[miningmx.com] — FIRST Uranium’s shareholders would have to accept a
smaller than previously announced payout should the sale of the group’s key assets
go ahead, as money originally earmarked for distribution would now be used to settle
a $10m loan.
Reporting production figures for the three months to end-March on Thursday, First
Uranium said its cash reserves had shrunk to $6.7m ($10m end-December) following
another loss-making quarter by the group.
Expecting its cash holdings to be inadequate until its proposed asset-sale deals with
Gold One International and AngloGold Ashanti have been concluded, First Uranium
has accessed $5m of a $10m loan facility granted to it by Gold One.
The facility formed part of the transaction whereby Gold One would buy Ezulwini gold
and uranium mine from First Uranium for $70m. AngloGold would acquire Mine Waste
Solutions (MWS), First Uranium’s surface operations, for $335m.
“The company has accessed the $5m of the Gold One loan and expects that it will
have to draw on the remaining $5m to sustain operations,’ read the production
statement.
“As the Gold One loan must be repaid at the closing of the … transaction, the
repayment of the loan will reduce the pro forma proceeds at closing by $10m.’
The company warned shareholders that distributions might be reduced even further:
“In addition, under the terms of the transactions, the working capital of the
operations acquired must be positive, or at a minimum there must be at least
sufficient cash and other current assets to fund current liabilities.
“If there is a further shortfall in operating performance, that may further reduce the
pro forma proceeds and result in [a] material reduction in the cash available for
distribution to shareholders at the closing of the transaction.’
According to the sales announcements, the $405m generated by sale of MWS and
Ezulwini would’ve been distributed as follows: $315.4m for settling the company’s
notes and debentures; $23m for operating and transaction-related costs, and $36.6m
among shareholders.
Another $30m would be held in escrow in the event of future claims.
Given that First Uranium has 238 million shares in issue, the payout of $36.6m
would’ve implied a distribution of $0.15 per share. Due to First Uranium accessing the
$10m loan facility, the payout per share would now decrease to $0.11, or around
R0.80.
The money held in escrow would also be distributed – $25.4m for shareholders and
$4.6 for debentures – should no claims arise.
The company’s shares closed at 65c on Thursday, after trading at a high of 105c prior
to the announcement.
