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« Obama: A One-and-Done President? | Main | Why Not Thorium? »
Wednesday
Feb152012

First Uranium looks to sell its core assets

 

First Uranium Corp. has been one of the uranium sector’s most disappointing performers, and it now appears that a major restructuring is around the corner.

On Tuesday night, the company announced it has entered negotiations to sell its principal assets, which have been plagued with delays and operational problems. Those include the Ezulwini mine and the Mine Waste Solutions tailings facility, both in South Africa.

First Uranium is eyeing the sale because it has €150-million in convertible debentures that come due in June of this year. The liquidity-starved company had just US$10.6-million in cash as of Dec. 31. It is also seeking a short-term loan because of its constrained financial position.

If the South African assets are sold, First Uranium expects to meet all its obligations. If the negotiations fail, BMO Capital Markets analyst Edward Sterck noted that the company has the option to convert the debentures to equity on expiry. That would have major consequences for long-term shareholders, who have already taken a huge loss on their investment in this company.

For the fiscal third quarter, First Uranium reported a headline loss of US$112-million, or US49¢ a share, with an underlying loss of US$15-million. Mr. Sterck was expecting underlying results to be breakeven, noting that revenue was lower than his forecast, while costs were higher.

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