Frank Timis, the controversial mining magnate, yesterday bought the Ebola-hit mining operations of Sierra Leone’s London Mining in a move that raised yet more questions over his modus operandi.
London Mining collapsed into administration recently after a host of problems including the spread of Ebola. A few potential bidders were cited for its iron ore mine called Marampa. These included African Minerals, a company listed on the Aim market in which Frank Timis is a shareholder and chairman.
African Minerals was seen as an obvious candidate because it was already in Sierra Leone and could combine its own operations with those of the Marampa mine, creating big cost efficiencies.
However, rather than African Minerals doing the deal, Mr Timis bought the collapsed business himself through his Timis Corporation.
Such transactions, where a powerful director of a plc with a variety of shareholders buys a closely associated business for himself, are generally frowned upon for conflict-of-interest reasons.
Mr Timis has agreed to buy port and rail access for his new mine from African Minerals and is planning to mix Marampa’s ore with that of African Minerals to make a blend that is in high demand in European markets. While African Minerals will benefit from these synergies, the Marampa end of the savings will now be entirely enjoyed by Mr Timis, analysts pointed out.
The brokerage SP Angel said African Minerals shareholders should be asking serious questions of the company: “We fail to understand why African Minerals have decided not to acquire London Mining themselves,” it said.
African Minerals said it had decided not to buy Marampa itself due to concerns it could jeopardise its debt refinancing schedule with Standard Chartered Bank.
Any deals between Timis and African Minerals would be at arms’ length and at the market rate, it said, adding that African Minerals’ investors would still benefit from the deal with estimated savings of $12 a tonne.
It is not the first time African Minerals has run into controversy under Mr Timis. In 2009, it said it was in “advanced” talks over being taken over by ENRC, the Kazakh miner. Two hours later ENRC issued a statement pouring cold water on such a deal.
Earlier this year it was ordered by the High Court to pay Renaissance Capital $35m in unpaid fees.
Mr Timis gave up a previous chairmanship, of Regal Petroleum, following allegations that its oil assets in Greece had been exaggerated. The well turned out to be dry.Reuse content