Oakbay Resources and Energy, which is owned by the controversial Gupta family, on Monday lost its JSE sponsor, River Group, after being given notice of the termination of their appointment as sponsor.
This is at least the second time this has happened, with the company struggling to get another sponsor after the last one, Sasfin Capital, pulled out.
The reason for River Group’s termination of their services with Oakbay was due to its revised assessment of association risk surrounding the company and its shareholders.
“Oakbay Resources is in the process of identifying and appointing a new sponsor. The effective date of River Group’s termination shall not be earlier than 31 July 2017 and shareholders will be advised in due course as to developments in this regard,” Oakbay said.
The Gupta family businesses have suffered a series of blows, including the loss of senior staff and banking facilities, amid allegations of political meddling and state capture.
All South African big banks, including Absa, Nedbank, FNB, and Standard Bank, have severed ties with the family’s business due to the perceived political risks of being associated with the Guptas.
Auditors KPMG and former sponsor Sasfin Capital resigned as Oakbay’s respective service providers this year over concerns about the family’s business activities.
Oakbay Resources is a JSE-listed miner of energy-related resources, with a priority focus on uranium. The company mines gold deposits as a by-product and also offers outsourced contracting to the mining industry.
Oakbay is expected to report a loss of nearly R1 billion because of an R880 million impairment recorded against its Shiva Uranium mine due to low uranium prices and reduced gold output.
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