congo minister cancels mining licenses , page-7

Camec's smoke-and-mirrors
From Moneyweb (SA), 30 August

The lurid tale of Billy Rautenbach, a buccaneer, Phillipe Edmonds, one-time
English cricketer, and Andrew Groves, foul-mouthed son of a policeman

Barry Sergeant

Johannesburg - In a letter dated Wednesday, August 29 2007, Tshimanga
Mukeba, attorney general of the Democratic Republic of the Congo (DRC),
informed Boss Mining sprl, and Mukondo Mining sprl, that relevant licences,
as purportedly transferred by DRC parastatal Gecamines in February 2004, had
been annulled and voided. Boss, purportedly 80% held by London-listed Camec,
had been sold, in chunks, to Camec by Muller Conrad "Billy" Rautenbach,
starting early in 2006. On Thursday, Camec's stock price fell in reaction by
as much as 40%. The immediate roots are found on July 17 2007, when the DRC
declared Rautenbach persona non grata. On Thursday Camec stated that the
"rumours of permit revocation" were "clearly timed to impact Camec's "offer"
for Katanga Mining, unveiled on the same day that Mukeba signed the memo
annulling and voiding the Boss and Mukondo licenses.

Complain as Camec may, more than 60 mining contracts in the DRC are
currently under review, and those related to Boss and Mukondo have always
been the most vulnerable. On Thursday, Camec reacted by attacking the entire
DRC, saying it was "totally confident" that it will "successfully refute any
allegations or attempts made against its licences". Camec is headed by a
haughty Phillipe Edmonds, one-time English cricketer, and Andrew Groves,
foul-mouthed son of a policeman. The fact is that the Rautenbach-Camec
licences have been under investigation for years. The core asset in this
story is Mukondo, possibly the world's richest cobalt deposit, held 40% by
Savannah Mining, 20% by Gecamines and 40%, apparently, by Boss. Last July
Savannah bought its stake in Mukondo from John Bredenkamp, a Zimbabwean
businessman. There was an immediate argument with Rautenbach as operator of
the mine; digging immediately stopped and is yet to resume.

For years there have been reasons to question the beneficial ownership of
the DRC concessions Camec claims it acquired from Rautenbach - the stake in
Mukondo, and concessions C19 (23 000 hectares) (within which Mukondo
Mountain sits, like an island), and C21 (12 000 hectares). As recently as
July 2006 the UN Panel of Experts on the DRC cited Rautenbach as amongst DRC
"investors whose personal and professional integrity is doubtful" and whose
continued involvement as a major shareholder in Camec is an example of "the
consequences of insufficient due diligence procedures", also reminding that
Rautenbach "is wanted by the authorities of South Africa for fraud and
theft". The original ownership of the concessions - C19, C21 and Mukondo -
is clear: they belonged to the DRC parastatal Gecamines until the outbreak
of the 1997-8 civil war.

As part of a deal struck between Zimbabwe president Robert Mugabe and DRC
president Laurent Kabila in November 1998, the named assets were transferred
to a joint venture between Rautenbach's British Virgin Islands-registered
Ridgepointe and Central Mining Group (CMG), a DRC company controlled by
Pierre-Victor Moyo, the-then minister of state in the DRC presidency.
Rautenbach was CEO of Gecamines when the assets were transferred "without
apparent compensation". The UN Panel described Rautenbach's dual role as a
"blatant conflict of interests". The concessions were stripped from
Rautenbach's control in April 2000 after he was fired from Gecamines by
Kabila, allegedly for theft and fraud. The assets were then transferred to
Bredenkamp. In April 2002 Rautenbach made one of a number of comebacks;
Bredenkamp was instructed to hand back C19, C21 and effectively 40% of
Mukondo to Rautenbach, apparently with zero compensation. Wow.

At this stage, the concessions were held by an offshore investment holding
vehicle, BVI-registered Shaford Capital, owned 70% owned by BVI-registered
Mercan Commercial (100% owned by Rautenbach). Shaford held, among other
interests, 80% of Boss, and 90% of DRC-registered Congo Cobalt Corporation
(CoCoCo). The arrangement tied in with a pattern outlined by the UN Panel:
"asset stripping of state mining companies . . . these transactions . . .
controlled through secret contracts and off-shore private companies, amount
to a multi-billion-dollar corporate theft of the country's mineral assets".
Rautenbach was specifically named by the UN Panel as a key figure in the DRC's
"elite network". Camec, new boy on the block, has always appeared determined
to maintain the opacity of offshore shelters. In 2007, Camec completed the
acquisition of 80% of Boss - following a series of transactions - for $51m
and 172m Camec shares. Then again, Camec has also stated that in March 2007
Camec acquired an 80% interest in Boss for cash of a paltry £31 511. Which
one is it?

Elsewhere, again, Camec has stated that it agreed in February 2006 with
Harvest View to acquire 100% of International Metal Factors, for $80m, being
$25m in cash and 172m Camec shares. There's that 172m shares, again. Camec
has also stated that in July 2006, Camec acquired the remaining 25% interest
in did not own in Congo Resources Joint Venture for £13.8m. The interest was
acquired through Camec buying the entire issued share capital of Majestic
Metal Trading for $25.8m in cash. Wow. Then there is CoCoCo, again, which
apparently owns and operates a cobalt processing plant in the town of
Likasi, as well as various other processing plants and facilities located on
the concessions owned by Boss. CoCoCo also "owns various mining equipment,
including extraction equipment, diggers and lorries".

Even today, it's not clear whether Camec acquired part, or all, of CoCoCo.
This week Camec stated that its mining in the DRC "is contracted out" to
CoCoCo, and that Camec is providing mining equipment to CoCoCo "on a
commercial remuneration basis", implying that CoCoCo remains under exterior
control. In the fine print this week, Camec also disclosed purchasing during
its fiscal 2007 year to March 31 "services and assets" of £19.2m from
companies in which "Rautenbach and his family continue to have a controlling
interest". As of March 31 2007 Camec owed several million pounds to Harvest
View, which holds 90.9m shares in Camec. Harvest view is, apparently, a
Rautenbach entity.




CANCELATION OF LICENCE IS ENTIRELY JUSTIFIED.
DONT THINK THEY WOULD MEDDLE WITH STRAIGHT PLAYERS