[miningmx.com] – JOHN Wallington said he decided to quit Miranda Minerals where he was CEO for a year because former director, Rudolph de Bruin, broke his promise to invest R20m in the coal development business.
De Bruin stenuously denies the allegation saying that they had discussed the possibility of investing capital in the company, but decided to step back after it failed to secure an empowerment deal in a proposed acquisition. De Bruin represented Incubex, a company he founded, which had a 15.5% stake in Miranda in 2012.
Wallington said his contract of employment wrote in a commitment to recapitalise the business which was to see De Bruin, a long-standing mining entrepreneur, sift through coal mining opportunities while Wallington tested their technical feasibility.
“I should have left Miranda in January when it became obvious that De Bruin was not going to put the money in that he promised to, said Wallington who disclosed that he provided up to R2m in his own money to pay salaries.
“I was naive and shouldn’t have taken so long to leave. In the end, I’m mad at myself most of all,” said Wallington who is now considering taking legal action. He joined Miranda after leaving Coal of Africa (CoAL) in April 2013.
De Bruin, however, denied he had promised to invest any money in the company. “There was no such agreement. There were discussions, which came to nothing because Miranda failed to deliver on its promises or representations,” he said.
In documents provided to Miningmx by Wallington, which he said was an extract of his employment contract, payment of R20m into the business is listed as a condition to the appointment either in cash or irrevocable and legally binding undertakings.
A letter signed by Incubex Minerals CEO, Alan Smith, and signed on November 11, 2013 states that the company looks forward to “a long and prosperous relationship” with Wallington.
It adds: “In this regard as a significant shareholder, and in support of your appointment, we are pleased to undertake, based on best commercial endeavours, to ensure that Miranda is placed in a position to receive funding to bridge the immediate requirements of the company.
It then sets down plans to pay R20m in two tranches of R10m each in November 2013 and February 2014.
The turning point in the relationship between Wallington and De Bruin was a failure to get traction in the purchase of Benicon Coal from Sentula Mining. Benicon owns Nkomati Anthracite, a mine in South Africa’s Mpumalanga province that had been placed on care and maintenance.
The terms of the proposed deal was for Miranda Minerals and Mochiba Investments to each buy 50% of Benicon’s 60% stake in the mine with Mpumalanga Economic Growth Agency owning the balance of the company.
The deal consideration was a nominal R1,000 and for the buyers to assume a R150m loan payable by Benicon to Sentula Mining.
According to De Bruin, however, the Nkomati Anthracite deal went sour after failing to secure an agreement over finance with Mochiba, a womans’ investment group.
“At the time when John and I had our discussions, I was told that Mochiba would sign an agreement for Miranda to claw-back into the Nkomati deal,” said De Bruin. “This was an important consideration for me”.
“In addition, Miranda would still need to raise the development and working capital. I expressed my willingness to assist Miranda to raise the working capital as part of the rescue plan,” said De Bruin.
“It subsequently transpired that the transaction with Mochiba was not going to happen and the discussions were terminated,” he said.
De Bruin is a well-known venture capitalist in South Africa founding a number of businesses in the last 15 years including Platmin, which is now owned by Pallinghurst Resources, as well as Sephaku Holdings, African Nickel and Taung Gold.
In March, Miranda Minerals announced that it was pressing ahead with the Nkomati Anthracite acquisition but that De Bruin, along with another non-executive director in John Bristow, would resign from the board.
Wallington subsequently sought funds for the transaction proposing to issue shares to Valinger, a company founded by Marc Veitch.
In terms of the proposed arrangement, Valinger would have subscribed for 760 million Miranda shares at 12.5 cents per share raising R95m. This would have given Valinger a 52% stake in the business, but the transaction failed according to a September 23 announcement. Wallington announced his resignation from Miranda on the same day.
A shareholder in Miranda Minerals, who declined to be named, said that the demise of the company dated from the failure to invest the R20m. “Rudolph did say he would join the board and invest in the company,” he said.
