Uranium One eyes African acquisitions

TORONTO (miningweekly.com) – TSX- and JSE-listed Uranium One may consider using some of the cash it will raise by selling almost 20% of itself to a Japanese consortium to buy uranium assets in Africa.

The Vancouver-based uranium miner, which produces the nuclear fuel in Kazakhstan, but also has projects in the pipeline in Australia and the US, is looking at a number of potential acquisitions, CEO Jean Nortier said in an interview.

In February, the firm announced it would sell a 19,9% stake to a group comprising Tokyo Electric Power Company, Toshiba Corporation and the Japan Bank for International Cooperation.

Uranium One already had about $200-million in cash and cash equivalents at the end of the first quarter, and will receive C$270-million (about $230-million) when the private placement closes - likely by mid-year.

Nortier declined to provide details of the potential targets, but hinted that the company would like to expand its African footprint.

“From a geography perspective, what interests us is the fact that more than half of the world's uranium will be mined out of Kazakhstan and Africa from the early 2010s,” he said.

“We obviously already have a good footprint in Kazakhstan, and I think that Africa is an interesting place to be.”

Although the company's current operations all use in-situ leach technology, the firm will not exclude buying conventional uranium mining assets.

However, one thing that the company is not looking at is greenfields opportunities.

As for Uranium One's existing African asset – the beleaguered Dominion operation in South Africa – Nortier says the company continues to have discussions with potential buyers for the mine.

The firm put the project on care and maintenance in October, citing plummeting uranium prices, cost inflation and a slower-than-expected ramp-up.

There are some parties conducting due diligence on the project, and others have indicated they would like to begin due diligence, but Nortier hesitated to comment on how long it could take before the mine's fate is decided.

“To be honest, it is not the most important thing for us right now.”

Depending on how the negotiations unfold with prospective buyers, Uranium One could also consider holding onto the asset and keeping it on care and maintenance for an extended period of time, until market conditions warrant reopening it.

However, because of South Africa's “use it or lose it” legislation governing mineral rights, this would require a special allowance to be made by government.

According to the law, companies must either develop a resource or give it up.

The company has not raised the issue with the government, but might consider initiating discussions depending on how the due diligence processes develop, he said.