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Algold Resources to buy First Uranium

29th October 2013

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

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TORONTO (miningweekly.com) – West Africa-focused gold explorer Algold Resources has offered to buy First Uranium, which last year had to sell its main assets in South Africa to repay its debt.

The companies announced in a joint statement on Tuesday that they had entered into a definitive agreement that would see TSX-V-listed Algold acquire JSE-listed First Uranium by way of an all-scrip court-approved plan of arrangement.

Algold owns a portfolio of precious metals exploration properties in Canada, Mauritania and Burkina Faso.

“The proposed transaction provides First Uranium shareholders with the opportunity to hold a majority interest in a mineral exploration company that has a number of properties and growth potential, which create the possibility for future value for First Uranium shareholders if Algold is successful in developing its business,” the companies said in a joint statement.

Under the terms of the transaction, First Uranium shareholders would receive 0.0729849 of an Algold share for each First Uranium unit held, implying an offer of about C$0.011 a unit based on the closing price of Algold's shares on the TSX-V on Friday.

Further, for every full Algold share issued to a First Uranium shareholder, the holder would receive half an Algold common share purchase warrant with a strike price of $0.20 per Algold share, exercisable within an 18-month period after being issued.

Pro forma the transaction, First Uranium shareholders would own about 52% of Algold.

First Uranium had been on the verge of dormancy after it sold its main assets, located in South Africa, to pay back debt. The group sold its subsidiary Mine Waste Solutions to AngloGold Ashanti for $335-million in July 2012, and its Ezulwini mine to Gold One International for $70-million in cash, in August 2012.

First Uranium’s board said the transaction represented the best alternative for its shareholders with the greatest upside potential, as it sought a way in which to distribute to the shareholders all the company’s remaining property, other than seeing the company being wound up and dissolved.

Algold expected the transaction to give it access to First Uranium’s net cash and cash-equivalent assets, which on Tuesday totalled about C$3.1-million.

The companies also said that First Uranium’s remaining shareholders comprising AngloGold Ashanti, Franco-Nevada Corp and Village Main Reef, which collectively own or exercise control or direction over 78.12-million First Uranium units, or about 33%, had agreed to vote their units in favour of the transaction and would enter into support agreements with First Uranium in this regard.

Algold expected to have about 33.47-million common shares outstanding after closing the transaction.

Edited by Creamer Media Reporter

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