First Uranium in $28M Deal

First Uranium in $28M Deal

First Uranium Corporation, which took a secondary listing on the JSE last week, said yesterday that it would buy a gold plant and three gold and uranium tailings dams in a R200 million (US$28 million) deal.

The purchase would help accelerate and expand the group’s plans to start producing gold and uranium.

President and CEO Gordon Miller also confirmed recent speculation that it was considering buying Harmony Gold’s [NYSE:HMY] Randfontein gold mine, which is adjacent to First Uranium’s Ezulwini underground project, but said there had been only preliminary discussions, and there was no certainty a transaction would result.

Miller said the company was not holding any talks with third parties on a takeover of First Uranium, contrary to recent media speculation.

First Uranium, which is 67% owned by gold junior Simmer & Jack, said yesterday that it had agreed to buy Mine Waste Solutions and its subsidiary Chemwes for about 3.2-million First Uranium shares, equivalent in value to R200m (US$28 million).

First Uranium vice-president: investor relations Bob Tait said the shares would be listed on both the Toronto and Johannesburg exchanges and could be traded on either.

Although all First Uranium’s shares are tradeable on both exchanges, they have not traded in SA in the four trading days since last Friday’s listing.

Yesterday sellers were asking R68.09 (US$9.54) a share and buyers were offering R77.07 (US$10.80), unchanged since listing.

Mine Waste Solutions’ assets are next to First Uranium’s Buffelsfontein project and include an operating gold plant, which can process 570,000 tonnes of ore a month, as well as three tailings dams containing gold and uranium and some rock dumps.

The purchase of the gold plant will make it unnecessary for First Uranium to build the first gold plant it had planned, which would save some capital spending, accelerate cash flows and increase the projected returns.

First Uranium will be able to recover about 43,000oz of gold in the first year at a cash cost of $317/oz and will increase the plant’s average monthly processing capacity to 1.2-million tonnes by November next year.

The deal will also allow First Uranium to build a bigger uranium processing plant at Buffelsfontein than initially envisaged.

The plant will be built by November next year and will start processing 40,000 tons of tailings a day for uranium as soon as it is completed, more than twice as much as planned at the outset.

The purchase of Mine Waste’s assets will lengthen the life of the Buffelsfontein project to 17 years from 14 years, First Uranium says.

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