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UPDATE 1-Blumont committed to Discovery deal despite Blumont share slump
October 7, 2013 / 12:53 AM / 4 years ago

UPDATE 1-Blumont committed to Discovery deal despite Blumont share slump

* Blumont Copper: Discovery Metals will add value to Blumont

* Share price dive due to shorting, Blumont Copper CEO says

* Blumont shares set to resume trading

* LionGold, Asiaons request continuation of trading halt (Adds Blumont Copper comment, share trading to resume)

MELBOURNE, Oct 7 (Reuters) - Blumont Group’s sudden share price slump will not affect its plan to invest $108 million in Botswana copper miner Discovery Metals, the head of Blumont’s copper unit said on Monday.

Shares in Blumont Group shares dived 56 percent on Friday - one of three firms to see their stocks slide dramatically, sparking trading halts and queries from the Singapore Exchange.

Those events came after Blumont announced it had agreed on a proposed S$146 million takeover of Australian-listed coal explorer Cokal, which it called off later in the day due to the share price fall.

Asked on Monday whether Blumont was having second thoughts about the Discovery Metals deal, Blumont Copper CEO Ines Scotland said: “Absolutely not. We think the Discovery transaction will add great shareholder value.”

Scotland said Blumont’s share price slump had nothing to do with the fundamental value of Blumont’s portfolio.

“It seems to be due to shorters in the market driving the price down and some knowledge gaps at the SGX about the vision that Blumont are executing,” she said in an email to Reuters.

The $108 million investment by Blumont Copper covers an already purchased 11.6 percent stake in Discovery Metals and plans to buy $100 million in convertible bonds. Blumont Copper is 85 percent owned by Blumont Group.

The other two Singapore-listed firms to suffer volatile trading in their shares were gold miner LionGold Corp Ltd and investment firm Asiasons Capital Ltd.

All three were cleared to resume trading on Monday, subject to restrictions barring short-selling of their shares and requiring anyone buying the shares to pay up in cash when their orders are executed.

The restrictions are imposed where the exchange thinks there has been manipulation or excessive speculation.

LionGold and Asiasons sought on Monday to have their trading halts continue, saying they have announcements pending. (Reporting by Sonali Paul; Editing by Paul Tait and Edwina Gibbs)

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