Potential partner for Emily manganese mine remains mysterious
As Crow Wing Power and its involvement with the Emily manganese deposit continues to progress, the public co-op is courting a potential partner in the mine.
Little is known of MIAS, short for Mineral Investments and Services Group, its CEO Erasmus "Hank" Venter and whether the outfit has the expertise and financial wherewithal to bankroll a project that could take tens of millions to get off the ground.
The Crow Wing Power Board of Directors' monthly meeting is 9:30 a.m., Thursday, Jan. 17. Sources communicated to the Dispatch that this gathering could be a key step in negotiations with the MIAS Group. While the agenda isn't known, spokeswoman Char Kinzer said the first item of business would be to determine whether media would be allowed to observe.
The MIAS Group is being shopped as a potential partner to develop the Emily manganese deposit, which contains 4 to 10 billion pounds of high-grade manganese and has the potential to garner its stakeholders billions of dollars.
According to the MIAS Group website—which is currently inactive, as of Wednesday evening—MIAS USA Inc. is based in Alpharetta, Ga., and established itself in Nevada in 1995, whereupon it dealt with "mining prospects" in Wyoming, Colorado and Montana. Venter himself is originally of South Africa and has touted his experience in mining operations there, according to the website.
The Dispatch contacted mining associations in these states, as well as third-party sources in South Africa and elsewhere who declined to be identified. With the exception of the Montana Mining Association—which did not return calls by deadline—none of them said they were aware of the MIAS Group, nor did they have any familiarity with the outfit.
The MIAS Group is registered as a business entity with state offices in Georgia and Nevada (starting in 1995, then revoked in 2008), as well as Wyoming, but not in Colorado and Montana.
Manganese—while historically used to toughen steel—is crucial in the manufacturing of products from medical implements and plow equipment, to burgeoning markets for batteries and electric cars.
Crow Wing Power signed a joint venture with deposit property owner Steve Carlton and his associates—the Carlton Group—in 2008. So far, the company has spent $23 million on the mine's development. Aside from a few drill tests and the construction of surface facilities, there hasn't been any active mining at the site. Attempts to extract the manganese have been unsuccessful.
Crow Wing Power CEO Bruce Kraemer is also the CEO of Hunt Enterprises, a for-profit subsidiary with a 5 percent royalty stake in the manganese deposit, and Cooperative Mineral Resources, a for-profit subsidiary managing the deposit.
Kraemer has told the Dispatch he does not see a conflict of interest in being the CEO of Crow Wing Power, Cooperative Mineral Resources and Hunt Enterprises simultaneously. He denied that retaining a 5 percent royalty stake could influence his decisions as the negotiator for a public co-op with roughly 38,000 members.
Kraemer declined to identify potential third-party investors—iterating, multiple times along with Crow Wing Power Attorney Paul Johnson, that it is standard business practice to withhold particulars, especially in terms of prospective partners during negotiations.
"There's a few different potential investors, but before they can even consider an offer they have due diligence to do, they have more testing to do," Kraemer said during a sit-down Dec. 13 at Crow Wing Power offices north of Brainerd, just off Highway 371. "They have to do their due diligence, that's basically it."
During a follow-up conference call Jan. 11, when specifically asked about the MIAS Group, or other potential partners, Johnson said those details would be withheld, citing standard business practice.
However, Crow Wing Power board member Bryan McCulloch expressed misgivings regarding the MIAS Group, citing a lack of information made available to members by Kraemer and other executives involved in third-party negotiations.
"I got one sheet on Hank Venter," McCulloch said. "All he's got is a little experience in—I think—a Ukrainian mine, maybe one year and no other experience. He's an accountant."
McCulloch said Kraemer and the executives of Crow Wing Power were not forthright to board members regarding their negotiations for the Emily deposit. Speaking as a business owner and a former 20-year board member for the Emily Cooperative Telephone Co., he said there was "secrecy from the start" in terms of potential business partners for the mine.
Beyond stating how many groups they were in discussions with, Kraemer didn't reveal who these groups were for board members to vet, McCulloch added—to say nothing of the negotiations with the MIAS Group, which he said were disclosed in a perplexing manner to board members.
"Only two or three years ago, (Venter) didn't pan out, and then, in the fall of 2018, Char and Bruce came to us and said, 'We've got some new investors,'" McCulloch said. "Hank Venter is one of them. I said 'What are you talking about? We were dealing with him a couple years ago and he didn't turn out to have any money or couldn't raise any funds.'"
McCulloch said Kraemer assured him and members of the board that Venter was the "right candidate" and "Hank's the viable candidate now."
Carlton, as the main representative for the Carlton Group, has to sign off on any joint deals with Crow Wing Power and a prospective third-party. When Kraemer presented the MIAS Group as a potential partner, he said he couldn't find much of anything on the MIAS Group in the vetting process beyond a few photos of Venter posing near rock piles and mine-related equipment.
In short, Carlton said—from the perspective of a potential business partner in this joint venture—Kraemer has not provided, nor has the Carlton Group's investigation into the issue produced any evidence of the MIAS Group's wherewithal to see the project through.
"I can't verify that they have money. I can't verify their previous businesses. I can't find any financial data on the companies that Hank Venter has run or developed," Carlton told the Dispatch, noting that it would take roughly $5 million alone to get the mine through the initial permitting process. "So I have to say that they don't to appear significant enough for us to sign off on them being involved in this project."
It should be noted that as owners of a 38.75 percent stake in the deposit, Carlton and his associates stand to make hundreds of millions if mine operations become profitable. Currently, communication between the Carlton Group and Crow Wing Power executives are nearly non-existent after a falling out around 2011, per both sides.
McCulloch said that eight of the nine members of the Crow Wing County Board of Directors signed non-disclosure agreements at the behest of Kraemer when the MIAS Group was being discussed. Johnson noted a "third-party investor" wanted the board to sign these non-disclosure agreements in order to facilitate negotiations.
Of these members, four have not responded to requests for comment. Three—Board President Bob Kangas, as well as members Dwight Thiesse and Gordon Martin—cited the non-disclosure agreements when they declined to speak with the Dispatch. Board member Paul Koering cited it stipulated limitations during discussions with the Dispatch. McCulloch said he is the only member to not sign a non-disclosure agreement.
The Crow Wing Power board agreed to the joint manganese venture in November 2008. The board is made up of members there before that decision was made and those who joined years later. McCulloch was first elected in 2012. Fellow board members Ric Larson (2017), Koering (2016), LuAnn Nelson (2016) and Doris Mezzenga (2016) also were elected after the 2008 decision. Kangas and Martin have been on the board since the '90s, while Thiesse and member Gert Roggenkamp were elected in 2005 and 2004, respectively.