HARARE, June 3 (The Source) – Resources group Mwana Africa’s chief executive, Kalaa Mpinga has attacked a requisition by minority shareholders of the company who are seeking to remove four independent non-executive directors of the company at an extraordinary general meeting next week as an unnecessary distraction.
The minority shareholders, calling themselves the ‘Concerned Shareholders Group’, led by Ian Dearing and others holding about 5,1 percent of Mwana’s issued share capital, requisitioned for the EGM on June 9 to, among other resolutions, remove interim non-executive chairman Stuart Morris, Johan Botha, Ngoni Kudenga and Herbert Mashanyare and replace them with Scott Morrison, Mark Wellesley-Wood, Oliver Barbeau and Anne-Marie Chidzero.
The minorities are alleging failed corporate governance at the company after Mwana fell out with its largest shareholder China International Mining Group Corporation (CIMGC) and Yat Hoi Ning, a Non-Executive Director and chairman of CIMGC, over board seats.
But in an interview with United Kingdom-based Edison Investment Research firm on Wednesday, Mpinga said Mwana and CIMGC were looking to resolve their differences and that the current board was critical to the success of its operations, particularly in Zimbabwe.
“The board view is that the (proposed) resolutions should be rejected,” said Mpinga, adding that CIMGC and Ning were not part of the requisition.
“The requisition is interfering with the discussions we are having with the Chinese, it’s an unnecessary distraction, certainly not when we are finding an amicable resolution to the dispute.”
The petition, which has been suspended by the court until June 15 this year to enable the parties to reach an agreement, is a dispute, between CIMGC and Mwana on the interpretation of the relationship agreement between CIMGC and Mwana, he said.
“When CIMGC invested into Mwana (in 2012), it entered into a relationship agreement which defines very clearly how CIMGC has to behave vis-a-vis the independence of the board and composition of the board. At (the annual general meeting in 2014), there was an incident that led to the CIMGC being disenfranchised. The board at the time believed that it had acted according to the relationship agreement and CIMGC doesn’t agree,” said Mpinga.
“That’s really the heart of the litigation. But the board has continued to function despite the litigation, I think we met five times since the litigation started and in three of those meetings Mr Ning was present and we took some very important decisions like approving the ($20 million bond to restart the nickel smelter in Bindura ) and approving some other investments in the operations so the board has been dispensing its duty in a very normal manner.”
The activist shareholders are seeking the removal of independent non-executive directors because they assume CIMGC wants the current board to leave, Mpinga noted.
“I do know that this is necessarily correct so we will just have to see what will happen,” he said, adding that the targetted board members, Zimbabwean old mining hands – Herbert Mashanyare, Mwana veteran Ngoni Kudenga and South Africans Stuart Morris, who is the current interim non-executive chairman and Johan Botha were representative of the company’s requirements.
“Our operations are based primarily in Zimbabwe, and all of our projects, certainly our most important projects are based in Zimbabwe. The biggest financial challenges and the biggest financial opportunities are in Zimbabwe so we believe that strong track record and expertise in the Zimbabwean business environment is probably one of the most important things we need,” said Mpinga.
“This current board played a very critical role in assisting me and the management team in securing government approval to get the ($20 million BNC) bond in place. Secondly all of our challenges are around technical issues: we mines to develop in DRC and a mine to restart in South Africa and we need a board that is made up of people who have hands on technical expertise , people who have built things. In that regard I think the existing board in better balanced and reflects more strongly the requirements of the company.”
He said the support of the requisition by former chairmen Mark Wellesley-Wood, Oliver Baring (who was succeeded by Wellesley-Wood ) was notable as they had been unanimously been removed by the board. Another requisition supporter, former finance director Donald McAlister left the company following a decision to downsize the corporate office and keep the operation under management closer to the mine.
“Since their departure, our corporate costs have almost halved,” noted Mpinga.
In the half-year December, the company recorded a 30 percent growth in revenue to $84 million and 32 percent growth in Earnings Before Interest, Taxes, Depreciation and Amortization (Ebidta) to $17 million.
“This has got to be the best half-year in the history of the company, so the operations are starting to deliver and the company is on a solid footing,” said Mpinga.
Morrisand Botha have indicated that they will quit before the EGM, leaving Zimbabweans Mashanyare and Mwana veteran Ngoni Kudenga in the line of fire, but Mpinga said the company had a succession plan in place.
Going forward, Mpinga said he was confident of a resolution with CIMGC and Ning before the court stipulated deadline.
“First and foremost we have to restore stability and harmony in our board,” he said.
“It’s very important that we maintain continuity, that we preserve the current memory that exists in the board and removing all the directors will destroy that. Not to mention that we are in the middle of our audit process and we are expecting to release our audited full-year accounts in the beginning of July so the requisition is an unnecessary distraction.”