FRANK TIMIS is no stranger to controversy. Only three years ago he sparked City outrage over the near-collapse of Regal Petroleum. Now the Romanian, who has a number of drug offences behind him, is on the cusp of a legal battle in Sierra Leone over a $45m (£26m) cash and shares deal he announced to the stock exchange last week.
A UK-registered mining minnow fears Timis may have sold exploration
rights that did not belong to African Minerals, the AIM-listed miner he
controls.
Late last week London Mining filed a writ in a court in Sierra Leone
seeking an injunction that would force Timis, 44, to move his workforce
from two stretches of disputed land.
The iron ore thought to be lying in the five square kilometres of
jungle is estimated to be worth at least $2 billion. And that’s just
what mining analysts describe as the “low-hanging fruit”.
The deposits in the Marampa mines supplied the allied forces with much
of their iron-ore requirements during the second world war and were
operational until the 1970s.
Timis has struck an outline agreement with the Australian miner Cape
Lambert that will see him swap 30% of his company’s interest in the
Marampa area for a 10% stake in Cape Lambert.
London Mining fears the deal with the Australian company includes
rights to the disputed territory. “London Mining invested in Sierra
Leone three years ago as it was a country that had made a clear
commitment to building long-term economic growth with overseas
companies,” said Graeme Hossie at London Mining. “We have every
confidence that this dispute can be resolved through the courts.”
Just three months ago, Timis took Bob Geldof, the rock singer turned
anti-poverty campaigner, to visit his operations in the west African
state. Geldof was flown in Timis’s private jet to visit the project,
which is linked to the redevelopment of a 75-kilometre railway and port.
“If Frank is going to build a modern railway and with the port now
functioning then it should be a matter of urgency to connect up with
the people and agricultural exports,” Geldof said. “If it’s a deal of
mutuality, I’m there.”
Timis is a big fish in Sierra Leone. African Minerals used to be the Sierra Leone Diamond Company.
It owns mineral exploration rights to 57% of the country’s land mass.
Timis bought a 30% stake in the company in 2005 through a
Bermuda-registered vehicle.
London Mining has assets all over the world and recently raised $800m
in cash through the sale of its Brazilian business to Arcelor Mittal.
It was enticed to Sierra Leone by an investment conference held by
Britain’s Department for International Development (DFID) in 2005,
which promised that the country was stable and would welcome foreign
investment.
It has told the Sierra Leone government that it would put up the cash
needed to develop the railway line so it can get its operations under
way. A government green light, however, has not been given.
Since Geldof’s visit, Sierra Leone has been pitched into a political
scandal. Last month the president suspended his transport minister in
connection with a 700 kg seizure of cocaine at the country’s
international airport. The minister’s brother, who is also the national
football team coach, had already been arrested in connection with the
seizure.
Contradictory messages from government departments lie at the heart of the new dispute.
Timis was granted rights to explore for minerals in the area, but
London Mining alleges that his permit warned he had to steer clear of
the areas they were working. The trouble is that the two sides have a
different interpretation of where those boundaries lie.
It is alleged that as recently as January this year, maps distributed
by the Sierra Leone mining ministry backed up London’s claims to the
disputed territory. That followed a formal letter sent in May 2007
confirming the co-ordinates of the site, London Mining claims.
Then, about two months ago, the official version of events changed. The
Sierra Leone mineral resources department has now adopted the same
interpretation as African Minerals. According to local reports, Timis
took the new mines minister with him on a trip to Romania.
The deal between Timis and Cape already faces obstacles. Cape’s biggest
shareholder is Evraz, the steel giant controlled by Roman Abramovich,
the Russian billionaire who owns Chelsea football club. Evraz sent a
letter to Cape Lambert’s chairman Tony Sage hours before the deal was
announced warning that it was opposed to the company getting involved
in any corporate deals without its say-so.
The legal wrangle could throw a further spanner in the works for Timis.
A spokesman for African Minerals said the company did not want to
comment on anything related to the Sierra Leone affair.
