Johannesburg (miningweekly.com) – Unhappy First Uranium shareholders led by Olma Investments have approached an unnamed company to bid for 50% of the troubled Toronto- and Johannesburg-listed firm, head of equities at the Russian investment company Nick Betsky told Mining Weekly Online.

"Since the board of directors (BOD) and RBC have not looked for any adequate options for shareholders, we are in the process of trying to make a better deal that the BOD cannot ignore," he said on Monday.

The deal which Olma, heading up a group of First Uranium shareholders that say they own over 17% of the company, could involve a new company buying a 50% stake in the gold and uranium producer.

It would also avoid the impending sales of First Uranium's two principal assets for deep discounts, Betsky said, adding he had already approached an unnamed firm that is potentially interested, and intends on approaching other groups.

Asked whether the company would consider such a deal if one was tabled, First Uranium lead independent director John Hick said it would.

"Any real proposal that makes sense the board would look at because that’s part of its duties," he told Mining Weekly Online.

“Writing a letter saying maybe we will do this and maybe we will do that...that’s nothing we can respond to. We have to deal with the facts there and we have two hard transactions on the table."

After announcing a strategic review of the company in July - its capital structure and any strategic alternatives, First Uranium said in March it reached an agreement to sell its Ezulwini mine, located in Randfontein, west of Johannesburg, to Gold One for $70-million.

A separate deal announced simultaneously would see AngloGold Ashanti buying the Mine Waste Solutions division, which reprocesses dumps to extract gold and uranium, for $335-million.

The pacts irked some shareholders, including Olma, Canada's Sprott Asset Management and Stratton Enterprises, as well as a grouping of Canadian minority holders, who said the sales prices were too cheap.

Shareholders are set to vote on them on June 13.

"We came up with the transactions in very difficult circumstances. We did the best we could – it’s a lousy market, you can’t raise equity. I understand people are frustrated, we’re frustrated, but the situation is the situation," said Hick.

"Everybody gets to vote. If they don’t like what’s done, then that’s up to them."

CIRCULAR OUT THIS WEEK

Hick told Mining Weekly Online that First Uranium would post the circulars regarding the Gold One and AngloGold Ashanti deals by the end of the week, and possibly as early as Tuesday.

Betsky had previously been involved in assisting to solicit an $80-million offer from Russia's Renova for Ezulwini, which First Uranium rejected on April 24, saying it would proceed with the deal to sell the operation to Chinese-owned Gold One.

He had been threatening to vote the AngloGold Ashanti and Gold One deals down, saying a bankruptcy process would be more transparent for First Uranium shareholders.

With the new proposal, Betsky is working to get an outside company to make an offer to buy a 50% stake in cash-strapped First Uranium, and said he is willing to use legal avenues to prevent the board from ignoring any offer that might transpire.

"If they do [ignore it], we will get the courts to decide which is a better deal," Betsky said.

He added he was willing to be diluted 100% through bringing in a new partner, which would hopefully also lend First Uranium the $150-million it needs to repay debentures on June 30.

"This way both bondholders and shareholders get a better deal," commented Betsky.

Key to the success of any such deal would be having AngloGold Ashanti – First Uranium's biggest shareholder, with just shy of 20% – on board.

A spokesperson for Africa's biggest gold-producer, Alan Fine, declined to comment.

LAWYERS LETTER

Last week, lawyers representing Olma, Stratton and Patto Corporate Services wrote a letter to First Uranium's legal representatives, in which they accused First Uranium's board of continuing to "act in a manner that is prejudicial to the interests of shareholders".

Toronto-based firm Lax O'Sullivan Scott Lisus said the board had brought about a "calamitous drop" in the company's value from $1-billion in 2009 to $25-million, requesting various pieces of information from First Uranium.

This includes a timeline of talks with Gold One and AngloGold Ashanti, any management/employment agreements between First Uranium's leadership and the two proposed asset buyers, a summary of any other third-party bids for the firm's assets, as well as the company's evaluation of any such bids.

The letter requested a response by May 3.

Hick said First Uranium responded by that date, but declined to detail what the response entailed.