Reenova Investment Holding’s rare earth adventure, which has put the company in the news since 2016, is poised to end.
The company, which used to be called ISR Capital, is selling its 75% stake in a tantalum concession in Madagascar to an entity called GRM Group for US$6 million.
No further information is provided on the buyer in the company’s announcement on Nov 10.
The company paid $4.5 million for the stake, sharply reduced from an initial price tag of $40 million.
This follows a series of actions on the part of SGX RegCo questioning the validity of the valuation of the concession.
Two valuers had each accorded a value of more than US$1 billion, sending the share price of ISR Capital then surging by around 4,000% within months.
See also: Kingsmen Creatives acquires 10% stake of Kingsmen E&E for $395,000
After the company was compelled to commission another valuation, a more sober number of US$48 million was concluded.
Reenova, under new controlling shareholder, executive chairman Chen Tong, explains that the pandemic had led to prolonged border closures of the African island nation.
As a result, it wasn’t able to properly go ahead with pilot production, much less commercialising the concession.
See also: Nissan CFO set to step down as carmaker faces raft of challenges
It was also unable to raise new funding from other investors despite “best efforts”.
As such, by selling now, Reenova can monetise its investment value “for the benefit” of its shareholders.
Upon completion of the divestment, Reenova will become a cash company and will “have the flexibility to explore and pursue viable business opportunities.”
Reenova’s shares has been suspended since Nov last year. It last traded at 0.3 cents
