Miners Brinkley and Celtic come under pressure

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Investors in small-cap miners on the London markets suffered yesterday as one lost a lucrative mining agreement in Africa, while another became the target of a hostile bid from a Russian oligarch.

Shares in Brinkley Mining, which specialises in uranium prospects, slumped 14 per cent to 9.5p on the London Stock Exchange's Alternative Investment Market as the Democratic Republic of Congo refused to hand over exploration permits initially agreed in July.

Brinkley said the news from the DRC, which emer-ged after the market closed on Friday, had come as a "total surprise". The government announced that an agreement between the Commissariat General a l'Energie Atomique (CGEA), the country's atomic energy authority, and Brinkley would be terminated. The DRC said it wanted to ensure its nuclear assets were managed to the "highest standards of integrity". It added: "The memorandum of understanding between CGEA and Brinkley does not live up to those standards."

Professor Francois Lubala Toto, the commissaire general of the CGEA, who negotiated the initial deal, has been put on a 60-day suspension and the government has launched a criminal investigation into the agreement.

Brinkley first signed a memorandum of understanding with the CGEA in October last year, and then signed agreements in July for first right of refusal on its uranium licences.

Confusion reigned yesterday as Brinkley tried to clarify its position. A spokeswoman said it had contacted the government but had received no response. It is not the first UK-listed miner to suffer in the Congolese republic. Shares in Central African Mining & Exploration slumped in August after it had licences revoked. The ruling was subsequently overturned.

Separately on London's growth market, Celtic Res-ources, a Kazakhstan-focused miner, fared better, although it still gave up 0.5p to 278p after news that the Russian steel giant Severstal had "turned up the heat" to try to buy the company.

Severstal, which lost out to Mittal Steel in the take-over battle for Arcelor, has had two bids rejected by Celtic in the past month. It took the bid hostile yesterday, writing to shareholders directly with the intention of sending them its offer document in the next two weeks.

The Russian group, owned by the billionaire Alexei Mordashov, has set an 80 per cent acceptance level for a full takeover, but should it fail to reach that level will call an extraordinary general meeting to try to oust the board.

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