Vultures circling around Mwana Africa again

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Chris Muronzi

Surreptitious corporate vultures are circling around Mwana Africa yet again as it emerged a minority United Kingdom based shareholder is pushing for the removal of four non-executive directors and replacing them with people of his choice.

According to a circular, a minority shareholder, Ian Dearing, is pushing for the convention of an Extraordinary General Meeting (EGM) to consider the removal of at least four directors and the appointment of their replacements.

A former board member, who was unanimously voted off the board a year ago for not sharing the same strategic vision, has also been shortlisted for a board seat.
Dearing and other minorities holding close to 5% of Mwana’s total issued share capital and called for EGM.

He is seeking to remove Zimbabwean directors Ngoni Kudenga and Herbert Mashanyare as well as South Africans – Stuart Morris and Johan Botha – from the board and replacing them with Scott Morrison, Mark Wellesley-Wood, Oliver Barbeau and Anne-Marie Chidzero.

Wellesley-Wood was sacked from his chairman job last year, barely five months after taking over from long serving chairman Oliver Baring.
Mwana said Wellesley-Wood did not fit into the corporate culture of the group.

While Kudenga is a widely respected corporate leader after he founded BDO Kudenga, a firm of auditors, the new directors proposed by Dearing do not have a comparable breadth of experience of operating in Southern Africa or operational track record compared to the incumbent non-executive directors they are seeking to replace.

None of the directors put forward by the Dearing group have been subjected to a due diligence by the nominated advisor as yet.
Chidzero, who has experience in finance, has not been resident in Zimbabwe for several years.

Barbeau is a chartered accountant in South Africa and Mauritius and is currently the manufacturing director of Moore Stephens in Johannesburg while Morrison is a geologist.

Interestingly, another minority shareholder, who has requisitioned the EGM is former Mwana Africa finance director Donald McAlister.
During the tenure of McAlister’s term of office, Mwana impaired its Bindura Nickel Corporation investment.

The impairment was later reversed the following year after McAlister left the mining group.

In a letter calling for the EGM also re-published by the company in its circular, Dearing wants shareholders to vote on more than 10 resolutions, which among other things, seek to bar directors from entering into any agreement to acquire or sell any major asset without initially disclosing the details to the group’s shareholders before an agreement becomes conditional.

The company said this week that the proposed plan to bar directors from entering into agreements over stepped already existent AIM rules governing disclosure of listed companies, adding this was not helpful and necessary to the operation of the company.

“No adequate explanation is given as to why the Mwana board should be constrained in a way that its AIM-listed peers are not, save that Dearing considers it ‘prudent’,” the company said.

The company said while AIM rules were precise and tied to specific numeric thresholds, the wording of the resolution was “extremely vague.”
Dearing also wants Yat Hoi Ning and China International Mining Group Corporation on the negotiating table.

This comes after a dispute over board seats allocated to Mashanyare and Kudenga created bad blood between the partners.

According to Mwana Africa, the four directors the requisitioners are seeking to remove from the board, willingly participated in the company’s cost cutting exercise.

Mwana announced that non-executive directors chose to take a voluntary 50% reduction in their fees to support the company’s cost savings initiatives between 1 July and 31 March.

Senior company management agreed to a 20% salary cut.

Yim Chiu Kwan, Mwana’s current finance director received US$123 267 compared to Donald McAlister, who in the same position pocketed US$943 099 for the year ended 31 March 2013.

Interim chairman Stuart Morris got US$49 627 while Wellesley-Wood got US$81 477 for the five months he served as chairman.
For the six months to 30 September 2014, Mwana posted a strong operational performance.

Revenue was up 30,6% to US$84,9million from US$65 million in the same period FY2014, a record for Mwana.

Earnings Before Interest, Depreciation and Armotisation (Ebitda) increased 32% to US$17,1 million from US$12 million in the same period in FY14 with cash on hand of US$6,9m. The company has a March financial year-end.

In February 2015, Mwana’s 74,73% owned BNC successfully raised US$20 million through the issue of a five-year bond in Zimbabwe which will enable the company to restart operations at its Trojan nickel mine.

BNC, Africa’s only integrated nickel company, with a mine, smelter and refinery, had its smelter and refinery closed more than 10 years ago after nickel prices fell and Zimbabwe’s economy went into recession, rendering operations unprofitable.

The bond issuance demonstrated the confidence the Zimbabwean financial institutions have in the prospects for BNC and its management team and was the first corporate bond to be issued for a mining company in Zimbabwe with both Prescribed and Liquid Asset status.

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