Simmers reviewing First Uranium options

I-Net Bridge | Mon, 08 Feb 2010 13:54

[miningmx.com] --Junior gold producer Simmer & Jack Mines on Monday said its newly configured board was reviewing the company's options with regard to its 37% holding in subsidiary First Uranium.

This follows disclosures by First Uranium last week regarding the change to its production and capital schedule as a result of the withdrawal of an environmental permit to build a tailings storage facility at its Mine Waste Solutions (MWS) project.

"The investment committee is currently considering the various options available to Simmers to protect and optimise the company's investment in First Uranium," Simmers said in a statement.

Simmers' board has also mandated its investment committee, lead by Bernard SwanepoelBernard Swanepoel, to actively work with First Uranium in finding sustainable solutions to its funding and permitting problems.

First Uranium last week warned that its capital position may be "severely compromised" by the South African government's decision to pull an environmental permit for the tailings storage facility, which was designed to accommodate future tailings deposition at MWS.

As a result of the permit's withdrawal, the company said it was delaying future development expenditures, particularly at its MWS tailings recovery operation as part of a company-wide program to conserve capital.

"The announcement of the withdrawal of the environmental authorisation has not only delayed construction of the tailings storage facility, it has also disrupted certain well-advanced corporate financing opportunities, which, along with the slower than expected production build-up at the Ezulwini Mine, would, if alternative financing is not obtained, severely compromise the company's financial position," First Uranium said in a statement last Tuesday.

It said it was now reviewing strategic alternatives and is engaged in discussions with respect to alternative financing opportunities.

In the meantime Simmers, which releases its financial results next week, said production at Buffelsfontein Gold Mines, which currently produces around 92% of the company's gold, is in line with guidance with production at Tau Lekoa exceeding management's expectations.

But it said production at Transvaal Gold Mining Estates was lower than expected due to excessive rainfall in the Mpumalanga region, which impacted on leaching operations.