indicated that there had been no married deals.

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

BlackGold entered a non-binding term sheet with MGL Development, the shareholder of TEC, which agreed to be paid by the allotment and issue of new ordinary shares. The purchase price will be adjusted based on the valuation of the TEC group and its assets in an independent valuation report.

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The coal-mining company 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."