A top legal official in the Democratic Republic of Congo withdrew a key licence held by Camec, the mining group run by the former England cricketer Phil Edmonds, a day after the company launched a hostile all-share takeover of its rival Katanga Mining.
The revocation led to a precipitous 24 per cent drop in Camec's stock, endangering the all-share offer for its rival. Camec said it was not officially informed of the cancellation, which was enacted by procurator general Tshimanga Mukeba, and questioned its validity.
The chief executive, Andrew Groves, said: "There is no legal basis for the removal of any of our licences in the DRC. This is clearly an attempt to destabilise Camec's share price in relation to our offer for Katanga, which was announced yesterday. We are confident this strategy to undermine the transaction will fail."
When the bid was announced on 29 August it was worth £715m, but it has taken a severe hit since Camec went public with the deal. The transaction would create the world's largest cobalt producer. It would also have significant copper operations.
Arthur Ditto, the chief executive of the Canada-listed miner, spoke out publicly against the offer and suggested that other mining groups were interested in Katanga. Nikanor, a copper and cobalt miner incorporated in the Isle of Man is thought to be the most likely candidate. Victor Kasongo, the DRC's deputy mines minister, has also made his opposition to the tie-up known. Katanga has advised shareholders to refrain from any decisions until it makes it official recommendation in the next two weeks.
Under DRC mining regulations, companies must be given a month notice before a licence revocation, as well as the opportunity to rectify the situation before it is cancelled. Camec said it was given neither. Mr Mukeba said that the license in question would be returned to Gecamines, the state-run copper miner.
The government launched a formal review into the mining sector this year to ensure that companies attained contracts lawfully. It is expected to publish its initial findings by the end of September.
Camec owns 22 per cent of Katanga's shares and has secured lock-up agreements from holders of another 32 per cent. Mr Groves said he received assurances that they remained committed to the transaction.Reuse content