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

CodeNameMarket CapLast PriceDate of SuspensionReasonCurrent StatusTrying to relist?
MAS MESA MINERALS LTD$4.2M0.00608.07.2016MoneyIn administration
ZTA ZETA PETROLEUM PLC-CDI $1.9M0.07103.04.2017MoneyInvestigating opportunities'Yes
ENB ENEABBA GAS LTD$2.6M0.00506.12.2018MoneySeeking to raise capitalYes
CTL CENTENNIAL MINING LTD$9.4M0.00921.06.2018MoneySeeking to recapitaliseYes
CDU CUDECO LTD$92.7M0.23512.03.2018Money & LegalSeeking to recapitalise, not miningYes
TEX TARGET ENERGY LTD$253.1K0.0814.12.2017Inadequate OperationsTook a year, transaction complete, will reconsolidateYes
HOG HAWKLEY OIL AND GAS LTD$1.2M0.00311-May-17'LegalNone. Some talks failed. $78k in cash left
KKO KINETIKO ENERGY LTD$7.5M0.0229.09.2017Money$800k in rights issue raised. Project issues to be resolvedYes
SSN SAMSON OIL & GAS LTD $328.3K0.01511.04.2018MoneyOperating but still suspended
CAS CRUSADER RESOURCES LTD $10.5M0.0227.09.2018Money/LegalRaised $1.4m in notes, to do BFS & permits
KIK KAIRIKI ENERGY LTD $2.8M0.00827.05.2016MoneyStill searching for opportunitiesYes
AQJ AUS ASIA MINERALS LTD$68K0.211.03.2016Money/LegalReviewing an acquisition opportunity'Yes
WFE WINMAR RESOURCES LTD $58.2M0.02404.06.2018Inadequate Operations/LegalProposed acquisition. ASX won't relist given 'significant change' in nature of the business & would fil to meet requirements - no licenseYes
LGR LANKA GRAPHITE LTD $2.3M0.02131.07.2018Inadequate OperationsTransaction to be e-commerce firm to be complete in June 2019 - needs shareholders approvalYes
PEL PELICAN RESOURCES LTD $6.2M0.01730.10.2018Inadequate OperationsFollowed 6 months of arguing with ASX it was. Looking for new opportunitiesYes
WPG WPG RESOURCES LTD $13.6M0.01522.06.2018MoneyIn recievership
SNV SINOVUS MINING LTD $643.9K0.00125.02.2016Legal/Inadequate operationsUncertain.
NAV NAVIGATOR RESOURCES LTD $3.1M0.00827.03.2017Inadequate operationsTo recapitalise as a law firmYes
NMI NORTHERN MINING LTD $10.3M0.01101.08.2017Inadequate operationsSeeking to recapitalise as property developerYes
EGO EMPIRE OIL & GAS NL $6.3M2.425.08.2017MoneyUncertain.
LGO LONGREACH OIL LTD $9.7M0.00826.05.2017LegalSeeking to recapitalise as milk producer. Yes
GBM GBM GOLD LTD $8.9M0.00805.10.2018Money - cancelled placement, got loan, it was delayedSeeking fundingYes
JVG JV GLOBAL LTD $2.5M0.00120.03.2018Legal/Inadequate operationsSeeking new opportunitiesYes
TGS TIGER RESOURCES LTD $105.7M0.04917.02.2017Money (Technical issues)Operating but seeking to recapitaliseYes
WLF WOLF MINERALS LTD $38.2M0.03524.09.2018MoneyIn Voluntary administration
ANS AUSTSINO RESOURCES GROUP LTD $86.4M0.01703.09.2018Inadequate OperationsStill seeking capital. Entered agreement with investor who has not paidYes
SDL SUNDANCE RESOURCES LTD $43.1M0.00505.09.2018Inadequate OperationsIn agreement with investor. Yet to finalise and fulfil ASX information requestsYes
WLC WOLLONGONG COAL LTD $74.9M0.00810.12.2018LegalSeeking to resolve with ASICYes
CDG CLEVELAND MINING CO LTD $27.9M0.0730.09.2016Money/Failure to lodge accountsIn administration*
HAR HARANGA RESOURCES LTD $1.7M0.00317.01.2018Inadequate OperationsSeeking to recapitaliseYes
EPA EPHRAIM RESOURCES LTD $3.1M0.00228.02.2017Money/RestructureSeeking capital - cash balance $38k. Yes
REL RAVEN ENERGY LTD $21.7M0.00207.03.2018Money/DivestmentsMade $160k placement, will undertake SPPYes
HDY HARDEY RESOURCES LTD $7.9M0.00306.09.2018LegalASX seeking to delist
MBT MISSION NEWENERGY LTD $1.5M0.03625.11.2016Inadequate OperationsSeeking reverse takeover. Yes
CEL CHALLENGER ENERGY LTD $4.7M0.01202.08.2018Money/Change in activitiesSeeking to relist. Yes
REZ RESOURCES & ENERGY GROUP LTD $13.7M0.10512.04.2018Money/RecapitalisationAcquiring new projectYes
JKA JACKA RESOURCES LTD$2.3M0.00318.09.2018Transaction Seeking new projectYes
IRL INDIA RESOURCES LTD $2.0M0.00215.08.2016MoneyUncertain.
AOK AUSTEX OIL LTD $9.6M0.01715.02.2018Inadequate OperationsUncertain.
EGS EASTERN GOLDFIELDS LTD $87.6M0.11520.07.2018MoneyVoluntary administration
BBR BORA BORA RESOURCES LTD $2.4M0.04719.12.2016Inadequate OperationsSeeking to relist but yet to comply with Listing RulesYes
ODN ODIN ENERGY LTD $160.8K0.3518.07.2016Inadequate OperationsSeeking reverse takeover. Yes
EOR ENHANCED OIL & GAS RECOVERY$9.0M0.00801.05.2018Inadequate operationsTransaction failed. Seeking new opportunitiesYes
CSD CONSOLIDATED TIN MINES LTD $13.6M0.2524.06.2016MoneyDrilling. Seeking to relistYes
NMM NOBLE METALS LTD $17.4M0.11514.03.2017MoneySeeking new projectYes
BSP BLACK STAR PETROLEUM LTD $1.3M0.00220.09.2018Inadequate OperationsSeeking new projectYes
NIO NICKELORE LTD $1.3M0.15619.07.2016Inadequate OperationsSeeking to enter solar industry, seeking fundingYes
LIN LINDIAN RESOURCES LTD $8.1M0.01901.11.2018Inadequate operationsUncertain.
MPO MOLOPO ENERGY LTD $34.9M0.1421.07.2017Inadequate OperationsNot pursuing activities until action taken against former directors*
MED MERLIN DIAMONDS LTD $19.8M0.00628.09.2018LegalHope to relist (once dispute with consultants resolved)Yes
IND INDUS ENERGY NL$3.5M0.02124.08.2016Inadequate OperationsSeeking acquisition then relistingYes
CNX CARBON ENERGY LTD $8.3M0.07428.09.2018MoneyIn administration
SKP SKYLAND PETROLEUM GROUP-CDI $64.0M0.0602.12.2016MoneyMade $700,000 placement. But director - David Robson diedYes
PGS PLANET GAS LTD$2.2M0.00422.11.2018Inadequate OperationsSeeking to acquire another company & relist Yes
ZAM ZAMANCO MINERALS LTD $4.1M0.06326.09.2016Inadequate OperationsLooking for opportunitiesYes
VIC VICTORY MINES LTD $6.8M0.00506.09.2018LegalSeeking to address ASX concerns about Hardey Resources relationsYes

 

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.