PAN African Resources (Panaf), a JSE-listed gold producer, has emerged as the company interested in buying the assets of Zimbabwe’s ASA Resource Group, a base metals and gold firm that in December told Miningmx it was seeking “justice and fair value”.
Panaf said earlier on Monday that it had entered into exclusive negotiations with the joint administrators of ASA Resource Group “… in relation to acquiring certain of the assets and liabilities of the group”. It said there could be no certainty an agreement would be reached. Shares in Panaf were 0.45% higher in Johannesburg at the close.
Given that Panaf’s CEO, Cobus Loots, was much criticised for departing from the company’s strategy of low cost gold mining when he bought the Uitkomst thermal coal mine in 2016, it seems likely the company will restrict its interest to ASA Resource Group’s Freda-Rebecca gold mine. ASA also operates a nickel mine in Botswana and has base metal exploration in the Democratic Republic of Congo (DRC).
ASA Resource Group’s legal advisor, Ian Dearing, said in an interview with Miningmx on December 21, that shareholders wanted “… to see justice and fair value” following an offer from a privately-held company called RichPro Investments Ltd (RPI) of some 2.1 pence per share seriously undervalued the assets of the company.
A principle objection to the offer is “strong evidence” suggesting that RPI is linked to Yat Hoi Ning, the former chairman and CEO of ASA Resources. Ning was dismissed from the company on April 18, 2017 following allegations of fraud related to Freda-Rebecca. A warrant for Ning’s arrest was subsequently issued as well as Ning’s colleagues Yim Kwan, chairman of Bindura Nickel company, through which ASA controls its Zimbabwe nickel investment, and Roy Shum who was financial controller of Freda Rebecca.
Dearing in December alluded to a rival offer for the company (now revealed as Panaf). This company is listed, has mining experience, and would be “… completely accepted in Zimbabwe and the Democratic Republic of Congo (DRC)” where ASA also has a presence, he said. “Why RPI persists when it won’t accept the reality of the better offer is a complete mystery,” said Dearing.
Crucially, RPI intends to fire the current board should its takeover offer pass muster. Whether that will happen, however, is uncertain. Although 52.94% of ASA’s shareholders have accepted the RPI offer, Dearing believes this was fraudulently achieved. According to a document compiled from a report by ASA’s joint administrators, some of the shares that RPI seeks to have registered in its application may not have been validly issued.
Loots has said in the past he was on the lookout for gold assets in other African geographies that were cash generative or near cash.
ASA is struggling to stay afloat. The company is unable to pay creditors when debts fall due, although Dearing argues the company’s assets exceed its liabilities. “It is not balance sheet insolvent,” he said in December. “What we want to do is get someone in control of the assets that will do the right thing for them for the benefit of creditors, employees and shareholders,” said Dearing. “We also want to see those who damaged our assets so badly brought before the courts,” he added.
Ning was appointed executive chairman of ASA Resources in June 2015 following the acrimonious ouster of Kalaa Mpinga, then CEO of Mwana Africa. Three months later the company raised $3m in cash through a share issue, a transaction where the funds were not used for their original purpose: the development of the Klipspringer mine in South Africa.
From this point, according to the joint administrators, there were a number of other investments either not explained to shareholders or which have questionable provenance. It was during this time that some $4.3m was reported missing from Freda-Rebecca.