First Uranium to sell South African assets

First Uranium (FIU-T) said it would be selling its chief assets – the Mine Waste Solutions tailings recovery project and the Ezulwini gold-uranium mine, both in South Africa – for US$405 million as the underperforming junior liquidates itself to pay off its looming debt.

First Uranium today signed a definitive agreement to hand off the Mine Waste Solutions project to major shareholder AngloGold Ashanti (AU-N) for US$335 million in cash. AngloGold owns 19.8% of the junior.

The company plans to sell its stake in its First Uranium Ltd. subsidiary, which owns the Ezulwini mine, to Gold One International (GDO-A) for US$70 million.

The Australian miner will also provide a $10-million loan facility to First Uranium, which has been inflicted by delays and operational problems at Ezulwini for some time.

Both asset deals would require a green light from shareholders and the company’s lenders. First Uranium anticipates holding a special meeting for shareholders to vote on the deals in mid-May.

The Mine Waste Solution agreement will require approval by two-thirds of the shareholders, of which 50.1% of the votes must not be from AngloGold shareholders or related parties. For the Ezulwini mine deal to go through, two-thirds of the shareholders must vote in favour for the transaction.

Once the deals close, the company will rake in much needed cash, totaling US$405 million, of which US$30 million will be held in escrow accounts, and US$23 million will go towards covering operating and transaction-related costs. The rest will be used to pay its security holders and shareholders.

First Uranium estimates making initial payments of US$167.7 million to note holders, US$147.7 million to debenture holders, and US$36.6 million to shareholders.

Once the escrows are released, assuming no claims are made, the company intends to distribute another US$4.6 million to debenture holders and US$25.4 million to shareholders.

On news of the potential sales, First Uranium closed up 9% to 18¢ per share as 7.15 million shares changed hands.