Mwana Africa's Shareholder Vote

Issue 128, June 2015

“You can't have two bulls in the same pen,” says Mwana Africa's Congolese-born chief executive, Kalaa Mpinga, letting out a brief chuckle that quickly fades and turns to silence.

One (if not both) is about to get gored.

When Mwana listed in London in 2005, it planned to build a pan-African mining house, coupling financial backing from London with Mpinga's knowledge of Africa, as a former director of Anglo American.

But the problems it has hit since, including hyper-inflation in Zimbabwe, a collapse in the nickel market and a drying-up of mining capital in London, have opened-up an irreparable rift between Mwana's double-barrelled London contingent and its African feet on the ground.

Shareholders vote on Tuesday on a proxy battle between the two. Two former chairmen, Oliver Baring and Mark Wellesley-Wood, are calling for the removal of four current directors, two of them from Zimbabwe, where the company's gold and nickel assets are based.

“It's an absolute mess,” one analyst says. “Mwana was a one-stop shop for a Zimbabwe recovery story, which we once believed, but it's never come to pass.”

Balance of Power

Wellesley-Wood is blaming the company for failing to settle a legal dispute with its largest shareholder, China-based CIMGC. Mpinga says he speaks to CIMGC's chairman daily, but shies away from predicting an outcome to the vote or the legal dispute.

“To tell you the truth, it's not something that is within my control. Looking at the way the proxies and the votes are going, I think most of the shareholders will support management."

"What is not very clear is how our Chinese shareholders are going to vote, because they hold the balance of power and I understand their position. They don't want to prejudice their legal position.”

Mpinga says the proxy battle has delayed a legal settlement and that the board has operated effectively despite the three-way battle. It is flattering to the company's asset base, including the Freda Rebecca gold mine (generating 59,000 ounces in the last 12 months) and its Trojan nickel operation, which lifted Mwana's revenue from $109m to $143m last year, flipping the company from loss to profit.

Unfinished Business

A former banker in London, Mr. Mark Wellesley-Wood, who could not be reached for comment, has variouly been described as “a pin-striped bandit” and “the kind of executive South Africa could do without,” admittedly by his opponents. He joined Mwana as non-executive chairman in late 2014, prompting an outburst from analyst John Meyer...

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“You can’t have two bulls in the same pen.”

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