WEALTH 4 U

Finweek English Edition - - Cover -

EL­E­MENTS OF FAN­TASY and re­al­ity are prob­a­bly best il­lus­trated in this West Coast di­a­mond miner that – at its mooted list­ing on the AIM mar­ket in Lon­don – was sup­pos­edly worth R300m. W4U’s web­site still claims the com­pany – now in liq­ui­da­tion – suc­cess­fully es­tab­lished it­self as a sig­nif­i­cant player in shal­low marine di­a­mond min­ing and is “po­si­tioned to in­crease our fairly mod­est out­put and gen­er­ate su­per prof­its!”

W4U – headed by lawyer Louis Lieben­berg – was formed by the merger of 22 sep­a­rate com­pa­nies that each op­er­ated a small boat-based or beach-based min­ing op­er­a­tion.

The com­pany tried to raise R56m by of­fer­ing shares to the pub­lic at 100c/share. In 2007, W4U claimed less than 20m shares re­mained – which in­fers 36m shares were placed with in­vestors or is­sued to min­ing op­er­a­tion ven­dors.

W4U also spewed out big num­bers. One such claim was that the com­pany’s ge­ol­o­gist es­ti­mated marine di­a­mond con­ces­sions be­ing worked by W4U would yield 750 000 carats. W4U also sug­gested that once it started mid-wa­ter min­ing for­ays there could be a di­a­mond re­cov­ery rate of 100 000 carats/year within less than three years.

Nat­u­rally, W4U share­hold­ers couldn’t quan­tify that prom­ise by scan­ning au­dited fi­nan­cial state­ments or au­dited pro­duc­tion re­ports. In fact, W4U had the au­dac­ity to ask share­hold­ers to ac­cept unau­dited fi­nan­cial state­ments at its AGM in late 2007.

W4U also lured share­hold­ers by promis­ing reg­u­lar div­i­dend pay­ments. How­ever, th­ese soon dried up, with W4U con­ve­niently cit­ing the need to shore up cash for a list­ing as the rea­son. It would not be askew to sug­gest W4U’s ini­tial div­i­dend pay­ments were funded by money raised from in­vestors rather than cash gen­er­ated by di­a­mond min­ing op­er­a­tions.

The bot­tom line is that W4U ended up on the block in April with es­ti­mated as­sets (ap­par­ently a cou­ple of old boats and some rusty plant) worth around R7m and li­a­bil­i­ties top­ping R130m.

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