Japanese consortium buys into Uranium One

Tuesday, 10 February 2009

Three Japanese companies are to take a holding of nearly 20% of Canada-based uranium producer Uranium One. The trio has also agreed a uranium offtake deal entitling them to up to 20% of Uranium One's production.

Drilling at Kharasan, Kazakhstan (Image: Uranium One)

The three Japanese companies - Tokyo Electric Power Company (Tepco), Toshiba and the Japan Bank for International Cooperation (JBIC) - have agreed to buy 117 million shares in Uranium One through a private placement at a price of C$2.30 each ($1.9 at current exchange rates), a total investment of approximately C$270 million ($220 million).

 

The purchase gives the consortium a 19.95% stake in Uranium One, while a uranium offtake agreement signed at the same time gives the Japanese consortium an option to purchase up to 20% of Uranium One's available production. The companies have also signed a strategic relationship agreement.

The investment will be made through Japan Uranium Management Inc (JUMI), a special purpose entity set up by the Japanese companies in British Columbia, Canada. Tepco and Toshiba will each hold 40% of JUMI, with JBIC holding the remaining 20%. The deal is expected to be closed by 31 March.

Vancouver-based Uranium One owns or has interests in uranium projects in Kazakhstan, South Africa, Australia and the USA, some of which are operating with others under development. The current economic climate led to a November 2008 announcement that the company had decided to put its Dominion mine in South Africa on care-and-maintenance and defer the start-up of its Hobson in-situ leach plant in Texas to focus its resources on its Kazakh ventures. The purchase of 49% of Uranium One's Australian portfolio by Japanese company Mitsui, completed in December 2008, provided it with the resources to push ahead with the Honeymoon in situ leach uranium project in South Australia, which is now expected to start production by mid 2010.

Uranium One president and CEO Jean Nortier said the proceeds of the latest share placement would result in a solid balance sheet to fund the company's growth and development plans. "We will benefit from the consortium's knowledge and expertise in the nuclear industry, from its high-level relationships in Kazakhstan and from its significant financial resources," he said.

Tepco owns and operates 17 of the 53 operating nuclear reactors which provide around 30% of Japan's electricity. However, Japan has no uranium resources and relies on imports to meet its requirements. Over recent years various Japanese nuclear companies have bought into overseas uranium operations to help to secure their supply. Japanese companies including Tepco and Toshiba hold a 40% share in the Kharasan uranium project in Kazakhstan, giving them the right to an aggregate annual quantity of 2000 tonnes of uranium once the project goes into full operation. By buying into Uranium One, they will effectively increase their interests in Kharasan, as Uranium One also owns 30% of the project. Tepco also has a 5% interest in the Cigar Lake mine in Canada.