South African investor Mandla “Bear” Kumalo said he offered to buy a stake of 26 percent in Canada’s First Uranium Corp. in an effort to block the sale of a mine to Australia’s Gold One International Ltd.
Kumvest (Pty) Ltd., Kumalo’s wholly owned investment company, would acquire new shares of First Uranium for 37 Canadian cents apiece, he said today in a telephone interview from Johannesburg. The offer is more than double First Uranium’s closing share price in Toronto yesterday.
First Uranium said in a statement that the bid is “highly conditional” and doesn’t include any evidence of financing. Its shares rose 27 percent to 19 cents in Toronto, giving the company a market capitalization of C$45.2 million.
First Uranium has plunged 98 percent in the past five years after uranium prices dropped and its South African operations faced delays. The Toronto-based company is selling assets for $405 million to help pay off debt, including about C$150 million ($146 million) due June 30.
Kumalo said the transaction is conditional on the company appointing a new chief executive officer, financial director and chief operations officer. He’s also seeking the new management be given 90 days to present a turnaround plan.
Kumalo said he wants to stop First Uranium’s agreed sale of its Ezulwini gold and uranium mine to Gold One for $70 million. The company is also selling its Mine Waste Solutions unit to Johannesburg-based AngloGold Ashanti Ltd. for $335 million.
“Management has done a bad job,” Kumalo said. “The board doesn’t have to sell all the assets.”
First Uranium has scheduled a June 13 shareholder vote on the asset sales.
The Kumvest deal would also enable First Uranium to satisfy South Africa’s black empowerment regulations that compels all mine operators in the country to sell 26 percent of their assets to black investors.