[miningmx.com] — SIMMER and Jack Mines (Simmers) shareholders on Friday overwhelmingly approved the reverse takeover of the company by Village Main Reef (Village) at a general meeting in Johannesburg.
Village shareholders also voted strongly in favour of the deal on Friday. Village CEO Bernard Swanepoel – who will be CEO of the merged group – said he was “delighted that shareholders had voted so strongly in support’.
Swanepoel told Miningmx the first priority would be to deal with the future of Simmers’ 25% stake in TSX and JSE-listed First Uranium.
It’s now clear the relationship between Simmers and First Uranium has soured in recent months, particularly over the latest C$50m fund raise by First Uranium which took place in February.
Simmers was unable to participate because of its own strapped financial situation and its interest in First Uranium was diluted as a result.
Swanepoel said: “We are the largest shareholder in First Uranium, but have very little ability to influence what that company does.
“Nine months ago Simmers put itself on the edge when it bailed First Uranium out of a financial crisis by supporting the $150m fund raise, which was supposed to finally set the company right.
“But now we don’t seem to get the attention from First Uranium that an investor holding just 100 shares would receive. We are being treated like an irritating shareholder and not as an anchor shareholder.
“We, as a board, are not convinced there has been an adequate explanation from First Uranium as to why the money raised nine months ago turned out to be $50m too little.’
Swanepoel said: “Being a large shareholder with no say is not a tenable situation, nor is it a viable business model. That stake does not make sense unless there are synergies between the two companies and a constructive relationship.
“There’s a strong possibility that the capital Simmers has tied up in First Uranium could be redeployed elsewhere.’
Following the merger, Village will become a diversified mid-tier miner controlling the Buffelsfontein (Buffels) and Tau Lekoa gold mines as well as the Consolidated Murchison gold/antimony mine and the Lesego Platinum project, where exploration drilling is under way.
Swanepoel said nearly all these operations had issues that needed to be dealt with, of which the most pressing were at Buffels and Tau Lekoa.
He said the latest results from Buffels indicated the operation was not yet configured correctly, while Tau Lekoa was performing worse under Simmers management than it had when it was run by former owners AngloGold Ashanti.
Turning to Consolidated Murchison, Swanepoel said the company was now properly capitalised and was “breaking even’, but that was because of the recent rise in the antimony price.
“So what that means is we have three assets in need of tender, loving care,’ he said.
The value of Lesego Platinum and Consolidated Murchison in the merger was pointedly questioned at the Simmers’ general meeting by AngloRand Securities fund manager Louis Venter.
At the beginning of the meeting, Venter proposed a vote of no confidence in the Simmers board which he accused of “giving the company away to Village for next to nothing’.
Venter said: “I said two years ago Bernard Swanepoel was going to steal this company. As far as I am concerned, Simmers has a value of 700c a share and we are giving it away to Bernard Swanepoel at 105c a share.
“What does he bring to the party? Only his name. I don’t want platinum in Simmers which is a gold stock, while Consolidated Murchison has been bankrupt for the past 40 years.’
Simmers interim CEO Marius Saaiman – the acting chairperson for the meeting – replied he noted Venter’s points, but that the meeting would stick to voting on the resolutions before it.
Asked about the possibility of Simmers shareholders providing the funds required by the company, Saaiman replied: “Over the last 12 months, Simmers has approached its major shareholders on a number of occasions to fix the company’s balance sheet.
“At no stage have our major shareholders been supportive of raising capital. That’s the reality of the situation.’
Saaiman added attempts to raise funds from overseas investors had also failed because of the company’s history.
“They would not even look at our assets because they knew they would not be able to get anything through their credit committees.
“That changes with Village. Investors will be able to look at the assets on a clean slate basis, while Simmers shareholders still have exposure to those assets. “
Saaiman said the Simmers board had been unanimous in backing the Village deal.
He pointed out that the valuation of Lesego Platinum by the Simmers board had been authoritative, given that three of Simmers’ non-executive directors were experienced platinum executives.
Those directors were Impala Platinum CEO David Brown, Aquarius Platinum CEO Stuart Murray and former Anglo Platinum CEO Ralph Havenstein.
