Paving way for listing of junior MOG firms

The SGX says that with listed companies diversifying into mineral, oil and gas activities, it is timely to review the sector's listing rules to ensure they remain relevant for the market and investors.
The SGX says that with listed companies diversifying into mineral, oil and gas activities, it is timely to review the sector's listing rules to ensure they remain relevant for the market and investors.PHOTO: REUTERS

New SGX rules categorise mineral, oil and gas companies based on stage of development

Early-stage or junior mineral, oil and gas (MOG) companies will have a better shot at listing on the Singapore Exchange (SGX) from Aug 28, following changes to the mainboard and Catalist listing rules that make a clearer distinction between a more established business and a fledgling company.

The amendment, which followed a market consultation exercise undertaken by the SGX earlier this year in which a majority of respondents backed the move, will reflect how companies are categorised in the sector, depending on their stage of development.

"Companies at an earlier stage of development can now list under the framework. The mainboard will continue to be for businesses that are more mature than those on Catalist, based on both asset development and size," said the SGX yesterday.

SGX's head of equities and fixed income Chew Sutat said: "The changes to the mineral, oil and gas rules will better align us with industry requirements and enable us to help MOG companies raise funds at an early stage of development.

"Investors will also benefit from the clearer distinction between MOG firms on the mainboard and those on Catalist."

A working group comprising MOG specialists, such as technical experts, corporate finance advisers and senior executives from SGX-listed issuers, had provided input on the SGX proposals.

  • 16

    The number of minerals listings.

  • 9

    The number of oil and gas listings

Previously, listing rules for both the mainboard and Catalist stipulated an MOG company must establish the existence of adequate "resources" categorised as "indicated resources" in relation to minerals or "contingent resources" in relation to oil and gas.

This would mean that the mineral reserves in question have a moderate chance of being present.

The working group said the minimum requirement to have "indicated resources" for mineral companies precluded many junior companies from considering a listing on the SGX as many of these have only "inferred resources". "Inferred resources" are less confirmed than those that are "indicated", being based on only limited data to ascertain the presence of the mineral.

It was proposed that as the mainboard is intended for established and mature companies, it could require listing aspirants to establish at least "reserves", while companies at an earlier stage of their business that are eyeing a listing on Catalist could continue to establish "resources" instead of "reserves".

The SGX accepted the group's recommendations. The working group said establishing different listing criteria would strengthen the profile and proposition of the respective boards.

The SGX first introduced rules for MOG companies seeking a listing on Catalist in 2011, followed by those for the mainboard two years later. Between then and now, the number of minerals listings has jumped from three to 16, while oil and gas listings have risen from four to nine, including both new admissions and companies that have acquired MOG assets.

MOG companies now include assets based in Australia, China, Indonesia and Malaysia, and have provided investors with exposure to a variety of commodities.

In January, as it launched its consultation exercise, the SGX said that with listed companies diversifying into MOG activities, it was timely to review the sector's listing rules to ensure they remained relevant for the market and investors.

A version of this article appeared in the print edition of The Straits Times on July 24, 2018, with the headline 'Paving way for listing of junior MOG firms'. Print Edition | Subscribe