Neal Froneman, CEO Aflease Gold
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Uranium One won't rebid for Sweetwater
Allan Seccombe
Posted: Tue, 27 Nov 2007

[miningmx.com] -- URANIUM ONE is unlikely to buy Rio Tinto’s uranium assets in the United States or Australia when they come up for sale as part of a strategic review, CEO Neal Froneman said.

Rio has rejected a $120bn all-share proposal from its larger peer BHP Billiton to merge their assets to extract cost savings and synergies from mines and projects in iron ore, coal and base metals.

Rio outlined its defence strategy and view of the commodity market on Monday as it rebuffs the unwanted overtures from the world’s largest resources company. It will spend R2.4bn on new mines, raise its dividend and generate some $15bn from asset sales.
not actively looking to buy any more assets
Included in the assets up for sale is the mothballed Sweetwater uranium mill in Wyoming and Kintyre uranium project in Australia.

Uranium One was chosen by Rio in July 2006 as the preferred bidder for Sweetwater in a process started in 2005. However, in January 2007 Rio changed its mind and decided to withdraw Sweetwater and related properties in order to re-evaluate them and see if they should be developed internally.

Rio said at the time if the assets came up for sale again within the next two years it would invite Uranium One to submit a bid. Froneman said there had not been any approach from Rio yet.

“We are not actively looking to buy any more assets at this stage,” Froneman told Miningmx in a telephonic interview.

“We’ve essentially bought all the assets we want in the United States and it’s unlikely we would bid for it (Sweetwater),” he said. “We’ve got good quality assets and don’t need more in the United States.”

Uranium One bought the Shootaring Canyon uranium mill, one of four in the US, in April this year, as well as the nearby town of Ticaboo to house its workers.

Asked about Kintyre, he said: “It’s unlikely we would look at that either.”

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Uranium One has its hands full with what it already has.

In October Uranium One’s shares plunged after it lowered its production forecasts for this year and 2008, citing the late commissioning of its Dominion project in South Africa and difficulties in sourcing sulphuric acid for its operations in Kazakhstan.

Uranium One’s 2007 output forecast fell 16% to 952 tonnes of U3O8. The outlook for 2008 was more dramatic, with the forecast dropping to 2,086 tonnes from 3,357 tonnes before.

Uranium expects to produce 3,630 tonnes in 2009 and some 4,990 tonnes a year later.

Dominion will commission a second autoclave this year, Froneman said. “Analysts were expecting a fully commissioned plant this year and that’s what we’ll deliver on.”

The South Inkai uranium processing plant in Kazakhstan, which began production on schedule, will miss output targets because of delays in the building of a copper smelter in the country, which was to have supplied acid to the uranium project for in-site leaching of uranium-bearing ore.

Uranium One will import sulphuric acid for six months, but finding rolling stock that can move the material is proving to be a challenge, Froneman said.

In the interim Uranium One will secure a more reliable dedicated out-of-country source of acid, which is in high demand from a growing uranium production sector.

Froneman reckoned it will take about two years to build a sulphuric acid plant in Kazakhstan. One of the partners in the project is Kazatomprom. Uranium One holds a 20% stake in the venture and its capital commitment is put at $20m.

The sulphuric acid shortfall for uranium miners in Kazakhstan could be solved by the start of 2008, Reuters reported, citing state nuclear company Kazatomprom.

Kazatomprom, the world's third largest uranium producer, said it had concluded contracts with new suppliers from Uzbekistan, supplying 10,000 tonnes of sulphuric acid to the end of 2007, the newswire reported.

Kazatomprom's subsidiaries are negotiating with Russian enterprises, such as Uralskiy Mining-Metallurgical Plant and Atompromtex, for delivery of additional quantities of sulphuric acid from the beginning of 2008, Kazatomprom said in a statement to Reuters.