[miningmx.com] — URANIUM One will have to pay around A$1bn to its controlling shareholder ARMZ to acquire Mantra Resources, which owns the Mkuju River uranium project in southern Tanzania.
CEO Chris Sattler told an investors’ conference call for the company’s March quarter results on Wednesday that Uranium One would then have to invest more than $430m in developing an operating mine at Mkuju.
Russian state uranium company ARMZ struck a deal to take over Mkuju in December, but also put in place an arrangement through which Uranium One will subsequently acquire Mantra and become the operator of the Mkuju mine.
In terms of that arrangement, Uranium One has a call option to acquire Mantra which it can exercise at any time within 12 months of the deal closing.
Uranium One can also extend that option to 24 months, provided it partially exercises the option and buys 15% of Mantra for $150m “before the later of six months of closing of the acquisition of Mantra by ARMZ and January 31, 2012′.
Sattler said this arrangement gave Uranium One “more flexibility and more time in the current changing uranium market to be able to put the right funding mix in place for the acquisition’.
He would not be pinned down by analysts on how Uranium One would fund the acquisition, and said: “This is work in progress. We will construct a package that offers the best value for our shareholders.’
Mantra recently published a definitive feasibility study on Mkuju, which estimated annual production from the mine at 4.2 million pounds of uranium oxide and put a capital cost of $430m on the project.
Sattler said: “We need to complete our own assessment of the project, but at this stage we think the mine could be a bit bigger which means the capital cost would be larger.’
Turning to the Fukushima incident, Sattler said this had led to a reduction of uranium demand in Japan because of the permanent shutdown of the Fukushima Daichi units and programme delays or extended outages at other reactors.
But he said: “While the impacts from Fukushima are not yet fully known, current indications are that uranium demand is expected to be reduced by only 5% over the next decade. As a result uranium market conditions should continue to be positive, particularly for diversified, low-cost producers such as Uranium One.’
Uranium One had recorded attributable production of 2.4 million pounds of uranium oxide in the March quarter, and reported net income of $14m.
