First Uranium Shareholders Object to AngloGold Deal

A group of First Uranium Inc. (FIU) shareholders said the mining company’s planned sales of South African assets to AngloGold Ashanti Ltd. (ANG) and Gold One International Ltd. for a combined $405 million are being done too cheaply.

The group sent a letter to the boards of First Uranium, AngloGold and Gold One explaining its objections, Nicholas Betsky, head of equities at Russia’s Olma Investment Firm in Moscow, and Mikhail Pak, a spokesman for Stratton Enterprises Inc. in Moscow, said yesterday in separate interviews.

The investor group comprises Olma, Stratton, Sprott Asset Management Inc. and Patto Corporate Services Ltd. and collectively holds more than 41 million shares, or 17 percent, of Toronto-based First Uranium. It may vote against both deals, Betsky said.

First Uranium’s board “has not exhausted all its options,” Betsky said by telephone from Montpellier, France. “We’re trying to tell the board they should go back to the drawing board.”

First Uranium said March 2 it agreed to sell its Mine Waste Solutions unit to Johannesburg-based AngloGold for $335 million and that Gold One International Ltd. (GDO) would buy its Ezulwini Mining Co. unit for $70 million. If the deals aren’t completed, First Uranium won’t have enough funds to pay the outstanding principal on about C$150 million ($151 million) of convertible debentures that are due June 30, the company also said March 2.

Related Parties

Gold One gained 14 percent to 3.99 rand at the close in Johannesburg. AngloGold fell 0.9 percent to 287.61 rand. First Uranium was unchanged at C$0.15 in Toronto.

The group of investors said in the letter that Mine Waste Solutions has a so-called net present value of C$700 million while just Ezulwini’s infrastructure is worth C$150 million, Betsky said.

First Uranium Chief Executive Officer Deon Van Der Mescht wasn’t immediately available to comment. Alan Fine, a spokesman for AngloGold, and Maria Smirnova, an associate portfolio manager at Sprott in Toronto, declined to comment. No number or e-mail address could immediately be found for Patto.

The AngloGold and Gold One deals will be voted on separately by First Uranium investors at a meeting to be held in mid-May. The Mine Waste Solutions acquisition requires 50.1 percent or more of the votes cast by shareholders excluding AngloGold and certain related parties, First Uranium said March 2. The Gold One deals needs 66.7 percent.

AngloGold owns 20 percent of First Uranium, according to data compiled by Bloomberg. Franco Nevada Corp. and Village Main Reef Ltd., which hold stakes of 7.4 percent and 5.7 percent respectively, are considered related parties.

“We are planning to vote ‘no’ and we think enough shareholders will join us,” Betsky said.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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