Renova prepared to return to talks on Ezulwini mine if sale to Gold One fails
MOSCOW. June 7 (Interfax) - Renova Group, which is controlled by Russian billionaire Viktor Vekselberg, could return to negotiations on the purchase of South African gold mine Ezulwini from Canada's First Uranium Corp if the deal to sell the mine to Gold One falls through, the Russian company told Interfax.
"Renova is still interested in Ezulwini, and if the deal with Gold One does not take place for some reason we are prepared to return to negotiations with First Uranium," Renova spokesman Andrei Shtorkh said.
The board of First Uranium announced in March that it had approved the sale of the company's gold and uranium tailings processing unit Mine Waste Solutions to Anglo Gold for $335 million, and the Ezulwini gold and uranium mine to Gold One International for $70 million. In April, it was reported that Renova Group, controlled by Russian billionaire Viktor Vekselberg, and South Africa's Waterpan Mining Consortium had made a nonbinding offer to buy the Ezulwini mine from First Uranium for $80 million. The offer was later withdrawn because the seller did not agree to the demand for a three-month due diligence period.
At the end of last week, South African media reported that Waterpan is raising funds to make an offer to buy 100% of First Uranium. On Tuesday, the Canadian company said that, taking into account covenants on debt securities and working capital requirements, more than $450 million would be needed to acquire control of First Uranium. The company's current market capitalization is less than $20 million.
It was reported that First Uranium would not be able to pay outstanding debt of CAD150 million on securities that falls due at the end of June if it is unable to sell the South African assets. Another CAD$170 million in secured notes are due at the end of March 2013.
At the end of April, a group of minority shareholders in First Uranium, including clients of Russia's Olma Investment Group (holding about 18% of shares in total) sent the company a proposal to renegotiate the terms of deals to sell the two South African assets and agreements with creditors.
The dissident shareholders proposed that Anglo Gold Ashanti increase its offer price for Mine Waste Solutions by 15% to $385 million, and that Gold One raise its offer price for the Ezulwini mine by 15% to $80.5 million. They also proposed that First Uranium note and debenture holders accept discounts of 5-10% of nominal value totalling $23.1 million.
First Uranium shareholders are to vote on the sale of the assets at an extraordinary general meeting on June 13. The board is recommending that they approve the deal on the previously announced terms. In that case, about $320 million of the total proceeds of $405 million would go to creditors, after which shareholders could receive about CAD0.11 per share.
First Uranium, citing the proposal from the dissident shareholders representing 18% (44 million) of outstanding common shares, said they plan to vote against the transactions. The signatories to the proposal sent to First Uranium's board are Sprott Asset Management, Olma Investment Group, Stratton Enterprise Inc and Patto Corporate Services
According to First Uranium, the Ezulwini underground mine, located in the Witwatersrand gold and uranium basin, had measured and indicated resources in the NI 43-101 classification estimated at 2.655 million ounces of gold (82.6 tonnes) and 654,600 pounds (297 tonnes) of uranium based on a cut-off grade of 3-4 g/t Au and long-term prices of $775 per ounce for gold and $56 per pound for uranium at the end of 2010. Ezulwini produced 47,435 ounces (1.5 tonnes) of gold and 87,340 pounds (40 tonnes) of uranium in 2011. However, the average grade of the processed ore was below the cut-off grain.
Renova manages the assets of Vekselberg and his business partners Yevgeny Olkhovik, Alexander Zarubin and Vladimir Kremer in various sectors.
In the gold mining sector, the group controls KamGold, which according to the Russian Union of Gold Producers was the country's 16th largest gold miner in 2011. KamGold produced 2.027 tonnes (65,200 ounces) of gold at the Aginskoye deposit in 2011, 2.7% less than in 2010. In South Africa, Renova has been working on a project to develop a major manganese deposit since 2005 - United Manganese of Kalahari, in which it owns a 49% stake - and it controls Transalloys, a plant that produces manganese alloys and ferrosilicon, which it bought from Evraz Highveld Steel & Vanadium in 2007.
