Dandy Yankee dollars

[miningmx.com] — WHEN I OPENED the Thabex annual report package I thought the company had set a record by releasing the report only in disc form. A second look revealed a printed version that must nevertheless also set a record, being smaller than a normal pocket-sized paperback and printed in the smallest available type size.

For the year to 28 February it was released only in October, a disturbing seven month-plus after the event, triggering a brief suspension of the share by the JSE.

Maybe legibility is why the chairman’s report describes respected mining engineer John Cruise, who has taken the chair of the Salt River Resources subsidiary, as “Dr CA” Cruise. But one wonders how much time and attention chairman Jeffrey Rapoo devotes to his duties, as he attended only two of its six board meetings. Two other directors attended only one meeting each, and a third director two.

Incidentally, the first board meeting was held as late as 8 August 2007, more than five months into the year. And though Thabex has audit and remuneration committees, no details of their meetings are given. With a record like that you wonder how effective corporate governance can be.

It may be significant that Thabex is involved in no less than four actual or potential litigations thought big enough to be mentioned in the report. And the auditor’s report is qualified, because adverse working capital created “going concern” fears.

Rapoo calls it a difficult year, with the transition from a junior exploration company into a junior miner and explorer, as the 70%-owned Angel Diamonds subsidiary came into production. But a week after the report went to press – and before it was circulated – Thabex announced a cash-and-shares agreement to sell its interest in Angel.

Thabex has received US$175 000 in shares in the acquirer, Mantle Diamonds, for the first 20% of its interest, plus $200 000 loan repayment. Phase two, for another 40%, will bring another $525 000 in shares and the remaining $300 000 loan. Phase three, for the balance, will be subject to valuation.

Mantle is a well-connected British company owned by a variety of institutions and high-worth individuals with projects in seven countries.

If the final 40% is on the same basis Thabex can look to receiving shares – admittedly, unlisted – valued at $1,225m and $500 000 cash, restoring its liquidity.

Its current market cap is R24m, and though a price of 110c/share is barely half its 12-month high, it’s 36% above the 80c low, so some investors thought there was value at the lower levels.