Says the share price has lost 85% of its value since June 2023 through what it believes is a campaign of market abuse. From Moneyweb.
Mantengu Mining has issued a public warning that it believes its shares have been manipulated downwards over a period of more than seven months in a calculated campaign to devalue the company and disrupt its growth plans.
The shares traded above 200c in June 2023, before commencing a sustained drop to 42c, where it traded last week.
Read: No getting away with manipulating share prices
Ironically, the shares bounced to 55c when the public warning was issued, and surged over 23% in trade on Monday.
Mantengu has “reason to believe that a certain group of individuals have been involved in the manipulation of the company’s share price and consequently, has reported the matter to the JSE and the Financial Sector Conduct Authority (FSCA) for investigation,” says the statement.
CEO Mike Miller says the company alerted the JSE to its suspicions. The JSE responded that it was premature to issue a Sens notice. The company decided in the interests of transparency to issue a public warning anyway.
Miller would not be drawn on the identity of the suspects involved, other than to say the information is in the hands of the JSE and FSCA.
Miller says the FSCA has found a prima facie case for further investigation.
“As to the reasons why these people would want to manipulate our share price down, our speculation is that they want to undermine our growth strategy,” Miller tells Moneyweb.
Mantengu’s sole operational asset is Langpan, a chrome and platinum group metal (PGM) plant in Limpopo.
Mining finance ‘disruptor’
The mining investment firm reverse-listed onto the JSE by way of a R15 million rights offer in November 2022, followed by a roughly 10:1 share consolidation in March 2023.
The first of two proposed chrome processing plants was commissioned in May 2023, with a second plant due to come on stream in April.
The company was valued by the JSE at R857 million at the time of the reverse listing, but its market cap has since fallen below R80 million.
This is despite a R200 million injection of assets into Langpan in 2023.
The shares now trade at 55c, exactly a tenth of its 550c net asset value – making it an absolute steal should the alleged conspirators be planning a takeover. This would be difficult, but not impossible, given a free float of about 50% in the shares.
The company secured a R500 million shares and warrants-for-cash facility from GEM Global Yield, according to a Sens announcement in January 2024.
Miller says this gives the company access to capital to pursue its next phase of growth.
Mantengu set out to disrupt traditional mining finance, which can take years to complete due diligence and other preliminary investment steps.
“We are able to act much quicker than other mining investment groups because of the way we have structured our balance sheet and our operations,” says Miller.
Suspicious trades
He adds that suspicious trades were first brought to the company’s attention in June 2023, but it lacked sufficient visibility into the share register to determine the extent of the irregular trades.
According to the Mantengu announcement: “The board has identified multiple trading anomalies arising from the Strate BND (beneficiary download) reports characterised by transactions executed at levels resulting in losses, defying logical financial rationale and logic.
“Notably, the costs associated with brokerage and administrative fees for many of these trades significantly surpass the sale proceeds, rendering them economically unjustifiable,” it adds.
“Such patterns suggest the trades may not have been carried out for profit, but rather for the purpose of manipulating market prices.”
Read: ConvergeNet share manipulation case settled nearly 10 years later
Some of the trading anomalies observed included a single share changing hands at the end of a trading day well below the quoted market price. For that to happen, there had to be a willing buyer and a willing seller trading below the market price for the likely purpose of signalling share price weakness to the market.
Another anomaly included share tranches changing hands at prices so outside the market range that they made no economic sense – particularly once the costs of trading are factored in.
“Since having been made aware of the collaboration, the board has noted that the frequency and pattern of the trading anomalies has continued, and pricing has continued to artificially erode the company’s share price,” says the company.
Mantengu says the JSE declined to release a notification on its Sens platform “and advised that the parties must be given time to investigate and make a finding”.
The JSE’s stance on this matter places Mantengu and its stakeholders in a prejudicial position, says the statement.
“After engaging with its JSE advisors, legal team, and auditors, Mantengu took the decision to bypass the Sens service to ensure that it makes its stakeholders aware of its concern on the most open platform.
“The board is fully committed and adheres to the highest levels of compliance and governance and will take all necessary steps to protect the integrity of the company and undertakes to keep shareholders advised of any significant developments emanating from the investigations presently being conducted.”
Miller says Mantengu’s board took the view that any delay in making this announcement would result in the company and its stakeholders being put into a significantly prejudicial position.
Moneyweb reached out to the JSE for comment but had not received a reply by the time of publication.
