Berkeley Mineral Resources shareholders hope they don’t have an Afren on their hands

Earlier today, Zambian focused tailings miner, Berkeley Mineral Resources (BMR) had its shares suspended, “At the request of the company trading on AIM for the under-mentioned securities has been temporarily suspended from 04/11/2014 12:00pm, pending clarification of the company’s financial position.”

On 20th October it was announced that the previous Executive Chairman, Mr Masoud Alikhani, resigned from the Board on 17 October 2014 for health reasons. He was then replaced by Alex Borrelli, previously chairman of Ablon Group Limited, a real estate group. Now it looks like Borrelli might have uncovered some uncomfortable financial information after taking over the reins with the announcement today that  Further to the announcement of Alex Borrelli as Chairman of the Company on 23 October 2014, certain material concerns have come to light as to the classification and valuation of approximately £4.3 million of prepayment for non-current assets as at 31 December 2013. The Company has instructed independent accountants and lawyers to investigate the circumstances underlying these concerns. ”

Alikhani was not without controversy during his tenure at BMR with the key Kabwe zinc and mineral tailings project delayed by months and subject to on then off then on again approvals by the Zambian government. Now as well as problems with project management, financial mismanagement now seems to be on the agenda. Falling commodity prices have also done little for shareholder value in recent months.

Shareholders are now hoping that this is not another Afren where illegal payments were being made to the CEO and COO of the Nigeria focused company and uncovered in July this share sending the shares down sharply. With £600,000 cash left BMR has fortunately enough capital to see it through in the short term but this is another example of dubious management behaviour on AIM, particularly in the mining sector. Investors will be hoping for a rapid resolution of the latest investigation.

Contrarian Investor UK

IMPORTANT: The posts I make are in no way meant as investment suggestions or recommendations to any visitors to the site. They are simply my views, personal reflections and analysis on the markets. Anyone who wishes to spread bet or buy stocks should rely on their own due diligence and common sense before placing any spread trade.