At first glance, it is puzzling: Golden Energy & Resources (GEAR) reported US$12.5 million in profit attributable to shareholders for 1H2019 -- but its comprehensive income attributable to shareholders was much higher, at US$56.8 million

The reason lies in the solid performance of its equity investments in a gold producer and a coking coal producer, both listed in Australia.

Diversifying to other resources, geographically

(ASX listed)


Buy period

No. of Shares

Purchase price

16 Aug 2019 price

Westgold Resources


Dec 2017-Jan 2018

36 m



Stanmore Coal


Dec 2018- Jan 2019

65 m



A positive surprise has happened: GEAR could realise a cash windfall if a takeover proposal announced on 7 Aug 2019 from privately-held Winfield Energy for Stanmore becomes binding.

The takeover proposal comes with an indicative price of between A$1.50 and A$1.70 per share in cash.

That's a 58% - 80% premium to what GEAR paid for its stake less than a year ago (see table).

Meanwhile, GEAR said it continues to evaluate other potential acquisition targets in counter-cyclical commodities.

markzhou1.17Mark Zhou, senior head of investments at GEAR. NextInsight file photoIn its core business of coal mining and coal trading, GEAR has had mixed fortunes.

In 1H2019, it delivered record revenue of US$500.4 million (+3.9% y-o-y).

It's the result of hard work (compared to its passive investments in ASX-listed equities), mining and selling 12.6 million tonnes of coal from its Indonesian mines (+38.5% y-o-y).

90% of the revenue came from coal mining, 10% from coal trading.

The higher tonnage mitigated a fall in the average selling price of its coal: The ASP was US$35.80 per tonne in 1H19 versus US$44.90 in 1H18.

Stock price 

19 c

52-week range

18–33 c

PE (ttm)


Market cap

S$447 m

Shares outstanding

2.35 b



1-year return


Source: Bloomberg  

Meanwhile, on the expense side, its cash cost per tonne declined to US$23.56 in 1H2019 from US$25.98 in 1H2018

GEAR's key revenue contributors in 1H2019, by geography, are:

• Indonesia (36%), where GEAR has exceeded its "domestic market obligations"; 

• China (34%) which has seen a decline in coal imports for environmental reasons, and

• India (23%). 

In the current 3Q19, the ASP of GEAR's coal has softened further, as reflected by the ICI4 coal index.

After producing 12.6 tonnes of coal in 1H2019, GEAR is on track to produce 25 million tonnes of coal, as guided at the start of the year. 

jetty8.19At Bunati port, owned by GEAR: This is where most of GEAR's coal is transferred by conveyor belts to barges, which then transport the coal to mother vessels. Photo: Company
It would be record production, made possible by its on-going investment (at the rate of USD30-40 m capex a year) in infrastructure such as roads and processing capacity at its key Bunati port.

Achieving or exceeding its production targets continues to be a hallmark of GEAR, cushioning a downtrend in ASPs and keeping GEAR profitable. 

GEAR has declared an interim dividend of 0.29 Singapore cent a share (2Q18: nil). 

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