How experts foresaw figures bandied by miner were exaggerated

Even before Mining Cabinet Secretary Najib Balala announced that he had cancelled the mining licence issued to Cortec Kenya Ltd- the company associated with exploration of rare earth in Mrima Hills of Kwale, -experts were warning that the large numbers being bandied about by the company were exaggerated.

In a press statement released last month by the managing director of Cortec Kenya, Mr Anderson. The company claimed lab results had established a potential grand value of $100 billion.

Pacific Wildcat Resources Corporation, a company listed on the Toronto Stock Exchange, owns 100 per cent of two UK-based companies, Sterling Ltd and Cortec Pty, which in turn owns 70 per cent of Cortec-Kenya.

Within mining circles, the big announcement was greeted with scepticism.

In the first place, the regulatory filings at the Toronto Stock Exchange (TSX) revealed that the firm had not raised much money to enable it do serious work at Mrima Hills.

Cash flow statements filed at the bourse showed clearly that the company had not committed large resources to actual drilling to determine commercial viability.

Although the statistics showed that Pacific Wildcat Resources Ltd had raised around $6 million on the TSX, the filings also revealed that part of the money had be expended on purchasing shares of the local subsidiary, Cortec-Kenya, from the two UK companies, Sterling and Cortec Pty.

Then there was the issue of what miners refer to as metallurgical extractability of minerals.

Experts warned that proof of commercial extractability for the minerals would take much longer.

Even though the company had recently conducted laboratory tests in Perth, Australia, those tests had not proved metallurgical extractability beyond doubt. This is according to what the company had itself announced in the TSX.

In view of the fact that tests were in the preliminary stages and that commercial extractability was yet to be proven, was it right for Cortec-Kenya to raise public expectations by touting the billions of dollars to be earned from Mirima Hills long before metallurgical validation and proof of what is commercially extractable had been established?

Clearly, the claims as they appeared in local press were meant to prop the price of the shares of the company on TSX and therefore increase opportunities for raising capital abroad.

That was the point Mr Balala made at his press conference yesterday when he described Cortec-Kenya as speculators.

But in Kenya the exaggerated numbers bandied about by Cortec had major implications. In the context of devolution politics, the promise of billions of dollars risked stirring up parochial nationalism.

Mr Kisero is Nation Media’s managing editor for business and economic affairs