Miners show close ties
By Barry Critchley
In a digital world, maybe the term six degrees of separation needs a little updating.
It seems that way in the case of resource companies Roxgold Inc., which has an operation in Burkina Faso; Teranga Gold Corp., which has an operation in Senegal; and Oromin Explorations Ltd., which also has an operation in Senegal next door to Teranga; and some of the principals behind the three issuers.
Their interconnectedness emerged more clearly in the past few days when Roxgold postponed its annual meeting to Sept. 25 from July 12. Roxgold, whose chief executive is Robert Sibthorpe, made that decision because just before the last day proxies could be submitted for the meeting it received news that it had a potential proxy battle on its hands.
That proxy fight was led by Oliver Lennox-King, who announced five nominees for election as directors. Lennox-King, who owns 3.829 million Roxgold shares (about 3%) also claimed the support of shareholders owning more than 25% of Roxgold. Later, he claimed he had received proxies for ownership of more than half the company. But Roxgold postponed the meeting “to protect the interests of all shareholders of the company,” a move Mr. Lennox-King termed, “a stunning betrayal of shareholder rights.”
And that’s where matters stand, presumably, until both sides release their circulars for the upcoming annual meeting. But a careful reader notes other connections between the various players. For instance:
- Oromin’s chief executive is Chet Idziszek, who is also a director at Roxgold. Mr. Sibthorpe is also an Oromin director.
- Oromin’s largest shareholder is Teranga Gold, with a 13.7% stake. Mr. Lennox-King is a director at Teranga Gold. (He is also a director of XDM Resources.) IAMGold Corp. is the second-largest shareholder, with an 11.8% holding.
Teranga’s operation in Senegal is running smoothly. Its website says “construction of the mill expansion to double capacity is done and commissioning is largely complete,” which means it will be able to produce at least 210,000 ounces a year in 2012.
Oromin’s operation is not producing. It expects to produce a resource update by the third quarter of this year, while the feasibility study and reserve update are scheduled for the fourth quarter. The company is looking at strategic alternatives for the project, one of which could be to sell the asset, a joint venture with two other parties, one from Saudi Arabia and the other from Senegal. While the share price of both Teranga and Oromin has fallen over the last year, Oromin’s has fallen the most.
Given the proximity of the Senegalese assets held by Oromin and Teranga, many argue Teranga is the logical buyer.
Indeed, one investor — who has stakes in all three companies, Roxgold, Teranga and Oromin — claims Teranga has had discussions about buying Oromin, a move that would give it a combined operation with 15 million ounces of gold.
Others with knowledge of the situation say it would be a “very complicated” process to acquire Oromin’s Senegal operation and merge it with Teranga’s operation. “Everyone would benefit from putting the two together but the main stumbling block isn’t Oromin,” the source said.
Is it possible frictions over a potential Oromin acquisition have led to moves being made on Roxgold?
Reached Tuesday, Mr. Lennox-King said “there is no link between the two.”