Trading volume hit 50 million shares in the past two trading days.
“We are targeting to start production by year-end,” HWGB’s managing director William Teo told The Edge Financial Daily when commenting on its tin mining operation.
“We have done the exploration and feasibility studies in the past two years. And the company has raised some fresh capital through its rights issue early this year so we can start mining soon,” said Teo.
According to Teo, the company’s tin mine near Sungai Endah has an estimated reserve of 50,000 tonnes. The reserve size of 50,000 tonnes is considered relatively small. However, the soaring basic metal prices, including tin, have made small mines commercially viable for production in recent years.
Tin price has climbed to US$26,000 (RM80,860) per tonne currently from US$10,350 per tonne at the peak of the financial crisis in December 2008.
Based on the price of US$26,000 per tonne, a production of 1,000 tonnes would be probably worth about US$26 million in gross revenue. This will be a boost to HWGB, whose current core business — trading of wire and electrical cables — has been hit badly by the high copper price.
Due to the sharp rise in copper price, HWGB’s net loss widened to RM23.44 million for FY09 ended Dec 31, from a loss of RM3.97 million the previous year. Revenue shrank substantially to RM144 million from RM220.8 million in FY08. The company loss per share was at 8.5 sen versus 1.44 sen the year before.
For the 1HFY10, the company posted a net profit of RM4.6 million due mainly to the sale of part of its equity stake in its associate company, CVM Minerals Ltd, which is listed in Hong Kong. The disposal earned HWGB a gain of RM15.42 million. The gain helped to offset the losses incurred in its wire and cable manufacturing division.
In June 2008, HWGB’s unit HWG Tin Mining Sdn Bhd secured its mining certificate that allows it to conduct tin mining on a tract of 500 acres in Sungai Endah, Hulu Perak for 10 years until May 2018.
Shortly after the grant of the mining certificate, HWGB acquired the remaining 49% equity stake in HWG Tin Mining, making the latter a wholly owned subsidiary.
The big jump in HWGB’s share price probably indicates rising expectation that its tin mining business will help turn the company around.
Over the years, HWGB has made several business ventures, including a casino in Cambodia, to enhance its earnings base. Will the tin mining business improve HWGB’s earnings prospect this time? That will likely depend how much tin it can extract from the mine.
This article appeared in The Edge Financial Daily, October 13, 2010.
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