London-listed Rockfire to buy Dubai-based gold refinery Emirates Gold DMCC

One of Dubai’s biggest gold refineries, suspended in July over concerns that its owners had ties to alleged money launderers, is being acquired by London-listed mining explorer.

Rockfire Resources Plc is buying Dubai-based Emirates Gold DMCC in a reverse takeover under London’s Alternative Investment Market rules, it said in a statement Friday.

Rockfire, valued at less than £7 million ($8.7 million) before trading was temporarily suspended on AIM, will pay a total of $20 million.

The London-listed company said the deal is conditional on Emirates Gold being restored to the United Arab Emirates’s Good Delivery List.

The UAE’s suspension of the refinery’s accreditation has prevented it from delivering bullion into the Dubai market, according to Rockfire.

The owner of the refinery, Paloma Precious Metals DMCC, announced it bought 21.7 percent of Rockfire in June. As part of the proposed transaction, Rockfire will seek to raise £14.7 million through a share subscription.

The UAE created its Good Delivery list as a standard for top precious metals firms. To maintain that accreditation, refiners must undergo annual audits to ensure they’re complying with anti-money laundering and responsible sourcing laws.

The clean-up of the gold sector is part of the UAE’s bid to rehabilitate its financial reputation, after being added to a watch-list by a money laundering watchdog last year.

The Paris-based Financial Action Taskforce named the UAE’s gold industry as a cause for concern before adding the country to its “gray list.”

Two of the ultimate beneficial owners of Emirates Gold are relatives of Zimbabwean businessmen Simon Rudland and Howard Baker, Bloomberg reported in July.

A documentary by Al Jazeera earlier this year alleged that the two men were involved in money laundering through the UAE’s gold sector. It didn’t name any specific UAE refiner in connection with them.

In response to the Al Jazeera documentary, Rudland denied involvement in money laundering. Baker didn’t respond to the channel when asked for comment.

In a separate statement, Emirates Gold said the company would “undergo a comprehensive change of its strategic direction.” It also announced it had appointed Daniele Provenzale, a former UBS Group AG and Credit Suisse Group AG bullion banker, as its new chief executive officer.