UPDATE: We received this email this morning from Lonmin’s Tanya Chikanza which is self-explanatory:
We saw the posting of the unfortunate open letter from Adrian Clayton of Northstar Asset Management this morning and we are sorry that that he needed to seek assistance from BizNews to get our attention.
I immediately called Adrian Clayton and Siegmund Thetard this morning, apologised and had a good discussion where we ironed out the issues. Thankfully they are now comfortable that our intention was not to ‘duck and dive’ the questions but rather that it was an oversight which we hope does not happen again.
This incident has not been helpful but we do learn from our mistakes and thankfully our relationship with our shareholder has not been irreparably damaged.
 THE ORIGINAL PIECE AS PUBLISHED APPEARS BELOW:
Shortly after the Marikana tragedy, I attended a hastily arrange Lonmin Press Conference. The executives were as efficient in communication as I am at jukskei. Which shouldn’t be a surprise given the company’s lineage traces back to the late Tiny Rowland whose distaste for the media was matched only by his propensity to bribe corrupt African leaders. Seems little has changed on the communication front under Lonmin’s new Ben Magara regime. Adrian Clayton, ex CIO of PSG and now running asset managers Northstar, wrote us of his “extreme levels of frustration trying to engage with Lonmin Management with no response forthcoming or explanation for their actions.” So he penned this Open Letter in the hope it forces Magara to afford a higher priority to shareholder relations. Clayton is worried Lonmin’s lack of response could be signalling a need to once again raise fresh capital. South Africa’s Deputy President Cyril Ramaphosa must curse the day he agreed to get involved with this evasive lot. – AH
From Adrian Clayton, Northstar Asset Management:
Dear Mr Magara,
In order to manage money professionally, managers are required to act as true custodians of their clients’ capital – a prerequisite for this being an innate level of MORALITY and, equally important, COMPETENCY.
Competent managers rely on research. We strive obsessively for in-depth price discovery – this takes goliath-like efforts involving tens of thousands of hours of hard work by our analysts, who view their reason for existence as building capital for our clients by picking winners and avoiding losers.
A key element in this journey is engaging company management to assess whether they view their  roles as true custodians of shareholder monies and possess the competency and will to deliver economic returns over time. This was precisely our intention when we at Northstar Asset Management made contact with you for the first time on the 21st of February 2014, when an e-mail requesting a meeting was sent to your investor relations executive, Tanya Chikanza. No response was forthcoming from your company.
On the 13th of May 2014, post your results, our analyst once again attempted to make contact with your firm. This was again via e-mail but was subsequently followed up by a phone call and message, again focusing efforts on your investor relations channel, Tanya Chikanza. Again, no response was forthcoming from your company.
We then decided to change tack and arranged a meeting through a well-respected domestic bank who have relations with your firm. This was arranged for the 4th of September 2014 and two of our analysts flew to Johannesburg to meet with you, Mr. Magara, and your Chief Financial Officer, Mr. Simon Scott. The meeting was cancelled at the last moment.
Our intended questions at this meeting revolved around the following important issues:
- Your ramp-up to full production and the cash implications thereof.
- Contingency plans in your business model, particularly around balance sheet management if the environment continues to be testing.
- Covenants.
- Changes in the spot price of your basket and the implications for your Income Statement and Balance Sheet.
- Labour issues in the future.
- Your ore body, costs of mining these and duration of reserves.
- Expected changes at the board – levels of competency.
- Another rights issue.
As you are aware, we then sent a long list of questions on the 8th of September 2014. Once again, no response was forthcoming from your company.
A follow-up mail requesting feedback on previous mails was sent to you on the 17th of September 2014. No response was forthcoming from your company.
It should be very clear to you that our goal is to do what is right for our clients, to truly understand every investment prospect in great detail, Lonmin being precisely such a project. We ask you to kindly do justice to our work by responding to this open letter and, in so doing, explain your lack of response to our mails and the last minute cancellation of the meeting. Fortunately, we have not received similar treatment from other South African mine management teams.
Kind regards,
The Northstar Research Team
