Sentula suspends its shares

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Sentula suspends its shares
Allan Seccombe
Posted: Thu, 11 Sep 2008

[miningmx.com] -- SENTULA Mining, a coal and contract mining company, has asked the JSE to suspend trade in its shares until it releases the results of a forensic probe into "possible irregular transactions" by KPMG Forensic.

The report back to Sentula management by KPMG has resulted in the company preparing to take legal action aggainst people and entities involved in events that led to a restatement of its 2007 financial results.

The investigation could have a "material impact" on its reviewed annual results for the 2007 and 2008 periods.

uncertainty regarding the magnitude of the pending restatement

Sentula's shares have been hammered down to R8.60, which is below the one-third drop in early June when the shares fell to R12 on news that its 2007 results were being restated.

"Shareholders are advised that the company has requested the JSE Limited to suspend trade in the company's securities until the finalisation and publication of these results," Sentula said.

"Due to the current uncertainty regarding the magnitude of the pending restatement of Sentula's reviewed results, the company believes that the suspension of trade is in the best interests of its shareholders," it said.

Among those investigated are former members of management. There has been a steady exodus of top people from the company.

JSE-listed Sentula, formerly Scharrig Mining, is also the subject of an investigation by the Financial Services Board for possible insider trading ahead of an announcement in June that it was restating its 2007 financial results.

Sentula�s price was hammered down by a third in early June to R12/share when it told the market of the restatement it blamed on a number of accounting "errors" - mainly related to the R53.9m acquisition of Benicon.

These included "an incorrect valuation of certain fixed assets on the date of acquisition" and an "erroneous conclusion as to the accounting effective date of the acquisition resulting in the incorrect measurement of the fair value of the consideration paid," Sentula said at the time.

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�The company believes that these irregularities will not have an impact on the company�s cash position and that the prospects for the current year remain intact,� Sentula said earlier this week, adding the release of its annual report has been delayed until late October.

Sentula said the FSB was continuing its investigations into trade in its shares between the start of 2008 and the end of May.

Former major shareholders Coronation Capital and Jonah Capital sold most of their stakes at R21.75/share in March this year, incurring the wrath of shareholders who a short while later were left with shares worth a fraction of that.

Shareholders were also irate with broking firm Barnard Jacobs Mellet, which ran the book-build exercise through which Coronation and Jonah Capital found buyers for the stock they sold, worth R680m in total.

A June review of directors' dealings showed two then-current directors of Sentula and one former director sold shares worth R14.2m in total between 10 January and 27 February ahead of the sale by Jonah Capital and Coronation on 10 March.

The three were non-executive director Trevor Hendry, who sold shares worth R3.1m, former financial director Jason Holland, who sold R6m worth of shares, and then-executive director Clint Moorcroft, who sold R5m worth of shares. Since 27 February only one of the three has traded again: Hendry took up 38,800 options at 53c/share each on 11 March.

All three are no longer with Sentula, with Moorcroft�s immediate resignation announced on Monday, 8 September.

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