Forsys loses patience, breaks off George Forrest deal
miningweekly.com
By: Liezel Hill
25th August 2009
Updated 5 hours ago
TORONTO (miningweekly.com) – Uranium junior Forsys Metals has terminated its agreement with George Forrest International (GFI), citing the other company's ongoing failure to transfer the funds to complete a C$579-million friendly takeover of Forsys.
“As of today's date, GFI has failed to transfer the funds necessary to complete the arrangement and the company's board of directors has determined that it was no longer in the best interests of the company to grant GFI any further extensions,” Forsys said in a statement.
Forsys has demanded that GFI pay a C$20-million reverse break fee, under the agreement between the two firms.
"It is disappointing that after all of the support and assistance that the company has given to GFI over the last several months, during very difficult economic conditions, that this transaction could not finally be completed,” Forsys CEO Duane Parnham said on Tuesday.
Forsys' flagship asset is the fully-permitted Valencia uranium project in Namibia.
GFI told Forsys on August 4 that it had signed "definitive and binding" documentation on terms that would allow the acquisition to move ahead and that the money for the transaction would become unconditionally available by August 17.
However, this proved overly optimistic and GFI subsequently asked for, and was given, a further extension to August 24.
As of Tuesday, however, there was still no evidence that the funds would become available, Parnham said.
GFI and Forsys initially announced the friendly takeover in November last year, and the C$7 a share deal was to have closed by March, but GFI asked for more time to come up with the funds.
A decision by Industry Canada to halt the transaction has also muddied the waters, as Forsys is still unclear on the specific concerns raised over the GFI investment, Parnham said.
Forsys' board is now reviewing its strategic options, including project financing, joint ventures and the possible sale of the company.
“With the currently improved global economic climate, as well as the improvements to the project, the board remains confident that a satisfactory arrangement for all stakeholders can be achieved," Parnham said.
Once up and running, the Valencia mine is expected to produce approximately three-million pounds of uranium a year, and Forsys was granted a 25-year mining licence for the operation in August last year.
GFI is based in Belgium and controlled by veteran mining entrepreneur George Forrest. |
