JOHANNESBURG (miningweekly.com) – First Uranium shareholder Olma Investments plans to submit a “concrete proposal” to the board of directors by Friday, laying out an alternative to the asset sales the gold and uranium producer has announced, head of equities at the wealth management firm, Nick Betsky, said.
Betsky was responding to a letter First Uranium chairperson Peter Surgey sent to shareholders on Wednesday, which called his criticism of the sale of the Ezulwini and Mine Waste Solutions (MWS) operations in South Africa “irresponsible”, saying he lacked “proper understanding”.
Shareholders are set to vote June 13 on the proposed sale of the Ezulwini gold and uranium mine to Chinese-owned Gold One for $70-million and MWS to AngloGold Ashanti for $335-million.
Surgey implored shareholders to vote in favour of the deals, saying there was no viable alternative for the company.
Betsky, however, said there soon would be.
“They probably see the vote and know it’s going to be ‘no’,” he commented in a telephone interview.
“They know the shareholders are voting against it.”
Olma claims to be part of a group of First Uranium shareholders that also includes Canada’s Sprott Asset Management and Stratton Enterprises, which collectively claim to own 17% of the company. They all intend to vote against the asset sales, Betsky said.
Canadian retail investors that claim to own seven-million shares would also vote “no”, a representative of the group said on May 7.
Owners of more than 50% of First Uranium shares other than AngloGold Ashanti – which owns 19.9% – are required to vote against the sale of MWS to sink the deal, which would also capsize the sale of Ezulwini, which is dependent on it to succeed.
In the letter, Surgey said “no other bona fide offers emerged for either of the company's two main assets or for the company as a whole”. First Uranium had started a strategic review in July, and had approached 20 potential partners since, with only Gold One and AngloGold Ashanti and one unnamed firm entering confidentiality agreements, the Toronto- and Johannesburg-listed firm said in a circular earlier this month.
He went on to warn that “the call to vote against the transactions carries enormous risks for the company, its shareholders and debt holders”.
First Uranium is a company in dire financial straits, which is what forced the asset sales in the first place. It has $150-million in convertible debt due at the end of June, and less than $10-million in the bank.
Betsky believes the miner failed to conduct a thorough search for potential buyers, though.
“I would love to see the list of the 20 people who have been approached,” he commented.
He argued that neither First Uranium nor its advisers had contacted the Russian firm Renova, which ended up making a conditional $80-million bid for Ezulwini in April – an offer First Uranium snubbed.
“They did not approach Renova,” Betsky put forward.
Regarding the proposal he intends to send to First Uranium by Friday, Betsky is tight-lipped.
“We’re not going to talk about the actual proposal with the media,” he said.
Betsky had on May 7 told Mining Weekly Online he was working to find a company to buy a 50% stake in First Uranium, and repay the debt that matures on June 30.
South Africa-based Waterpan Mining Company (WMC), along with unnamed investors, aims to bid for a controlling stake in First Uranium if shareholders vote down two proposed deals to sell its main assets at the June 13 meetings, director Chopper van der Bijl said last week.
Betsky’s proposal was separate to WMC’s, Olma’s head of equities said.
Perhaps, ironically, Ezulwini is an isiZulu word that loosely translates as "from heaven". Given that First Uranium has already invested over $400-million in refurbishing the old mine, and proposes to sell it for only $70-million, a better name might have been Esihogweni – meaning 'from hell'.