Russia's Rosatom to buy 16.6-per cent stake in Canada's Uranium One

17 June 2009

Russia's Rosatom State Atomic Energy Corporation (Rosatom), the country's monoply controller of all activities related to nuclear power both for civilian and defense use in Russia, is set to buy a 16.6-per cent stake in Canada's Uranium One Inc – one of the world's largest uranium producers, in exchange for a 50-per cent stake in a uranium mine.

Uranium One announced on Monday that the company signed a definitive agreement with Atomredmetzoloto (ARMZ) the Russian state-owned uranium mining company (under Atomenergoprom which manages all civil nuclear assets and in turn part of Rosatom) to acquire 50 per cent stake in its Karatau uranium mine in Kazakhstan in a cash-and-stock deal.

The deal comprises issue of 117 million common shares of Uranium One which will account for 16.6 per cent stake in the company and a cash payment of $150 million.

A long-term off-take agreement has also been signed by both the parties under which ARMZ has an option to purchase, on industry-standard terms, the greater of 50 per cent of uranium concentrate produced by the Karatau uranium mine (equal to 1000 t at full capacity) or up to 20 per cent of Uranium One's available attributable production.

Russia is world's third-largest holder of uranium resources after Australia and Kazakhstan with 10 per cent of recoverable reserves. It accounts for 8 per cent of mine production and has around 40 per cent of the world's uranium enrichment capacity. Rosatom is on the lookout for cheaper uranium assets worldwide.

Uranium One CEO Jean Nortier said, ''The acquisition 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.''