[miningmx.com] — GOLD One International CEO Neal Froneman has said the company won’t offer more for First Uranium’s Ezulwini than the $70m that was already on the table, adding that nobody was likely to make a success of the asset as a stand-alone operation.
The disposal of Ezulwini to Gold One, together with AngloGold Ashanti’s proposed acquisition of Mine Waste Solutions for $335m, would be voted on by First Uranium’s shareholders on June 13 as the company seeks to cover debts from the sale of key assets.
A significant number of minority shareholders in First Uranium have voiced their opposition to the deals, saying the assets were priced too cheaply. First Uranium has so far spent $400m on shaft refurbishment and the construction of a gold and uranium plant at Ezulwini.
First Uranium’s TSX-listed shares traded in excess of C$12 in 2007, while the company did a fundraising at C$1.00/share in March 2011. Following the disposal of Ezulwini and Mine Waste Solutions, the company’s shareholders would realistically receive no more than C$0.11/share in distributions.
“I’m not insensitive to objections because people have lost a lot of money here, but the valuations proposed by some First Uranium shareholders does not make sense,’ Froneman told Miningmx. “I don’t think shareholders have viable alternatives. My board was particularly critical about the price we’re offering because they could see the risk we’re taking on.
Froneman said he didn’t believe Ezulwini could viably operate as a stand-alone operation. Ezulwini is contiguous to Gold One’s Cooke operations which the company acquired as part of the Rand Uranium transaction in 2011.
“There is a water pillar between the mines [Cooke 3 shaft and Ezulwini] that none of us has access to with these as two separate companies,” Froneman said when asked about the potential synergies of the respective operations.
“The [unmined] Zuurbekom area is also down dip and cannot be mined in isolation,” he said. “That is a synergy we would realise over time.”
Over a shorter term, Gold One could start utilising Ezulwini’s gold plant to process ore mined at the Cooke operations. The Ezulwini plant has a capacity of 200,000 tonnes per month of which it only utilises 30,000 tonnes at the moment. Cooke’s ore is currently treated at Harmony’s Doornkop mine.
“It can’t go immediately to Ezulwini, because we’ll have to make some significant infrastructural changes,” he said. “But in six to nine months time it could go there.”
Still, Froneman said Gold One’s plans for Rand Uranium were not dependent on the acquisition of Ezulwini.
“We’ve already got the capacity and will be building a uranium plant anyway, irrespective of Ezulwini,” he said. “Ezulwini in our hands make a lot of sense. I’ll go as far to say it cannot operate in isolation, but we’re not dependent on the acquisition of Ezulwini.””
Meanwhile, Waterpan Mining Consortium has said they’ll offer a new bid for Ezulwini should shareholders reject the sale of the mine.
The consortium consisting of Waterpan and Russia’s Renova in April offered $80m for the asset in a non-binding agreement, saying any deal would be conditional upon a 90-day due diligence period. First Uranium’s board rejected the offer because of this conditionality.
Waterpan director Chopper van der Bijl told Miningmx on Monday the company’s next move would be guided by what shareholders decide on June 13. He didn’t say who’ll partner Waterpan in such a move.
“We need to do the due diligence, but we won’t be afforded the opportunity at this stage,’ he said.
He said he agreed with Froneman that Ezulwini couldn’t be mined in isolation, but that shared ownership wasn’t a prerequisite for neighbouring mines to extract synergies.
“Ezulwini comes with a number of opportunities,” Van der Bijl said. “If Neal Froneman should get it, then good luck to him.
“But if I should get it.’ he said, not completing his sentence.
