Canadian IPO for SA gold and uranium company

November 19, 2006 Filed Under: Mining Services, Uranium Mining  

Simmer and Jack Mines has selected the Canadian market to raise funds for its proposed uranium and gold subsidiary, First Uranium, through an Initial Public Offering (IPO) on the grounds of the market size and its good understanding of mining projects under development.

Chief executive Gordon Miller said after the announcement of the IPO today the company received positive feedback from its shareholders who believe they will quickly see value from projects near production and obtain more clarity on their financing.

”Shareholders are positive because we are enjoying a high gold price and the price of uranium is forecast to rise over the next years,” he said.

Simmer and Jack Mines announced that a preliminary prospectus has been filed with the securities commissions in each of the provinces and territories of Canada for the IPO of First Uranium Corporation.

Proceeds from the IPO, debt and operating cash-flow will be used to fund the development and construction of two uranium and gold plants ”“ a tailings dump reprocessing facility near Simmers’ current Buffelsfontein underground mine and a recommissioned underground Ezulwini uranium and gold mining operation.

Simmers will transfer two South African subsidiaries ”“ First Uranium and Ezulwini mining company ”“ the owners of the project assets – to First Uranium in return for common shares in the company (First Uranium) before the IPO closes.

The company will hold a majority interest in First Uranium after the completion of the ”reorganisation”.

Miller said Simmers was expecting the go-ahead for the IPO from the South African Reserve Bank (SARB) shortly. The company has already received approval from the SA National Treasury for both the reorganisation and IPO financing and the green light from SARB was a mere formality.

Pre-production capital costs for the development of the Buffelsfontein and Ezulwini projects are estimated around US$300 million to be spent over the next three years.

The Ezulwini project is expected to start producing gold in the second quarter of 2007 and uranium by the end of 2008. Initial uranium and gold is expected from the Buffelsfontein facility by mid-2008.

Miller said the company was following a unique and effective approach in mining uranium through a flotation process that involved concentrating the uranium in order to treat less material at a higher grade. The approach would boost margins from mining uranium.

The Buffelsfontein project, located 160 km south-west from Johannesburg, comprise an above ground tailings recovery operation to process approximately 291 million tonnes of tailings. Measured and indicated resources total just over 280 million tonnes.

Miller said the uranium and gold commodity mix, ease of processing and location made it a low-cost and resilient operation. Preliminary metallurgical test results indicate that recoveries will be approximately 27% for uranium and 68% for gold.

The Ezulwini project will involve the re-commissioning of an underground uranium and gold operation situated approximately 40 kilometres from Johannesburg on the outskirts of Westonaria town.

Currently operated on a care and maintenance basis ”“ the mine was constructed in the 1960s and reached production of 200,000 tonnes in the same decade.

Mine production was halted as a result of capital constraints compounded by a weak gold and uranium market.

”However, the value of rock at Ezulwini has increased three times since 2001 to make it both a robust and low cost mine,” said Miller.

First Uranium’s refurbishment of the mine will enable the project to reach a production output of 130,000 tonnes per month by 2009 and 180,000 per month by 2012. Measured and indicated resources of the mine is currently 10,507 000 tonnes.

The IPO is expected to be completed by the end of the year.

Miller has been appointed as chief executive of First Uranium and said the company was fortunate to have the services of very experienced people such as a technical director and project manager who have been involved in the projects and know the lay of the land. ”This is a huge benefit to us” he said.