While other juniors fight to remain solvent amidst a lurching global economy, Forsys Metals (FSY-T, FOSYF-o) has managed to snag a potential $580-million windfall.
Belgian national George Forrest and the company he controls — George Forrest International Afrique (GFI) — has launched a friendly takeover bid for Oakville, Ont.- based Forsys that represents a 55% premium on the company’s 20-day trading average. Forsys’s most advanced asset, the Valencia uranium deposit, in Namibia, is targeted for production in 2010.
While the news couldn’t have come at a better time for mining investors with Forsys in their portfolios, Forrest is by no means an uncontroversial suitor.
The Forrest name is well known in the Democratic Republic of the Congo (DRC) thanks to the family’s foray into mining there back in 1922.
While George Forrest continued with mining, he also delved into arms manufacturing through his ownership of Belgian-based New Lachaussee. He remains chairman of the company.
Forrest’s eventual position as chairman of the DRC state-controlled Gcamines from 1999 to 2001 –a time of war in the DRC — and his acquisition of mineral concessions landed him in a United Nations report issued in 2002.
The report stated his role with Gcamines presented a conflict of interest and pointed out that his operations in the country had been “strongly criticized (one Belgian diplomatic cable referred to Forrest running a ‘strategy of attrition’ in the mining sector of the DRC) and have recently come under the scrutiny of the Belgian Senate’s investigation into resource exploitation in the DRC.”
Clearly, Forrest would like to put such assertions well behind him, and the acquisition of Forsys would represent a diversification out of the DRC at a time when the country is again teetering on the brink of war.
In a prepared statement, Forrest called Namibia a country with “a very positive future for economic growth with an established mining industry, including world-class uranium mines.”
Bruce Hall, chief communications officer with Forsys, confirms Namibia’s growing reputation as a desirable destination for capital.
“The government has been outstanding,” he says. “It follows the processes it has laid out to a tee. It explains in advance what a given process is and how it is moving along, and it just assists in developing and moving projects along.”
The GFI proposal offers $7 for each Forsys share as well as the “in-the-money” amount of any outstanding Forsys options and warrants.
On the news Forsys shares climbed 30% or $1.36 to close at $6 on 8.1 million shares traded.
Beyond the stability and transparency of Namibian politics and bullish indicators for uranium going forward, Hall also credits the work of chief geologist Roger Laine as a key to the company’s success.
Laine — a former leading exploration geologist with Areva (ARVCF-o)– convinced the Forsys board to launch an eight-hole drill program in November 2007 under his guidance. The program brought results encouraging enough to coax another 10,000 metres worth of drilling out of management, and when those holes showed higher and more consistent grades than previous drilling, Forsys piled its funds in and proved up 41.4 million lbs. of U3O8 in the measured and indicated category.
Forsys says Valencia could go into production by the end of the second quarter in 2010.
The Valencia deposit lies in the same neighbourhood as Rio Tinto’s (RTP-N, RIO-l) massive Rossing uranium mine — which has been in continuous production since the 1970s. Valencia sits 35 km along geological strike from Rossing and 40 km north of Paladin Energy’s (PDN-T, PDN-a) Langer Heinrich uranium mine.
Be the first to comment on "George Forrest Bids For Forsys Metals"