[miningmx.com] — TSX and JSE-listed gold producer First Uranium says
currency fluctuations may work in shareholders’ favour when the leftover proceeds
from the sale of its key assets are distributed.
In a notice posted to the JSE on Thursday, the company gave new projections on
how it would allocate the US$405m collected from the proposed sale of Ezulwini (for
US$70m, to Gold One International) and Mine Waste Solutions (US$335m, to
AngloGold Ashanti).
A major portion of the proceeds would go towards the settlement of debentures and
notes to the tune of C$320m.
When the deals were first announced in March, First Uranium projected US$36.6m
would be distributed among the holders of the company’s 237.9 million shares,
equating to around US$0.15 per share. The company has since drawn down on a
US$10m bridging facility provided by Gold One to cover operational expenses, which
would have left equity holders US$26.6m to share among themselves at around
US$0.11 per share.
However, First Uranium on Thursday said the weakening of the Canadian dollar
against the US currency might offer its largely Canadian shareholder base $50.2m in
distributions – the transactions would be concluded in US dollars but the debt
payment is for Canadian currency and South African Rand denominated bonds.
This amount would equate to distributions of around C$0.21/share.
The US dollar traded at C$0.99 when the deal was announced on 1 March, but
strengthened to C$1.04 on June 4, the date used by First Uranium for its
calculations. It has since retreated somewhat to C$1.03.
For JSE-listed shares, the estimated payout changed from around R1.14 on March 1
to R1.79 on June 4.
The company is facing a revolt against the proposed sales from minority
shareholders over the pricing of the deals.
Nick Betsky, Head of Equities at Russia’s Olma Investments and outspoken critic of
the proposed transactions, said changes based on foreign exchange rates could come
back to haunt shareholders.
“Forex goes both ways,’ he said. “What is important is that AngloGold Ashanti and
Gold One have not increased their purchase price.
“The board is allowing them to steal the assets at a 50% discount. We are voting
“no’’.
