TORONTO (miningweekly.com) – Just as George Forrest International (GFI) appeared finally to have arranged the cash for its acquisition of Canada-based Forsys Metals, the transaction has run into another bump in the road, this time from the government of Canada.
“GFI has provided Forsys with a copy today of an unsolicited letter GFI received last night from Industry Canada. The notification states that GFI is prohibited from implementing the investment pending further notice from Industry Canada,” Forsys said in a statement on Wednesday.
Forsys shares dropped on the news. The stock was down 15% in Toronto, at C$5,30 apiece, by 14:47. It was halted earlier, ahead of the announcement.
But Forsys communications officer Bruce Hall said on Wednesday afternoon that the Industry Canada notification was routine and should not create any problems.
Because the transaction is more than the C$312-million threshold under the Investment Canada Act, Industry Canada wants to know where the funds are coming from. GFI has not publicly disclosed the source of the finance it is arranging for the acquisition.
"All they [GFI] have to do is answer some very simple and basic questions and we are good to go," Hall said.
GFI and Forsys initially announced the friendly takeover in November last year, and the C$7 a share deal was to have closed by March.
However, GFI asked for and was granted more time to arrange the funds needed.
Finally, on August 4, the two companies said that GFI had signed "definitive and binding" documentation on terms that would allow the acquisition to move ahead, and that the funds would be "unconditionally available" within 14 days.
Fast forward two weeks, and Forsys issued a statement yesterday to the effect that GFI was still “attending to issues relating to the transfer of funds" and had, once again, asked for some more time.
The arrangement agreement would stay in force for at least another four days, pending receipt of the funds, as GFI now expected the money would be received and confirmed by the depositary on or by August 24, Forsys said on Tuesday.
Forsys' flagship asset is the fully-permitted Valencia uranium project in Namibia.
The project is located 35 km along the geological strike to Rio Tinto's Rössing mine and 40 km north of Paladin Resources' Langer Heinrich operation.
Once up and running, the mine is expected to produce approximately three-million pounds of uranium a year, and Forsys was granted a 25-year mining licence for the operation in August last year.
GFI is based in Belgium and controlled by veteran mining entrepreneur George Forrest.