| Mon 5 Mar 2012, 7:21 | | MWNT - Mine Waste Solutions (Proprietary) Limited - First Uranium announces the |
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JSE MWNT
MWNT
MWNT - Mine Waste Solutions (Proprietary) Limited - First Uranium announces the
sale of all of its principal operating assets and withdrawal of cautionary
announcement
Mine Waste Solutions (Proprietary) Limited
(Incorporated in the Republic of South Africa)
(Registration number 2000/1443/07)
(a wholly-owned subsidiary of First Uranium Corporation)
JSE code MWNT ISIN: ZAE000156261
FIRST URANIUM ANNOUNCES THE SALE OF ALL OF ITS PRINCIPAL OPERATING ASSETS,
ARRANGEMENT FOR A $10 MILLION BRIDGE LOAN FACILITY AND PROPOSED REORGANIZATION
PROCEEDINGS AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
All amounts are in US dollars unless otherwise noted.
Johannesburg - Mine Waste Solutions (Proprietary) Limited (JSE:MWNT) (ISIN: ZAE
ZAE000156261)("the Company or MWS") today announced that its parent company,
First Uranium Corporation ("First Uranium", "FIU" or "the
Corporation")(ISIN:CA337744R1029) has entered into agreements with respect to
two separate transactions which provide for the sale of the Company as well as
the Ezulwini Gold Mine and related assets ("Ezulwini") and will hold a
shareholders meeting to approve these transactions and a reorganization of First
Uranium Corporation.
AngloGold Ashanti Transaction
First Uranium has entered into a definitive agreement (the "AGA Agreement")
dated March 2, 2012 for the sale indirectly of all of the shares of MWS to
AngloGold Ashanti Limited ("AGA") (the "AGA Transaction"). Under the terms of
the AGA Agreement AGA will pay $335 million in cash (the "Purchase Price") for
all of the shares and associated claims of First Uranium (Proprietary) Limited
("FUSA"), which holds, indirectly, the MWS tailings recovery project, subject to
the fulfillment of a number of conditions precedent including: (a) approval of
the AGA Transaction by the shareholders of First Uranium; (b) release of all
security against the assets of MWS including under the Secured Convertible Cdn
$110 million Notes due March 31, 2013 (the "Canadian Notes") issued pursuant to
a Canadian note indenture dated April 8, 2010 (the "Canadian Note Indenture")
and the Secured Convertible ZAR 418.6 million Notes due March 31, 2013 (the "ZAR
Notes" and together with the Canadian Notes, the "Notes") issued pursuant to a
Rand note indenture dated April 23, 2010 (the "Rand Note Indenture" and together
with the Canadian Note Indenture, the "Note Indentures"); (c) receipt of
approval in accordance with the Exchange Control Regulations of the Republic of
South Africa from the South African Reserve Bank ("SARB Approval"); (d) approval
by the Competition Tribunal of South Africa under the terms of the Competition
Act (or if failure to obtain such approval shall be subject to an appeal, the
Competition Appeal Court) ("Competition Act Approval"); (e) approval by the
Johannesburg Stock Exchange ("JSE") and The Toronto Stock Exchange ("TSX") to
the extent necessary on terms mutually acceptable to First Uranium and AGA; and
(f) that no material adverse change with regard to FIU shall have occurred.
During the period from the date of execution of the AGA Agreement to the
closing, FUSA will continue to carry on business in the ordinary course and with
reasonable diligence in accordance with best international mining practices in
accordance with its existing mine plan. In addition, First Uranium has given a
number of representations, warranties and indemnities which are customary in
transactions of this nature. In order to protect AGA in the event of any breach
of warranty, the parties have agreed at closing that $25 million of the Purchase
Price will be placed in escrow for a period ending on the later of six (6)
months from the date of closing and December 31, 2012 ("AGA Escrow"). If there
are claims for loss or liability, which in the aggregate are less than $3
million, AGA will have no claim on the AGA Escrow. If the aggregate claims
exceed $3 million, AGA may claim its entire loss up to the limit of $25 million
but FIU will have no further liability to AGA under the AGA Agreement.
The AGA Agreement provides that completion of the AGA Transaction will occur no
later than June 29, 2012 (the "Long Stop Date"), however if the Competition Act
Approval has not been obtained by the Long Stop Date, then the date for
fulfillment of that condition precedent shall automatically extend without the
need for any notice by, or agreement between, the parties, to August 31, 2012.
Gold One Transaction
In a separate transaction, First Uranium also announced today that it entered
into a binding letter agreement (the "Gold One Letter Agreement") dated March 2,
2012 providing for the sale, indirectly, of all of the shares of First Uranium
Limited (a wholly-owned subsidiary of the Corporation), which owns all of the
shares of Ezulwini Mining Company (Proprietary) Limited (collectively,
"Ezulwini") to Gold One International Limited ("Gold One") for $70 million in
cash (the "Gold One Transaction" and together with the AGA Transaction, the
"Transactions"). The Gold One Letter Agreement is subject to fulfillment of a
number of conditions precedent including: (a) entering into a definitive
transaction agreement on or before March 16, 2012; (b) release of all security
against the assets of Ezulwini including the security under the Notes; (c)
completion of the restructuring of Ezulwini announced by FIU in December, 2011;
(d) receipt of all necessary consents, rulings or directives from the Minister
of the Department of Mineral Resources to the extent required; (e) approval of
the Gold One Transaction by all applicable regulatory authorities including
Competition Approval, SARB Approval, and, if required, under the National
Nuclear Regulatory Act, 1999; (f) approval by the TSX, JSE and the Australian
Stock Exchange ("ASX"); (g) Gold One entering into an agreement with Nuclear
Fuels Corporation of South Africa (Nufcor) related to the calcining of uranium
ore produced by Ezulwini at Nufcor for 50% of the capacity to which First
Uranium is entitled under the existing Toll Treatment Agreement between FIU and
Nufcor; and (h) no material adverse change with regard to First Uranium and/or
its business.
The Gold One Letter Agreement contemplates that the liabilities of First Uranium
to Gold One under warranties given in the definitive transaction agreement will
be limited to $5 million, which amount will be held in escrow ("Gold One
Escrow") for six (6) months from the date of closing ("Escrow Release Date").
The AGA Escrow and the Gold One Escrow are herein collectively referred to as
the "Escrows".
First Uranium has agreed to work exclusively with Gold One and has undertaken
not to solicit any asset or share acquisition or proposal ("Alternative
Transaction") with respect to Ezulwini. The Corporation is obliged to advise
Gold One if it receives an Alternative Transaction which the Board of Directors
on the advice of its financial and legal advisors, determines is a superior
proposal ("Superior Proposal") and Gold One will have a five (5) business day
right to match any Superior Proposal. If Gold One and First Uranium do not
agree to amend the Gold One transaction in light of the Superior Proposal, FIU
may proceed to complete a Superior Proposal or, in the event that Gold One
terminates the agreement due to a material breach by FIU of its non-solicitation
obligations, First Uranium shall thereafter on the date of closing of the
Superior Proposal pay to Gold One a break fee of $2.5 million in consideration
of the termination. The Gold One Transaction also provides that the completion
date will be the Long Stop Date, subject to extension by mutual agreement.
Loan Facility
Gold One has also provided a loan facility to First Uranium for an amount up to
$10 million available for drawdown in accordance with the loan agreement between
the parties (the "Loan Facility"). Any monies advanced will bear interest at
the South African prime rate of interest and payment will be guaranteed by Main
Street 789 (Proprietary) Limited so that the Loan Facility shares the benefit of
the indirect security provided in respect of the Notes, pari passu. Any amounts
drawn on the Loan Facility will be repayable on completion of the Gold One
Transaction and, if not completed, on demand after the Gold One Transaction
agreement is terminated or if other specified events occur.
Shareholder Votes
Each of the AGA Transaction and the Gold One Transaction will be considered
separately by shareholders of First Uranium at a Special Meeting which the
Corporation anticipates will be held in mid May, 2012. In relation to the
approval of the AGA Transaction, First Uranium has been advised that the AGA
Transaction will be considered a "related party transaction" under Multilateral
Instrument 61-101, as a result of the ownership by AGA of 19.8% of the common
shares of First Uranium. Accordingly First Uranium engaged Paradigm Capital
Inc. to provide a formal valuation of MWS and its related entities, a copy of
which will be included in the Information Circular to be sent to shareholders.
In order to approve the AGA Transaction 66-2/3% of the votes cast by
shareholders of First Uranium and 50.1% of the votes cast by shareholders other
than AGA and certain other related parties are required. With respect to the
Gold One Transaction approval is required from 66-2/3% of the votes cast by
shareholders at the meeting.
The financial advisor to the Board of Directors of First Uranium, RBC Capital
Markets, has delivered oral opinions to the effect that, as of the date of such
opinions and based upon and subject to the assumptions, limitations and
qualifications specified therein, the consideration to be received under each of
the AGA Transaction and the Gold One Transaction is fair, from a financial point
of view, to FIU and the consideration pursuant to the Transactions is fair, from
a financial point of view, to the shareholders of FIU (other than AGA and
certain other related parties). The opinion of RBC Capital Markets in respect of
the Gold One Transaction is subject to review of the definitive transaction
agreement. A copy of the fairness opinions will also be included in the
Information Circular to be sent to shareholders.
Senior Unsecured Convertible Debentures
First Uranium has outstanding approximately Cdn $150 million aggregate principal
amount of 4.25% Senior Unsecured Convertible Debentures ("Debentures") due June
30, 2012. Pursuant to the Debenture Trust Indenture ("Debenture Indenture")
dated May 3, 2007 First Uranium has the option, subject to regulatory approval,
to satisfy its obligations to repay the principal amount of the Debentures at
maturity (provided no event of default has occurred and is continuing) upon not
less than 40 days and not more than 60 days prior notice by issuing and
delivering that number of freely tradable common shares of the Corporation
obtained by dividing the principal amount of the Debentures by 95% of the
weighted average trading price of the common shares on the TSX for the 20
consecutive trading days ending 5 days before the maturity date.
In order to complete the Transactions, First Uranium will hold a meeting of the
Debenture holders at which they will be required to approve amendments to the
Debenture Indenture to agree, inter alia, that following completion: (i) neither
Gold One nor AGA will be a successor corporation for the purposes of the
Debenture Indenture; (ii) no interest will accrue following the date of this
announcement; and (iii) the maturity date will be extended to October 5, 2012.
Furthermore, Debenture holders will agree to accept on closing of the
Transactions a cash payment of 95% of the principal amount of the Debentures, an
additional 2% of the principal amount if they have executed and delivered a
validly completed form of election proxy voted in favour of First Uranium`s
proposals on or before the early consent deadline to be set (the 2% will be
allocated pro rata to holders tendering by the deadline) and an additional
payment of the lesser of (i) 3% of the principal amount or (ii) the total amount
released to First Uranium from the Escrows, in priority to any distribution to
FIU shareholders from the Escrows. Holders of approximately 52% of the
outstanding Debentures have agreed to vote in favour of the amendments to the
Debenture Indenture.
In the event that the Transactions are not completed, First Uranium will have
insufficient funds to pay the outstanding principal owing on the Debentures at
the maturity date. Accordingly, First Uranium proposes to issue a notice to
Debenture holders in accordance with the terms of the Debenture Indenture that
it will issue freely tradable common shares in accordance with the formula
described above. The issuance of common shares is subject to receipt of
approvals from the TSX and shareholders of First Uranium.
Secured Convertible Notes
In order to complete the Transactions, First Uranium will hold a meeting of the
Note holders at which they will be required to approve amendments to the Note
Indentures to agree that following completion, the Note holders will accept
repayment in cash of 100% of the principal amount outstanding on the Notes on
the closing of the AGA Transaction. The Note holders will also be required to
agree that an interest payment in cash will be paid for the period ending March
31, 2012, but that no interest will accrue after March 31, 2012. The amendments
to the Note Indentures will also provide, inter alia, that neither Gold One nor
AGA will be a successor corporation for the purpose of the Note Indenture.
Holders of approximately 44% of the outstanding Notes have agreed to vote in
favour of the amendments to the Note Indentures.
Amendments to the MWS Gold Stream and the Ezulwini Gold Stream
Franco-Nevada (Barbados) Corporation, a subsidiary of Franco-Nevada GLW Holdings
Corp. (collectively "Franco") is the successor to Gold Wheaton (Barbados)
Corporation ("GW") which, by agreement made November 28, 2008, holds the right
to receive 25% of the life of mine gold productions from MWS (the "MWS Gold
Stream"). In November, 2009, GW acquired the right to receive 7% of the life of
mine gold production from the Ezulwini Mine (the "Ezulwini Gold Stream") which
has also been acquired by Franco. In connection with the Ezulwini Gold Stream
the Corporation granted a special bond over plants and equipment at Ezulwini and
the pledge of the gold production from Ezulwini.
As a precondition to their obligations under the AGA Agreement and the Gold One
Letter Agreement, each of AGA and Gold One has agreed with Franco to certain
amendments and understandings under the MWS Gold Stream and the Ezulwini Gold
Stream, respectively. Franco is also the holder of Notes and common shares of
First Uranium and it has agreed to vote to approve both the AGA Transaction and
the Gold One Transaction, subject to a right of termination in certain
circumstances. First Uranium has been advised that Franco is a related party for
purposes of the approvals of those transactions and the AGA Transaction and
their votes will not be included in any majority of the minority vote of
shareholders.
Village Main Reef Limited
Village Main Reef Limited ("Village") is the holder of 13,556,739 common shares
of the Company and ZAR392,874,000 of the Notes and has agreed to vote to approve
the AGA Transaction, the Gold One Transaction and the Reorganization Proceedings
(as defined below). First Uranium has been advised that Village is a related
party for purposes of the approval of the AGA Transaction and their votes will
not be included in any majority of the minority vote of shareholders.
Proforma Use of Proceeds
Upon completion of the AGA Transaction and the Gold One Transaction First
Uranium will receive an aggregate of $405 million in cash at closing of which
$30 million will be held in escrow accounts. First Uranium expects that it will
make the following initial payments (1) to security holders from the proceeds
received on the closing of the Transactions, after deducting approximately $23
million in operating and transaction related costs(2):
(in million of US$)
Notes $167.7
Debentures $1 47.7
Shareholders $36.6
1. These amounts are approximate and subject to change due to, among other
things, currency fluctuations (conversion rates for the above dollar values
were based on the Bank of Canada noon rate as of March 1, 2012), results of
operations and the repayment at closing of the Transactions of any amount
drawn under the Loan Facility.
2. These amounts include retention and severance payments, payments owing to
Vulisango (Proprietary) Limited (First Uranium`s Black Empowerment Partner)
upon termination of the Management Agreement with Vulisango dated August
25, 2011, payments in respect of interest owed on the Notes and Debentures
and payments to financial, legal and other advisors.
The balance of the funds held in escrow will be disbursed following the release
of the Escrows. Assuming no claims are made, the amount available for
distribution will be $30 million which First Uranium intends to distribute as
soon as legally permissible as follows:
Debentures $4.6
Shareholders $25.4
In the event that the AGA Transaction is approved and the Gold One Transaction
is not approved, the total amount available for distribution will be reduced by
$70 million in which case the above Pro Forma Use of Proceeds calculation will
be amended and, in view of the requirements under the AGA Transaction to deliver
the MWS assets free of security, the Note holders will receive payment in full
of the amounts owed to them (assuming amendments to the Note Indenture are
approved) and the balance of the proceeds available to First Uranium will be
distributed as may be agreed among the remaining stakeholders in accordance with
their respective interests. First Uranium will continue to own Ezulwini which
will continue as an operating mine and which will require additional funding for
working capital in order to carry on its business.
In the event that the Gold One Transaction is approved and the AGA Transaction
is not, the Gold One Transaction cannot be completed because First Uranium will
be unable to deliver Ezulwini on a debt-free basis. In that event, or in the
event that both Transactions are not approved, First Uranium will be compelled
to exercise its option to deliver common shares on the maturity of the
Debentures. Based upon the existing trading price of its common shares on the
TSX for the 20 consecutive trading days ended five days prior to March 1, 2012,
First Uranium would issue approximately 806 million common shares which would
represent approximately 77% of the total issued capital following such issuance,
however there are no assurances that the trading price of the FIU common shares
at the maturity date of the Debentures will not be materially different than the
above noted trading price, or that the number of common shares issuable on such
date will not be materially different than the above noted number of common
shares.
Proposed Reorganization of FIU
In addition to seeking shareholder approvals for the Transactions at the Special
Meeting, First Uranium intends to pursue, in accordance with the applicable
corporate and securities regulations, an amalgamation, arrangement,
discontinuance, dissolution, liquidation, winding-up or other reorganization of
the Corporation or its share capital ("Reorganization Proceedings") and to
distribute to FIU shareholders all remaining property of First Uranium following
the Transactions as described herein and payment of FIU`s creditors. First
Uranium is currently considering the alternative means of undertaking the
Reorganization Proceedings to ensure that the interests of all parties can be
accommodated and to provide a tax effective distribution of the proceeds.
Details of the Reorganization Proceedings will be included in the information
circular sent to FIU shareholders in connection with the Special Meeting.
Withdrawal of Cautionary Announcement
As noteholders have now been provided with details relating to the agreements to
purchase FIU`s principal assets and the Loan Facility, caution is no longer
required by noteholders when trading in the Company`s Rand Notes.
Corporate Governance
In July 2011, the Board of Directors of First Uranium empowered a Special
Committee to monitor developments and undertake a strategic review of First
Uranium and to advise on any strategic alternatives made in the interests of
First Uranium and its stakeholders. Following a lengthy review and
solicitation of third party interests the Special Committee entered into
negotiations with both AGA and Gold One in connection with the potential
acquisition of assets of First Uranium. It also pursued a potential
restructuring of its outstanding indebtedness and entered into negotiations with
Vulisango, both through entering into a management agreement and a potential
equity investment consistent with the requirements of law in South Africa. In
addition to shareholders, there are a number of constituencies including Franco,
Village Main Reef, the successor to Simmer & Jack Mines Limited, and various
debt holders who required consideration by the Special Committee. In view of
any potential short-term cash constraints, First Uranium also engaged in
negotiations for a short-term bridge lending facility. Each of the Transactions
announced today was reviewed by the Special Committee and recommended to the
Board of Directors of First Uranium who have approved these Transactions.
First Uranium engaged RBC Capital Markets and Gary Sugar Consulting Inc. as its
financial advisors together with The Standard Bank of South Africa Limited as
advisor with respect to the potential BEE transaction and Paradigm Capital Inc.
to provide a formal valuation of MWS.
First Uranium also retained Fraser Milner Casgrain LLP in Canada and Eversheds
in South Africa as its legal advisors. AGA was represented by Fasken Martineau
LLP in Canada and Edward Nathan Sonnenbergs in South Africa as its legal
advisors. Gold One appointed Qinisele Resources (Pty) Limited as financial
advisors and Stikeman Elliott LLP in Canada and Edward Nathan Sonnenbergs in
South Africa as legal advisors.
For further information, please contact
John Hick or Mary Batoff
(416) 306-3072
mary@firsturanium.ca
Cautionary Language Regarding Forward-Looking Information
This news release contains and refers to forward-looking information based on
current expectations. All other statements other than statements of historical
fact included in this release are forward-looking statements (or forward-looking
information). First Uranium`s plans involve various estimates and assumptions
and its business and operations are subject to various risks and uncertainties.
For more details on these estimates, assumptions, risks and uncertainties, see
First Uranium`s most recent Annual Information Form and most recent Management
Discussion and Analysis on file with the Canadian provincial securities
regulatory authorities on SEDAR at www.sedar.com. These forward-looking
statements are made as of the date hereof and there can be no assurance that
such statements will prove to be accurate, such statements are subject to
significant risks and uncertainties, and actual results and future events could
differ materially from those anticipated in such statements, including without
limitation, the statements regarding the proposed transactions with Gold One
International Limited and AngloGold Ashanti Inc. No assurance can be given that
First Uranium will be successful in concluding the proposed transactions and
achieve the desired results. Accordingly, readers should not place undue
reliance on forward-looking statements that are included herein, except in
accordance with applicable securities laws.
Sponsor:
Investec Bank Limited
05 March 2012
Date: 05/03/2012 07:21:02 Produced by the JSE SENS Department.
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