http://www.miningmx.com/news/energy/First-Uranium-shake-up-marks-fund-raising.htm

Tue, 16 Mar 09

Deon van der Mescht, CEO Simmer & Jack

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] -- FIRST Uranium is raising up to C$150m, relocating to South African and appointing a new CEO in the form of Simmer & Jack head Deon van der Mescht in a deal to inject urgently needed capital into the business.

A merger of First Uranium and Simmers will be considered by the two boards, van der Mescht told Miningmx, stressing there would be a lot more cooperation between the two companies to unlock value.

"Having a new Simmers' board, probably one of the most powerful boards in the industry, and a new First Uranium board certainly sets the scene for far more cooperation and they will obviously look at a merger as one of their options, and, if it makes sense, look at it seriously," van der Mescht said.

Simmers, as the largest shareholder in First Uranium with a 37.24% stake, will participate in the TSX- and JSE-listed group’s issue of senior secured convertible notes to raise between C$125m and C$150m towards completing the Mine Waste Solutions tailings treatment division.

Simmers will pay C$10m from cash and raise R220m (C$30m) in debt from Rand Merchant Bank for which it will hold a rights issue of convertible notes partially underwritten by RMB.

Simmers has also agreed in principle to exchange its C$22.7 million loan to First Uranium for rand-denominated notes with a conversion price of C$1.30 (currently R9.31). Simmers will appoint three members onto the First Uranium board.

The transaction entails the departure of the increasingly unpopular Gordon Miller as CEO of First Uranium, following hard on the heels of his exit as CEO of Simmers. He is replaced by van der Mescht, who barely had time to warm the Simmers’ CEO seat.

Unlike Miller, van der Mescht will be based in South Africa. The office in Toronto will be cut back to a size suitable to managing the listing in Canada. It is understood that Miller will resign with immediate effect on Monday as will First Uranium chairman Nigel Brunette.

Nico Schoeman, Simmers’ group business development executive, replaces van der Mescht who has resigned with immediate effect to take up the position of interim CEO at First Uranium.

"We are pleased to participate in a holistic solution that protects Simmers` significant investment in First Uranium by addressing a number of issues that have dogged First Uranium in recent months," said Vusi Khanyile, chairman of Simmers.

Simmers' shares closed up nine percent at 136 cents. First Uranium traded down 0.3% at R11.30.

"It's crucial that this has been done. First Uranium needed refinancing and this is taking out the uncertainty whether it is a going concern. It has got great assets," said Garreth Montano from Top Flite Asset Management, a shareholder in Simmers.

"It's unfortunate there's a dilutive nature to the transaction, but we are pleased to see Deon (van der Mescht) will be taking over First Uranium," he told Miningmx. "I'm very excited about the prospects for Simmers and that it is appointing three directors to First Uranium. There could be an opportunity down the line of merging the two businesses. It's pointless having two smaller companies. Let's have a good middle-tier miner. This might be the catalyst we needed."

Another major feature in the transaction is resolving the $42m penalty that was payable to Gold Wheaton. Gold Wheaton will participate in this transaction, it has agreed to settle in part the penalty in exchange for 14 million ordinary shares in First Uranium.

Gold Wheaton will stump up a further C$20m in the First Uranium capital raising exercise, while a minimum of C$65m and a maximum C$110m will be offered to investors accredited by RBC Capital Markets, the exclusive placement agency for First Uranium