JOHANNESBURG (miningweekly.com) – The sacked former CEO of junior Wesizwe Platinum has been reinstated in a pyrrhic victory that simultaneously exposed corporate governance issues and a polarised community shareholding.
Michael Solomon got his job back by a slender 51,7% majority vote at a well-attended and often robust extraordinary shareholders' meeting (EGM).
The ousted former chairperson, Robert Rainey, was also reinstated by a narrow margin and the incumbent non-executive independent chairperson, Dr Iraj Abedian, and acting CEO Nyasha Tengawarima, were removed from the board, along with director Disele Phologane.
Abedian had earlier read from a Deloitte report that found Wesizwe's corporate governance in poor shape, with even board decisions not being properly recorded.
"There were question marks of all types," Abedian told the EGM.
Shareholder watchdog Theo Botha said also that the audit committee did not have enough independent nonexecutive members, and pointed out that King II principles do not allow the chairman to be the chairman to the board as well as the chairman of the audit committee.
In terms of JSE rules, if a company does not adhere to certain principles of King II, it must explain the non-adherence in its annual report, but this was not done.
Abedian responded that he had found an absence of a corporate governance framework when he joined the company a year ago and had been unable to make much headway in his attempts to improve the situation.
He said that there were instances of the board not being made aware of company payments: "That's when I realised that things had gone too far, and that certain individuals were not acting in the best interests of the company," Abedian added.
Uncovered was credit card expenditure of R2,8-million on hotels, helicopter hire and jewellery that could not be substantiated by vouchers or slips.
Solomon told Mining Weekly Online after his reinstatement that he would prioritise the introduction of good governance and would establish a board to serve all shareholders.
On the issue of his converting shares for cash, Solomon said that he had volunteered to leave in the company the R14,8-million in cash that had been given to him, and had offered to take a large portion of the money in shares, but the board had told him that there were issues with share-based payments and that he should rather take the money in cash.
"I had attempted all along the line to do the honourable thing, and it is incorrect that I tried to influence the board in any way. It's simply not true," Solomon said.
On community polarisation, he said that the Bakabung-Ba-Ratheo representation on the Wesizwe board had not been properly mandated and that it was important that community representation be properly mandated in order to avoid the problem of community polarisation.
He said the company's strategic options were to put the promising Frischgewaagd-Ledig platinum project on hold until the capital markets improved or to raise equity capital in order to build the mine.
Militating against the equity route, however, was shareholder dilution. At the same time, project finance remained expensive.
"A third option is to begin a disposal process, but I don't believe that disposal is in the shareholders' good interests, because we have built a phenomenal project. We've gone through the S curve that juniors go through, and we are now in the situation where we face the prospect of a dramatic net-present-value buildup over the next five years.
"A fourth option is to bring in a strong strategic partner that would allow us access to capital markets at a reasonable price, while at the same time giving upside to the existing shareholders who have footed the bill for what is a relatively low-risk project from the geological and mining perspectives," Solomon told Mining Weekly Online.