MAC: Mines and Communities

London Calling: no boundaries for Edmonds?

Published by MAC on 2008-10-27

The activities of London-listed miner, Camec, whose main play is in DR Congo, have long been associated with highly dubious transactions verging on the illicit. Recently it embarked on the equally questionable "purchase" of two platinum projects in Zimbabwe.

Barry Sergeant of Mineweb (a journalist "long black-listed by the company") has remarked that "Camec's DRC assets have a strange and startlingly controversial history."

That's putting it mildly.

According to Sergeant, Camec secured the Zimbabwean platinum deposits by agreeing to loan US$100 million to British Virgin Islands investment company, Meryweather, which owns 60% of a company that, in turn, owns the platinum ground. Since that company is state-owned, in effect this "appears to have been nothing less than an unsecured cash loan to the Robert Mugabe regime".

The mines were themselves appropriated from Anglo Platinum - which isn't likely to get any compensation for the seizure. Moreover, says Sergeant, Camec agreed to pay Meryweather 215 million of its own new, "locked up" shares. Poor Meryweather! The value of these has dropped by nearly three quarters since the deal was sealed.

But it's Camec's operations in DR Congo which bear the biggest whiff of scandal.

Although last year it failed to take over Katanga Mining - one of the two potentially biggest cobalt-copper ventures in the country - apparently it still holds onto more than half the Katanga shares it acquired for that ill-fated ploy.

What does seem incontestable is that Camec is now scrabbling both for credit and credibility. Its chairman - the notorious maverick businessman and ex-cricketer, Phil Edmonds - seems to be cutting deals to protect his assets which are hardly transparentl.

Short selling - at a profit

No doubt you've heard of "short selling" - that bane of the "free" market which both the US and UK governments recently decried as a key contributor to the current financial fall out/ bail-out/get-out (choose your own description)?

Well, Edmonds sold 8.5 million of his own shares in Camec on July 25th, reaping an estimated £3 million for him and his family. The stock price crashed, and he bought back half a million shares at rock bottom price. While keen to vaunt the buy-back, and boost the fortunes of his faltering enterprise, Edmonds didn't issue the required announcement of the previous sale.

Clearly, the UK Financial Services Authority (FSA) hasn't kept track of Camec as it should have done (that's putting it mildly). Nor does the British government, ready at the drop of a hat to condemn Mugabe's ZANU-PF, appear concerned that the London company may have directly financed (bribed?) the iniquitous regime.

No credit to the Suisse

But the dubiety in regulation doesn't end there.

Sergeant points out that, in mid-July 2008 - just before Edmonds made his stock sale killing - "investment analysts at Credit Suisse ‘raised' their stock price target on Camec from GBP 1.20 to GBP 1.60 a share."

What a coincidence! - especially if Sergeant is correct in his tantalising claim that ".. for years [Credit Suisse has] maintained fascinating relationships of various kinds with Camec ." Read into that what you will - Sergeant is obviously cautious about employing the "C" word directly

Concludes Sergeant: "Camec's selective communiqués with markets, mixed in with factors less visible to investors, have sometimes produced truly gob smacking results."

It's high time Edmonds and his motley crew were bowled a googly - and his gob-smacking plays knocked firmly into the net.

[Source: "Camec - naked as the tide recedes", Barry Sergeant, Mineweb, 5 October 2008]

London Calling is published by Nostromo Research. Opinions expressed in this column do not necessarily represent those of any other commentator, including the editors of the MAC website. Reproduction is welcomed, so long as full credit is given to Nostromo Research and any sources quoted.]

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