Insider moves
Chen Tong, executive chairman of Reenova Investment Holdings, has raised his stake in the company again. On Jan 23, he bought 250 million shares from the open market at 0.3 cent each, or a total of $750,000. With this purchase, Chen now holds 564.8 million shares in the company, which translates to a stake of 12.81%, up from 7.14% previously.
Reenova, formerly known as ISR Capital which underwent a name change last July, has been trying for years to acquire and commercialise a tantalum mine in Madagascar. Back in 2016, ISR Capital drew controversy when it tried to acquire a 60% stake in the mine for $40 million by issuing new shares at 10 cents each. After two Australian valuers appraised the mine at more than US$1 billion, shares of ISR Capital surged 4,000% within months.
However, the surge prompted close scrutiny from the Singapore Exchange which subsequently rejected the two valuations and forced ISR Capital to appoint a third valuer, which lowered the asset’s valuation to just US$48 million.
ISR Capital subsequently paid $4.52 million for its stake by issuing 674.8 million new shares at 0.67 cent each.
Chen first invested in ISR Capital back in September 2016. He was part of a group of four individuals who took up a placement in the company at 8.5 cents per share. Back then, he bought the equivalent of just 0.92% of the company.
In November 2016, ISR Capital’s share price collapsed by more than half to 12.7 cents after the arrest of John Soh, alleged mastermind behind the manipulation and subsequent crash of the three penny stocks in 2013 – Blumont
Group, Asiasons Capital, which has been renamed Attilan Group and ordered to delist by SGX, and LionGold Corp. Within weeks, prosecutors also charged Soh had allegedly manipulated shares in ISR Capital as well.
ISR Capital’s former CEO Quah Su-Yin is the sister of Quah Su-Ling, who is standing trial with Soh. Chen, who took over as the company’s executive chairman just over a month before Quah Su-Yin’s resignation in December 2016, insisted on pushing ahead with the acquisition of the Madagascar mine.
On Jan 25, 2018, Chen bought 246 million ISR Capital shares at 0.512 cent each on the open market, lifting his stake from 0.92% to 10.51%. He was subsequently diluted when ISR Capital issued new shares as repayment for a loan, which was part of a convertible loan programme funded by Value Capital Asset Management.
From the convertible loan, ISR Capital raised a total of some $12 million in funding and the proceeds kept the company going, given there there are several more milestones to meet before commercial production can begin at the mine.
In a Jan 9 response to queries raised by SGX, Reenova said it is actively seeking financing via external borrowings and exploring the possibility of raising funds through the capital markets including placements and, or, rights issue.
The company adds that upon sufficient new funding, it will commence the next phase of work including a feasibility study, which includes pilot production and on-site geological topography, completing the environmental impact assessment, as well as relevant engineering studies.
Next, the company would then be able to obtain a full mining licence before Nov 2021 – the expiry of its current exploration licence issued by the Madagascan authorities.
Meanwhile, Reenova is “deliberating” its investment in an entity called Straits Hi-Rel, a semiconductor testing services provider, suggesting a sale of the entity might be in the works.
For the three months ended Sept 30, 2019, Reenova reported zero revenue. Losses during the quarter widened y-o-y to hit more than $1.28 million, from $144,839 incurred in 3Q2018.
Losses widened because of higher costs incurred. During the quarter, Reenova Investments incurred $717,405 in fees paid to various external consultants. The biggest portion went to this entity called One Target, which received $651,225 for functioning as the project manager at the Madagascar project, providing both managerial and technical services.
As of Sept 30, 2019, Reenova had cash and equivalents of just $103,120, down from $151,555 as of Dec 31, 2018. Its total current assets as of Sept 30, 2019, was $210,542.
In contrast, its current liabilities as of Sept 30, 2019, was nearly $5.9 million – including a tranche of convertible bonds worth $480,916 due for repayment by Sept 2020. The company’s accumulated losses as of Sept 30, 2019, was nearly $27.9 million, up from nearly $23.4 million as of Dec 31, 2018.