In the end of the year 2011, Fortis Mining Limited, a publicly listed mineral exploration company based in Melbourne, Australia, and focused on potash, gold, nickel, and copper deposits, was banned from raising US$35 mln to fund the purchase of two potash projects in Kazakhstan. The capital raising is now on ice until January 13, after the Australian Securities and Investments Commission issued an interim stop order.
In its November prospectus, Fortis warned of “significant doubt about the company’s ability to continue as a going concern” if the Kazakhstan projects did not go ahead. It said if they didn’t, there was no guarantee it would be able to recover US$30 million already paid to their overseas owners.
While Fortis is buying the projects by acquiring shares in a Hong Kong company, the prospectus shows that payments in money and shares ultimately go to Panama and British Virgin Islands. First, Fortis is purchasing HK-registered company Ji’an Resources Investment from its owners, British Virgin Islands-registered company Mainstar Investment, which holds 75 per cent, and another BVI company, United Delight Holdings, which holds 25 per cent. Mainstar is to receive $US1 million and up to 40 million Fortis shares while United Delight, owned by Ji’an director Ya Chen, is to receive up to 15 million shares. Ji’an is, in turn, buying Panamanian-registered Wiyot from its owners for up to US$215 million in cash and scrip. It has already given them a down payment of $US30 million of Fortis’ money.
The prospectus was updated in November to reflect upheaval on the Fortis board. It is believed ASIC wanted the prospectus to include more information about new board members. However, it seems the company was unable to provide updated information before Christmas.