Resilient’s review fails to impress investors
If only it were so easy. Resilient’s share price enjoyed something of a recovery on the expectation of the all-clear from the strangely termed “independent review” carried out, at Resilient’s request, by the former auditorgeneral, Shauket Fakie.
In the week ahead of the actual release of the “independent review” the Resilient share price jumped 30%, recovering from its 12-month low of R50 to close at R65 on the day the report was released.
After a six-week investigation, Fakie’s key findings, according to Tuesday’s SENS announcement, are that there is no evidence of executive misconduct or of any market manipulation or insider trading.
Indeed, there was no evidence of anything untoward at all, which must be as great a relief to CEO Des de Beer as it is a surprise to his detractors.
Strangely, investors did not seem overly impressed with the sparkling endorsement of the group’s upstanding nature. On Wednesday the share price crept up just 31c.
The problem is, despite the involvement of one of the country’s most respected auditors, it is going to be extremely difficult to put the Resilient “misconduct” genie back in the bottle.
The findings of the investigation into Resilient were weakened by its failure to interview one of the company’s major critics, 36ONE Asset Management.
But over and above that, there are a number of significant issues that have not yet been fully addressed. The issue of the independence of key parties and entities, including the trustees of the enormously wealthy (at one stage) education trusts, has surely not been finally settled; nor has the role of two “K” companies been adequately resolved. But perhaps of greatest concern, which appears not to have been dealt with by the review, is what happens to the heavily indebted employees who borrowed from the company to buy shares at levels unlikely to be seen in the shortto-medium future?
For the new mineral resources minister, Gwede Mantashe, to proclaim there is no crisis in SA’s platinum sector on a public platform — no matter what he might say behind closed doors — is nothing short of astonishing.
A cursory glance at the financials of the world’s second- and third-largest platinum miners’ results would shoot down Mantashe’s contention during his opening address at Tuesday’s inaugural Jo’burg Indaba Platinum conference.
There is clearly something wrong with an industry where more than half of its mines are unprofitable. Northam CEO Paul Dunne says a quarter of SA’s annual output of four million ounces costs producers R5bn.
The fact that most speakers flagged the dismal state of the industry also underscored how wrong Mantashe was in making the assertion.
Conference chairman and organiser Bernard Swanepoel, the former CEO of Harmony Gold, said industry, labour and the mineral resources department established the gold crisis committee in the late 1990s at a time when the industry was in far less distress than the platinum sector finds itself in now.
Mantashe said problems in the sector stemmed from poor relations with labour and communities. This is simplistic. While it may feed into what ails the industry, there are far broader and more complex issues at play. The government has to act with platinum miners to save jobs and avoid further community unrest on the platinum belt.