Iron Ore Giant to Issue Bonds Next Week

Technically, the bonds are called Ijarah sukuk—securities representing the ownership of well-defined assets tied up to a lease contract, the rent for which is the return payable to its holders.

Ijarah bonds are the most widely used form of the 14 types of Islamic bonds. They first debuted in Iran in 2011.

The four-year bonds pay a nominal rate of 17% in return every three months and are priced at 1 million rials each ($22). They are set to be auctioned for three days on the capital market.

Golgohar plans to buy 63 machinery and equipment, including water pumps, valves and conveyor belts, for its iron ore concentrate production lines.

The complete list and each article’s price can be found at Codal.ir.

Golgohar is currently Iran’s largest iron ore concentrate and pellet producer.

Authorized by the Securities and Exchange Organization, Ordibehesh Sevom Financial Intermediation Company is set to issue the sukuk and lend the funds raised to Golgohar.

The bonds’ buyback will be guaranteed by Bank Parsian.

According to SEO official, Ali Beygzadeh Milani, Golgohar’s Ijarah sukuk issuance will send positive signals to the equity market.

“When a company issues debt, it sends two signals to the market. First is that the firm is confident about the quality of its financial structure and liquidity flow … and the second is that the management team has chosen a low-risk, high-gain investment opportunity that can boost share prices and create more value for investors,” the official was quoted as saying by Bourse Press.

Golgohar has had a good 10 months this fiscal year (March 21, 2017-Jan. 20, 2018), as it produced 9.36 million tons of concentrate and 9.04 million tons of pellet, with sales reaching 1.74 and 9.09 million tons respectively.

Sales value amounted to 3.63 trillion rials ($79.84 million) and 33.11 trillion rials ($727.74 million) respectively for the period.

Exports made up 1.51 million tons of total concentrate sales valued at 3.43 trillion rials ($75.6 million) and 107,399 tons of pellets worth 225.4 billion rials ($4.9 million) during the period.

Golgohar’s shares, currently with a 107.4-trillion-rial ($2.36 billion) market capitalization, are being traded at 3,650 rials (about 8 cents) each on Tehran Stock Exchange.

Located in southern Iran about 50 km from Sirjan in southwest Kerman Province, Golgohar operates mines containing six ore bodies spread over 40 square kilometers.

The total deposits of iron ore in the region are estimated to be over 1.135 billion tons. The major ore body has a deposit of more than 650 million tons, according to the company’s website.

The mines are connected to the Trans-Iranian Railroad through the Tehran-Bandar Abbas route.