[miningmx.com] — FIRST Uranium’s management runs a significant risk of
being given a bloody nose by shareholders when the sale of the company’s key assets
are put to the vote in June.
The company said on Wednesday it would stick to Gold One International’s offer of
$70m for Ezulwini, despite a higher bid of $80m from Russian firm Renova’s local
subsidiary Transalloys and partner Waterpan Mining Consortium (WMC).
AngloGold Ashanti, which already owns a 20% stake in First Uranium, is offering
$335m for the surface operations of Mine Waste Solutions.
The proceeds of the sale would be used to pay debts totalling C$320m, with
shareholders standing in line for an estimated C$0.11 per share. The company did a
fundraising as recently as March 2011 at $1.00 per share.
An investor grouping which collectively holds around 41 million (17%) of First
Uranium’s 238 million issued shares would vote the Gold One and AngloGold deals
down, according to Nicholas Betsky, Head of Equities at Russia’s Olma Investment
Firm.
A Canadian official from a financial services firm told Miningmx that he and
other minority shareholders, representing 10 million shares, would also vote against
the deals.
Should their threats translate into reality when voting comes to pass on June 13, the
two groupings would be very close to the approximately 57 million votes needed to
sink the Ezulwini deal.
This transaction requires the approval of two-thirds of shareholders. AngloGold,
Village Main Reef and Franco Nevada (which collectively holds around 30% in First
Uranium) cannot vote due to being related parties – implying that 57 million among
the remaining 166 million votes can halt the sale of Ezulwini.
“We’re working on a no vote,’ the Canadian investor said. “Earlier yesterday [Monday]
we have received the shareholders list from First Uranium’s Toronto office and we’re
preparing an e-mail and telephone blitz over the next week to drum up support for a
rejection of the sales.’
One obvious problem in Renova/WMC’s bid for Ezulwini is that it requires a period for
due diligence studies until August 1. First Uranium is already drawing down on a
$10m credit facility extended to it by Gold One and could run out of cash for operating
purposes by the time such a deal has been settled. Also, the offer doesn’t hold a
solution to the first payment of $150m to noteholders which is due end-June.
WMC director Chopper van der Bijl told Miningmx his and Renova’s next move
would be determined by how shareholders vote on Gold One’s offer. He didn’t want to
comment when asked whether the partners would now stay out of the picture until
voting has taken place.
“We cannot put in an offer without doing due diligence,’ he said. “I know that mine
very well but we want an opportunity to see what is necessary to turn it around.
Betsky said, however, that First Uranium’s management has a responsibility towards
its shareholders to pursue talks with anyone who is interested and open to
discussions. He said it was unacceptable that First Uranium has now twice rebuffed a
bid from Renova/WMC without engaging the interested party in a meaningful way.
“A normal board will speak to people from whom they get an offer,’ he said. “When
you’re a willing seller you work with people who hand you an offer.
“[Renova] told us they still had interest but was shut out from the beginning,’ he
said. “Our legal team is advising us to sue the board of directors, which we plan to
do.’
Betsky added he was confident the MWS sale, which requires 50% approval from
eligible voters, would also be unsuccessful.
“The money we’re getting is ludicrous,’ he said. “We stand a better chance through
bankruptcy [of First Uranium] than with these offers. A liquidation process will at
least be transparent.’
John Hick, the lead independent director of First Uranium, said the company would
make a full disclosure of its rationale for the proposed deals in circulars to be sent to
shareholders in May.
