Bheki Mpofu
26 November 2009
Johannesburg — JUNIOR miner Central Rand Gold (CRG) said yesterday the Financial Services Board (FSB) had rejected a complaint by its 26% empowerment partner, Puno Gold Investments, that CRG had issued false information to its investors.
CRG said it had been informed of the investigation by the FSB in June, when the complaint was lodged.
The FSB's dismissal of Puno's complaint comes after CRG earlier this month won a court battle with the empowerment company when the South Gauteng High Court threw out Puno's original urgent interdict application to stop some of CRG's operations in Johannesburg.
This latest development is likely to worsen the bad relations between the two partners, which has seen Puno file two litigation cases against CRG this year.
CRG chief financial officer Patrick Malaza said the FSB complaint arose from a claim that the company was underreporting its gold resources, which he denied.
Puno had alleged that CRG was misleading investors by telling them it was doing trial mining, when in fact it was involved in full-scale commercial mining.
The gold miner faces a further legal challenge from Puno Gold, which has applied for leave to appeal against the court ruling. CRG is reviewing the papers with a view to opposing the application.
Malaza said the two partners would come before independent arbitrators in the first quarter of next year in a bid to resolve their differences. He warned that if this failed, it could lead to the break-up of the relationship.
Malaza said CRG was getting impatient with Puno's actions. If no solution was found to mend their relationship, there might be a "parting of ways".
The relationship between CRG and Puno, which Malaza said had been deteriorating for more than a year, was now keeping management's "eye off the ball" on running the company.
"We feel vindicated by the FSB decision and the court ruling, and we feel Puno is now wasting our management's time by its actions. We are going to challenge their latest appeal of the court ruling because we believe they have no case," he said.
Puno CEO Mandla Mtshweni said yesterday Puno would approach the FSB to find out what informed its decision .
"We are disappointed ... but we feel it was a necessary course of action for us to take. The story of the conflict with CRG is much bigger than the complaint we laid with the FSB," he said.
Earlier this year, CRG's CEO, Johan du Toit, said the company was negotiating with a new broad- based black empowerment consortium after the failure of the arbitration between CRG and Puno over differences in interpretation of their shareholders' agreement.
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