Geovic Faces Financial Pinch, as Africa Project Unravels
Geovic Mining Corp., the Colorado company that launched plans for a rare-earth mine at Wind Mountain, faces dire financial straits. The company’s signature project – a decade-long effort to develop a cobalt mine in Cameroon, Africa – has run aground, amidst allegations that Cameroon officials embezzled public funds tagged for the project.
It is unclear whether Geovic’s financial troubles will have any bearing on the future of a proposed rare-earth mine at Wind Mountain. Earlier this year, Geovic transferred a 90-percent interest in the project to the Wyoming-based JS Group, and the JS Group has taken the lead on the rare-earth project.
Geovic Mining was created to pursue the cobalt mine in Cameroon. The company secured the mining concession in 2003, but no mine has been developed. Securities filings indicate that the company is now having trouble meeting payroll expenses.
Cameroonian media has reported on troubles with the proposed cobalt mine for years. Now, a former employee of the International Monetary Fund, which allocated funding for the project, has filed suit against the organization. Eugène Nyambal, a Cameroonian economist, alleges that he was fired from the IMF after blowing the whistle on corruption in the mining project. Nyambal says that current and former Cameroon government officials and their associates embezzled millions in IMF funding intended for the project.
Nyambal’s suit against the IMF, which is being heard by the federal appeals court in Washington, D.C., is focused not on the corruption allegations – but on Nyambal’s claim that he was manhandled by private security guards at an IMF employee credit union after his firing. 100Reporters, a nonprofit news organization focused on corruption issues, reported on the court case in D.C. – and, more broadly, on Nyambal’s corruption allegations – in a Sept. 5 story (100r.org/2014/09/i-m-f-whistleblower-battle-down-to-a-scuffle-in-public/).
In 2008, the Cameroon government was approved to use $60 million in IMF-administered public funds to invest in Geovic’s proposed cobalt mine. GeoCam, a local subsidiary, was created to manage the funding – and it was to use the money to repay Geovic for mine operating expenses. Nyambal alleges that GeoCam was placed under the control of Geovic Inc., a Cayman Islands-based concern, and that the IMF funding was transferred to the Cayman accounts. 100Reporters said that GeoCam was owned by “unidentified local shareholders, whom the government has refused to identify but who are reportedly tied to former government leaders.”
In July of last year, Geovic Mining announced it was selling its stake in the cobalt project to Jiangxi Rare Metals, a Chinese mining company, but that deal has apparently fallen through. Geovic now faces the prospect of bankruptcy, 100Reporters said.
Geovic began exploratory drilling at Wind Mountain, in the Cornudas Range northwest of Dell City, in the summer of 2011. The company said that a mineral called eudialyte, found in a ring at the base of the 7,200-foot peak, contains high concentrations of rare earth elements, the heavy metals used in a range of contemporary technologies, from laptops and smartphones to laser-guided munitions. Plans for a second, more extensive round of exploratory drilling have been on hold for more than a year.