Uranium One makes strong case for Mkuju

[miningmx.com] — URANIUM One has talked up the potential of takeover target Mantra Resources, saying the Tanzanian-focused group would significantly assist Uranium One to reach an annual production rate of up to 26 million pounds (m lb) per year – up from 2010’s 7.4 m lb.

Commenting on the proposed transaction during a presentation of Uranium One’s annual results to end-December on Tuesday, CEO Chris Sattler said Mantra would release the findings of a definitive feasibility study for its Mkuju River project in Tanzania by the end of March.

In December, Uranium One acquired the option to buy all the shares of Australian-listed Mantra Resources from its largest shareholder, the state-owned Russian miner ARMZ.

ARMZ is in the process of acquiring Mantra in a cash deal worth about A$1.2bn.
Uranium One would become the operator of the Mkuju River project as soon as the ARMZ deal closes. Once this has happened, Uranium One would seek shareholder approval to purchase Mantra from ARMZ.

“The Mantra transaction demonstrates how the partnership between Uranium One and ARMZ adds value,’ said Sattler. “We now have the option to acquire the asset, while (we were) also given plenty of time to search and compare optimal financing alternatives for the transaction.’

Sattler said Mantra’s shareholders were to vote on the deal with ARMZ on April 28, after which ARMZ would put the transaction to shareholders in May.

Mantra earlier indicated a resource base of 100 m lb for Mkuju, but Sattler said he expect this base to grow, as it was based on information dated December 2009. He said Mkuju could eventually contribute between 3.7 m lb and 5.7 m lb to annual production from 2014 onwards.

The group’s production forecast for 2011 is 10.5 m lb, to be increased to 12.5 m lb in 2012.

LOWER COSTS

During the period under review, the group achieved average cash cost per pound sold of $13, compared to $16 in 2009.

Attributable sales volumes increased by 116% to 6.9 m lb, while revenue were up 115% to $327m.

However, the carrying value of the Honeymoon Uranium project in Australia was written down by $113.5m, primarily due to the strengthening of the Australian dollar and increased capital expenditure.