Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
John Hick, lead independent director of First Uranium Corp, described demands from Olma Investment Group and other dissident shareholders received by the company Tuesday as “unrealisic”. Olma is trying to force the uranium producer to renegotiate the terms of agreed asset sales and to seek concessions from debt holders.
“Olma and its partners have repeatedly promised a concrete alternative to our restructuring plan,” Hick said in a statement.
“Instead of putting forward a viable stand alone proposal as Olma has been promoting, they have only come forward with a set of unrealistic demands that have zero chance of being accepted by the parties involved,” he added.
Last month, TSX- and JSE-listed First Uranium (TSX:FIU) (JSE:FUM) said it will stick with an earlier announced deal to sell the South African Ezulwini gold and uranium operation to Chinese-owned Gold One, with shareholders due to decide on June 13.
The company, which is trying to sell its South African mines to repay $150 million in debt due at the end of June, had earlier in the day confirmed a possible bid from a group consisting of a division of Russia’s Renova Group and Waterpan Mining Corporation, saying a rival $80 million offer for Ezulwini may come by Aug. 1.
The shareholders, which claim to own 18% of First Uranium’s shares, are displeased with the asset sales the company announced in March, which implies that Gold One would buy Ezulwini for $70 million, and AngloGold Ashanti would acquire the Mine Waste Solutions (MWS) operation for $335 million.
The Ezulwini Mine is approximately 40 kilometers from Johannesburg, in the West Rand Goldfield of the Witwatersrand Basin, and is contiguous to Gold One’s Cooke Operations.
Ezulwini is an underground mine that has two primary tabular ore bodies which are approximately 400 metres apart. The Upper Elsburg (UE) ore body, where the majority of mining has been done to date, is primarily a gold deposit. The Middle Elsburg (ME) ore body is a gold and uranium bearing deposit that has been less extensively exploited.
