TORONTO – First Uranium Corp. (TSX: FIU) says it has received an offer from a South African investor that wants to buy 26 per cent of its shares for about $22 million in an effort to block the sale of its Ezulwini gold mine.
The Toronto-based uranium miner that is in the process of winding down operations said Friday after markets closed that Kumvest Ltd. has made a conditional proposal to buy more than a quarter of the miner’s shares at 37 cents apiece.
Shares shot up 27 per cent Friday to close at 19 cents each, still only close to half of what Kumvest has suggested it is willing to pay. Trading was then halted for the announcement.
Conditions on Kumvest’s offer include that shareholders vote down the sale of its Ezulwini mine to Gold One International Ltd. for $70 million.
It is also asking for a new management team and new directors on its board.
It expects the new management team would be given 90-days to present a turn-around plan.
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Kumvest said in its letter that it has the support of 20 per cent of First Uranium shareholders, and attached a letter signed by Nicholas Betsky and Eric Sprott representing Sprott Asset Management, Olma Investment Group, Stratton Enterprises Inc. and Pratto Corporate Services.
However, First Uranium said it later received an email from Betsky stating that group does not support Kumvest’s intention to allow the sale of its Mine Waste Solutions business to go ahead.
“Accordingly, it is unclear whether Kumvest continues to have the voting support and backing of the Shareholder Group,” First Uranium said in a release Friday.
The company said it has conducted limited due diligence of the investment company and has determined that it is a holding company, but found no information about its interests.
According to Kumvest’s website, it is wholly-owned by financier Mandla “Bear” Kumalo and invests in companies – in financial services, mining, construction, property development and media – “with strong market positions, recognized brands and growth potential.”
“By focusing on a company’s core business, Kumvest helps nurture and build the business to new levels of performance and success,” the website says.
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The individuals proposed for management are all currently directors of companies in the Minero Group, a company that has no published financial statements. Its website indicates that intends to disclose financials after its planned initial public offering in 2012, First Uranium said.
One of the named is Chopper van der Bijl, a director of Waterpan Mining Company, another company that has said it will make an offer to First Uranium shareholders, but has not yet done so.
The Toronto-based uranium company said Kumvest has also not provided any information as to whether it can finance the proposal.
First Uranium’s board plans to meet to consider the offer, but warns “shareholders should use caution when considering this expression of interest which is highly conditional and does not include evidence of financing.”
The company announced in March that it has signed deals to sell its Mine Waste Solutions tailings recovery operation in South Africa and its Ezulwini gold mine and wind up its operations.
The company said AngloGold Ashanti Ltd. agreed to pay $335 million for Mine Waste Solutions, while Gold One International has signed on to buy the Ezulwini gold mine for $70 million.
AngloGold Ashanti is the largest shareholder in First Uranium, with a roughly 19.8 per cent stake in the company.
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