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BMR Scandal – Jubilee says it knew nothing of the default notice.

By Nigel Somerville, the Deputy Sheriff of AIM | Thursday 8 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.

Well, well. Yesterday AIM-listed BMR ‘fessed up that it had received a default notice way back in September from the Zambian authorities with reference to its Kabwe project. The company didn’t notify the market of that until yesterday, when it ‘fessed up that it has now been stripped of the license. So what of its joint venture partner, fellow AIM-listed Jubilee Metals Group (formerly Jubilee Platinum, JLP): what did it know?

Jubilee was announced to have entered the scene on 23 October (so about 4 weeks after BMR knew that its license was under threat) under a binding term sheet and cash from Jubilee. On 15 January it was announced that Jubilee had subscribed for 97 million BMR shares, coughing up £0.5 million in cash and a further 63 million Jubilee shares. The overall average subscription price was 2.9p, for 29% of BMR.

At that time, BMR still knew of the threat to strip it of Kabwe and we were told yesterday that the execution letter had been issued some four weeks previously. Quite why it took so long to arrive is another matter.

Yesterday, following BMR’s statement that it had been stripped of then Kabwe license, Jubilee’s CEO told us:

This announcement was totally unexpected and Jubilee was not made aware of any potential challenge to the mining right.

That, I put it to you, is utterly damning. We are being told that Jubilee put cash into BMR unaware of the threat to the license.

Normally, if I were Jubilee, I would be wanting my money back. I would take the view that I had bought 29% of BMR on a false prospectus. But that assumes there is any cash there: if there isn’t then I assume I would be left whistling.

And so, following confirmation from BMR that it has 30 days from 6 February to appeal the decision, Jubilee announced that it will support BMR to favourably conclude this process. Well, I guess it has no choice, then.

I’m not a lawyer, so I only ask: what part of that does not look horribly like securities fraud? Answers on a postcard.

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