Simmers shares fall amid dispute with Vulisango
October 5, 2009
By Justin Brown
Simmer & Jack Mines (Simmers) shares fell to an eight-month low on Friday after the firm wrote to its shareholders to explain its unresolved dispute with its empowerment partner, Vulisango.
Simmers chairman Nigel Brunette said there was no legal basis for the company's mining rights to be revoked.
"Simmers' mining rights could not be based solely on its relationship with Vulisango," he wrote. Empowerment firm Vulisango owns 22 percent of the junior gold producer.
However, Vulisango chief executive Valence Watson yesterday denied that his company had ever questioned the standing of Simmers' mining rights.
He said: "We never asked for that - what Brunette says is garbage. What would it help Vulisango to see the loss of Simmers' mining rights and the demise of the company? What we want is what is best for all shareholders.
"What Simmers says is nonsense - these are Kebble surrogates. Roger Kebble used to be Simmers' chairman (up to December 2005). Simmers is living in the past."
Simmers shares on Friday fell to R1.68, the stock's lowest level since late January, before closing down 4 percent on the day at R1.72, which valued the group at R2.1 billion.
Simmers and Vulisango are in dispute over a number of issues, including that Simmers restore Vulisango's stake to 26 percent. The stake was diluted to 22 percent as a result of two issues of shares for cash.
Brunette said Vulisango had tried to restore its stake "by, among other things, attempting and failing to interdict Simmers from executing the board-approved acquisition of Tau Lekoa mine".
Watson said Vulisango was unhappy about the way Simmers raised cash via shares.
"There could have been a better way in which the funding could have been raised for the Tau Lekoa deal to avoid diluting shareholders," he said.
Brunette said the empowerment firm had also approached the Department of Mineral Resources to "adopt a different set of rules for Simmers" to other local mining companies.
Brunette said it had been reported that the department had launched a probe into "fronting" claims made by Vulisango.
"Simmers welcomes any investigation that leads to a speedy resolution of this matter. We are comfortable that Simmers meets and exceeds the requirements of the mining charter," Brunette said.
Last month five Simmers directors - Kevin Wakeford, Stuart Murray, Siviwe Mapisa, Baba Njenje and Ayanda Sisulu-Dunstan - resigned from the Simmers board. Mapisa, Njenje and Sisulu-Dunstan are all Vulisango directors.
The resignation of the three Vulisango directors and Wakeford was a result of the dispute. Watson said the three Vulisango directors had resigned because of "bad corporate governance".
It is not clear what prompted Murray's resignation.
Simmers is recruiting a new set of board directors.
Watson said he seriously doubted whether "anyone of substance" would join the Simmers board.
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