London-listed mining company finds £3.3m hole in accounts

Asa Resource Group, a pan-African resources company listed on London’s alternative investment market (AIM), has reported ‘strong evidence’ that $4.3m (£3.3m) of funds from one of its mines in Zimbabwe have gone missing, and has dismissed its chief executive and group finance director

EY, the company’s auditors, have been asked to undertake further investigation, with Asa Resources saying it has identified that funds are still to be accounted for by group subsidiaries managed from Hong Kong. It also said the events it has uncovered have prejudiced normal cash flows. 

At the beginning of the month, the company put out a statement describing ‘completely mischievous ’anonymous allegations made in relation to Freda Rebecca Gold Mine (FRGM), Zimbabwe, in which it has an 85% interests. Asa Resource said it suspected ‘certain disgruntled former employees’ of making false claims about ‘certain aspects of financial management’, but did order an internal inquiry.

This week the company put out a statement saying: ‘The board is extremely disappointed to report that there is strong evidence of funds amounting to several million US dollars being transferred from the accounts of FRGM to entities in China, without full value being received by FRGM.’

The company has now removed chief executive Yat Hoi Ning from the board and his post as chief executive, along with the group's finance director, Yim Kwan, who has had his contract of employment terminated without notice.

The statement went on to say that ‘the directors are satisfied that a number of anonymous allegations and press reports into matters at FRGM are unfounded and, particularly, that there has been no thefts of gold from the gold room at FRGM, nor had there been shipments of gold ore to China.’

David Murangari, chairman of Asa Resources, said: ‘We feel very sorry that we have been misled and are only thankful that the anonymous allegations led to an inquiry as a consequence of which we have identified a lot of what has gone wrong. The executives in whom the directors reposed their trust were misled and so it was necessary for the independent directors to take decisive and rapid action.’

Asa Resources said the board is satisfied that it has established that the total amount of Asa Resource funds that are unaccounted for is $4.3m. Of this $2.7m relates to the year ended 31st March 2016 and $1.6m relates to the year ended 31st March 2017.

The sum of $1.6m in 2017 has been traced to two group companies administered from Hong Kong but the board has yet to confirm whether any part of this sum remains within the two companies.

The statement went on to say the board has not relied on these amounts and any recoveries will improve the expected cash position. It said continuing cash flows from operations at FRGM and its other major site, Bindura Nickel Corporation (BNC), are expected to be adequate for the normal working capital requirements of these mines. Both FRGM and BNC have their own banking facilities that are being utilised in the normal way.

At group level there are a number of outstanding creditors, mainly relating to legacy litigation and unpaid directors fees and salaries. These amounts are expected to be paid in due course from management fees payable by BNC and FRGM to the company.

The statement concluded: ‘Following recent management changes announced on 18 April 2017, the board is now satisfied there are sound operational financial controls at FRGM and BNC.

‘Shareholders should be assured that the board is taking every measure possible to recover these sums and to restore confidence in its operations and across the group.’

0
Be the first to vote
Subscribe