Charlotte Mathews
9 November 2009
Johannesburg — GOLD and uranium miner First Uranium has entered into a second financing transaction with Gold Wheaton, which will help to cushion its gold production against future challenges in economic, industrial or operating conditions, such as delays in permitting or production, the group said on Friday.
Last November First Uranium entered into its first deal with Gold Wheaton, a Toronto-listed specialist gold financier, in which Gold Wheaton bought 25% of the gold production from First Uranium's surface operation, Mine Waste Solutions, in two tranches.
In the latest deal, Gold Wheaton will buy 7% of the life- of-mine gold production from First Uranium's developing Ezulwini underground mine.
Gold Wheaton will pay First Uranium 50m up-front and will take delivery of a minimum of 16500oz of gold next year, 19500oz in 2011 and 26000oz a year from 2012.
First Uranium expects Ezulwini to produce 5,8-million ounces of gold and 18,4-million pounds of uranium over its lifetime, which is on average about 352000oz of gold and 1,1-million pounds of uranium a year.
In its latest quarterly report, First Uranium said the decline in the rand price of gold had forced management to focus on higher- grade areas at Ezulwini, which would improve margins but reduce gold output.
Gold Wheaton will pay First Uranium the lower of either 400/oz or the prevailing gold spot price for these deliveries, with an inflation adjustment of 1% after the fourth year. Gold touched a peak of about 1100/oz late on Friday.
This is First Uranium's third financing transaction this year. It also raised 47,6m through a private placing in February and 106,8m through a share issue in June, bringing the total amount raised since its listing in December 2006 to 560m. The money has been used to develop Mine Waste Solutions and Ezulwini through a period of rising costs, power shortages and the credit squeeze that began last year.
At the end of its financial year in March, First Uranium held 112m in cash after spending 211,3m during the year on development.
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