Neal Froneman, CEO Aflease Gold
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Uranium One creates $5bn company
David McKay
Posted: Mon, 12 Feb 2007

[miningmx.com] -- sxr URANIUM One is to buy UrAsia, a Canadian-based investment holding firm with uranium prospects in Central Asia, creating a $5bn company and the world's second largest uranium firm by market capitalisation.

The new entity, which will be renamed Uranium One, intends to have five uranium mines operating by the first quarter of 2008, said Neal Froneman, sxr Uranium One's CEO.

The transaction effectively catapults sxr Uranium One into the top tier of uranium producers at a time when the metal is notching up all time high record prices as supplies struggle to keep pace with vaulting demand.

The financing of UrAsia's takeover will be through the issue of sxr Uranium One shares at a price of C$7,05/share, a 13% premium to UrAsia's February 9 closing price on the Toronto Stock Exchange. The deal is valued at about C$3.4bn, Bloomberg News said.

The offer values UrAsia at about C$3.4bn ($2.9bn), according to Bloomberg News. "The new Uranium One will be an exciting, low-cost growth-orientated company," said Froneman in a statement.

Cameco Corporation is the world's largest publicly traded uranium company with a market capitalisation of about C$15.4bn, said Bloomberg News.

Concluding acquisitions in the uranium industry would become more difficult owing to improved prices for the metal, said sxr Uranium One's chief financial officer, Jean Nortier in an interview with Miningmx on January 8.

“Assets have become very expensive and it’s difficult to find value,” said Nortier. “It is a sign of the times that sellers of uranium assets are starting to reassess.”

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This was after Rio Tinto Energy America, a business unit of London-listed Rio Tinto, had withdrawn from the sale of its Sweetwater uranium assets for which sxr Uranium One was the preferred bidder.

sxr Uranium One said Rio Tinto’s decision was “prompted by significant and unexpected changes in the world-wide market for uranium since July 7, 2006”.

Resource Capital Research, an Australian research house, said in December that the uranium price would continue to climb in 2007.

“The uranium price is forecast to reach $90/lb by mid-2007, an increase of 37% over the current spot price and $115/lb by late 2008, an increase of 75% over the current spot price,” it said.

Driving uranium demand is the growth in nuclear power station construction. Some 251 reactors are planned or are under construction compared to 442 in operation.

According to a feasibility study, Uranium One will produce 500,000 lbs of uranium oxide this year from its South African-based Dominion Reefs mill. The asset will start operating from the first quarter of this year.

sxr Uranium One's share price was last trading at nearly 6% higher at R101.50/share on the Johannesburg Stock Exchange, a 140% gain since the beginning of 2006.