Will 2013 see the new 'brooming' of dubious mining investment?

Published by MAC on 2013-01-14
Source: From Money to Metal

Will 2013 see the new "brooming of mining investment?

The recent winter "lull" hasn't prevented regulatory authorities in three jurisdictions - the UK, Australia and Canada - from spotlighting the recent dubious activities of four mining financiers.

In mid-December 2012, the UK Takeover Panel ruled that the notorious Bakrie Group, and an investor called Rusan Roeslani, must reduce their shareholder voting rights in London-listed Indonesian coal giant Bumi plc from 50.3% to less than 30%.

The Panel said both had acted as a "concert party" when injecting their Indonesian coal assets into Nat Rothschild's Vallar plc in 2011. They should either have mounted a takeover bid for Bumi on securing more than 30% of the company's shares; or else gained a waiver from the Panel - which they didn't.

In response, Roeslani has resigned from the Bumi board, while Bakrie's nominee, Nalin Rathod, stepped down as the company's CEO at the end of the year (December 31 2012) [Mining Journal 21-28 December 2012].

Dirty Doings Down Under

Then there's Gina Rinehart - one of the world's richest women - whose flagship Hope Downs 4 iron ore project in Western Australia is valued at close to $2 billion and, once operational, will have annual capacity of 15 million metric tons.

It's now been belatedly revealed that Rinehart had almost-doubled her after-tax profits to Aus$1.2bn by the end of June 2011, as she finally "gave in to pressure...to disclose details of her fortune" [Reuters 3 January 2013].

The report, released by the Australian Securities and Investments Commission (ASIC), also showed that Gina's Hancock Prospecting Ltd had borrowed money from Rio Tinto.

According to Reuters, at the end of June 2011, "Hancock Prospecting sat on a cash pile of A$1.68 billion...and more than doubled its dividend to A$12.5 million from A$6.1 million in 2010″ - something which must have shocked the growing number of Ms Rinehart's critics.

The "G-man"

This blog has already mentioned a man called Bobby Genovese (known in the industry as Bobby G). In December 2012, he filed a document with Canadian regulators showing he'd made more than 250 transactions in 2011, involving shares in a company called Liberty Silver, shortly before it listed on the Toronto Stock Exchange (TSX).

Strong doubts were expressed last year as to the degree of control Genovese had over Liberty Silver and the lack of transparency involved in his trading of its shares.

Now, Canadian regulators have announced that the BG Group (not to be confused with musical legend The BeeGees, of course) and two his other entities held around 8.6 million LIberty Silver shares, or more than 10% of the total, at the time.

Comments Canada's Financial Post: "Before listing on the TSX, Liberty Silver issued almost 70 million shares for fractions of a penny each, and there have been anonymous allegations that Mr. Genovese has undisclosed control over tens of millions of them.

"It is not clear why Mr. Genovese waited so long to make the transactions public. Some of them are more than a year old" [Financial Post, 31 December 2012].

Well, sometimes - as with Gina Rinehart - public concern can cause a controversial wheeler-dealer to issue details of their private wealth, even if they don't technically have to do so.

So, will we find even more speculators of such a distasteful ilk, being forced to air their "dirty linen" in public as the new year unfolds?

Just watch this space!