MINING: Cape Miner On The Precipice
Recent Western Cape Business News
THE Cape Town mining curse appears to have struck at Waterfront-based diamond mining venture Kimberley Consolidated Mining (KCM).
KCM is currently under suspension on the JSE for failing to submit its year to end February annual financial statements. As most experienced investors know; “no news is bad news”.
Why it has taken so long for KCM to update the market to the status of its mining and exploration operations is not known since the company has not communicated such matters to shareholders.
Last month Hein le Riche, the CEO and prime mover of KCM, stepped down - purportedly so that he could concentrate on a joint venture with a Chinese mining firm to seek out new mining opportunities.
At the time of the last financial report KCM was contemplating the sale of equipment and assets to fortify the company balance sheet, which showed current liabilities exceeding current assets.
When KCM listed in 2008 the company reckoned its Bo-Karoo mine would generate sufficient cash flow to fund exploration activities.
In May KCM advised that its headline losses would be greater for the year to end February 2009 than the previous financial year.
Directors claimed the “continued and protracted global economic downturn” as well as the reduction in the demand for rough diamonds had hit KCM’s cash flows.
Matters were made worse by the fact that an ‘anchor investor’ failed to pay for subscribed shares.
Unless KCM can surprise the market with proof of its solvency and (more importantly) viability, the company looks set to reinforce the notion that Cape-based resource ventures (remember Exxoteq, Union Mines, Benco, Zenith, Regional Resources, Dalsig Mining and Wealth 4 U) are rarely up-to-scratch.
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