It’s almost unbelievable to think that Copper 360* shares once traded at R6.45 (in April 2023), after bursting onto the JSE as the hot play on an expected copper price boom. At 53c now, the stock is 87% down over five years. The business has had at least two executive overhauls, which culminated in February with the removal of former Harmony head Graham Briggs after a short spell as CEO. Former COO Gordon Thompson was then named transitional CEO. The big news now for investors is the arrival of former Sibanye founder Neal Froneman as chair. He speaks to the FM.
What did you see in Copper 360 that made you agree to join it?
I think my best skill is being more entrepreneurial, and I enjoy the challenge of start-ups, especially in the critical minerals space. As you know, I was steering Sibanye into that area, and at Sibanye we looked at Copper 360 before it was even Copper 360. We had a Northern Cape copper strategy, but it was too small really for a major mining company.
I know the company has gone through some very difficult times and that it’s a typical example of overpromising and underdelivering. It’s also, in my view, typical of a business that has not done enough of the detailed engineering work required. Starting a company on a pre-feasibility-type level is very dangerous. So I have both the scars and the experience for the position.
What makes you comfortable about the current level of governance? Is that what you have to do — stabilise it and bring in top management?
I’ve done my due diligence about what happened in the past. I don’t believe there was any fraud — it was just poor governance. It’s a really good board; there are lots of skills and a solid management team underneath it. Of course we will probably have to supplement it, but what’s needed now is to go in and understand what exists rather than to go in with preconceived ideas.
What actually was the issue? Briggs told me that Copper 360 had started with the wrong capital structure, for instance. But then he was forced out …
Obviously I don’t want to go into confidential issues, but essentially, funding agreements were not adhered to. When you raise funding, shareholders expect you to use it in the way you said you’re going to. If you don’t apportion it in the right way, it creates fallout.
Given that you’ve invested in a raft of other mining start-ups, will you be putting some of your own cash into Copper 360?
Yes, absolutely. It’s one of the commitments I’ve made. I’m one of those people who are prepared to invest where I’m focused. It’s important for directors to be aligned with investors.
Copper 360 has also missed most of its production guidance over the past three years. What is going to change?
I can assure you that the board and management are well aware of their misses, and you would note that they’ve not provided any guidance [recently]. I would only want to do it when we’re absolutely sure that we have the right level of engineering and detail. When you’ve got a rising commodity price, [start-up] companies tend to rush in, and they’ve got limited capital. Instead of them investing more into moving up the curve from pre-feasibility to feasibility and then to detailed bankable engineering, they tend to think they’ve got it covered.
I’ve made the same mistakes, and I know what it’s like being on that treadmill. You get surprise after surprise, you don’t have enough contingency, you don’t have enough capital, you miss targets, you lose trust. It’s a horrible cycle. You can normally break it only when you bring in new management and start afresh.
The first thing I’ve asked the board to do is have a strategic session with management so we can really understand where we are. There are competent people — Thompson is a very experienced mining engineer whom I’ve worked with in the past. But before I provide public guidance, I want to take the time to do it properly so we can start a cycle of building trust.
I guess you’re not going to say whether Copper 360 will need to raise more capital?
It would be inappropriate for me to express an opinion about that at this stage.
* The writer holds shares in Copper 360
