Mongolia Energy Shares Fall on Earnings Speculation

By John Duce

Dec. 17 (Bloomberg) -- Mongolia Energy Corp., the Hong Kong-listed mineral and energy explorer, fell the most in more than a year on speculation the company will report an earnings loss next week.

The shares declined as much as 21 percent in Hong Kong trading, the most since Oct. 27, 2008, to HK$3.76. The stock was at HK$4.06 at 2:32 p.m. local time. Mongolia Energy has risen 70 percent this year compared with a 49 percent gain on the benchmark Hang Seng index.

Mongolia Energy is developing a coal mine in the west of the country at Khushuut and the pit is due to go into production in the second quarter of next year. The company will announce first-half earnings on Dec. 23. It made a loss of HK$252.8 million ($32.6 million) in the second half of the last financial year.


“The stock has gained in value in recent months after the company announced agreements for the mine to go into production, so I think investors are taking profit ahead of a possible loss in their results,” said Timothy Kwai, an analyst at Quam Securities in Hong Kong. “It’s quite a volatile stock as the company is investing a lot ahead of going into production next year.”

Mongolia Energy is unaware of any reason for the drop in its share price, the company said in a statement to the Hong Kong stock exchange today.

Total investment in the Khushuut mine will likely reach $2.85 billion over its estimated lifetime of 19 years, said the company’s general counsel, Mohan Datwani on Nov. 11.

Mongolia Energy last month signed an agreement with contract miner Leighton Holdings Ltd., a unit of Australia’s largest construction company, to extract coal from the Khushuut pit. The mine will initially produce 3 million metric tons of the fuel a year.

The company also owns 330,000 hectares of mineral and energy concessions in the resource-rich north Asian country.

To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

Last Updated: December 17, 2009 01:40 EST

Source:Bloomberg