A bad day for exploration

Marc Hasenfuss | Wed, 01 Jul 2009 15:18
[miningmx.com] -- TWO junior mining and exploration companies – Kimberley Consolidated Mining (KCM) and Thabex – were suspended on the JSE on Wednesday for not publishing annual financial statements on time.

Both KCM and Thabex are overdue with their audited financial statements to end-February 2009, which were due for delivery to shareholders at the end of May.

The JSE gives listed companies three months from financial year-end to publish audited financial statements.

The overriding question is how two small entities like Thabex and KCM cannot manage to post audited results to shareholders within the stipulated deadline. This, after all, is a task that is comfortably managed by much larger and more complicated corporations.

Directors at Thabex and KCM could not be reached for comment at the time of posting this article.

Both companies were facing considerable financial pressure, according to interim results to end August 2008.

Thabex’s current assets of R2,4m did not come close to covering current liabilities of over R6m, while KCM’s current assets of R9m were dwarfed by current liabilities of R24m. Neither company generated the necessary cash flows to cover operational expenses.

But both companies were recently involved in desperate efforts to restore some respectability to their respective balance sheets.

Thabex has sold its 9% of its 70% stake in Angel Diamonds for around $300 000, while KCM – which only listed in 2008 - raised R4,3m by issuing shares to unnamed parties in April and was looking to sell off non-essential mining equipment.

KCM’s most recent posting on SENS advised shareholders the company was in talks with China National Geological and Mining (HK) Limited.

Ultimately, the suspension of Thabex and KCM’s listings will up the anxiety levels for both bodies of shareholders.

Sometimes there is a valid reason for the delay in posting audited results, but common corporate courtesy would demand that such a development be communicated timeously to shareholders.