Mining Empire on Shaky Ground
By Rob Rose
25 Jul 2005 at 07:37 AM EDT
JOHANNESBURG (Business Day) -- Brett Kebble’s mining empire looks shakier than ever after the Nasdaq threatened last week to boot his Randgold & Exploration off the bourse for failing to file its F20 annual report.
For Kebble, an enthusiastic litigant with a reportedly stormy relationship with the tax man 
, this capped a bad week. On Tuesday, the JSE threatened to suspend a number of Kebble’s other companies — the once-mighty JCI, and JCI empowerment partner Matodzi — if they don’t submit their results for the year to June by the end of this week.
Doubts have also emerged in recent weeks over the brightest spark in Kebble’s Byzantine empire , Western Areas, which owns 50% of one of the richest gold deposits in the southern hemisphere in South Deep.
Amid production hiccups, Western Areas’ liabilities outweigh assets by R394m — a clear red flag.
Last week, Kebble reassured investors that he was putting the finishing touches on Randgold’s report, saying there were delays in getting information from subsidiaries.
The auditors will surely have struggled to acquaint themselves with an empire that at times resembles the board game Risk, with an interwoven mesh of cross-shareholdings and stock being shifted across imaginary lines.
So what is delaying Randgold & Exploration’s financials?
Could it be the R2bn worth of unaccounted-for shares Kebble claims to own in Mark Bristow’s company, Randgold Resources, a separate company despite the confusing name?
Kebble told the US Securities and Exchange Commission (SEC) in February he “beneficially owned” 30,6% of Randgold Resources, but Bristow says he can find no proof that Kebble owns anything close to that.
Bristow says an Ilios audit puts Kebble’s shareholding at 6,6% of Randgold Resources. “I asked Kebble to demonstrate that he owned the shares, which he could not do.”
So where are these shares? Kebble’s answer is that the shares have been lent to his empowerment partners to allow them to raise money to buy a stake in Western Areas.
Bristow says this is unlikely, as his company is keenly aware of where its shares are going.
The endgame will be fascinating. No matter how notoriously soft the JSE is on its listed companies, the SEC is an animal of far sharper tooth.
For Kebble’s Randgold & Exploration, this is crucial. If it owns more than 30% of Bristow’s company, it can consolidate some of the earnings into its financials. If it owns less than 30%, it cannot.
But this dispute could not come at a worse time for Kebble. The profits and share prices of his companies appear to be languishing dangerously, creating the impression Kebble is in more need of pulling a rabbit out of his hat than ever before.
http://www.resourceinvestor.com/pebble.asp?relid=11574
