# First Uranium Corporation (FIU)



## PMREdmonton (Apr 6, 2009)

I have a question for those of you who have participated in risk arbitrage and what-not.

First Uranium Corporation is a Canadian company which owned some rights to mining properties in South Africa, I believe. They ran into various issues and have suffered severe losses in share price over the last few years. They ended up selling their two main properties in South Africa for $405M and were trying to come to terms with creditors and shareholders to wrap things up. However, some major shareholders revolted at the first proprosed deal of a $0.22 payout to the shareholders. After some behind the scenes bargaining the groups that put up the roadblocks on the deal said they won't resist after the offer increased to $0.33. Shortly after the new agreement was reached the stock went up about 20% but yesterday it retracted back down to $0.225.

So I guess my question to the board experts if this seems like a fairly low risk proposition to buy the shares right now for $0.225 and then ultimately get a payout of $0.33 once all the i's are dotted and the t's are crossed or could a lot more go wrong than meets the eye. Apparently there are deals to pay off the creditors at the same time that has been pre-negotiated here.

In terms of what happens if the deal is off, this is still a stock that trades at a massive discount to where it once was and still has decent gold and uranium deposits. The Uranium market is in a major and likely temporary slump so there is reason to believe that they aren't getting a great offer to sell their properties right now. You do have to consider that 5 years ago they sold for 12.50 a share during the last major Uranium bull market and even in the past year they traded as high as 0.70 and this is after Fukushima. So even if the deals fall through there may yet be value in this "cigarette butt". It all goes back to the idea of valuing assets instead of earnings in a company like this. Having said that, right now they haven't been able to get a better deal for their assets.

Nevertheless, if everything goes as is right now it looks like a 0.105 gain on an initial investment of 0.225 or somewhere around 45% which is likely to be realized in the near future.

Here is the latest news release:
http://www.firsturanium.com/sjfu/action/media/downloadFile?media_fileid=1888

Here is the news release on the initial agreement that caused some of the major shareholders to revolt (only 0.22 offered here):
http://www.firsturanium.com/sjfu/action/media/downloadFile?media_fileid=1886

There was one other offer which the board considered but ultimately rejected:
http://www.firsturanium.com/sjfu/action/media/downloadFile?media_fileid=1887

So I will remind everyone this is a penny stock, total market cap of about $50M right now (but was around $2B at its peak). Most recently after all the write-downs it has an overall negative shareholder equity.


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## bigbadbull (May 25, 2012)

This is a distribution right? even if its 0.22 or .33 you still own your shares, sounds pretty good to me.

I just don't understand why there are more sellers right now than buyers, the ask is around 500K while the bid only 200K


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## bigbadbull (May 25, 2012)

Trading halted, they passed the yes vote on selling the assets, I'm pretty sure you gunna get your $0.33/share payout


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## bigbadbull (May 25, 2012)

Did you buy any today PMR?


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## PMREdmonton (Apr 6, 2009)

No, I was too busy today at work to put in any trades and hadn't read enough to get comfortable with everything. 

Them's the breaks I guess.

Hopefully one of you got a tranche before trading halted.


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## PMREdmonton (Apr 6, 2009)

I bought some today.

In principle it should pay off. 

I have my fingers crossed on this one as I know sometimes things sour unexpectedly.


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## Toronto.gal (Jan 8, 2010)

PMREdmonton: your list of penny stocks is growing. :hopelessness:

Good luck with it, but you know, you could have made a nice profit with UEC without the added stress and not just once, but twice today!


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## bigbadbull (May 25, 2012)

PMREdmonton said:


> I bought some today.
> 
> In principle it should pay off.
> 
> I have my fingers crossed on this one as I know sometimes things sour unexpectedly.


I believe it should work out.


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## Dopplegangerr (Sep 3, 2011)

Toronto.gal said:


> PMREdmonton:
> Good luck with it, but you know, you could have made a nice profit with UEC without the added stress and not just once, but twice today!


Do you trade this stock regularly Tgal? I brought this stock up in another post today from an article I read.


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## Toronto.gal (Jan 8, 2010)

Dopplegangerr said:


> Do you trade this stock regularly Tgal? I brought this stock up in another post today from an article I read.


Yes, since 2010 when it was in the $5+ range. 

I held shares long-term as well, but thanks to the Libyan crisis in 2011, I got rid of a lot of my uranium/riskier shares that were bought at much higher prices than now, but I have since bought them back [UUU & CCJ as well].


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## Dopplegangerr (Sep 3, 2011)

Very cool Tgal. I am really getting into mining stocks and have been trying to learn as much as possible. I dont own much at the moment though, just a hundred shares of POT.TO, slowly but surely I am keen to add other companies


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## PMREdmonton (Apr 6, 2009)

I also like uranium stocks presently and have a bunch of CCO. Why did you buy CCJ, T.gal?

I have been considering a purchase of UEC due to their plans to increase uranium production at low-cost through ISR in mining-friendly Texas. They have been aggressive with acquisitions during this period of weakness in the market. They also sell all uranium mined at spot prices so they are going to be much more highly levered to the increase in spot uranium prices in the future. There should be a critical uranium shortage by the end of 2013 once all the nuclear warheads that were put up for energy extraction are cleared.

So my strategy in uranium is one safe stock (CCO) which can survive weakness in the market due to hedging and low cost production and one newcomer highly levered to spot prices.

FIU is just clearly a risk arbitrage situation I am playing for a quick 40% gain assuming everything turns out as expected.


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## Toronto.gal (Jan 8, 2010)

PMREdmonton said:


> 1. Why did you buy CCJ, T.gal?
> 2. There should be a critical uranium shortage by the end of 2013.
> 3. So my strategy in uranium is one safe stock (CCO).


1. I buy/trade some of the CDN companies on both exchanges for many reasons, one of them being that I have more USD at times. I hold CDN companies in both exchanges as well, as some of them report & pay dividends in USD, like TLM for example, and an important fact that many people here did not know until hp brought it to the forum's attention. 

I had traded CCJ yesterday, so I had that symbol fresh in my mind, but like I said above, I work with both exchanges. 

2. Don't know about 2013, but the ones I'm holding long-term, I'll hold for many years.

3. #1 for sure.


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## Toronto.gal (Jan 8, 2010)

Toronto.gal said:


> you could have made a nice profit with UEC..


Speaking of which, it went up 21.81% yesterday, so who needs penny stocks?! 
http://investing.money.msn.com/investments/stock-price?symbol=uec


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## PMREdmonton (Apr 6, 2009)

I certainly don't exclusively buy penny stocks by any stretch of the imagination.

I have just recently been trying to venture into the odd spots of the market that most people totally ignore - micro caps. What is even more ignored in Canadian micro caps. I just think there is massive price anomalies presently in Canada which is about a solid 15 months into a small bear market. They have been pounded into oblivion almost across the board and there are many sitting around with great prospects awaiting 

As I've mentioned before it is an attempt to see if I can spot undervalued companies and up-and-coming players with new products and technologies. I would agree that I am probably quite skewed to small and microcaps right now. This experiment will last about a year at which point I'll examine what my returns have been which will be around March 2013.

I may yet buy UEC but I haven't done so yet. I think many would actually consider them a penny stock at this point with their low valuation and extremely low revenues.


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## Toronto.gal (Jan 8, 2010)

PMREdmonton said:


> 1. I have just recently been trying to venture into the odd spots of the market that most people totally ignore - micro caps.
> 2. I think many would actually consider them a penny stock at this point with their low valuation and extremely low revenues.


1. There are good reasons why most people ignore such stocks though.
2. Perhaps, but as I'm also a short-term trader, my point was that I'm making money with it now because there is volatility. A year from now, most penny stocks might not be around.

I definitely like junior companies and trade as well as hold a % of shares, but not at penny levels because honestly, I don't have the devotion/expertise nor time that is required to identify which companies in certain sectors might be the promising ones, so I leave that kind of fundamental analysis to the pros, who have been investing for years [which is not me].


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## kwasley (Jun 21, 2012)

Surprised to see a FIU thread here.

Heres my experience,

Made the mistake and bought into FIU last year during the pre-fuka uranium runup. Got in a round the dollar mark, averaged down a few times and thankfully go out last week at .25 cents. Not looking back!

Lots about 50% but it could've been much worse.

IMO, the company has very questionable business pratices and its the gamble you take when you invest in such junior miners.


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## Fain (Oct 11, 2009)

PMREdmonton said:


> I also like uranium stocks presently and have a bunch of CCO. Why did you buy CCJ, T.gal?
> 
> I have been considering a purchase of UEC due to their plans to increase uranium production at low-cost through ISR in mining-friendly Texas. They have been aggressive with acquisitions during this period of weakness in the market. They also sell all uranium mined at spot prices so they are going to be much more highly levered to the increase in spot uranium prices in the future. There should be a critical uranium shortage by the end of 2013 once all the nuclear warheads that were put up for energy extraction are cleared.
> 
> ...


There will be enough increase in supply to offset the HEU deal coming to a close i think. However if 16% of the supply is made up by producers like CCJ instead of the russion government/companies then CCJ and otheres will benefit also


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## PMREdmonton (Apr 6, 2009)

The problem with the increasing supply story to meet the upcoming need is that many juniors have gotten crushed since Fukushima and the fall in uranium spot prices. This means all the production that was slated to come online won't be ready now to meet the upcoming shortage. This is going to push up Uranium spot prices until it induces enough investment to get uranium production going. 

You have to remember that it takes a long time to get many uranium mines into production so there is going to be a lag time from the increase in Uranium spot prices to get the juniors investing again in the development of their assets. Right now many are uneconomic at current prices so they haven't been able to get funding. What's happened instead is the majors have been trying to buy out Juniors at favorable pricing. 

I still like CCO in the current situation and that is where all my uranium investments lie at the moment. UEC is still just a thought until I hear more about their execution of their operations that has just come online.


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## PMREdmonton (Apr 6, 2009)

The shares are down again within worthwhile buying range.

I think one of the two deals they have worked out had to be delayed and this has caused some consternation for folks who had bought in at lower prices and they decided to take their profits and run lest the deal fall apart.

I still think the stock is a definite buy around 0.23 for a pretty sure upcoming 0.33 payout.


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