WILLIE McLucas, the entrepreneurial mining investor who dreamed of creating a ''mini-RTZ'', yesterday paid the price for his ill-fated investment in Monktonhall Colliery.
Mr McLucas was said to have resigned as chief executive of Waverley Mining Finance, the group he has built up over the past 15 years.
The official statement offered no explanation, prompting rumours that Mr McLucas, 42, had suffered a health relapse following the heart attack and triple heart by-pass operation he underwent in January while on holiday in Hawaii.
Neither the chairman, Anthony Johnston, nor part-time finance director Peter Lawwell, who will jointly take over responsibility for the company ''for the time being,'' were available for comment yesterday. The board was said to be ''reviewing its operations with a view to enhancing shareholder value''.
But in fact Mr McLucas was deposed by institutional investors, led by Equitable Life which has 20% of Waverley and Phillips & Drew Fund Managers (PDFM) which has 23% and which is known for taking big positions in smaller companies but expecting them to perform.
Pressure had been building since the shock announcement five weeks ago that Monktonhall Colliery in East Lothian, where Waverley had its only 100% interest and had sunk #23m, was to call in the liquidator after flooding made it impossible to resume commercial production.
Mr McLucas was devastated, saying the colliery was about to move into profit for the first time in February when the flooding occurred.
But shareholders were equally unhappy, seeing a venture which had forced Waverley to reclassify itself as a trading rather than an investment company swallow up #23m of equity and loans, leading to cumulative losses for the group of #10.1m to the end of 1996.
Mr McLucas's supporters were stunned by the development. ''Without Willie, where does the company go?'' said one adviser. ''All the other investments are doing pretty well.'' The share price dropped 1p to 34p yesterday.
Mr McLucas said yesterday: ''I am going sailing for the afternoon. Then I need to get back on the job and make some money. I am a pragmatic sort of fellow.''
When pressed on his shareholders' attitude to Monktonhall, he said: ''When you do things right nobody wants to know. When you get them wrong somebody has to carry the can.''
Neither PDFM nor Equitable Life were prepared to return the Herald's calls yesterday, but the moves appear to have been made over the past week. Waverley's board said yesterday it would honour Mr McLucas's one-year service contract. Although his salary is around #100,000, the Herald understands that the severance pay-off is worth #300,000 or more.
Only eight days ago, Mr McLucas told the Herald he would like the group to invest in Canadian mining shares, which crashed following the Bre-X gold mining scandal which came to light earlier this month. Ironically, Mr McLucas originally had control of the Busang mine, thought to contain #43bn of gold, but sold it in 1993 for #50,000, making him one of the few people to make any money out of a venture which lost investors fortunes.
He has also steered Waverley Mining Finance into a range of successful strategic investments, including a 38% stake in Perseverance Corporation, an Australian group which this year is to increase its gold production from 40,000 to 90,000 ounces a year, an 11% interest in Kingstream Resources now developing the biggest iron ore and steel project in Australia, and a 19% holding in Diadem, a Canadian resources group which has added significant value to Waverley in the past two years.
Mr McLucas has agreed to continue as chairman of Perseverance Corporation and also of Montague Gold of Australia, which has rights to mine iron ore in Alaska and in which Waverley has a 49% stake.
Mr McLucas built his reputation as a mining fund manager, founding the Waverley Asset Management group in the 1980s, and floating Waverley Mining Finance in 1988 as an investment company.
It retained investors' confidence sufficiently to hold two share issues and raise #21m in 1994-95, to buy Monktonhall Colliery and take a 22% stake in Mining Scotland, the group which took over most of the former British Coal interests in Scotland.
But for international gold-digger Mr McLucas, it was Scotland where the Midas touch deserted him. He helped save the worker-owned Monktonhall colliery in 1994, when he brokered a #7m refinancing package, and in November 1995 he bought the pit over by offerring the 200 miners 10,000 Ordinary shares in Waverley, not redeemable for three years, but then worth #1.
He promised a doubling of production, 80 new jobs and a 16-year life for the colliery. The reclassification of the company, however, meant a reduction in its net asset value from #39m to #28m.
Meanwhile, Waverley's other Scottish coal investment in Mining Scotland has been blighted by the uncertainty over the 32.5% stake held by Coal Investments, now in receivership.
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