[miningmx.com] — A BLACK-owned private investment company is the
latest party to state its interest in gold miner First Uranium, and has made an offer to
acquire a 26% stake in the group.
The offer comes less than a week before First Uranium’s shareholders are due to vote
on the sale of the group’s key assets for a collective $405m, scheduled for
Wednesday. The proceeds of the sale would go towards the settlement of some
$320m in debt, of which $150m would be due end-June.
Minority shareholders have vowed to oppose existing proposals, according to which
AngloGold Ashanti would acquire surface operator Mine Waste Solutions for $335m,
with Gold One International accounting for Ezulwini in a $70m deal.
In an offer presented to First Uranium on Friday, holdings company Kumvest said it
was prepared to buy 26% newly issued shares at C$0.37 each – more than double
the price at which the company has been trading in recent months. In its offer,
Kumvest said it agreed that Mine Waste Solutions had to be sold to settle all debts.
The company would then be able to carry on as a going concern with Ezulwini as a
sole asset.
“We acknowledge that the Corporation will have to sell at least one of its operating
assets in order to prevent a default and potential chaotic liquidation of First Uranium,’
read Kumvest’s offer. “For this reason, Kumvest is supportive of the disposal of MWS
as proposed by the directors.
“Based on the limited amount of information available to it, Kumvest believes that the
remaining assets are viable as a going concern once the sale of MWS goes forward to
settle all immediate financial obligations.’
In an annexure accompanying the Kumvest offer, the Head of Equities of Russia’s
Olma Investments and spokesman for a group of shareholders opposed to the current
deals, Nick Betsky, signed his support for the proposal.
On Ezulwini’s future financing requirements, Kumvest said it would “procure an
injection of a reasonable amount of new capital into the company’ and “can mobilise
additional capital’ should this be required.
Based on Kumvest ownership profile, the proposed deal would also fully address First
Uranium’s BEE requirements.
Among the conditions attached to the offer is the appointment of a new CEO, finance
director and COO. Kumvest would also propose a new chairman and three non-
executive directors. The new management team would have to present a turnaround
plan for the company within 90 days.
Kumvest is headed by Mandla “Bear’ Kumalo, who was raised in exile in the USA and
received his tertiary education there. In South Africa, he had worked for Standard
Corporate and Merchant Bank before establishing various investment advisory firms
and vehicles of his own.
He told Miningmx on Saturday that Kumvest would finance the 26% purchase
from the contributions of private investors. First Uranium would have to issue around
85 million new shares to Kumvest to give Kumalo a 26% stake in the firm, implying
an immediate capital injection of around $31m. Kumalo said Kumvest would also
make an estimated $100m convertible loan available to fund Ezulwini’s capital
requirements.
Kumvest’s proposed management team for Ezulwini includes Waterpan Mining
Consortium’s Chopper van der Bijl, who earlier said he was working on a bid for First
Uranium. Van der Bijl confirmed to Miningmx that Kumvest’s and his proposal
were one and the same.
In a statement issued via the TSX on Friday, First Uranium’s board said it would meet
to consider the offer.
However, the board said it has not been provided any information to determine
whether Kumvest can finance the proposal. Also, the statement read, “Betsky
forwarded an email to FIU in which he states that the shareholder group does not
support Kumvest’s proposal with respect to the sale of MWS.’
In an email to Miningmx, Betsky said these shareholders would be willing to
vote for the sale of MWS “if Kumvest can convince Anglo to pay a premium to what
they [Anglo] are offering’.
“We like the idea of a new management team and board of directors and FIU
operating with Ezulwini with no debt, and fully BEE compliant,’ Betsky said. “We feel
the board should delay the vote by one to two weeks in the best interest of
shareholders. This two week delay would not materially change anything.’
Said Kumalo: “We will prove our financial credentials once First Uranium’s board is
prepared to engage with us.’
