29 May 2012 13:58

First Uranium calls dissident shareholders' demands unrealistic

TORONTO. May 29 (Interfax) - A group of minority shareholders in First Uranium Corp, including clients of Russia's Olma Investment Group (holding about 18% of shares in total) has sent the Canadian company a proposal to renegotiate the terms of deals to sell two South African assets and agreements with creditors, First Uranium said.

The dissident shareholders are proposing 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, First Uranium said in a press release. They also propose that First Uranium note and debenture holders accept discounts of 5-10% of nominal value totalling $23.1 million.

First Uranium's lead independent director, John Hick was quoted in the press release as saying that the dissident shareholders have "come forward with a set of unrealistic demands that have zero chance of being accepted by the parties involved."

It was reported earlier, 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, 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 The offer was later withdrawn because the seller did not agree to the demand for a three-month due diligence period.

First Uranium, which is in dire financial straits, last December announced plans to slash the workforce at Ezulwini by about half due to its inability to raise financing. 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 these assets.

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.

The company, citing the proposal from the dissident shareholders representing 18% 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, Mine Waste Solutions, which is located in the Witwatersrand gold and uranium basin, has recoverable reserves of about 55 million pounds of uranium and 2.9 million ounces of gold.

The Ezulwini underground mine, also located in the Witwatersrand, 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.