Mungo Soggot
The offshore branch of embattled mining company Amalia is still enthusiastically punting the company’s London listing, trumpeting its exclusive deal to exploit Liberia’s mineral wealth – despite the fact Liberia has threatened to kill the deal.
“It’s a $750-million deal – their main asset. It’s theirs unless there is a coup. Nobody can take it away from them. Liberia has become Americanised. Most of its Cabinet were educated at Harvard, et cetera. Don’t sell your shares,” gushed Ian James of Fl eet Public Relations this week as he sang Commonwealth Gold’s (Commgold) praises.
The real picture in Liberia is far shakier, particularly where Amalia is concerned, while back in Johannesburg Amalia/Commgold directors have been hit with a final liquidation order from the high court.
Liberia’s Minister of Land, Mines and Agriculture, Jenkins Dunbar, has sent the group two letters threatening to pull the plug on the deal because of Amalia’s “non-performance”.
It is two weeks since the Johannesburg Stock Exchange suspended the share of Amalia Gold Corporation – the day after it emerged that its Liberian deal was on the rocks. The Amalia share price had already plummeted 95%, leaving shareholders – many of whom are farmers – with nothing to show for their life savings.
The company’s auditors have not signed off its accounts and it faces a string of creditors, including Standard Bank, which has successfully applied to the high court for the company’s liquidation.
Many of the group’s shareholders have expressed their anger at the company’s collapse, with some crying foul. A few are standing by the company’s directors, who insisted during one shareholders’ meeting that all will come right. The company sold shares d irectly to many of these people.
Most South African institutions have laughed off the group, which has set up a string of new companies – with the same directors as shareholders – and a string of deals, such as an Angolan diamond venture, which are dormant or dead.
The share price of Amalia’s London offshoot, Commonwealth Gold, has had a similarly disastrous run, collapsing to as low as 2p last week from a high of 35p. Commonwealth Gold and Amalia are both run by the same directors from the same Johannesburg office .
After the news about Liberia broke, Amalia released a letter from Liberia’s mines minister saying the deal was still on, but omitted to supply a letter sent the previous day in which the Liberian government reminded Amalia it had not performed and had a week to come up with a feasible package. There has been much speculation in Liberia that Amalia pulled off its exclusive deal with the help of gen erous assistance to warlord-turned-president Charles Taylor. Amalia denied this.
Nevertheless, Commgold’s London-based PR consultant was this week full of hope for the company’s prospects, saying the Liberia deal was safe, with European and United States funding lined up.
Amalia finance director Peter Trickey said the Liberians had only threatened to kill a deal involving Amalia and the country’s small miners.
He was still confident the full package would survive, and said there was a lot of goodwill in Liberia.
He added that Commgold was about to secure a lifeboat from some of its Swiss shareholders, who are also insisting on changes to the Amalia board. Some other Swiss shareholders are reportedly preparing a class action against the Swiss bank which sold them Commgold shares.
Among the more mysterious characteristics of the group are its associated companies, which are run by the same Amalia directors and which have received money from the main companies.
One, Gorda Peak, registered in the British Virgin Isles, tied up a deal to receive o575 000 a year from Commgold. Trickey said the company “provides services”, but would not disclose further details of the company.
The other interesting company is Independent Holdings, which received proceeds of shares issued in both Amalia and Commgold. Trickey confirmed Independent loaned money to a company called Amalia Corporation, which in turn loaned money to Amalia Gold Corp oration.
Trickey accepted the group had sowed unnecessary confusion by changing the names of some of these companies.
The Office for Serious Economic Offences has confirmed that a fraud docket has been opened against the company, but said it is being handled by the South African Police Service.