MAC: Mines and Communities

On the rocks and off the high ground

Published by MAC on 2009-08-25

London Calling examines the curious case of a British "African Venture"

Earlier this month, the share price of UK-listed mining company, Noventa, rose sharply when the company announced that it soon expected to resume operations at a promising tantalum find in northern Mozambique.

Don't be deceived by the "news".

Many market aficionados are tending to grab at any indication of an upswing in these troubled times.

Considering the specific troubles that have dogged Noventa, since its March 2007 floatation on the UK Alternative Investment Market (AIM), there's precious little indication that the company will fly higher in the near future.

HAV - and have not

Behind Noventa, and holding the largest investment in it, is a weird bunch called Highland African Ventures Ltd, or HAV.

Now, when it comes to determining who bears ultimate responsibility for a mining company's dubious acts of commission or omission, the conscientious researcher is often diverted by numerous twists, turns, and acts of downright deception.

In comparison to such deviance, most other industrial sectors look as transparent as a carefully conceived contraceptive: whatever's done (or not) is usually plain for all to see - at least when you finally pull it off.

But Highland African slouches in the lower swamps of transparency.

Three years ago Noventa was boasting ownership of one of the world's biggest, lowest-cost, industrial-scale tantalum deposits to be found anywhere.

But the company rapidly began foundering: the ore was of lower quality than earlier declared; processing equipment didn't work properly; power supplies failed; and banking group First Rand (Ireland) plc withdrew a pre-shipment financing facility.

To cap it all, last month Investec plc tendered its resignation as the company's "Nomad" (the nominated advisor without which no AIM-listed company can legitimately secure capital). Clearly the bank had had enough.

Out of the Woods - and into the mire

A man called Clinton Woods set Noventa rolling amid the breakers of the Channel Islands' tax haven in 2006.

However, on July 9 this year, Woods was sacked by a majority of the company's shareholders, without any explanation being proffered.

His successor is a "corporate restructuring expert", called Eric Kohn, who has failed to reveal the identity of the stock holders that booted Clinton out. As construed by the Mining Journal's diligent researcher, Ken Gooding: "[I]t is inconceivable that Noventa's biggest shareholder, Highland African Ventures Ltd ... did not lead the charge."

HAV is controlled by a trust, one of whose beneficiaries is former UK mining banker and mining investor, Roddie Fleming.

Indeed, Noventa's 2008 annual report acknowledges the company's "ultimate controlling party" to be Fleming Family and Partners AG, based in Liechenstein - yet another locale where books can be cooked if it gets too hot in the main kitchen.

The Flemings are still a force to be reckoned with, although they had to offload their banking business to Chase Manhattan bank nine years ago.

The Flemings have launched a number of key mining plays in Russia, and remain a minor shareholder in Highland Gold, whose leading backer is the world's premier gold producer, Barrick, holding 20% of that company's stock.

BlackRock Investment Management, one of the most important global backers of mining finance,held 10.8% of Noventa until recently. But BlackRock now seems to have sold considerably down - if not out of ,the company.

There are, according to Ken Gooding, three other significant shareholders in Noventa: an outfit dubbed Varroville Finance; another called Lochside International, and Kerias Management Trading Ltd. (A fourth, going under the superficially-reassuring moniker of Mozambique Trust, apparently holds 2.05% of Noventa's equity -  putting it beneath the bar whereby a fund has to declare an interest under London Stock Exchange rules).

Both Kerias and the Mozambique Trust are formally connected with HAV. But if you "google" them you'll find out nothing further.

So that's the story to date.

Although it's a more intriguing tale than most of its ilk, it's nonetheless indicative of the murky dabbling to which many junior mining financiers are resorting, as they scrabble to compete with each other - and for credibility - now that the carpet of the market has been pulled from under their feet.

As for their "accountability" - we'll try  resist crying: "Pull the other one".

Sources: Noventa's announcement of possible re-start, Mineweb, 3 August 2009; Noventa's 2007 optimism and background on Highland African Ventures: Mining Journal, 24 July 2009; current shareholders in Noventa: Hemscott Investment services, 6 August 2009

[London Calling is published by Nostromo Research, London, which takes all responsibility for content. Reproduction is welcomed, provided acknowledgment is paid to Nostromo Research and any sources quoted.]

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