African Minerals Ltd., which last month investigated Chairman Frank Timis and a director over a $50 million payment, said an internal probe found no evidence Timis benefited from the payout.
The payment was made to Global Iron Ore Ltd. after African Minerals canceled iron-ore sale agreements with the Cyprus-registered group in 2012, documents on the London-based company’s website yesterday show. Timis, the founder and biggest shareholder with almost 13 percent of African Minerals, agreed to the settlement to GIO Cyprus without board approval, which wasn’t required, the company said.
Affidavits from the former chief financial officer of GIO Cyprus, who wasn’t named by African Minerals, and an investor in GIO Cyprus contained claims that Timis, Coughlan, his son Craig and a fourth person each owned 25 percent of GIO Cyprus “pursuant to a side agreement.”
“The company confirms the investigation found no evidence that its chairman was a director or shareholder in GIO Cyprus or indeed any of its affiliates,” African Minerals said today in an e-mailed statement. “Furthermore Mr. Timis confirmed this to be the case denying all the allegations.”
African Minerals declined as much as 5 percent to 48.25 pence and traded at 49 pence as of 11:11 a.m. in London.
The Sierra Leone iron ore producer, down more than 75 percent in London trading this year, has some significant questions to answer regarding the probe, Deutsche Bank analyst Rob Clifford, who changed his buy recommendation on the stock to no recommendation, wrote in a report dated yesterday. Details of the probe point to “potential corporate governance shortcomings,” he said.
It “will potentially make it difficult to raise funds and leaves significant unanswered questions needed to make an informed investment decision,” Clifford said. He offered nine questions for the board on the issue and is awaiting answers before reviewing his recommendation.
The probe was completed last month and led to the resignation of Director Dermot Coughlan. Both Timis and Coughlan denied benefiting from the payment and the company said the probe didn’t prove or disprove allegations against them.