| Thu 17 Nov 2005, 8:00 | | Simmers creates new uranium company |
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Simmers creates new uranium company
Simmer and Jack Mines, Limited
(Incorporated in the Republic of South Africa)
(Registration Number 1924/007778/06)
("Simmers" or "the Company")
Share code: SIM
ISIN: ZAE000006722
SIMMERS CREATES NEW URANIUM COMPANY
Simmers today announced that it had obtained board approval to form a new
uranium company to investigate the viability of mining uranium deposits at its
Buffelsfontein and Hartebeesfontein mines in the North West. To this end,
Simmers has concluded a financing agreement with a private Canadian entity,
First Uranium Corporation, to fund the project without diluting Simmers" equity.
Said Simmers chief executive, Gordon Miller: "Both mines were historically
significant producers of uranium and have substantial surface and underground
U308 resources, as does Ezulwini mine near Randfontein, which we are in the
process of acquiring the mining right to. All three mines" uranium plants were
decommissioned in the 90s and were profitable at much lower uranium margins than
exist currently. In fact spot uranium prices have tripled in less than three
years due to increasing world energy demand"
Funding to determine the financial viability of the project is already in place.
"First Uranium Corporation, which has some of the large resource finance houses
in Toronto as shareholders, has raised US$2-million in private equity to fund
the bankable feasibility study," said Miller.
Elaborating on the deal structure, Miller said that the intention is to create a
South African uranium company that attracts foreign direct investment but where
control of the assets is vested in South Africa.
"It was very important for us to create a separate and independent uranium
company which differentiated Simmers" business according to the needs of
investors in gold and uranium metals. First Uranium Corporation will acquire 30%
of the project in exchange for the US$3-million required to cover the
feasibility study and initial floatation plant start-up costs. Should the
feasibility study prove viable, First Uranium Corporation is obliged to fund the
construction costs up to a maximum of US$25-million, at which point they would
hold 49% of the new entity. Should First Uranium Corporation be unable to fund
the construction costs, within a specified time period, a dilution mechanism
will be triggered which will allow the new company to pursue alternative
financing arrangements."
Miller did not rule out the possibility of an IPO on the Toronto Stock Exchange
(TSX) as a funding option for both companies.
The uranium concept is based on a by-product model for the gold treatment plant,
and as such, uranium has the potential to generate substantial incremental
revenue to Simmers" gold business.
"At Buffelsfontein, we have 290 million tonnes of surface material and 67
million tonnes of underground resource that is known to contain uranium. While
the historic mineral resource statements are no longer compliant with new
requirements governing mineral reporting codes, it is estimated that the total
contained uranium content at Buffelsfontein may be of the order of 68 million
pounds. The dump drilling, sampling, metallurgical test work and underground
resource estimation is already underway to determine if any of the uranium
mineral potential is economically viable.
Jim Fisher, who has substantial experience in operating uranium plants and an
extensive knowledge of the Buffelsfontein metallurgical facilities, will head up
the new entity.
According to Fisher, historical test work at Buffelsfontein indicates that the
extraction of gold, uranium and sulphur from floatation concentrates may be
commercially viable: "Buffelsfontein has a 250 kilo tonne per month float plant
which could be re-commissioned at a cost of US$1-million."
"The opportunity to realize value from a uranium operation would be great news
for Simmers, its shareholders and the community at large. We will have created
a South African business capable of attracting US$28 million in foreign direct
investment. The resulting capital projects will have a significant economic
impact on Stilfontein while also extending the life of the gold operations.
Additionally, a successful uranium operation at Buffelsfontein will also
eliminate the rehabilitation liability of the slimes dams since we will be
reprocessing and removing pyrite, resulting in a more benign tailings deposit,"
said Miller.
The uranium at Buffelsfontein occurs within the same gold reef that
AnglogoldAshanti currently produces uranium from. Preliminary results from the
feasibility study are expected by the end of the first quarter next year.
About First Uranium Corporation
First Uranium Corporation (FUC) is a private Canadian company based in Toronto,
Ontario that has been created exclusively to acquire up to 49% of the new
company from Simmers. FUC has entered into an agreement with Simmers to provide
funding for the bankable feasibility and also to fund the plant construction,
subject to a positive feasibility study. FUC will initially advance US$3 million
for a 30% interest and increase its interest to 49% by funding up to US$25
million for the plant construction
George Faught, President and CEO of FUC, stated: "We are delighted about the
opportunity to participate in this exciting uranium production venture with
Simmer and Jack in South Africa. The facilities were previously fully licensed
and have been historical producers of uranium and gold. With buoyant uranium
prices and a bullish long term forecast, we think it"s an excellent opportunity
to enhance shareholder value for FUC shareholders."
FUC is currently owned by a group of private investors, who plan to take FUC
public on the Toronto Stock Exchange subject to meeting any regulatory
requirements.
Ends
For further information, please contact Gail Strauss on +2784 777 4060, or Lucy
Corkin on +2782 850 4774.
Date: 17/11/2005 08:00:07 AM Produced by the JSE SENS Department
