Too sudden.
This year, the first company to voluntarily delist has emerged.
On Friday, Shandong Yulong Gold, a Gold Concept stock with a market cap exceeding 10 billion, suddenly announced its intention to delist from the Shanghai Stock Exchange and transition to the delisted segment of the National Equities Exchange and Quotations. The company’s stocks will resume trading on Monday (March 24) at opening.
Today, Shandong Yulong Gold announced that due to personal reasons, Mr. Niu Lei has applied to resign from the positions of Chairman, Director, and member of the Board of Directors' special committee. After resigning from these positions, Mr. Niu Lei will no longer hold any position in the company.
The compensation mechanism has been determined.
Prior to this, March 18 was the last trading day before the suspension of Shandong Yulong Gold's stocks, with the company’s stock price rising by 7.24% that day, closing at 13.04 yuan per share, and a total market cap of 10.21 billion yuan.
Shandong Yulong Gold announced that due to poor operating conditions and a continuous deterioration of cash flow, the company faces significant uncertainties in its operations. To protect the interests of minority shareholders, it plans to voluntarily withdraw its A-share stocks from trading on the Shanghai Stock Exchange and apply for its stocks to enter the delisted segment of the National Equities Exchange and Quotations for continued trading.
This termination of listing plan sets up protection mechanisms for dissenting shareholders and other shareholders. Shandong Yulong Gold plans to provide cash options to all A-share shareholders registered on the record date for cash options, except its controlling shareholder Jigao Capital.
The record date for this cash option is proposed to be April 16, with an exercise price of 13.2 yuan per share, which is 0.16 yuan higher than the closing price before the trading halt.
After deducting the 0.23 billion shares held by Jigao Capital, it is expected that Jigao Capital will provide cash options for no more than 0.553 billion shares, totaling nearly 7.3 billion yuan.
Basically lacks the ability for self-sustaining.
According to the information, Shandong Yulong Gold mainly engages in gold Precious Metals mining and CSI Commodity Equity Index trade.
In the announcement, Shandong Yulong Gold stated that the company's overall Operation has stalled, cash flow is tight, and it basically lacks self-sustaining ability, posing risks to continued Operation.
Specifically, Shandong Yulong Gold has faced multiple lawsuits and arbitration disputes, leading to the freezing of core assets and escalating debt risks, which brings significant uncertainty to future governance and production operations.
On one hand, the assets of Shandong Yulong Gold have been judicially seized and frozen.
Due to outstanding payments and penalties of approximately 0.495 billion yuan owed to the partner upon maturity, Shandong Yulong Gold has been subjected to arbitration by the partner, with 0.839 million yuan of bank deposits frozen, along with approximately 0.43 billion yuan of external receivables frozen. At the same time, the 67% equity stake in Shaanxi Shanjin Mining Co., Ltd. and the 45% equity stake in Lighthouse City Shuangli Silicon Mining Co., Ltd. held by Shandong Yulong Gold have been frozen and pending freezing by judicial authorities.
On the other hand, Shandong Yulong Gold faces the risk of debt default.
On March 10, Triton Company sent a claim letter to NQM Company (the operator of the Pakingo mine) regarding the unpaid acquisition price for the Mozambique graphite mine, explicitly requesting NQM Company to pay the 3.42 million Australian Dollars as soon as possible, while reserving the right to take legal action. Currently, a total of 8.5 million Australian Dollars remains unpaid under the acquisition contract for the Mozambique graphite mine.
In addition, the operating conditions of the mineral projects of Shandong Yulong Gold are not optimistic.
The Loufanggou Vanadium Mine held by Shaanxi Shanjin is currently in the early stages of Infrastructure investment, with Shandong Yulong Gold having cumulatively invested 0.24 billion yuan. The project currently does not have the capacity to generate cash flow and faces a shortfall, requiring an additional investment of 0.5-0.6 billion yuan in the future.
The project has not yet obtained environmental assessment procedures and will be difficult to complete in the short term, meaning the production schedule cannot be determined at this time. Furthermore, the vanadium product market has been declining steadily for the past two years, with vanadium prices significantly dropping; production costs at 0.09 million yuan/ton present a risk of investment loss.
The Pakingo project held by NQM Company, a subsidiary of Shandong Yulong Gold in Australia, has been operating for over 40 years. After takeover by Shandong Yulong Gold, a substantial amount of exploration funds were invested, but there have been no significant increases in reserves in the past two years, and the grade of the deep ore body has decreased, with a relatively short remaining mine life. Additionally, the equipment at the Pakingo processing plant is severely outdated, and the actual processing capacity has reached its limit with no room for improvement.
The Liaoning silicon stone mining project has been tested multiple times, and the ore characteristics do not meet the initial investment expectations; multiple indicators fail to satisfy the production requirements for industrial silicon.
At the same time, the current market price of quartz sand, which is the main source of revenue, is sluggish and has a continuous downward trend, greatly impacting future operations and development.
Looking at the previous few years, Shandong Yulong Gold's performance has been quite good.
From 2020 to 2023, Shandong Yulong Gold achieved net income of 0.117 billion yuan, 0.364 billion yuan, 0.291 billion yuan, and 0.445 billion yuan respectively, with year-on-year changes of 474.24%, 210.78%, -20.03%, and 52.9%.
However, Shandong Yulong Gold's performance suddenly declined last year.
In the first three quarters of last year, Shandong Yulong Gold's revenue was 1.3 billion yuan, a year-on-year decrease of 19.87%; the net income attributable to the parent company was 0.288 billion yuan, a year-on-year decrease of 21.03%; and the cash flow from operating activities (CFO) was -2.271 billion yuan.
