Mantengu price doubles
MINER CONCERNED OVER MARKET MANIPULATION Noose tightening around alleged perpetrators with probe in high gear.
Mantengu Mining doubled to 100c last week after the company went public with its suspicions that its share price had been manipulated lower over a period of about eight months. The shares have been on a steady decline – until the announcement came out a week ago.
The shares changed hands below 50c prior to the announcement, falling to less than a quarter of the 220c it traded at in June last year. Post the announcement, the shares doubled to 100c by Friday.
Asked whether it plans to bring a civil claim against the alleged perpetrators, the company said it would first have to complete its own investigations. If its suspicions are proven true, it will then be up to the shareholders who suffered losses to bring a claim.
Mantengu reported its suspicions of share manipulation to the JSE and the Financial Sector Conduct Authority (FSCA). The JSE decided it was premature to issue a Sens notice, while the FSCA believes there is sufficient evidence to warrant further investigation. The company decided in the interests of transparency to bypass the JSE and issue its own public warning.
Evidence
Moneyweb asked to see evidence of the alleged share manipulation
and was given access to the share trade logs for the last eight months. The logs show several trades of less than a handful of shares well outside the day’s trading range.
“None of this makes any economic sense,” said Mantengu Mining chief financial officer Magen Naidoo. “If you add brokerage and admin fees, these trades are being conducted at a substantial loss.”
The trades are in the names of different individuals, though Naidoo suspected they were acting in concert.
“If you are looking for proof of market abuse, look at the performance of the shares since we
issued the announcement a week ago,” he said. If shareholders were to bring a civil claim against the perpetrators, the first problem is identifying them, and then proving that they were part of a conspiracy to collapse the share price. Naidoo said the company has its own investigators on the case.
R500m facility
The chrome and platinum group metals company last month secured a R500 million shares and warrants-forcash facility from UK-based GEM Global Yield.
Mantengu’s ability to draw on this facility is in large part de
termined by the share price. The agreement allows GEM to acquire warrants at a 400c strike price, which is well above the current market price. The alleged share price manipulation could slow down the rate of cash drawdown for expansion.
We believe this is a calculated campaign...
‘Calculated campaign’
“We believe this is a calculated campaign by certain actors trying to disrupt our growth plans and prevent us accessing the cash we need for a fairly aggressive expansion path,” said CEO Mike Miller.
Mantengu was valued at R857 million at the time of its reverse listing early last year, but the share price plunge dropped its market valuation to below R80 million a week ago. Last week’s jump in share price put market cap back at R160 million.