Shares in First Uranium Corp. plunged Friday after it warned it may have to take legal action against the South African government over the right to operate a mine waste project.
The stock dropped nearly 13 per cent, or 4.5 cents, to 30.5 cents in midday trading on the Toronto Stock Exchange.
The Toronto-based miner said it received a letter from South Africa's Ministry of Mineral Resources informing the company its mining right for the Mine Waste Solutions tailing recovery operation has been withdrawn.
"The notice received is fatally defective and correspondence to this effect has been sent to the minister. The minister has therefore been requested to withdraw the letter," First Uranium said in a release.
"The company awaits the minister's response. Depending on the minister's response, shareholders are advised that legal action may be required in order to protect MWS' rights."
First Uranium said its lawyers in South Africa have consistently said reclamation activities such as MWS are not classified as a mining project, and as such do not require a mining right.
It said South African legislation does not make provision for the "withdrawal" of a mining right, but does allow authorities to take other action, 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," First Uranium said.
In July, First Uranium said South Africa's nuclear regulator ordered it to halt operations at MWS due to "alleged issues regarding pipeline maintenance and non-reporting." The regulator gave First Uranium conditional permission to resume a week later.
In a separate release Friday, First Uranium said it received the go-ahead to resume operations at its Ezulwini gold and uranium mine in South Africa. Underground mining operations had been suspended following the accidental death of an employee earlier this week.