SGX Proposes New Rules To Allow Early Stage Mineral, Oil And Gas Companies To List On Catalist

Singapore Exchange Ltd (SGX) is inviting public comments on its proposed rules to allow early stage mineral, oil and gas (MOG) companies to list on Catalist, its sponsor-supervised board for fast-growing companies.

MOG companies are those involved in the exploration and extraction of minerals and fossil fuels. MOG companies already in commercial production with on-going revenue streams can list on the Mainboard. The proposed rules will allow companies in the exploration stage to list on Catalist.

Such early stage MOG companies, engaged in exploration and feasibility studies, may require several rounds of funding over a long period without certainty of future economic viability. As such, the risk and return investment profile of such companies are distinct from those involved in later stage activities. The proposed rules introduce standards in line with international practices and contain stringent disclosure requirements to address these business risks.

The new listings will broaden investors’ choice and deepen SGX’s resource sector. Catalist’s value proposition as a choice listing venue for fast growing companies will be enhanced.

The proposed rules require an MOG company seeking a listing on Catalist to have made MOG discovery. Such discovery must be certified by an independent technical expert, and be conducted in accordance with internationally recognised standards. SGX is also proposing the timely disclosure of resources and reserves as well as other technical information.

Key features of the proposed listing rules are as follows:

1. Companies seeking a listing on Catalist must have discovered deposits with reasonable prospects for economic extraction, as certified by an independent qualified technical expert in accordance with internationally recognised standards.

2. MOG exploration companies listed on Catalist must provide quarterly reports on use of funds; projected use of funds for the next immediate quarter; material information on exploration and extraction activities undertaken; and an update on its reserves and resources.

3. MOG companies listed on Catalist must have their disclosures of technical information such as geological analysis reviewed by an appropriate qualified technical expert. Where the disclosure relates to important milestones such as discovery of a new material resource or a 100% change or more in existing resource, such expert must be independent.

4. Introduction of prescribed disclosure content (Practice Note 4D) and format (Appendix 7E) to help investors understand technical information disclosed by MOG companies. Practice Note 4D sets out specific disclosure requirements, particularly for statements of reserves and resources as well as exploratory updates. Appendix 7E aims to standardise the presentation of quantitative information in summary form.

5. Sponsors of MOG companies must have access to appropriate technical expertise to discharge their responsibilities.

The consultation paper, which explains the rationale and proposed rules in detail, is available on SGX website at www.sgx.com from today. Going forward, SGX plans to organise educational seminars on the nature of early stage MOG companies.

Market participants and members of the public can forward their feedback and suggestions on the proposed rules from 11 August 2009 to 31 August 2009 via email and either by post/courier or fax:-