ASA Resource Group PLC Anonymous allegations, Legal update, Freda Rebecca (5700C)

TIDMASA

RNS Number : 5700C

ASA Resource Group PLC

18 April 2017

Asa Resource Group plc

("Asa Resource", "the Group" or "the Company")

Anonymous allegations & Legal update- Freda Rebecca

Further to the Company's announcement on 4(th) April 2017, the Board has now received and considered the initial report it commissioned into anonymous allegations made in relation to Freda Rebecca Gold Mine (FRGM), Zimbabwe, in which the Group has an 85% interest.

The Board is extremely disappointed to report that there is strong evidence of funds amounting to several million US dollars being transferred from the accounts of FRGM to entities in China, without full value being received by FRGM.

As a result of the findings of the report and the lack of any explanation, the Board has removed Mr. Yat Hoi Ning from the Board and from his post as chief executive. The Board has also removed the Group's finance director, Mr Yim Kwan, from the Board and terminated, without notice, his contract of employment.

The Board has made the following appointments: Mr Toi Muganyi as interim chief executive, Mr Batirai Manhando as an interim executive director and Ms Carla Mackay as interim finance director. Both Mr Muganyi and Mr Manhando have long experience at FRGM and Bindura Nickel Corporation (BNC) and Ms Mackay has over 8 years' experience in dealing with the Group's accounts and administration.

The Directors are satisfied that a number of anonymous allegations and press reports into matters at FRGM are unfounded and, particularly, that there has been no thefts of gold from the gold room at FRGM, nor had there been shipments of gold ore to China.

Ernst & Young, auditors to the Group, who are already progressing their audit for the Group's financial year ended 31 March 2017, will undertake further investigation. It is intended that a full procurement audit will be undertaken as necessary.

The Directors have, and are, informing the proper authorities in all jurisdictions where the Group carries on business of these developments. It is anticipated that senior Zimbabwean directors of ASA, FRGM and BNC will the meet the relevant government ministries and authorities in Harare this week. The financial controller of FRGM was suspended from his duties on 10th April 2017 in light of perceived breaches of FRGM procedures. FRGM is following its own internal disciplinary procedures.

The Company has identified that funds are still to be accounted for by Group subsidiaries managed from Hong Kong. This is a matter that Ernst & Young will be attending to. The cash analysis reveals that there is a pressing need for cash at ASA, FRGM and BNC levels and that the matters now under investigation have prejudiced their normal cash flows. Steps are being taken to bring all cash management under the direct control of Ms Carla Mackay and Jan Lampen (deputy finance director who already has been given a dual role of heading financial controls at BNC and FRGM).

In consequence of the developments, a number of appointments made by Mr Yat Hoi Ning of Chinese managers and department heads are being rapidly reviewed and are likely to change.

The Directors know that this news will come as a shock to many who have placed their trust in Mr. Yat Hoi Ning and Mr. Yim Kwan and they share the consequent disappointment with a feeling that they have been misled.

At an initial meeting with the Workers Council at FRGM last week feedback was constructive and the Directors hope that the workers will see that by these actions that the Directors of ASA mean business and give the workers confidence that their efforts will be properly rewarded. David Murangari, Chairman of ASA, said - "This is a very sad day for all who have been connected with ASA, Mr. Kwan and Mr. Ning. We feel very sorry that we have been misled and are only thankful that the anonymous allegations led to an inquiry as a consequence of which we have identified a lot of what has gone wrong. The executives in whom the directors reposed their trust were misled and so it was necessary for the independent directors to take decisive and rapid action.

Dr Scott Morrison, Senior Independent director of ASA said "Coincidentally repeated enquiries by non-executive directors of the executive directors into matters of finance and corporate governance coincided with the need for an independent inquiry in matters at FRGM. The two only came together in the last few days when the lines of enquiries between FRGM, BNC and ASA (from a prior year transaction) were joined together. Hard decisions have to be made and that applies equally to executive directors as it does to any other group employee".

In relation to the proposed new appointments for executive directorship, Mr Murangari said: "Toi and Bati have many years experience on the ground and under it for BNC and FRGM. I have every confidence in them. Carla has been a bedrock of the group finances since she joined the Group".

On a more positive note Asa Resource can now announce that its exploration permits in relation to Zani Kodo in DRC have been renewed until 2029.

CONTACT

London

Asa Resource Group plc.

One Fleet Place, London EC4M 7W

Ian B Dearing Ll B, Group General Counsel and Company Secretary

Niall Henry, non-Executive Director (Investor Relations)

[e-mail]

Nominated Adviser and Joint Broker

SP Angel Corporate Finance LLP

Prince Frederick House, 35-39 Maddox Street, London W1S 2PP

John Mackay, Jeff Keating, Caroline Rowe

Tel: [phone]

This information is provided by RNS

The company news service from the London Stock Exchange

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April 18, 2017 04:13 ET (08:13 GMT)