Minorities in U-turn on First Uranium deals

[miningmx.com] — THE sale of gold producer First Uranium’s key assets
is close to a done deal after a block of minority shareholders ran out of options in a
battle to stop the proposed transactions.

Nick Betsky, Head of Equities at Russia’s Olma Investments who for the past three
months acted as a spokesman for a group holding around 18% of First Uranium’s
issued shares, said in an email sent to the company’s board on Monday that the
group would now vote in favour of the deal.

Apart from Olma, the grouping includes Stratton Enterprises, also from Russia, as
well as Patto Corporate Services. Another member of the group, Sprott Asset
Management, has not yet indicated whether it has changed its stance.

Voting on the matter is to be finalised on Wednesday.

“In light of First Uranium Corporation’s June 6, 2012 announcement of the increased
distribution to shareholders to the amount of $75.9m, or C$0.33 per share, we plan
to support the proposed transactions,’ read Betsky’s email.

“We still feel very strongly that the board of directors, RBC [advisors] and
management have not acted in the best interest of shareholders, but due to the time
constraints, at this point we see no other choice but to vote YES.’

The sale of First Uranium’s Ezulwini and Mine Waste Solutions for a collective
$405m would go towards the settlement of debt to the value of around $320m, of
which a payment of $150m is due end-June. Shareholders would’ve initially received
no more than C$0.11 per share of the leftover proceeds, but in a statement issued
last week the group said currency fluctuations could lift distributions to as high as
C$0.33 per share.

The company listed on the TSX in 2007 at C$7/share and moved on to hit a high of
C$13. It did its last fundraising in March 2011 at C$1.

Said Betsky: “As you [board of directors] are aware from the April 30 letter from our
legal counsel, we have commenced preparation for the legal proceedings against the
board.

“Should the distribution to the shareholders indeed amount to no less than C$0.33,
we agree to discontinue legal actions.’

First Uranium also said it would not proceed with an offer received from Kumvest on
Friday. Kumvest offered around C$30m for a 26% stake in the group with Ezulwini
as the sole asset, and suggested that the sale of Mine Waste Solutions should be
used to clear the company’s debt.