Uranium One to buy UrAsia
sxr Uranium One Inc has agreed to acquire UrAsia Energy Ltd for some $3.1 billion. The deal will create a major uranium producer.
The combined company – to be known as Uranium One Inc – will have a market value of some $5 billion, making it the world's second largest uranium producer by capitalization, behind Cameco Corp, which is valued at about $13.1 billion.
Uranium One will be the only uranium producer with production and asset exposure to each of the world's five largest resource areas – Kazakhstan, South Africa, Australia, the USA and Canada. It will have estimated production of more than 3200 tonnes U3O8 from five operations (Dominion, Akdala, South Inkai, Kharassan and Honeymoon) in 2008, with production costs of some $22-$26 per kilogram U3O8.
The company will have a proven and probable reserve base of 22,200 tonnes U3O8, indicated resources of 46,300 tonnes U3O8 and inferred resources of 122,000 tonnes U3O8.
Uranium One has offered C$7.05 ($6.01) per share in stock for UrAsia – 13% more than UrAsia's closing price on the Toronto stock exchange on 9 February. The board of directors of both companies have agreed to the transaction, which will need to be approved by two-thirds of UrAsia's shareholders. A meeting to vote on the deal will be held on or about 15 May 2007.
"The new Uranium One will be an exciting, low-cost, growth-orientated uranium company with five mines in operation by the first quarter of 2008," said sxr Uranium One's CEO Neal Froneman. He added that by 2012 the company will produce "upwards of between 12 and 15 million pounds (5400 and 6800 tonnes) per annum."
Froneman also noted that sxr Uranium One planned to acquire assets in North America, southern Africa or Australia by the end of March 2007.
Philip Shirvington, CEO of UrAsia, who will join the board of the new company, said "the new Uranium One will be the pre-eminent growth company in the sector, with an unrivalled growth profile. The company is well positioned to gain maximum benefit from rising uranium prices."
UrAsia mines 817 tonnes U3O8 annually in Kazakhstan. It also has three mining and exploration projects in Kazakhstan, as well as an exploration venture in Kyrgyzstan. In September 2005, UrAsia agreed to pay $75 million for a 30% share of the Kharasan project in Kazakhstan, as well as $350 million for 70% of the South Inkai project and the Akdala mine, the latter producing 1000 tU per year from 2006. The South Inkai mine is due to start production in 2007 and ramp up to 2000 tU per year in 2011.
In December 2005, Southern Cross Resources Inc was taken over by Aflease to form sxr Uranium One Inc, which is committed to develop the Dominion uranium project in South Africa and has since decided to develop the small Honeymoon ISL mine in South Australia. The Dominion project is scheduled to start production before the end of March. In January 2007, the company was awarded an export permit for its Honeymoon project.
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