[miningmx.com] — ABOUT the only ray of hope for First Uranium shareholders, who every day see the value of their investment reaching new lows, is the possibility that AngloGold Ashanti may finish what it started when in July it bought a 20% stake in the gold/uranium producer from Village Main Reef.
First Uranium on Friday traded at yet another record low, shedding 7% by late afternoon to R1.84, with no end in sight for shares which a year ago were still valued R10.40 each (and R100 in 2007). The stake which AngloGold paid R205m for in July is now worth closer to R90m – CEO Mark Cutifani got his timing wrong if he thought he came in at a low.
However, AngloGold would never have bought the stake for the sake of being a passive shareholder, even though it passed on an option to buy Village’s remaining 5% in First Uranium by end-October.
That shouldn’t be interpreted as the end of that, though. Cutifani and AngloGold has never divulged their intentions for First Uranium, but recently refused to rule out buying more of First Uranium.
“We’re still considering our position on that investment,’ Cutifani said when pulsed about the issue at the release of AngloGold’s most recent financial results. “That’s all I’m prepared to say about that.’
The most likely explanation for Cutifani’s caution is the host of regulatory hurdles which First Uranium faces. First Uranium and the department of mineral resources are locked in a continuing stand-off over the need for a new order right at Mine Waste Solutions (MWS), while the plant is also facing opposition from environmentalists.
Yet, if all the cards fall in place, AngloGold – with its ability to throw money at most of First Uranium’s ills – could now bag a well-worth asset at a fabulous price. The R205m it forked out in July can today buy a another 47%.
Many analysts have pointed to the obvious possibility for synergies between the highly profitable surface operations of AngloGold’s Vaal Reef assets and MWS.
Also, the two companies are the sole operators of uranium plants in South Africa. Given the close proximity of uranium resources close to First Uranium’s plants and the high capital requirement of constructing such plants, sole ownership of these assets would give AngloGold a trump card in the possible consolidation of the sector.
