ASA Resources Ltd has come unstuck in its attempt to exorcise the ghost of China International Mining Group Corporation (CIMGC)’s frontman and former chief executive Yat hoi Ning on the board as well as management in the wake of a US$4,3 million fraud scandal.
This comes after the company appointed Ian Dearing, the man who engineered the hostile take-over along with the Chinese shareholders of the group two years ago, as an executive director.
Dearing, a minority in Asa (formerly Mwana Africa Plc), in concert with others holding 5% of Mwana’s total issued share capital, was the matchstick that lit the take-over keg that saw the removal of Zimbabwean directors Ngoni Kudenga and Herbert Mashanyare as well as South Africans — Stuart Morris and Johan Botha — and their replacement with Scott Morrison, Mark Wellesley-Wood, Oliver Barbeau and Anne-Marie Chidzero.
The outfit, calling itself “Concerned Shareholders Group”, wanted Wellesley-Wood, once accused of trying to engineer a take-over of the company when he was briefly appointed chairman in September 2013, to return to the board as a non-executive director, which suggests he is representing or working in concert with the interest of the CIMGC.
The appointment of Dearing raises questions over the independence of the appointment given his past roles and possible connections to Ning and his CIMGC, analysts feel.
Dearing, who took a back seat after the extraordinary general meeting, which saw the ouster of founder and then chief executive Kalaa Mpinga and the emergence of Ning as executive chairman in June 2015, has suddenly found himself in the hot seat.
He reappeared at Mwana Africa as secretary and legal advisor in September 2016 before becoming executive director last month.
His return at a time the London Stock Exchange-listed mining junior sacked Ning and finance director Yim Kwan after they irregularly transferred money to two Hong Kong-registered companies could have betrayed the group’s efforts to rid the company of Ning and his CIMGC on the board and position it as a public company determined to create value for all shareholders in the wake of a scandal which CIMGC was accused of charging millions of dollars in management fees.
“It seems Dearing’s presence could be to protect Ning’s interests after the take-over,” a source said. “His return is quite instructive.”
Asa said it had replaced the two with chief operating officer Toi Muganyi and Carla Mackay, who take over as interim chief executive and finance director, respectively.
Batirai Manhando, the Bindura Nickel Corporation (BNC) managing director, was named as an interim executive director.
The resource group said of the missing money, US$1,6 million had been traced to two of the group’s companies in Hong Kong, but could not ascertain if the money remained in its accounts.
“The board is satisfied that it has established that the total amount of Asa Resources funds that are unaccounted for is US$4,3 million. Of this amount US$2,7 million relates to the year ended 31st March 2016 and US$1,6m relates to the year ended 31st March 2017,” the company said in the regulatory filing.
“The sum of US$1,6 million in 2017 has been traced to two group companies administered from Hong Kong, but the board has yet to confirm whether any part of this sum remains within the two companies. The board has not relied on these amounts and any recoveries will improve the expected cash position.”
This week, the Asa board said a number of decisions have been taken to consolidate the structure and operation of the group following the recent removal of two executive directors.
“Yuan Hu Ching, an appointee of (“CIMGC”), has been removed from office as a non-executive director. CIMGC is entitled, under its relationship agreement with Asa Resources, to nominate two non-executive directors to the board although, at the time of this announcement, no such nominations have been received,” the group said.
The group said Dearing appointment was meant to enable continuity of restoration of a proper corporate governance structure within the group, the company said.
The group also announced the appointment of Conrad Mukanganga, current BNC company secretary, to the position of assistant company secretary for the group with responsibility for the secretarial functions of BNC and Freda Rebecca Gold Mine (FRGM) plus administration of the group’s other subsidiaries.
“The board has met with directors of BNC and Freda and restated the position that both companies are operated on an independent basis and that the boards of BNC and Freda are responsible for governing the actions of their own executives without interference from Asa Resources. This was welcomed by the local boards, who are pleased that Toi Muganyi will retain responsibility for Freda and Bati Manhando will retain responsibility for BNC’s operations, whilst both will also be undertaking additional roles in relation to the wider group.”
The appointment of Zimbabweans to key managerial roles in the group post the US$4,3 million fraud scandal is seen as an attempt to appease the authorities, who are said to be concerned by the misdeeds of CIMGC and reports Asa brought in Chinese expatriates for skills available locally, marginalising indigenous staff.
“Mining plans at BNC have been restored to those recommended by the local operational teams and supported by the BNC board,” he said.
“The board firmly believes the direction of the group’s operations are now in the hands of a competent Zimbabwean team headed by Toi Muganyi and Bati Manhando and under the chairmanship of David Murangari.”
Scott Morrison, a senior independent director, said his group had acted swiftly to stabilise Freda Rebacca and BNC.
“We have acted swiftly and decisively to protect and stabilise Freda Rebecca and BNC. Our job at group level is to support the teams at both mines from bottom to top. We may provide guidance and facilitate proper changes, but we will not interfere with day-to-day management. We have every confidence in our operational teams and look forward to supporting them in the months ahead. We have stopped the actions which were bleeding FRGM and undermining BNC,” he said.
The financial structure of the group has been consolidated by confirmation of Jan Lampen as financial controller of both BNC and FRGM.
The lease of the Hong Kong offices has been terminated with the saving of up to 10 jobs, and the company revealed that management would be on site at the mines in Bindura.