Trading Symbols: UUU - Toronto Stock Exchange, JSE Limited (Johannesburg
VANCOUVER and JOHANNESBURG, June 15 /CNW/ - Uranium One Inc. today
announced the signing of a definitive purchase agreement to acquire a 50%
interest in the Karatau Uranium Mine in Kazakhstan from JSC Atomredmetzoloto
("ARMZ"), the Russian state-owned uranium mining company.
The purchase price will be paid by way of the issuance of 117 million
common shares of Uranium One and a cash payment of US$ 90 million (or
equivalent promissory note). The purchase agreement also provides for a
contingent payment to ARMZ of up to US$ 60 million, payable in three equal
tranches over the period between 2010 and 2012 subject to certain post-closing
tax related adjustments.
The acquisition of a 50% interest in Karatau enhances Uranium One's
position as one of the world's leading uranium suppliers. Following the
acquisition, Uranium One is expected to have:
- attributable 2010 production guidance of 7.5 million pounds, an
approximate 35% increase over the Company's previous 2010 production
guidance of 5.6 million pounds
- 2010 weighted average cash operating costs of less than US$20 per
The acquisition is also expected to be accretive to Uranium One's net
asset value, cash flow, earnings and production per share, based on the
Company's internal evaluations.
Jean Nortier, President and Chief Executive Officer of Uranium One said:
"The acquisition of a 50% stake in Karatau adds another long-life, large
scale and high margin asset to our portfolio and will significantly enhance
Uranium One's production profile and cement its position of leadership in the
Kazakh uranium mining industry. The completion of this transaction, as well as
our previously announced private placement with the TEPCO/Toshiba/JBIC
consortium, will give us long-term partnerships with the governments of
Russia, Japan and Kazakhstan, as well as some of the most influential
customers and suppliers in the global nuclear industry."
Vadim Zhivov, Director General of ARMZ commented:
"I am delighted to announce our agreement with Uranium One to become a
significant shareholder and to enter into a long-term relationship. This
transaction meets all the strategic objectives of ARMZ, including increasing
our access to uranium reserves and resources, diversifying our ownership
interests in production assets and increasing our ability to supply uranium to
the Russian nuclear industry. I have just returned from a business trip to
Kazakhstan to discuss this transaction where I am pleased to say that this
agreement with Uranium One is viewed positively."
Concurrently with the purchase agreement, Uranium One has also entered
into a long-term offtake agreement and a framework agreement with ARMZ, both
of which will become effective upon closing of the Karatau acquisition.
Under the offtake agreement, so long as the framework agreement remains
in effect, ARMZ has an option to purchase on an annual basis, on
industry-standard terms, the greater of 50% of Karatau's annual production and
20% of Uranium One's available attributable production from assets in respect
of which it has the marketing rights.
The framework agreement provides Uranium One with an exclusive right to
negotiate the acquisition of ARMZ's 50% interest in the Akbastau Uranium
Project, which is currently in pilot production and is located adjacent to the
Karatau Uranium Mine. In addition, Uranium One has been granted a right of
first offer on ARMZ's assets outside the Russian Federation in the event ARMZ
determines to offer any of these for sale in the future.
ARMZ has also agreed to assist Uranium One in the opening of accounts
with Russian uranium converters and to use Russian uranium conversion and
enrichment facilities for the benefit of Uranium One's customers. Since
Uranium One currently receives payment for its production at conversion
facilities located in North America and Europe, access to Russian facilities
will potentially significantly shorten the time period required for the
Company to turn production into sale proceeds, and assist utility customers
with access to enrichment services, particularly those customers located in
Europe and Asia.
Upon closing of the Karatau acquisition (after giving effect to the C$270
million investment of the Japanese consortium), ARMZ will hold an indirect
16.6% interest in Uranium One. ARMZ has agreed to a standstill covenant under
which it may not (subject to certain exceptions), without Uranium One's prior
consent, for a period of at least five years from closing acquire more than
19.95% of Uranium One's outstanding common shares.
Uranium One has agreed to appoint Vadim Zhivov, Director General of ARMZ,
to its board of directors effective on closing and subject to regulatory
approval. Uranium One has agreed to appoint a second representative of ARMZ to
its board in May 2010 subject to receipt of shareholder approval to increase
the size of its board by one additional director.
The acquisition is subject to completion of a legal due diligence review
by ARMZ. The acquisition is not subject to technical or financial due
diligence conditions. Closing is also subject to the approval of the Kazakh
regulatory authorities and to certain other regulatory and stock exchange
regulatory approvals, as well as other usual and customary closing conditions.
Uranium One expects to close the acquisition on or before December 15, 2009.
The Karatau Uranium Mine
Karatau is part of the Budenovskoye complex and is located in close
proximity to the Akdala and South Inkai Mines of Uranium One's 70% owned
Betpak Dala joint venture. Karatau commenced commercial production in 2008 and
produced 1.7 million pounds U(3)O(8) in that year. For 2009, Uranium One
expects Karatau to produce approximately 3.3 million pounds U(3)O(8), at a
total cash cost per pound sold of approximately $15 per pound. Karatau is
expected to reach steady state production of 5.2 million pounds of U(3)O(8)
per year by 2011.
The other 50% interest in Karatau is held by JSC Kazatomprom, the
Kazakh-stated owned uranium mining company which also holds joint venture
interests in Uranium One's other Kazakh mines and projects.
According to an Independent Technical Report dated December 20, 2007
prepared by Scott Wilson Roscoe Postle Associates Inc. for a wholly owned
subsidiary of ARMZ, as at November 2007 Karatau had indicated resources
totalling 9.8 million tonnes, at a grade of 0.115% uranium, containing 11,273
tonnes of uranium (29.3 million pounds U(3)O(8)), and inferred resources
totalling 0.9 million tonnes, at a grade of 0.088% uranium containing 771
tonnes of uranium (2.0 million pounds U(3)O(8)). The resource estimates were
prepared in accordance with the CIM Definition Standards on Mineral Resources
and Mineral Reserves adopted by the Canadian Institute of Mining, Metallurgy
and Petroleum and National Instrument 43-101 - Standards of Disclosure for
The resource estimate is based on parameters (e.g. cut-off grade,
grade-thickness, internal waste, mineralization to waste ratio, block size,
permeability and density) used for the South Inkai deposit and originally
approved by the Ministry of Geology and the Ministry of Atomic Energy and
Industry of the USSR. The modelling methodology applied considered similar
structural and tectonic characteristics, lithological and facies types and
hydrogeological and geotechnical features. The 2007 resource estimate is based
on information from approximately 59,000 metres of drilling. The indicated
resources have been drilled on fences 200 metres apart, with holes spaced at
50 metres. The inferred resources have been drilled on fences 400 metres
apart, with holes spaced at 50 to 200 metres apart. Gamma ray logging is used
in conjunction with the geological interpretations to determine the uranium
The mineral resource estimate for the Karatau Uranium Mine is updated
each year and certified by JSC Volkovgeologia on behalf of the Kazakhstan
State Committee on Reserves. The most recent update made as of November 1,
2008 has not yet been converted to the CIM standards prescribed by the
Canadian Institute of Mining, Metallurgy and Petroleum.
BMO Capital Markets is acting as the financial advisor to Uranium One
with respect to this transaction. Uranium One's legal advisors are Fasken
Martineau DuMoulin LLP and Macleod Dixon LLP. Goldman Sachs International is
acting as the financial advisor to ARMZ and Stikeman Elliott LLP, Allen &
Overy LLP and Aequitas Law Firm are acting as legal advisors to ARMZ with
respect to this transaction.
Uranium One will be hosting a conference call and webcast for investors
and analysts on Monday, June 15, 2009 at 10:30 am (Eastern Time) to discuss
the transaction. Participants may join the call by dialling toll-free
1-800-732-9303 or 1-416-644-3415 for local calls or calls from outside Canada
and the United States. A live webcast of the call will be available through
CNW Group's website at: www.newswire.ca/webcast
A recording of the conference call will be available for replay for a two
week period beginning at approximately 1:30 pm (Eastern Time) on June 15, 2009
by dialling toll-free 1-877-289-8525 or 1-416-640-1917 for local calls or
calls from outside Canada and the United States. The pass code for the replay
is 21308837. A replay of the webcast will be available through a link on our
website at www.uranium1.com
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 wholly owned by
Atomenergoprom, the holding company which consolidates all civil nuclear
assets and, in turn, is part of Rosatom - the Russian State Corporation
controlling the nation's nuclear activities.
About Uranium One
Uranium One is one of the world's largest publicly traded uranium
producers with a globally diversified portfolio of assets located in
Kazakhstan, the United States, South Africa and Australia.
No stock exchange, securities commission or other regulatory authority
has approved or disapproved the information contained herein.
Investors are advised to refer to independent technical reports
containing detailed information with respect to the material properties of
Uranium One. These technical reports are available under the profiles of
Uranium One Inc., UrAsia Energy Ltd., and Energy Metals Corporation at
www.sedar.com. Those technical reports provide the date of each resource or
reserve estimate, details of the key assumptions, methods and parameters used
in the estimates, details of quality and grade or quality of each resource or
reserve and a general discussion of the extent to which the estimate may be
materially affected by any known environmental, permitting, legal, taxation,
socio-political, marketing, or other relevant issues. The technical reports
also provide information with respect to data verification in the estimation.
This document uses the terms "measured", "indicated" and "inferred"
resources as defined in accordance with National Instrument 43-101 - Standards
of Disclosure for Mineral Projects. United States investors are advised that
while these terms are recognized and required by Canadian regulations, the SEC
does not recognize them. Investors are cautioned not to assume that all or any
part of the mineral deposits in these categories will ever be converted into
reserves. In addition, "inferred resources" have a great amount of uncertainty
as to their existence and economic and legal feasibility and it cannot be
assumed that all or any part of an inferred mineral resource will be ever be
upgraded to a higher category. Investors are cautioned not to assume that all
or any part of an inferred resource exists or is economically or legally
mineable. Mineral resources are not mineral reserves and do not have
demonstrated economic viability.
Scientific and technical information contained herein has been reviewed
on behalf of Uranium One by Mr. M.H.G. Heyns, Pr.Sci.Nat. (SACNASP), MSAIMM,
MGSSA, Senior Vice President of Uranium One Inc., a Qualified Person for the
purposes of NI 43-101.
Scientific and technical information contained herein has been reviewed
on behalf of Effective Energy N.V. (a wholly owned subsidiary of ARMZ) by
Wayne W. Valiant, P.Geo, John I. Kyle, P.E. and Helen Oliver, C.Geol. of Scott
Wilson RPA - all Qualified Persons for the purpose of NI 43-101.
Forward-looking statements: This press release contains certain
forward-looking statements. Forward-looking statements include but are not
limited to those with respect to the price of uranium, the estimation of
mineral resources and reserves, the realization of mineral reserve estimates,
the timing and amount of estimated future production, costs of production,
capital expenditures, costs and timing of the development of new deposits,
success of exploration activities, permitting time lines, currency
fluctuations, requirements for additional capital, government regulation of
mining operations, environmental risks, unanticipated reclamation expenses,
title disputes or claims and limitations on insurance coverage and the timing
and possible outcome of pending litigation. In certain cases, forward-looking
statements can be identified by the use of words such as "plans", "expects" or
"does not expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or "believes"
or variations of such words and phrases, or state that certain actions, events
or results "may", "could", "would", "might" or "will" be taken, occur or be
achieved. Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Uranium One to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such risks and uncertainties include, among
others, the actual results of current exploration activities, conclusions of
economic evaluations, changes in project parameters as plans continue to be
refined, possible variations in grade and ore densities or recovery rates,
failure of plant, equipment or processes to operate as anticipated, accidents,
labour disputes or other risks of the mining industry, delays in obtaining
government approvals or financing or in completion of development or
construction activities, risks relating to the integration of acquisitions, to
international operations, to prices of uranium as well as those factors
referred to in the section entitled "Risk Factors" in Uranium One's Annual
Information Form for the year ended December 31, 2008, which is available on
SEDAR at www.sedar.com, and which should be reviewed in conjunction with this
document. Although Uranium One has attempted to identify important factors
that could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other factors that
cause actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that forward-looking statements will prove
to be accurate, as actual results and future events could differ materially
from those anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. Uranium One expressly
disclaims any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise, except in accordance with applicable securities laws.
For further information about Uranium One, please visit www.uranium1.com.
For further information:
For further information: Jean Nortier, Chief Executive Officer, Tel:
(778) 384-6217; Chris Sattler, Executive Vice President, Corporate Development
and Investor Relations, Tel: (647) 408-8274