ENRC shares are a 'no-go' over governance worries

City analysts have warned that the Eurasian Natural Resources Corporation (ENRC) has become a "no-go" for investors worried about corporate governance issues as the Kazakh miner yesterday told the market its boardroom review was "well under way".

The group said the results of a three-month review, announced in June alongside the departure of four non-executive directors, including the City grandee Sir Richard Sykes, would be published in mid-September.

ENRC was also confident the exercise would result in a "properly constituted board, which will encompass the interests of all stakeholders".

However, Collins Stewart analysts said: "Given the recent issues this seems to be a highly optimistic statement and is likely to be sceptically received by investors." The broker also highlighted the fact that, among the big mining companies, ENRC's shares were the second cheapest, behind those issued by the controversial Indian miner Vedanta Resources – a state of affairs that its analysts said was set to persist as the Kazakh group had become a "no-go stock for many investors due to corporate governance issues".

Yesterday, as it posted a 33 per cent increase in underlying earnings before interest tax, depreciation and amortisation, its chief executive Felix Vulis attempted to reassure investors by promising an independent board.

"We are on target and some time in mid-September we will come out with the full review and the full results of the review," he said. "[We are] committed to a full independent board, I can assure you of that."

The issue burst out into the open in June, when Sir Richard Sykes, the company's senior independent director, and non-executive director Ken Olisa were voted out, while two other directors decided not to seek re-election.

In a valedictory letter to the board, Mr Olisa said the company's "chronic failure to meet the governance standards expected of a FTSE 100 company" had been "laid bare" by an independent review – but that no action had been taken.