Alcorn Gold raising P100 million via stock rights offering

MANILA, Philippines - Alcorn Gold Resources Corp., controlled by Puregold owner Lucio Co, is raising around P100 million through a stock rights offering to fund its oil exploration projects.

In a filing with the Philippine Stock Echange, Alcorn said shareholders are entitled to buy one share for every 11.72 shares held as of Oct. 28 at one centavo per share.

Net proceeds from the offering will be used to partly fund the work program requirements of the West Linapacan oil exploration project in Palawan under Service Contract 14.

The offering will run from Nov. 15 to 26 while the listing of the shares has been set on Dec. 6.

Asian Alliance & Investment Corp. has been tapped as issue manager and underwriter.

Co now owns 66 percent of Alcorn following his subscription to the listed firm’s latest increase in capitalization from P700 million to P3 billion.

Of the P2.3-billion capital increase, Co subscribed to P575 million, equivalent to 57.5 billion shares at one centavo par value.

Market observers were earlier speculating that Co might use Alcorn as his vehicle for gaining a backdoor entry into the stock exchange. This time, though, Co is reportedly considering to list his Puregold chain of department stores to capitalize on a booming stock market.

Puregold has over 20 outlets across Metro Manila and nearby provinces. The first Puregold store, located on Shaw Boulevard in Mandaluyong, was put up in 1998.

Alcorn, on the other hand, is on the lookout for acquisitions to ensure its long-term growth. It is currently studying its possible participation in other industries and projects that are compatible to its long-term plans and funding position.

As of end-December 2009, Alcorn had a cash position of P225.486 million, which is sufficient to support its operations and project commitments for the next 12 months

Alcorn is engaged in the exploration, development and production of oil and gas, as well as metallic and non-metallic reserves. The company has participating interests in a number of petroleum and mineral properties in Palawan, the Visayas region and in Mindanao and Gabon, West Africa.

The company reported a net income of P9.3 million last year, up 91 percent from the 2008 level.

Bulk of the increase in net profit was due to income from sale of petroleum interest amounting to P31 million.

Income from the sale of petroleum interest reached P31 million, representing 60 percent of the total revenues. Among the company’s oil interests, Service Contract 14 in Northwest Palawan is considered the largest oil discovery in the country’s petroleum exploration history, with more than 48 million barrels of oil produced from its wells. However, in December 1995, the consortium decided to temporarily suspend production operations in the West Linapacan oilfields due to high production costs, low production levels and low prevailing price of oil.