The ASX has the power to suspend stocks from trading, meaning trading cannot take place until the suspension is lifted. Suspensions can either occur at the company’s behest or the ASX’s.

Stockhead analysis has found 56 small cap mining stocks are suspended from trading, several of which have been out of action for many months. Why are they suspended and is there any hope for them?

The most common reasons companies get suspended are:

1. Financial Condition  

This is the most common reason, with 26 companies being suspended at least partly because of their financial condition.

Companies must release quarterly cash flow statements and annual reports. The ASX can suspend a company if its cash flow is inadequate or if it does not lodge such documents to prove its cash flow. They may query the company first and the company’s response will be released as an announcement, along with the initial letter.

The ASX will commonly ask:

  • If the company expects negative cash flows to continue (or if not why not)
  • Has the company tried to raise capital and if so, will they get the deal done?
  • Does the company expect to continue and if so, how so?

In asking these questions the ASX will commonly allude to the most recent quarterly and potentially other announcements. While the company will always seek to talk up their long term future, it is easier to be confident when they recently raised capital.

It is not uncommon to see suspended companies having literally no revenue at all. However,  such companies will only be operating in an administrative capacity.

 

2. Inadequate Operations

In mining companies, this occurs when a company has no projects and is looking for new opportunities or seeking recapitalisation.

Only 14 of the 55 on Stockhead’s list are not proactively seeking new opportunities in some form. Some may be in long term talks, others may have been in talks but had them fail and are searching for others.

New opportunities may not necessarily be in mining. Some suspended companies want to enter new industries altogether from milk manufacturing (Longreach Oil (ASX: LGO)) to legal services (Navigator Resources (ASX: NAV)).

Even when an opportunity has been found, making it happen is no easy feat. Austsino (ASX: ANS) and Sundance Resources (ASX: SDL) were both voluntarily suspended in the first week of September.

After extending their suspension several times over the next three weeks, AustSino agreed to acquire Sundance for $58 million and anticipated it would take four months. Now they predict it will be complete by March 31.

They have also had difficulty in chasing money from Chinese investor, Guan Min Jie, who having agreed to invest $3 million last August has not paid and until 15 March to cough up the rest.

Whoever’s call the suspension is, it’s anyone’s guess when it will be lifted. Although the ASX will may say, “the suspension will continue until [the Company] is able to demonstrate compliance with Listing Rule 12.1”, it can take a while for the ASX & the company to see eye to eye.

 

3. Running into legal issues

The three most common ways to run foul of the ASX are failing to lodge documents, failing to pay listing fees or failing to respond to ASX queries (either adequately or at all). 

Just because a company is suspended, it does not mean it has broken ASX Listing Rules or other regulations. The ASX may have suspicions and question their financial state or conduct.

Sometimes misconduct, or at least allegations of it, can emerge from company responses to queries.

Hardey Resources (ASX: HDY) was suspended after making two acquisitions and giving securities (equating to nearly half the company) without transparency.

The purchasers were just vaguely listed as ‘NV/VM Vendors’, the codes after the projects’ names. Several to and fro letters failed to convince the ASX that the conduct was acceptable and the ASX has been seeking to delist them.

ASX listing fees range from $26,376 to $61,729 for small cap companies.

New companies have to cough up entry fees as well. Eight companies on Stockhead’s list failed to pay listing fees and this is easy to tell.

The ASX released a ‘name and shame list’ after the deadline in August last year – many of which were suspended already.

Arguably though if they lack money to pay these fees (miniscule compared to the costs of mining), they should not be listed anyway.

Companies can also be suspended for breaches of other regulations particularly the JORC Code and the Corporations Act. It will not end well for the company when it is exposed from the outside and worse still when the company live ins denial.

 

The end?

The ASX will sometimes delist companies within a matter of months but other times it can take up to 3 years – which is the deadline when they usually will be removed. Of Stockhead’s list, only Sinovus Mining (ASX: SNV) is facing the axe very soon, having first been suspended back on February 25 2016.  

It’s fair to say that the longer time goes on without a resolution, the less hope there is for shareholders.

Unfortunately, once a stock is suspended you are ‘trapped’ in your holdings. What can you do to avoid getting caught out?

It should go without saying – keep an eye on your shareholdings. Check their annual reports and their quarterlies and consider acting when things are starting to look suspicious.

And if you see the ASX & the company at polar opposite perspectives… well, you have been warned.

This is not to say companies cannot be turned around – they can. But it is more difficult for mining companies with high capital costs and difficulty in transitioning, because they may have to use new equipment or take up more promising projects.

How much hope there is for those in these companies that are suspended will depend on their status. If they have a clear opportunity on the table, there is hope. If they are in administration or are just ‘reviewing opportunities’, relief for shareholders will be a long time coming.

 

Here’s a list of suspended small cap miners and why they are suspended

Code Name Market Cap Last Price Date of Suspension Reason Current Status Trying to relist?
MAS MESA MINERALS LTD $4.2M 0.006 08.07.2016 Money In administration
ZTA ZETA PETROLEUM PLC-CDI $1.9M 0.071 03.04.2017 Money Investigating opportunities' Yes
ENB ENEABBA GAS LTD $2.6M 0.005 06.12.2018 Money Seeking to raise capital Yes
CTL CENTENNIAL MINING LTD $9.4M 0.009 21.06.2018 Money Seeking to recapitalise Yes
CDU CUDECO LTD $92.7M 0.235 12.03.2018 Money & Legal Seeking to recapitalise, not mining Yes
TEX TARGET ENERGY LTD $253.1K 0.08 14.12.2017 Inadequate Operations Took a year, transaction complete, will reconsolidate Yes
HOG HAWKLEY OIL AND GAS LTD $1.2M 0.003 11-May-17' Legal None. Some talks failed. $78k in cash left
KKO KINETIKO ENERGY LTD $7.5M 0.02 29.09.2017 Money $800k in rights issue raised. Project issues to be resolved Yes
SSN SAMSON OIL & GAS LTD $328.3K 0.015 11.04.2018 Money Operating but still suspended
CAS CRUSADER RESOURCES LTD $10.5M 0.02 27.09.2018 Money/Legal Raised $1.4m in notes, to do BFS & permits
KIK KAIRIKI ENERGY LTD $2.8M 0.008 27.05.2016 Money Still searching for opportunities Yes
AQJ AUS ASIA MINERALS LTD $68K 0.2 11.03.2016 Money/Legal Reviewing an acquisition opportunity' Yes
WFE WINMAR RESOURCES LTD $58.2M 0.024 04.06.2018 Inadequate Operations/Legal Proposed acquisition. ASX won't relist given 'significant change' in nature of the business & would fil to meet requirements - no license Yes
LGR LANKA GRAPHITE LTD $2.3M 0.021 31.07.2018 Inadequate Operations Transaction to be e-commerce firm to be complete in June 2019 - needs shareholders approval Yes
PEL PELICAN RESOURCES LTD $6.2M 0.017 30.10.2018 Inadequate Operations Followed 6 months of arguing with ASX it was. Looking for new opportunities Yes
WPG WPG RESOURCES LTD $13.6M 0.015 22.06.2018 Money In recievership
SNV SINOVUS MINING LTD $643.9K 0.001 25.02.2016 Legal/Inadequate operations Uncertain.
NAV NAVIGATOR RESOURCES LTD $3.1M 0.008 27.03.2017 Inadequate operations To recapitalise as a law firm Yes
NMI NORTHERN MINING LTD $10.3M 0.011 01.08.2017 Inadequate operations Seeking to recapitalise as property developer Yes
EGO EMPIRE OIL & GAS NL $6.3M 2.4 25.08.2017 Money Uncertain.
LGO LONGREACH OIL LTD $9.7M 0.008 26.05.2017 Legal Seeking to recapitalise as milk producer. Yes
GBM GBM GOLD LTD $8.9M 0.008 05.10.2018 Money - cancelled placement, got loan, it was delayed Seeking funding Yes
JVG JV GLOBAL LTD $2.5M 0.001 20.03.2018 Legal/Inadequate operations Seeking new opportunities Yes
TGS TIGER RESOURCES LTD $105.7M 0.049 17.02.2017 Money (Technical issues) Operating but seeking to recapitalise Yes
WLF WOLF MINERALS LTD $38.2M 0.035 24.09.2018 Money In Voluntary administration
ANS AUSTSINO RESOURCES GROUP LTD $86.4M 0.017 03.09.2018 Inadequate Operations Still seeking capital. Entered agreement with investor who has not paid Yes
SDL SUNDANCE RESOURCES LTD $43.1M 0.005 05.09.2018 Inadequate Operations In agreement with investor. Yet to finalise and fulfil ASX information requests Yes
WLC WOLLONGONG COAL LTD $74.9M 0.008 10.12.2018 Legal Seeking to resolve with ASIC Yes
CDG CLEVELAND MINING CO LTD $27.9M 0.07 30.09.2016 Money/Failure to lodge accounts In administration*
HAR HARANGA RESOURCES LTD $1.7M 0.003 17.01.2018 Inadequate Operations Seeking to recapitalise Yes
EPA EPHRAIM RESOURCES LTD $3.1M 0.002 28.02.2017 Money/Restructure Seeking capital - cash balance $38k. Yes
REL RAVEN ENERGY LTD $21.7M 0.002 07.03.2018 Money/Divestments Made $160k placement, will undertake SPP Yes
HDY HARDEY RESOURCES LTD $7.9M 0.003 06.09.2018 Legal ASX seeking to delist
MBT MISSION NEWENERGY LTD $1.5M 0.036 25.11.2016 Inadequate Operations Seeking reverse takeover. Yes
CEL CHALLENGER ENERGY LTD $4.7M 0.012 02.08.2018 Money/Change in activities Seeking to relist. Yes
REZ RESOURCES & ENERGY GROUP LTD $13.7M 0.105 12.04.2018 Money/Recapitalisation Acquiring new project Yes
JKA JACKA RESOURCES LTD $2.3M 0.003 18.09.2018 Transaction Seeking new project Yes
IRL INDIA RESOURCES LTD $2.0M 0.002 15.08.2016 Money Uncertain.
AOK AUSTEX OIL LTD $9.6M 0.017 15.02.2018 Inadequate Operations Uncertain.
EGS EASTERN GOLDFIELDS LTD $87.6M 0.115 20.07.2018 Money Voluntary administration
BBR BORA BORA RESOURCES LTD $2.4M 0.047 19.12.2016 Inadequate Operations Seeking to relist but yet to comply with Listing Rules Yes
ODN ODIN ENERGY LTD $160.8K 0.35 18.07.2016 Inadequate Operations Seeking reverse takeover. Yes
EOR ENHANCED OIL & GAS RECOVERY $9.0M 0.008 01.05.2018 Inadequate operations Transaction failed. Seeking new opportunities Yes
CSD CONSOLIDATED TIN MINES LTD $13.6M 0.25 24.06.2016 Money Drilling. Seeking to relist Yes
NMM NOBLE METALS LTD $17.4M 0.115 14.03.2017 Money Seeking new project Yes
BSP BLACK STAR PETROLEUM LTD $1.3M 0.002 20.09.2018 Inadequate Operations Seeking new project Yes
NIO NICKELORE LTD $1.3M 0.156 19.07.2016 Inadequate Operations Seeking to enter solar industry, seeking funding Yes
LIN LINDIAN RESOURCES LTD $8.1M 0.019 01.11.2018 Inadequate operations Uncertain.
MPO MOLOPO ENERGY LTD $34.9M 0.14 21.07.2017 Inadequate Operations Not pursuing activities until action taken against former directors*
MED MERLIN DIAMONDS LTD $19.8M 0.006 28.09.2018 Legal Hope to relist (once dispute with consultants resolved) Yes
IND INDUS ENERGY NL $3.5M 0.021 24.08.2016 Inadequate Operations Seeking acquisition then relisting Yes
CNX CARBON ENERGY LTD $8.3M 0.074 28.09.2018 Money In administration
SKP SKYLAND PETROLEUM GROUP-CDI $64.0M 0.06 02.12.2016 Money Made $700,000 placement. But director - David Robson died Yes
PGS PLANET GAS LTD $2.2M 0.004 22.11.2018 Inadequate Operations Seeking to acquire another company & relist Yes
ZAM ZAMANCO MINERALS LTD $4.1M 0.063 26.09.2016 Inadequate Operations Looking for opportunities Yes
VIC VICTORY MINES LTD $6.8M 0.005 06.09.2018 Legal Seeking to address ASX concerns about Hardey Resources relations Yes

 

This is not intended to be legal or financial advice and does not take into account your personal circumstances. The labels attributed under ‘reason’ may not be the only factors the ASX took to suspend them or the company took to suspend themselves.