JES International shares soar after releasing bullish report on target acquisition

SHARES in loss-making Chinese shipbuilder JES International rose strongly on Tuesday after the firm released a bullish report on a mining company that it is buying a stake in.

JES shares were trading at 16.1 cents shortly after 1pm - a gain of 1.8 cents or 12.6 per cent on turnover of about 93.2 million shares.

Trading had resumed just before noon after a halt had been called ahead of the announcement.

The good news involves JES unit Mineriver, which holds mineral exploration rights for about 21.5 sq km in Tacheng City, which is in China's Xinjiang Uygur autonomous region.

JES said it has a report which says there is about 4.202 billion tonnes in measured and indicated magnesium oxide resources in this area.

JES said the price of dead burned magnesia with 90 per cent magnesium oxide starts at US$340 (S$430) per tonne. This translates to an "in situ mining value" of more than US$500 billion, more than the $60 billion benchmark condition set in the investment agreement with Mineriver.

"In situ mining value" is a very rough gauge of the value of minerals at a site. The valuation method has flaws, such as ignoring whether some of the resources are hard to reach - and thus too costly to extract.

Mineriver holds mineral exploration rights to the deposits and will now apply for mining rights. It is considering a potential listing on a "reputable stock exchange", said the JES statement.

JES reported a net loss of 339.9 million yuan for the nine months to Sept 30 last year, reversing a profit of 46.1 million yuan recorded for the same period a year earlier.

The company is in the process of buying up to 30 per cent in Mineriver for up to $127 million, a purchase which will be carried out in three tranches.