G

old miner Archi Indonesia announced Thursday it was postponing its initial public offering (IPO), which was scheduled for next week, due to an unfavorable global economy and bearish gold prices.

The IPO, which was expected to raise Rp 4 trillion (US$324.5 million) would be carried out at '€œa more favorable time'€.

The proceeds from the IPO were supposed to be used to refinance the company'€™s debts and to support its acquisition plan. With the delay, the company will need to source other funding.

Archi corporate secretary Edgar Affandi said that given the world economic slowdown and volatility in the commodity market, the company had decided to delay its plan to go public this year, as conditions were projected to result in minimal proceeds from the company'€™s planned IPO.

'€œWe will keep monitoring developments in the market, as well as commodity prices, going forward. We will resume our IPO plan at a more favorable time,'€ Edgar said.

The price of gold has been volatile all through the year, with the benchmark spot gold price in New York having dropped by about 14 percent from its year-high in March to end at $1,209 per ounce on Wednesday.

The gold price touched on $1,130.4 per ounce in early November '€” its lowest since 2010 '€” according to Bloomberg data, as gains in the US economy spurred a rally on the dollar.

Archi, part of conglomerate Rajawali Corpora owned by tycoon Peter Sondakh, initially planned to release up to 1.6 billion shares to the public in its IPO.

The shares to be offered to the public were equal to 40.4 percent of issued and paid-up share capital after the public offering, with a price range of Rp 1,895 to Rp 2,445 per share.

The pricing would bring a total of between Rp 3.03 trillion to Rp 3.9 trillion in fresh funds for the company. If realized, it would have been the largest amount to be raised this year.

The company has appointed PT CIMB Securities Indonesia, PT Danareksa Sekuritas, PT Mandiri Sekuritas and PT Valbury Asia Securities as underwriters for the IPO.

Of the total proceeds from the IPO, $216.2 million was earmarked to pay its debt to London-based gold miner Archipelago Resources Plc due at year end.

Some $35.9 million would be used to acquire a 99.98 percent stake in PT Smart Mining Resources (SMR) and the remaining $67.6 million would be working capital.

'€œRegarding our debt refinancing with Archipelago Resources, we will look for other funding options. As for SMR, we will continue with the acquisition plan and we are currently scrutinizing [acquisition] time and funding options,'€ Edgar told The Jakarta Post in an e-mail.

In 2013, Archi produced 147,000 ounces of gold with total revenue of $213.7 million, earnings before interest, taxes, depreciation and amortization (EBITDA) of $101.1 million and net sales of $42.9 million.