Allgemein « Mining Blog

A British company and Indonesia’s mining boom – the scandal continues

14. November 2012, Comments (0)

During late summer this year, the UK’s Financial Services Authority (FSA) was rocked by the news that a London-listed mining company had sustained some US$400 million in debts – which it couldn’t account for.

At the time of writing, Bumi plc – the world’s largest exporter ofr thermal coal from mines in tropically-forested East Kalimant (Indonesian Borneo) – still hasn’t got to the root of this gob-smacking event.

It’s one which has left Britain’s financial regulators, and the London Stock Exchange itself, floundering. How to explain why such an ill-managed enterprise could be invited into London in 2011, when such poor due dilgence had been performed on its operations?

Not only that: Bumi had been allowed to take the leading investment role in a UK-listed firm called Vallar plc, set up by Nat Rothschild of the eponymous banking dynasty.

This enabled Bumi to raise vital capital outside Indonesia. The notorious Bakrie family group, whose pater familias had recently faced corruption charges in Jakarta, used Bumi as a “trojan horse” into the English capital, effecting a “reverse takeover”. Later another powerful Indonesian family firm, the Roeslanis, got in on the act.

In its latest proposals to tighten listing regulations, the FSA says it will ban such manoeuvres. But, in the Bumi-Vallar case, the horse had already been allowed to bolt.

All this came as little surprise to NGOs, in both Indonesia and the Uk, who for years had sought to expose the irregularities – both financial and environmental – which lie at the heart of Bakrie-Bumi on its home ground in Kalimantan. (See: http://www.minesandcommunities.org/article.php?a=11939&l=1).

Bumi plc is still being allowed to sell shares on the London Stock Exchange, and is trying to repay a debt owed to Credit Suisse, for a loan made by the bank to the Bakries, which assisted its London “invasion”. (JP Morgan was the prime agent in facilitating the move).

* * *

Last week, in a commentary on this scandal, William Gamble of Money Life magazine (12 November 2012), compared the Bakries (and the Rothschild dynasty) to Chinese elite families.

Said Gamble:

“Nathaniel Rothschild, scion of the English branch of the famous banking family, teamed up with the Bakries and the Roeslanis of Indonesia to exploit its mineral wealth. But it dawned on him too late that the Bakries and the Roeslanis were acting in concert from the beginning.

” The enormous wealth and power of elite families is not just limited to China. It extends to all emerging markets. The reason is simple. The rules are different. Investors in any given market are aware of the local rules and adapt their business practices and models to them. The problem comes when outside investors want to play too.

“… Over the past several years Indonesia’s vast mineral wealth has been exploited to feed the seemingly ever growing demand from China. Even with China slowing, Indonesia has grown at an enviable 6.2%. Its market has increased at twice the rate of the S&P 500 since 2009 and is up 13% since June.

“The idea of exploiting this market and especially Indonesia’s mineral wealth seemed to be a “no-lose” situation especially if investors could be protected by listings on markets with better safeguards. This was the brain child of Nathaniel Rothschild.

“Nathaniel Rothschild is the scion of the English branch of the famous banking family and the future fifth Baron Rothschild. He believed that with the world’s growing demand for energy resources, an investment in Indonesian coal, would net investors returns of “two to three times their money”. To exploit this idea he created a company, Vallar. With the magic of his name and the promise of unlimited growth in emerging markets, he was easily able to raise $1.07 billion from Vallar’s IPO on the London Stock Exchange in July of 2010.

“With all that money, Mr Rothschild went looking for local companies and local partners who he could help with foreign capital. He found them in the Bakrie family of Indonesia — an aristocratic lineage in their own country equal to his…

“There was one problem with the Bakries. Their business practices were adapted to Indonesia. They survived, not through the legal protections, but because they developed strong relationships with the government and other powerful families.

“The Bakries’ empire was created through leverage made possible by a corporate shell game. It had nearly collapsed twice in the past 12 years, after the 1997-98 Asian financial crisis and again in 2008. When this was pointed out to Mr Rothschild by a local journalist in December of 2010, he brushed it off. He told the Jakarta Post that there was nothing wrong with them.

“So Rothschild teamed up with not only the Bakries, but with another powerful Indonesian family, the Roeslanis. They contributed their interests in two large coal mining concerns, Bumi Resources and Berau, in exchange for shares in Vallar which was renamed Bumi plc. The deal seemed quite a success. After it came out, Bumi’s shares increased by 30% by April 2011, but then things began to go horribly wrong.

“The Bakries, true to form, had leveraged up their interests. By fall, the stock had fallen 40% from April and was 20% below its IPO price…But the Bakries had been here before and knew how to handle these problems. They called in one of their friends — another Indonesian business tycoon—Sami Tan. Like the Roeslanis, Mr Tan had a long term relationship with the Bakries and arranged to bail them out. They didn’t even bother to contact Mr Rothschild. He wasn’t part of the family. When he called, they didn’t bother to pick up the phone.

“In November [2001] Rothschild vented his anger in the press, but it didn’t help. By February Tan and the Bakries almost removed him from the board.

“But that wasn’t the only problem. By September of 2012 Bumi investors learned of $400 million inter-party loans to the Roeslanis that, despite promises, were never repaid…

“By October [2012] Rothschild resigned from the board when it finally dawned on him that the Bakries and the Roeslanis “were acting in concert from the beginning”. He never understood until it was too late that the relationship systems in emerging markets are transparent only to the locals. He was playing in a game where he never understood the rules.”

* * *

Whether, as Gamble comments, Mr Rothschild did indeed fail to “understand the rules” of emerging markets, is open to question.

Certainly he chose to ignore the rules he should have been playing by in London.

But then, UK regulators were all too content to go along with both these games and they should take primary responsibility for the debacle that ensued.

After all there were several informed voices warning what could happen, and which went unheeded.

Canadian Shenanigans (updated and corrected)

9. November 2012, Comments (0)

Canadian Shenanigans

The From Money to Metal wiki database has just posted three new entries which have a lot in common. They relate to allegedly fraudulent schemes, used by private promoters to profit from boosting a mining company’s stock price – even when there’s little or nothing in the ground to justify doing so.

All three schemes were played out by Canadian citizens in North America.

Take Kelly Fielder. He’s alleged to have raised money for a capital pool company and defrauded the man who gave it to him; he’s also currently promoting a gold“ shell” company. See: http://moneytometal.org/index.php/Kelly_Fielder

Then there’s Bobby Genovese, a flamboyant private equity and venture capitalist who’s been accused, along with others, of holding undisclosed control over tens of millions of shares in a US company called Liberty Silver. Allegedly this created a huge rally in the company’s share value, just before trading was suspended and the price collapsed. See:
http://moneytometal.org/index.php/Bobby_Genovese

Most intriguing perhaps is Tom Coldicutt, a former Vancouver stockbroker, currently facing civil fraud charges in the United States for an OTC-BB (Over The Counter Bulletin Board) “shell selling scheme”.

“Shell” (sometimes called “front” companies) are outfits, listed on a stock exchange or similar market, which may in reality have no assets to back their credibility. Unsuspecting, or naïve, investors who put money into them may end up in debt, while originators of the scheme become considerably better off – at least for a short while.

The United States Securities & Exchange Commission (SEC) claims that Coldicutt and his wife Elizabeth employed a network of nominee officers and directors that allowed them to create fifteen purported “mining companies”. According to the SEC, Coldicutt then sold the companies as shells, grossing US$4.8-million in dodgy profits [Stockwatch, 24 October, 2012; Street Wire, 23 October 2012].

The SEC mantains that the couple never intended to run the companies as exploration outfits, “merely form[ing them] to be sold as clean shells for the benefit of the Coldicutts and their network of corporate nominees”.

One example of this was a company called Mesquite Mining Inc, incorporated in October 2007 by one of Mrs. Coldicutt’s friends “who knew nothing about mining”. Although Mesquite raised $25,000 in a public offering purportedly made by 25 shareholders, “all of the money came from the Coldicutts”, according to the SEC.

Shell shock

Like “many other companies in the scheme”, Mesquite abandoned mining after obtaining its listing. In June 2009, Mr. Coldicutt negotiated an agreement to sell the company as a shell, obtaining $225,000. (The company then became Mesa Energy Holdings Inc., an OTC-BB oil and gas company whose share price went to $3.50 a share in 2010, but has now toppled to 17.9 cents.)

The other defendants in this case include Mr. Coldicutt’s office manager who allegedly convinced her sister and a friend to serve as nominee officers and directors of two Coldicutt companies. Another defendant is a former housekeeper to the Coldicutts which the SEC claims provided the names of 200 investors that purportedly subscribed to offerings in at least 12 of the Coldicutt companies.

Another defendant is San Diego lawyer Robert Weaver who “wrote opinion letters, served as securities counsel to the companies and helped prepare regulatory filings£. The final defendant is Mrs. Coldicutt’s son from a prior marriage, Christopher Greenwood. The SEC says he helped set up Las Rocas Mining Inc., a shell that Mr. Coldicutt ultimately sold for $760,000.

The Coldicutts have disputed the SEC’s contention that they only created the companies to sell them at a profit, arguing they were all formed to pursue genuine mining activities and only sold off as shells “after exploration activities showed [their properties] not to have commercial potential.”

At the time of writing, no trial date had been set for a hearing of the case.
http://moneytometal.org/index.php/Tom_Coldicutt

However, it seems that the dark shadows, cast by the Bre-X scandal fifteen years ago, aren’t easily going to be dispersed. See:

http://www.minesandcommunities.org/article.php?a=9801

Canadian Shenanigans

8. November 2012, Comments (0)

The From Money to Metal wiki database has just posted three new entries which have a lot in common. They relate to allegedly fraudulent schemes, used by private promoters to profit from boosting a mining company’s stock price – even when there’s nothing to justify doing so.

And all three schemes were played out by Canadian citizens in North America.

Take Kelly Fielder – alleged to have raised money for a capital pool company and defrauded the man who gave it to him – he’s also currently promoting a gold “shell” company. See: http://moneytometal.org/index.php/Kelly_Fielder

Then there’s Bobby Genovese, a flamboyant private equity and venture capitalist, accused with others of holding undisclosed control over tens of millions of shares in a US company called Liberty Silver – and promoting a huge rally in the company’s share price just before trading was suspended and the price collapsed. See:
http://moneytometal.org/index.php/Bobby_Genovese

Most intriguing perhaps is Tom Coldicutt, a former Vancouver stockbroker. He’s currently facing civil fraud charges in the United States for an OTC-BB (Over The Counter Bulletin Board) “shell selling scheme” – allegations he denies.

“Shell” (sometimes called “front” companies) are outfits, listed on a stock exchange or similar market, which may in reality have no assets to back their credibility. After unsuspecting investors have put money into them they often go bust – thus leaving the investors high and dry, but with the originators sometimes considerably better off.

The United States Securities Exchange Commission (SEC) claims that Coldicutt and his wife, Elizabeth, employed a network of nominee officers and directors that allowed them to create fifteen purported “mining companies”. According to the SEC, Coldicutt then sold the companies as shells, grossing US$4.8-million in dodgy profits[Stockwatch, 24 October, 2012; Street Wire, 23 October 2012].

The SEC complains that the couple never intended to run the companies as exploration outfits, and “merely formed [them] to be sold as clean shells for the benefit of the Coldicutts and their network of corporate nominees”.

One of the examples of this was a company called Mesquite Mining Inc – incorporated in October 2007 by one of Mrs. Coldicutt’s friends “who knew nothing about mining”. Although Mesquite raised $25,000 in a public offering purportedly from 25 shareholders, “all of the money came from the Coldicutts”, the SEC said.

Like “many other companies in the scheme”, Mesquite abandoned mining after obtaining its listing, according to the complaint. In June 2009, Mr. Coldicutt negotiated an agreement to sell the company as a shell, obtaining $225,000. (The company then became Mesa Energy Holdings Inc., an OTC-BB oil and gas company that went to $3.50 a share in 2010, but has now topped to 17.9 cents.)

The other defendants in the case included Mr. Coldicutt’s office manager allegedly convinced her sister and a friend to serve as nominee officers and directors of two Coldicutt companies. Another defendant was a former housekeeper to the Coldicutts, said by the SEC to have provided the names of 200 investors that purportedly subscribed to offerings in at least 12 of the Coldicutt companies.

Another defendant was San Diego lawyer Robert Weaver. The SEC claims he wrote opinion letters, served as securities counsel to the companies and helped prepare regulatory filings. The final defendant is Mrs. Coldicutt’s son from a prior marriage, Christopher Greenwood. The SEC says he helped with the formation of Las Rocas Mining Inc., a shell that Mr. Coldicutt ultimately sold for $760,000.

The Coldicutts have disputed the SEC’s contention that they only created the companies to sell them at a profit, arguing that they were all formed to pursue genuine mining activities and only sold off as shells “after exploration activities showed [their properties] not to have commercial potential.”
At the time of writing, no trial date had been set for a hearing of this case.
http://moneytometal.org/index.php/Tom_Coldicutt

PwC warns of coming climate catastrophe, unless…

6. November 2012, Comments (0)

PricewaterhouseCooper’s on 5 November 2012 issued a stark warning about our common failure to limit global carbon emissions to 2% pre-industrial levels, agreed at the Copenhagen Climate Conference in 2009.

According to PwC,the only way to avoid “the pessimistic scenarios” will be “radical transformations in the ways the global economy currently functions:rapid uptake of renewable energy, sharp falls in fossil fuel use or massive deployment of CCS, removal of industrial emissions andhalting deforestation.”

PwC says “This suggests a need for much more ambition and urgency on climate policy, at both the national and international level.”

As noted on the Mines and Communities website, last month, Carbon Capture and Storage (CCS) is almost certainly not going to cope emissions from coal fired power stations across the globe –even if the technology were proven (which it isn’t):

http://www.minesandcommunities.org/article.php?a=11958&l=1

So, when the world’s leading “financial services” company calls for “sharp falls in fossil fuel use”, as the only alternative to “massive deployment of CCS”, the writing is surely on all our walls…

Here’s a little more detail from Reuter’s PlanetArk, published today (6 Novemeber 2012):

“The world will have to cut the rate of carbon emissions by an unprecedented rate to 2050 to stop global temperatures from rising more than 2 degrees this century, a report released by PwC on Monday showed.

“PwC’s annual Low Carbon Economy Index report examined the progress of developed and emerging economies towards reducing their carbon intensity, or their emissions per unit of gross domestic product.

%Global temperatures have already risen by about 0.8 degrees Celsius above pre-industrial times. Almost 200 nations agreed in 2010 at United Nations climate talks to limit the rise to below 2 degrees C (3.6 Fahrenheit) to avoid dangerous impacts from climate change.

“Carbon intensity will have to be cut by over 5 percent a year to achieve that goal, the study said. That compares with an annual rate of 0.8 percent from 2000 to 2011.

“Because of this slow start, global carbon intensity now needs to be cut by an average of 5.1 percent a year from now to 2050. This rate of reduction has not been achieved in any of the past 50 years,” it added.

“Climate scientists have warned that the chance of limiting the rise to below 2C is getting smaller…

“Even if the 5 percent rate is achievable in the long term, decarbonisation will not be ramped up immediately, meaning that future cuts would have to be far more…

“According to the study, European Union countries had the highest rates of decarbonisation, with Britain, France and Germany all cutting carbon intensity by over 6 percent in 2010-2011…

“Decarbonisation in China and India in the last decade seems to have stalled, while Australia’s carbon intensity grew by 6.7 percent last year and Japan’s was up 0.8 percent.”

Gold bull says don’t bank on the banks or ETFs

15. September 2012, Comments (0)

The founder of the UK’s Matterhorn Asset Management, Egon von Greyerz, claims that fund managers and investors are shifting from gold ETF’s to physical gold, and that the “move in gold and silver has barely started.”

In an interview with King World News he claims the shift has sarted because investors are concerned about the prospect of a “ystemic collapse”.

Greyerz made these remarks following the European Central Bank’s approval of unlimited bond buying, observing that the ECB bank will do all it can to preserve both the euro and eurozone.

According to Greyerz, money printing is “absolutely guaranteed” and the prospects for the EU’s Mediterranean members are dire, with Greece bankrupt and Spain a “basket case.”

In the event of systemic financial collapse, Greyerz says the only surefire means of preserve wealth is to keep physical gold outside of the banking system.

“Gold in a safe deposit box in a bank is also not safe because if something happens to the financial system banks will close, and who knows when they will reopen? You will not have access to your gold. So I would not keep gold in a safe deposit box. The bottom line here is that gold and silver stored outside of the banking system is the ultimate way to preserve wealth”

Mind you Greyerz, is a distinct bull when it comes to gold and silver, predicting they will hit stratospheric heights in the face of imminent catastrophe [Mining.com 10 September 2012].

In royalty we trust?

7. September 2012, Comments (0)

BlackRock World Mining Trust isn’t alone in finding it difficult to raise investment for mining projects at present.

And it should know – given it has provided finance for numerous companies in the sector in recent years.

Now, the Trust has provided US$110 million to London Mining plc, in return for its securing a 2% revenue-related royalty, calculated on the London-listed mining company’s iron ore sales from its Marampa iron ore mine in Sierra Leone.

The Trust’s fund manager, Evo Hambro, has told the Mining Journal that this arrangement was “a first” for his firm, explaining that “capital has become more expensive, as well as being just generally harder to find…So everything is on the table regarding financing” [MJ 3 August 2012].

For more on BlackRock World Mining Trust, see:

http://moneytometal.org/index.php/BlackRock_World_Mining_Trust_PLC

Vulture fund fails to pick a mining company’s debts for its own profit

18. August 2012, Comments (0)

A so-called “vulture fund” – the description used to typify entrepreneurs who buy up poor country’s debts in an attempt to wreak a profit from them – fell on stony ground in July 2012.

The British government’s Privy Council blocked US-owned FG Hemisphere from collecting a US$100 million debt, purportedly owed by DR Congo’s state-owned Gecamines, after mining company allegedly failed to pay a loan provided by the former Yugoslavia to the former Zaire.

The loan was made during the 1980s for the provision of electrical power lines; FG Hemisphere was claiming a re-payment of US$100 million, after paying US$3.3 million to acquire the debt.

According to Bosnian police files, shown to the UK’s Guardian newspaper and British TV programme Newsnight, the arrangement had been brokered by a Michael Sheehan, “another so-called vulture who…chooses to refer to himself as Goldfinger after the James Bond villain [and] is said to have collected more than half a million dollars from setting up the deal” [Guardian, 18 July 2012].

FG Hemisphere appears to have used a mining shell company, called GTL, based in the Channel Islands tax haven of Jersey, to make the claim [Private Eye, 27 July – 9 August 2012]. A Jersey court initially ruled that Gécamines had to re-pay the debt.

But, in July 2012, the UK Privy Council – the final court of appeal for Crown dependencies – ruled that Gécamines was not responsible for the Congolese government’s debts. The Council said that the company could not possibly bear “responsibility for the whole of the debts of the DR Congo” [Private Eye, ibid].

Said the Guardian: “The ruling means FG Hemisphere can no longer collect the debt via Jersey and the case may set a precedent making it harder for vulture funds and other sovereign debt creditors to collect funds from state-owned companies.

“Peter Grossman, who runs…FG Hemisphere, had tried to exploit a legal loophole to demand the impoverished African nation pay back the debt…In an attempt to skirt British law, which bans “vulture funds” from buying poor nations’ debts on the cheap before suing them for 10-100 times the amount paid, Grossman took the case to Jersey, a crown dependency not covered by the UK law.

Before turning to the Jersey loophole, Grossman’s company had also unsuccessfully tried to “seize [sic] the DRC’s embassy in Washington as a down payment on the debt”

Justin Harvey-Hills, a partner at Mourant Ozannes, which represented Gécamines in the case, has claimed that the Privy Council ruling “will go far beyond Jersey and the UK. It sets an important precedent in common law. In order to enforce claims for sovereign debt against state-owned companies, creditors will need to show that the company is so much part of the state it has no meaningful independent existence.”

However, Private Eye has not been so sanguine, commentng that: “Despite the verdict…the loophole allowing vulture funds to chase debts via the Jersey courts remains. This is because the Debt Relief (Developing Countries) Act 2010, which put limits on pursuing old debts from the 40 most highly indebted countries through the UK courts, still does not apply in the offshore haven” [Private Eye, ibid].

Is there a wind of change to pension fund investment strageties?

17. August 2012, Comments (0)

Pension funds are “hunting for higher returns [by] buying direct equity stakes in wind power projects that are being shunned as too risky by banks and other investors”

So says a report by Reuters’ PlanetArk (15 August 2012), which describes the moves as a “major change for the funds, which favored government bonds for years until the debt crisis gripping Europe turned this once low-risk strategy on its head and drove down interest rates elsewhere, leaving few alternatives.

“Green power needs heavy investment if the European Union is to reach targets for boosting its share of total energy supply to 20 percent by 2020 and cut both carbon emissions and dependence on fossil fuels”.

However, “a funding gap has emerged because banks are staying away, in compliance with new rules aimed at reducing risk.”

Not that wind generation doesn’t have its own financial risks. The plants “are expensive to build and maintain” while “the plants can face logistical and technological problems connecting to the wider grid”, some pension funds are now “thinking longer-term, to steady cash flow over 20 to 30 years once projects are in place”

Among those now committed to wind power investment is Denmark’s state-owned DONG Energy, which “has enlisted several investors as it builds wind power projects off Denmark, the UK and Germany.”

There’s also Danish pension providers, PensionDanmark and PKA, along with Dutch pension group PGGM, as well as “industrial investors including the private owners of Danish toymaker Lego and Japanese trading house Marubeni”

PensionDenmark’s managing director, Torben Moger, predicts that other investment funds will follow suit “because the alternative of investing in government bonds provides such bad returns that you are obliged to identify alternative investments”

PensionDanmark’s total investment in DONG wind projects is 4.5 billion crowns and it plans to increase its allocation to alternative energy and infrastructure to 10% from its current roughly 6 %.

Comments PlanetArk: “It is no surprise that Denmark, world leader in wind energy, should spearhead new project finance in the sector. The country built the world’s first offshore wind farm in 1991 and now meets roughly a quarter of its electricity needs from wind energy.

“Many other pension funds and insurers are still put off investing in wind power by perceptions of regulatory risk and lack of knowledge about the industry. In Germany in particular this is hampering growth and industry targets.”

Nonetheless, “this is expected to change.The OECD estimated in a report published in September last year that less than 1 percent of pension funds worldwide were invested in infrastructure projects…[they]s may therefore play a more active role in bridging the infrastructure gap”

Indeed, “Europe’s biggest insurer, Allianz of Germany, has invested more than 1.3 billion euros ($1.59 billion) in renewable energy since 2005. Most of this is in wind farms in Germany and France, but also some solar power plants in France and Italy.”

According to David Jones, CEO of Allianz Specialized Investment, “returns on wind and solar projects are now around 7 percent – much higher than many other asset classes – and are totally decoupled from the ups and downs of the financial markets.”

Dutch pension group PGGM also “altered its strategy two years ago to become a direct investor as well as a fund investor in energy projects, and has since taken a stake in DONG’s Walney wind farm in the UK and in a large Mexico wind power project backed by Australian investment bank Macquarie.”

PGGM has reportedly allocated 15-20 percent of its infrastructure portfolio to renewable energy.

London 2012 – not going much for gold!

10. August 2012, Comments (0)

As night follows day, so “natural resource” investors follow the fortunes of the world’s most important mining companies.

And as many of them report their first-half results for 2012, it’s no surprise that London-based companies remain ahead of the field.

However, their performances have hardly been of Olympian proportions.

According to Mineweb (8 August 2012), “few mining company stocks have ever got back to their peaks prior to the mega-crash of Q3 2008…as the global recession has bitten and commodity prices have, for the most part, been hit hard, the biggest global mining companies have seen their stock prices, and market capitalisations fall.”

On average, these so-called “marcaps” are around 30% below their past annual highs.

Among the global “top ten” mining giants, Canada’s potash miner PotashCorp is now stronger in the market than the world’s number one gold producer, Barrick Gold, and copper-gold miner Freeport McMoRan.

However, says Mineweb,”the differentials between some of the bigger ones have narrowed – in particular between Rio Tinto and Vale.” (the world’s biggest iron ore miner). It’s not hard to see that Rio Tinto – with massive plans to expand iron ore mining in Australia – may soon bolt ahead of the Brazilian company, to come in behind BHP Billiton,the world’s leading company in the mining sector .

Here’s where the contenders currently line up for the resource races ahead: BHP Billiton (listed in Australia and Great Britain); followed by Vale; Rio Tinto (listed in GB and Australia); Anglo American (a pure “Team GB”) and Xstrata (based in London, dual-listed in the UK and Switzerland).

Meanwhile, the shine has come off Gold, with Barrick and Goldcorp having, says Mineweb, “seen their stocks suffer accordingly…Of the other top gold miners, Newcrest and Newmont both come in just below the top 10 global miners of all types.”

Mineweb tries putting an optimistic spin on these lacklustre performances by the most-muscled miners, commenting: “Even so, the overall market situation, coupled with their strong balance sheets and cash generation abilities, does give them some great opportunities to build at the expense of those further down in the pecking order.”

So, what are the chances of a flurry of mergers and acquisitions (M&As) in the near-future? One of the most significant “developments” of late has been the growth in shareholder pressure on companies, to return more profits to their own pockets – rather than splurge surplus cash on buying-up smaller runners in the field.

Mineweb admits:”With the global slowdown not showing any real signs of improvement, prices may continue to suffer until the markets, and commodity prices, begin to see something of a sustained upturn.”

Nonetheless, “as weaker stock and commodity prices begin to adversely affect new mine developments and existing mine expansions there is definitely the prospect that anticipated supply growth will not materialise” .

It’s anyone’s guess as to whether the medal winners of this year’s Olympic games will triumph at Rio de Janeiro in 2016.

Nor would I place any bets on which top miners will cross the line in four years’ time.

Or even which of them will be in the running.

A strange case which has become even stranger…

2. August 2012, Comments (0)

On 17 July I posted details of the “strange case” that developed when a hedge fund, called Anthion, was sued for damages by Canadian mining company, Silvercorp, for “shorting” the company’s stock value.

To many observers it must have seemed like one suspected fraudster pitting itself against another of the same ilk: “dog fighting dog”, one might say.

Although Anthion lost its counter-claim against Silvercorp last month in New York, the affair is far from over.

According to Canada’s Street Wire (1 August 2012) late last month, Silvercorp filed a petition in the Supreme Court of British Columbia, seeking an interview with Vancouver geologist John-Mark Staude.

The company claims Staude wrote a geological report that “may” be connected to the alleged “short-and-distort conspiracy” of which Anthionn and others have been accused.

Silvercorp says that the identities of “some of those behind the conspiracy remain unknown and Mr. Staude, as the report’s author, may be able to ‘shed light on this issue’ “.

The B.C. petition is part of the defamation case that Silvercorp is still pursuing in the Supreme Court of the State of New York, relating to the 14-page letter to the B.C. Securities Commission which stated that there was an accounting fraud at Silvercorp, and which Anthion appears to have endorsed.

Although Silvercorp isn’t claiming that Mr. Staude had any direct role in the letter, it says he may have “relevant knowledge”.

Just what that knowledge may be, and how relevant, is open to speculation.

Silvercorp identifies Mr. Staude as “a geologist working for Riverside Resources Inc. (a TSX Venture Exchange listing for which he serves as president)”, saying he was “commissioned to prepare a geological report on Silvercorp for Gerson Lehrman Group, a New York research group that works for hedge funds”.

According to Market Wire: “Silvercorp does not state exactly how the short-sellers may have used Mr. Staude’s report, but claims his ‘work product [sic] appears to be referred to in the anonymous publications’.”

The mining company now wants to examine Staude, to obtain evidence “pertaining to the commissioning and dissemination of the report” by Anthion and other defendants in the New York case.

In addition to Staude himself, the respondents named in the petition include Riverside Resources – and yet another private company “associated with Mr. Staude”, called Arriva Management Inc.

As we pointed out in our blog comment last month, although this little drama may seem a petty one, it had the potential to reveal much more about Silvercorp’s activities than we currently know – specifically in China.

Just how has the company managed to become not only the largest primary silver producer in the Peoples’ Republic – but also the cheapest among its peers?

Just what – if anything – Mr Staude’s geological report revealed that called into question Silvercorp’s assertions about the value and viability of its huge mineral deposits – or any problems in accessing them – we don’t know.

Indeed, we may never know. And the more’s the pity if that’s the case.

N