KCM investors pencil in August showdown

[miningmx.com] — AFTER spending 20 months in the dark, shareholders in junior diamond group Kimberley Consolidated Mining (KCM) look determined to take matters into their own hands.

It’s rare in South Africa to see shareholders in a down-and-out junior mining company making a concerted attempt to restore investment value, but the fight back may have come too late to prevent the JSE terminating the listing of KCM in August.

Shareholders, claiming a stake of around 20% of the company, held a meeting in Sea Point on Friday to discuss possible rescue plans for KCM.

The aim is to confront the current KCM board, which to date has provided very little in the form of operational or corporate updates, at an extraordinary meeting of shareholders in Kimberley next month.

The shareholder action is long overdue. KCM shareholders have not had sight of audited financials since the publication of the year to end February 2008 annual report, which was released in September 2008.

The last set of “official’ numbers released by KCM – which owns the Bo-Karoo diamond mine – was the year to end August 2008 interim figures, released 20 months ago in November 2008.

The prime mover among the disgruntled shareholders is former KCM director Johan Cilliers who unfortunately was not at the meeting after undergoing minor surgery.

In Cilliers’ absence, the meeting agreed at the upcoming meeting to propose a vote of no confidence in the current KCM board – headed by Phemelo Sehunelo – and vote in a number of new directors.

KCM’s main directors at listing in 2007 – Hein le Riche (CEO) and FD Koos Pieterse (now the FD of Media24) – both resigned from the board in 2009.

The biggest concern amongst the assembled shareholders was a contract mining agreement between KCM and director Trevor Pikwane.

Shareholders have, to date, been unable to access the contract mining agreement between KCM and Pikwane – which means no details around production or lease arrangements.

Shareholders were also concerned about the possible termination of KCM’s suspended listing on the AltX, arguing that it would be difficult to trade unlisted shares even if the company was restructured into a viable entity.

The JSE has given KCM until next Thursday to produce the long overdue audited financial statements for the year to end February 2009 and year to end February 2010. Failure to publish the audited numbers will lead to KCM’s listing being suspended.

The shareholders were also addressed by former trade union heavyweight and COPE member of parliament Phillip Dexter. Cope is the acronym for Congress of the People, a party created following the recall of former South African president Thabo Mbeki and rise to power of Jacob Zuma, the current president.

Dexter, who was initially involved in trying to secure union investment in KCM, indicated that an unnamed investor had expressed interest in rescuing the diamond mining company.

He said if certain conditions were met the investor would be able to provide much needed financing for KCM, and could also consider making an offer to buyout minority shareholders.

Dexter believed that if KCM’s Bo-Karoo could be restored to profitable production there could be sufficient cash flow to start exploring the Carter Block (which lies adjacent to De Beer’s Finch mine).