A GROUP of small European shareholders, including former directors, are seeking the removal of four key non-executive directors from the Mwana Africa board and replacing them with four other people including a former director who was unanimously removed from the board a year ago for not sharing the same strategic vision.
The requisitioners represent approximately 5,1 percent of the company’s aggregate 71 095 755 ordinary shares.
Mwana announced in a circular on May 12 that Mr Ian Dearing and a number of small shareholders had requested the removal of four independent directors from the board of the mining company and their subsequent replacement with directors of his choice at an extraordinary general meeting slated for next month.
This comes amid concerns by the London-listed mining junior the move would cripple the board and deprive the firm of valuable indigenous experience, corporate memory and key experience to steer the company forward.
The company stated that over the years it has faced a series of major problems including adverse economic conditions in Zimbabwe and falling commodity prices.
Mwana, with the support of its shareholders has overcome these challenges, restarting operations following care and maintenance at its Freda Rebecca and Trojan Nickel Mine in Zimbabwe and making significant progress around corporate restructuring in 2013.
Last year, the strong foundation for growth were reflected in the group’s ability to complete the raising of $20 million through the issue of a five-year bond that was awarded prescribed and liquid asset status, a huge feat for a Zimbabwe mining company.
The requisitioners are seeking to remove Zimbabweans Mr Ngoni Kudenga alongside Mr Herbert Mashanyare, Mr Stuart Morris and Mr Johan Botha from the board and replace them with Scott Morrison, Mark Wellesley-Wood, Oliver Barbeau and Anne-Marie Chidzero.
Mwana announced that Mr Morris and Mr Botha have the intention to retire, leaving Mr Kudenga and Mr Mashanyare on the board.
Interestingly, Mr Wellesley-Wood was removed as chairman in February last year after assuming the position in September 2013.
Mwana Africa said Mr Wellesley-Wood “did not fit with the corporate culture of the group” and “did not share the strategic vision for the company.”
On the other hand, Mr Kudenga is a widely respected corporate leader and Mr Mashanyare is a mining engineer and has over 30 years experience in metallurgy and has extensive project management experience.
He previously worked with Mimosa, Zimasco and Rio Tinto Zimbabwe. Mr Botha has over 40 years’ experience in the African mining sector building and running mines while the directors proposed by Mr Dearing do not have experience in southern Africa particularly Zimbabwe.
The company said the new directors proposed by Mr Dearing do not have a comparable breadth of experience of operating in Southern Africa or operational track record to the incumbent non-executive directors they are seeking to replace.
Barbeau is a chartered accountant in South Africa and Mauritius and is the manufacturing director of Moore Stephens in Johannesburg while Morrison is a geologist.
Donald McAlister, who is also among shareholders seeking to remove the four directors, is the former finance director of Mwana.
Interestingly, under his tenure, BNC was impaired in Mwana books only to be reversed the following year when McAlister had left.
Mwana announced last week that a petition issued in the UK Companies Court by the group’s shareholders, China International Mining Group Corporation (CIMGC) and Mr Yat Hoi Ning, against Morris and Botha that, the Court has been granted stay of the proceedings until 15 June 2015 to allow the parties to continue to explore settlement.
CIMGC and Mr Ning are fighting the appointments of Mr Kudenga and Mr Mashanyare.
In a letter requisitioning the EGM also re-published by the company, Mr Dearing also wants shareholders to vote on a resolution compelling directors not to enter into any unconditional agreement to acquire or dispose of any major asset without disclosing the details to shareholders of the company before an agreement becomes conditional.
The company said this was neither helpful nor necessary to the operation of the company, saying Mwana was already subject to the transaction tests set out at rules 12 to 16 of the AIM rules, which include disclosure and shareholder approval requirements for certain substantial, and related party, transactions.
“No adequate explanation is given as to why the Mwana board should be constrained in a way that its AIM-listed peers are not, save that Mr Dearing considers it ‘prudent’,” the company said.
The board said unlike the AIM rule class tests, which are precise and tied to specific numeric thresholds, the wording of the resolution was extremely vague.
They said what would constitute a “major” asset or a “reasonable” time frame was open ended.
Mr Dearing also wants Yat Hoi Ning and China International Mining Group Corporation to iron out differences. This comes after a dispute over board seats allocated to Mr Mashanyare and Mr Kudenga created acrimony in the partnership.
Mwana Africa said the four directors Mr Dearing was seeking to remove from the board were willing participants in the company’s cost reduction programme.
According to the company, non-executive directors opted to take a voluntary 50 percent cut in their fees to support the company’s cost savings initiatives.
Senior management also accepted a salary reduction of 20 percent as part of the cost cutting exercise.
“For the year ended 31 march 2015, non-executive director’s remuneration was set at levels 20 percent below the 30 June 2013 levels,” said the company in a statement.
For instance, Yim Chiu Kwan, Mwana’s current finance director received $123 267 compared to Mr Donald McAlister, who in the same position pocketed $943 099 for the year ended 31 March 2013.
Mwana interim chairman Mr Stuart Morris received a total $49 627 while Mr Wellesley-Wood got $81 477 for the five months he served as chairman.
The circular pointed out that Peel Hunt the Nominated Advisor had not yet been provided with sufficient information on the proposed appointees despite making a number of requests to enable it to assess their appropriateness and independence to act as directors of the company under the AIM rules.
The circular issued excludes Ning and Hu, who on account of the ongoing petition with CIMGC have chosen not to participate in the directors’ recommendation.
However, the board continues to function as reflected by the growth in the company’s operational performance and strongly stated that they do not believe the requisitioned resolutions are in the best interests of the company or the shareholders as a whole.