Centerra shares drop 9% on rumor Cameco may be dumping Cdn$600m in Centerra shares
Author: Dorothy Kosich
Posted: Tuesday , 11 Aug 2009
RENO, NV -
Despite media reports and industry gossip which have Cameco on the threshold of dumping their Centerra Gold shares, representatives for both Cameco and Centerra say they have no knowledge of such activities.
Canada's Globe and Mail reported, "Saskatoon-based Cameco has tasked RBC Dominion Securities and CIBC World Markets with the massive share offering, according to sources familiar with the matter. "
"'They have been appointed to jointly place the stock,' said a source close to the situation," the paper said.
The story caused the stock price of Centerra stock to drop 9% Monday. Cameco was advised by the Investment Industry Regulatory Organization of Canada (IIROC) to publish a statement, assuring the market "there are no undisclosed material developments related to the progress of divesting the company's interest in Centerra Gold Inc."
Although Cameco has stated repeatedly for several years it wanted to get out of the gold business to concentrate on uranium, the company stressed Monday, "Contrary to speculation, the company is not working with underwriters to draft a preliminary prospectus."
Cameco spokesman Lyle Krahn told Mineweb Monday that the company has not been working to sell its shares in a public stock sale that the Globe and Mail claims would raise more than Cdn$600 million. Krahn also told the Canadian Press, "We want to focus on the nuclear business. That's where our best assets are and where we see the most opportunity for the future of the company."
The uranium company long ago agreed to sell a portion of its Centerra shares to the Republic of Kyrgyzstan, which wishes to hold a greater ownership of the Kumtor gold mine. Under a plan of arrangement announced in April, Cameco will reduce its Centerra holdings from 49% to perhaps 38%. The Kyrgyz Republic will eventually have a one-third interest in the gold miner with the remainder of the stock being held by the public.
Centerra President and CEO Steve Lang told Mineweb Monday that the gold miner has long been aware Cameco would like to get out of gold mining. Centerra was initially formed as a Cameco subsidiary. Nevertheless, he added, Cameco has not indicated to Centerra that the uranium miner is now preparing to sell its shares.
