Wesizwe's Solomon to fight shock firing

David McKay | Tue, 03 Nov 2009 18:08
[miningmx.com] -- Mike Solomon, CEO of Wesizwe Platinum, has vowed to fight a board decision, earlier this morning, to have him fired.

“I think it was in bad faith and unlawful,” Solomon told Miningmx in a telephonic interview.

Earlier this afternoon, Wesizwe Platinum announced that Solomon and non-executive director, and former acting chairman, Robert Rainey, had been served written notice to relinquish their positions with immediate effect.

Nyasha Tengawarima, currently financial director of Wesizwe Platinum, would be acting CEO until the board had identified “a suitable replacement”, it said.

The exact nature of Solomon’s position, however, has been thrown into doubt: “The board has agreed not to make my removal effective, pending litigation,” he told Miningmx.

There was also the possibility of more board disruptions as Wesizwe Platinum said “… further announcements regarding the reconstitution of the board would be made in due course”.

I consider it a major sell signal for Wesizwe if Solomon is out of the company

A cautionary announcement, thought to relate to the possible takeover of Wesizwe Platinum by Impala Platinum, remained in place.

Solomon said he received written notice of his firing earlier this morning after four of the seven directors voted in favour of his dismissal.

He declined to comment whether the action was related to ill health or his possible opposition to a takeover deal. “I really am not at liberty to say,” said Solomon. “I can’t comment on rumours about my ill health.”

There have been a number of changes at Wesizwe Platinum's board lately with Rainey being replaced by the economist, Iraj Abedian. Dawn Mokhobo, another independent non-executive director, also resigned her post recently.

In a curious announcement on June 30, Wesizwe said its chief financial officer, Tengawarima, continued in that role on becoming financial director of the company.

Leon Esterhuizen, an industry analyst for RBC Capital Markets, said that if Solomon was opposed to certain corporate action, it was certainly the right decision. "I consider it a major sell signal for Wesizwe if Solomon is out of the company," Esterhuizen said.

"Mike has been meticulous with that company and a leader in the industry in the way he has discovered value in it," he said.

Possible ambush

It's uncertain which directors voted to have Solomon and Rainey removed, but the speculation within the company is that shareholders were likely to call for a meeting to discuss the action.

"There was no consultation with shareholders about Solomon and the fear is that this is an ambush by a pocket of interested shareholders," a company insider said.

"They are effectively trying to get the company on the cheap."

According to Wesizwe Platinum's latest annual report, the community Bakubung-Ba-Ratheo Community is the largest shareholder with a 12.6% stake. AfricaWide Investment Holdings owns 9.8% of Wesizwe followed by Liberty Life (7.8%), Vunani Capital (5%) and 4% owned by directors.

Newshelf 925 is also a major shareholder of Wesizwe Platinum with about 12% of total shares in issue.

In terms of the consolidation of Anglo Platinum assets into Wesizwe, Anglo Platinum is set to become a 25% shareholder in Wesizwe Platinum. "It's uncertain what its attitude will be to having Wesizwe's lifetime backer (Solomon) out of the company," an insider said.

Volatile times

Solomon was not a founding director of Wesizwe, but after joining the firm as CEO in 2004 he took it to a listing in 2006. On debut, the share price first tanked, a development Solomon said related to over ambitious pricing by the firm's advisor, but then recovered as the bull run in metal prices took hold.

However, Solomon has long struggled to raise sufficient capital to build Wesizwe's flagship R5.6bn Frischgewaagd mine - a 980 metre operation with nameplate capacity of 350,000 oz of platinum group metals a year - a struggle exacerbated by the financial crisis last year.

As banks stopped lending, Solomon attempted to have a phased-in mine build financed, but in September suspended development of the mine until conditions improved.

Currently, the company has R120m in cash, enough to support R5m per month overhead burn for two years.