By Steve Moore | Tuesday 18 April 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Early this month ASA Resource Group (ASA) announced its directors had “received certain anonymous allegations relating to… certain aspects of the financial management at Freda Rebecca” (gold mine in Zimbabwe in which it has an 85% interest). However, it sought to reassure that “the company's directors believe these allegations to be completely mischievous”. Now though “the board is extremely disappointed to report”…
“… that there is strong evidence of funds amounting to several million US dollars being transferred from the accounts of Freda Rebecca Gold Mine to entities in China, without full value being received by Freda Rebecca Gold Mine”. Babylon Zoo to the warm-up area please, calling Babylon Zoo to warm up...
This has seen the removal of Chief Executive Yat Hoi Ning and Finance Director Yim Kwan from their posts, “a number” of appointments of Chinese managers and department heads being rapidly reviewed and “likely to change” and the authorities in jurisdictions where the group carries on business being informed. This all compares to the company’s announcement two weeks ago including senior non-executive director Dr Scott Morrison stating;
“We take our corporate governance duties very seriously and we stand by the executive's efforts to drive through efficiency measures of its subsidiaries for the benefit of all stakeholders. We regret if difficult retrenchment decisions need to be made, but the executive must take every effort to ensure our mines are profitable. Any reorganisation takes time and there are inevitably and regrettably casualties along the way.”
Hmmm, how’s that worked out Scott? That the directors now state that they “share the consequent disappointment with a feeling that they have been misled” is far from sufficient. It is now also stated that “the financial controller of Freda Rebecca Gold Mine was suspended from his duties on 10th April 2017 in light of perceived breaches of Freda Rebecca Gold Mine procedures”! (my bold underlined) and, at the end of the announcement, “on a more positive note Asa Resource can now announce that its exploration permits in relation to Zani Kodo in DRC have been renewed until 2029”. Oh, that makes things a lot better then!?!
Furthermore, the announcement two weeks ago also reassured that “the alleged matters are not believed to have had any impact upon the continuing operations at Freda Rebecca”. Now, “cash analysis reveals that there is a pressing need for cash at ASA, Freda Rebecca Gold Mine and Bindura Nickel Corporation levels and that the matters now under investigation have prejudiced their normal cash flows”. You couldn’t make it up!
Natch, bargepole / sell. Babylon Zoo to stage centre please, Babylon Zoo to stage centre...
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