Thwarted explorer wants investors to believe Ghana oil is as good as gold
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Soon Mining has put its gold mining aspirations in Ghana to one side and levelled up to the world of oil trading, after the national government placed an ongoing ban on mining.
After being locked out of the country’s gold industry in May, Soon Mining told investors it was now in “advanced discussions” with the government to get permission to trade sweet light crude oil.
China-based Soon Mining (ASX:SMG) reckons that because Ghana is a fast-growing economy and its oil is sought-after in Asia, it’s onto a winner.
Stockhead could find no immediate evidence of oil trading experience among the company directors, though the company told investors it would benefit from a “deep knowledge and experience of doing business in the country, as well as the board’s understanding of the Asian market”.
Soon does not plan to raise capital to fund the change-over. It had $2.2 million in the bank in June.
Brent oil, the price marker for oil in Asia, dropped 0.12 per cent to $US57.86 a barrel on Monday. Gold was down slightly to $US1,276 an ounce.
Soon Mining listed in Australia in March 2016, raising $4.5 million selling shares at 20c apiece and promising investors golden riches from the Ashanti Gold Belt in eastern Ghana.
In February it doubled down, locking in extra rights for three years within the Konongo project area.
Then in May things turned to custard.
“The Konongo Project mining preparations have been temporarily delayed due to a nationwide investigation into illegal mining activities in Ghana,” the company said at the time.
“All mining in the country has been suspended while the investigation is conducted.
“Nine District Mining officers of the Minerals Commission have also been suspended pending the outcome of the investigation.
“To date, SMG has not conducted any mining projects in Ghana and has under no circumstance engaged in any unauthorised or illegal activity. We strongly oppose any misconduct in the mining sector and are pleased the appropriate action has been taken to stop illegal mining and the associated potential for environmental damage.”
The foray into oil has raised the attention of the ASX, which is not a big fan of early or mid-life career shifts without shareholder approval.
Soon Mining says a shareholder decision will be known by the end of December.
Soon’s shares were steady on Monday at 26c, valuing the company at $41 million. The shares have traded between 12c and 36c over the past year.