Bellzone Mining – Bell Ends?

Sometimes you do wonder about some of the folks running AIM listed companies. Is there some sort of secret sweepstake CEO’s hold each year to see who can act like the biggest knob with a press release that sends investors the wrong way. If so, AIM listed Bellzone Mining (LSE: BZM) put in a strong late run with its announcement of 27th December in which it boasted of its first shipment of iron ore from Guinea. It stated that it was “delighted to announce that the first shipment of iron ore from the 50:50 Forecariah joint venture operation in the Republic of Guinea, West Africa was despatched on 26 December 2012. The Company will issue a more detailed statement on January 3, 2013.” And today? Er……

Well shareholders were looking forward to how a 150,000 tonne vessel was sailing full laden with iron ore from bongo bongo land to wherever. But it appears not. There were “trans-shipment issues” which means problems getting ore onto a boat and so rather than loading a 150,000 deadweight (DWT) Cape Sized vessel, a smaller 65,000 DWT Panamex sized vessel was filled instead. Ooops. For the next six months Bellzone will have to charter smaller vessels while it fixes the “transhipment issues”. That means lower volumes and higher costs.

The operation will still generate cash. In the greater scheme of my DCF valuation this might just share a bit of a penny off my numbers so this stock is still easily worth 25p plus – you can see my detailed calculations here. It is not a big financial or valuation issue.

But it does make you question the management and how they interact with investors. Surely on December 27th they had some idea of the issues and the effect? This sort of behaviour does not inspire confidence. The shares are still a buy ( such was the margin of error in the investment case anyway but the company has done itself no favours.

 Tom Winnifrith writes for 10 UK and US financial and investment websites. To get alerts on all of his articles both financial and political follow him on twitter @tomWinnifrith.

All of his free content is aggregated on his own blog www.TomWinnifrith.com

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