MOSCOW, Dec. 15 /CNW/ - JSC Atomredmetzoloto ("ARMZ"), the Russian state-owned uranium mining company announced today that it has closed in escrow the sale of its 50% interest in the Karatau Uranium Mine in Kazakhstan to a wholly-owned subsidiary of Uranium One Inc. ("Uranium One"). As consideration for the sale of ARMZ's interest in the Karatau Uranium Mine, Uranium One has issued 117 million common shares to ARMZ, representing a 19.9% ownership interest in the common share of Uranium One, as well as a US$90 million promissory note due to ARMZ in twelve months. The purchase agreement also provides for a contingent payment to Uranium One of up to US$60,000,000, payable in three equal tranches over the period between 2010 and 2012 subject to certain post-closing tax related adjustments. The common shares of Uranium One issued to ARMZ will be released from escrow upon: (i) the re-registration of Karatau Limited Liability Partnership by the applicable Kazakh state authority; and (ii) receipt of an amendment to the charter of Karatau Limited Liability Partnership, which identifies the Purchaser as the holder of the Karatau Interest, stamped by the applicable Kazakh state authority.
ARMZ has acquired ownership and control of the shares through its subsidiary, Effective Energy NV, located at Leliegracht 10, 1015 DE, Amsterdam, the Netherlands. ARMZ did not have beneficial ownership, control or direction of any Uranium One common shares prior to the date hereof. The transaction was effected by Effective Energy for investment purposes. Subject to a standstill restriction with Uranium One, Effective Energy and its affiliates may, from time to time, acquire additional common shares of Uranium One, dispose of some or all of the common shares of Uranium One that it exercises control or direction over, or may continue to hold the common shares of Uranium One. Effective Energy and ARMZ are joint actors in connection with the transaction.
ARMZ and Uranium One have also entered into a framework agreement (the "Framework Agreement") and an offtake agreement. Pursuant to the terms of the Framework Agreement, ARMZ has agreed to a standstill under which it may not (subject to certain exceptions), without Uranium One's prior consent, for a period of at least five years, acquire more than 19.95% of Uranium One's outstanding common shares.
ARMZ is the world's fifth largest uranium producer with operating mines in Russia and Kazakhstan. During 2008, operations in which ARMZ is involved produced 9.6 million pounds of U(3)O(8). ARMZ is part of Rosatom - the Russian State Corporation controlling the Russian Federation's nuclear activities. Together with its affiliates and subsidiaries, the company employs over 14,000 people.