Shares in First Uranium plunged in Johannesburg late on Friday, after the gold and uranium miner said that the new order mining right for its Mine Waste Solutions (MWS) tailings operation had been “withdrawn”.
Shares fell 15% to R2.50 apiece just before the market closed at 17:00.
First Uranium, which is also listed in Toronto, said the notice from the Mineral Resources Department was “fatally defective”. The company maintained that under South African legislation, reclamation activities, such as MWS, were not classified as a mining project and therefore did not require a mining right.
It also said that South Africa’s Mineral and Petroleum Resources Development Act (MPRDA) did not make provision for a mining right to be withdrawn.
“The MPRDA does make provision for the authorities to take other actions in relation to mining rights provided due process is followed. This includes the serving of notice of the intended action and provides for an opportunity for the recipient to respond, none of which took place in this instance,” it said in a statement.
First Uranium said it had sent correspondence to Mineral Resources Minister Susan Shabangu, requesting her to withdraw the letter about the licence.
“Depending on the Minister’s response, shareholders are advised that legal action may be required in order to protect MWS’ rights,” it said.
MWS consists of 14 tailings deposits from three gold and uranium mines that operated for 50 years of which the Buffelsfontein No.2 and No.4 tailings dams are currently being mined. According to the First Uranium website, these tailings represent in excess of 349-million tons of mineral resources including inferred resources, of which 323-million are mineable reserves estimated to contain 55-million pounds of uranium and 2.9-million ounces of gold.
Meanwhile, First Uranium also said that the notice temporarily suspending operations in the underground workplaces at its Ezulwini mine had been lifted. The Department of Mineral Resources issued the notice on September 13, following the death of a worker in a fall-of-ground incident.
First Uranium traded at C$0.355 a share in Toronto on Friday.