Price to pay for flawed re­port­ing

Mi­nor­ity re­sis­tance could force full dis­clo­sure

Finweek English Edition - - Insight -

DE­VEL­OP­MENTS AT con­tro­ver­sial min­ing com­pany Kim­ber­ley Con­sol­i­dated Min­ing (KCM) may at least sig­nal a change in mi­nor­ity share­holder ap­a­thy when com­pa­nies re­sort to cut­ting off com­mu­ni­ca­tions. KCM was sus­pended in mid-2009 for not pub­lish­ing its au­dited fi­nan­cial state­ments for the year to end-Fe­bru­ary 2009.

Since its sus­pen­sion KCM hasn’t ex­actly been the bearer of a sur­feit of op­er­a­tional news and of­fi­cial share­holder com­mu­ni­ca­tion through the JSE’s Sens. News has largely been limited to the com­ings and (mainly) go­ings of di­rec­tors and a few vague ut­ter­ances about a pos­si­ble tie up with a Chi­nese part­ner.

That’s not un­usual. Sus­pended com­pa­nies of­ten let their re­spon­si­bil­i­ties to share­hold­ers lapse, not pub­lish­ing fi­nan­cial state­ments or is­su­ing progress re­ports. Still, the sit­u­a­tion at KCM is quite sur­real. A small min­ing com­pany has ab­so­lutely no ex­cuse for not be­ing able to pro­duce its 2009 an­nual fi­nan­cial state­ments a full 18 months af­ter the close of its fi­nan­cial year-end.

There­fore, it’s hardly sur­pris­ing a group of dis­grun­tled share­hold­ers – led by for­mer ex­ec­u­tive di­rec­tor Jo­hann Cil­liers – wants to run the board out of town and in­stall new di­rec­tors.

No­body likes to be left in the dark about a com­pany’s op­er­a­tional and fis­cal sta­tus – es­pe­cially when its main as­set, the Bo-Ka­roo di­a­mond mine, is cur­rently op­er­a­tional and be­ing con­tract mined. It ap­pears KCM’s dis­grun­tled share­hold­ers’ de­ter­mi­na­tion to boot out the board – which Fin­week hears was fended off on a tech­ni­cal­ity – at least got its di­rec­tors to

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