SGX consults on new Mainboard rules for mineral, oil and gas companies

SGX consults on new Mainboard rules for mineral, oil and gas companies

In response to global market demands, Singapore Exchange (“SGX”) is consulting the public and market participants on proposed new admission rules and continuing listing obligations to allow mineral, oil and gas (“MOG”) exploration companies with resources to list on Mainboard.

The proposed rules will welcome more MOG exploration companies seeking to extend their presence in Asia to list on SGX. For local and international investing communities, the new listings will broaden the range of investment choices via SGX’s commodities and resource sectors. This new development augments Singapore’s position as a commodity trading, financing and risk management hub.

Companies in MOG exploration typically have periodic need for large exploration expenditure at various stages of project development. The proposed rules will allow them access to funding from the equity market. To list on SGX Mainboard, MOG companies must fulfill the proposed stringent listing requirements including the following key conditions:

(i) Have market capitalisation of not less than S$300 million based on the issue price and post-invitation issued share capital if they are non-producing;
(ii) Have adequate working capital for at least 18 months after listing;
(iii) Disclose its plans and milestones and relative capital expenditure in advancing to production stage. These plans must be substantiated by the opinion of an independent qualified expert; and
(iv) Have reached at least “indicated resources” stage for minerals or “contingent resources” stage for oil and gas as certified by an independent qualified expert and in accordance with internationally recognised standards.

In addition to periodic financial reporting, MOG companies will be required to provide quarterly reports on their projected use of funds, and provide updates on their exploration and extraction activities. This keeps investors informed on the progress of the projects, and maintains transparency and accountability in the marketplace.

It is important that retail investors understand the business of exploration in the specific minerals, oil and gas and the attendant risks. SGX has already conducted several related investor education workshops and will continue to do so as part of its ongoing effort to educate investors in its marketplace.

The consultation paper, which explains the rationale and proposed rules in detail, is available on SGX website at from today. Market participants and members of the public can forward their feedback and suggestions on the proposed rules from 20 June 2012 to 20 July 2012 via email