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SCANDAL!! BMR: loses Zambian mining right (of which it was forewarned but shareholders weren’t), shares suspended. What about the cash? What about Nomad W H Ireland?

By Nigel Somerville, the Deputy Sheriff of AIM | Wednesday 7 February 2018


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.


AIM-listed BMR updated the market at 1.15 this afternoon: it has been stripped of its Zambian Mining right and the shares are now suspended. And it seems the threat was known back in September, but the company didn’t bother to mention it.

The company stated:

BMR announces that it received yesterday a letter from the Mining Cadastre Department of Zambia dated 19 December 2017 terminating with immediate effect the aforementioned mining right in respect of BMR's Kabwe operation. This follows a default notice dated 24 August 2017 and received on 26 September 2017, to which BMR had officially responded.

Well, so when did BMR announce by RNS that it had received a default notice? Oddly enough, I can’t find it. Worse still, on 23 October we were told:

 The Company has entered into a new arrangement for the proposed funding, construction and operation of the Kabwe zinc-lead tailings re-processing plant ("Kabwe Plant") with Jubilee Platinum Plc ("Jubilee");

·          The arrangement is subject to technical review by Jubilee and final agreement of work programme and legal documentation by no later than 28 February 2018;

·          Under the proposed arrangement, Jubilee would provide up to £2.3m for construction of the Kabwe Plant;

·          BMR would retain 100% ownership of the Kabwe Large Scale Mining Licence, tailings and infrastructure (the "Kabwe Assets"), and a minimum of 60% of the economic interest in the long term post-tax profits of Kabwe operations;

·          BMR and Jubilee targeting completion of the construction and  commissioning of the Kabwe Plant by 30 June 2018 and commencement of operations and revenue generation thereafter;

And…

"I am delighted to reach this agreement with Jubilee after an extended period of negotiation with a number of groups. BMR has chosen to advance the Kabwe operation with Jubilee given its strong credentials and high degree of technical, operational and managerial experience. We believe that we have secured a strong partner to co-develop Kabwe and despite the recent disappointments the Company is now in a good position especially at a time when both lead and zinc commodity prices are performing strongly.

 

"Our principal objective is to ensure that, subject to Jubilee's review, we can complete the construction, and start commissioning, of the Kabwe Plant by 30 June 2018 with revenue generation commencing thereafter. BMR is confident that Kabwe is a robust and feasible operation and we look forward to co-developing this project with Jubilee.

 

That doesn’t sound like there are any problems, does it?

More recently, on 28 December, we were told:

we are making good progress towards our principal strategic objective of completing the construction of the Kabwe plant.  On another level, we are disappointed with the delay in securing funds from African Compass International ("ACI"), further to the agreement reached last year.  This delay has significantly impacted upon our timing for construction, our working capital position and therefore our market valuation.  I have previously alerted shareholders to construction delays.  However, we expect to make up ground in recovering our shareholder value as we conclude the agreements which are under advanced discussions relating to the Kabwe plant with Jubilee Platinum Plc (Jubilee) and to Star Zinc with Galileo Resources Plc (Galileo).

…and all the while the company was sitting on a default notice!

No wonder the financing didn’t arrive.

I note that the shares are now suspended. One might imagine that this is to do with the loss of the license.

Or is it to do with lack of funding?

I think we should be told.

One way or another, this is an absolute scandal. Shareholders in BMR were not informed of this and those who bought after 26 September might be forgiven for wanting their money back.

Meanwhile, there is no sign (yet) of Nomad WH Ireland resigning. So obviously there hasn’t been a slam-dunk breach of AIM Rules then….

One final question: did Jubilee (JLP) know about this?


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