| Tue 8 Jun 2010, 14:30 | | UUU - Uranium One Inc - News Release |
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UUU - Uranium One Inc - News Release
Uranium One Inc
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: UUU & ISIN: CA91701P1053
Share code on the TSX: UUU & ISIN: CA91701P1053
NEWS RELEASE
June 8, 2010
Uranium One to Acquire Two More Kazakh Mines from ARMZ and
To Pay Special Dividend to Minority Shareholders of at least US$ 1.06 per
Share
Vancouver, British Columbia and Johannesburg, South Africa - Uranium One Inc.
("Uranium One" or the "Company") today announced the signing of a definitive
purchase and subscription agreement ("PSA") with JSC Atomredmetzoloto
("ARMZ") under which Uranium One will acquire ARMZ`s 50% interest in the
Akbastau Uranium Mine ("Akbastau") and its 49.67% interest in the Zarechnoye
Uranium Mine ("Zarechnoye"), both located in southern Kazakhstan.
The acquisition will increase Uranium One`s steady state production from its
Kazakhstan assets by approximately 60%, from approximately 10 million pounds
to approximately 16 million pounds. Total cash costs per pound sold are
expected to remain less than US$ 20 per pound on a consolidated basis.
Uranium One expects to realize management and operating synergies upon
integration of these assets, especially at Akbastau, which is contiguous to
the Company`s Karatau Uranium Mine.
Pursuant to the transaction, ARMZ will contribute its interests in the
Akbastau and Zarechnoye joint ventures and US$ 610 million in cash, in return
for 356 million new common shares of Uranium One. Following closing, Uranium
One will pay a special cash dividend of at least US$ 1.06 per share to
shareholders other than ARMZ. The foregoing assumes that Japan Uranium
Management Inc. ("JUMI") exercises its right of repurchase under the terms of
its convertible debenture, which will be triggered by the transaction.
Should JUMI elect to retain its debentures, the PSA provides for
consequential increases in the cash to be contributed by ARMZ to Uranium One,
shares issued by Uranium One to ARMZ and dividends paid to minority
shareholders.
ARMZ currently holds 23.1% of Uranium One`s outstanding common shares. On
completion of the transaction, ARMZ will own not less than 51% of the
Company`s outstanding common shares. ARMZ has agreed to a standstill of 18
months from closing during which it may not, without prior consent, dispose
of or acquire any additional Uranium One shares, except pursuant to agreed
anti-dilution rights, which will permit ARMZ to maintain not less than a 51%
interest in the Company and to certain other exceptions.
The transaction terms also include "coat-tail" protections under which ARMZ
has agreed not to sell any of its Uranium One common shares to a purchaser
who would, after such sale, hold 33.3% or more of Uranium One`s common shares
unless that sale was made pursuant to an identical offer made to all Uranium
One shareholders.
In addition, the Board of Uranium One will be reduced from thirteen to nine
directors but continue to have a majority of independent directors. ARMZ will
be entitled to appoint three nominees to the Board of Uranium One. Ian
Telfer will continue as Chairman and Jean Nortier will continue as Chief
Executive Officer.
Jean Nortier, Chief Executive Officer of Uranium One said:
"The acquisition of 50% stakes in two additional, high quality and long life
ISR mines strengthens Uranium One`s asset portfolio and positions the Company
to be among the world`s top 5 uranium producers by 2011, as our Kazakh assets
ramp up to full capacity. I am very pleased that we can also deliver to our
shareholders a significant premium to the current value of their shares in
the form of a special cash dividend and ongoing participation in the enlarged
and enhanced company."
Vadim Zhivov, Director General of ARMZ commented:
"I am delighted to announce our agreement to become the majority shareholder
of Uranium One. With the strong support of ARMZ, and under the continued
leadership of an independent Board and professional management team, I am
confident that Uranium One will develop into a leading global uranium
producer, to the benefit of all the Company`s shareholders and stakeholders."
In connection with the transaction, Uranium One and ARMZ have also agreed to
amend the offtake agreement between the parties, to provide ARMZ with
increased offtake rights commensurate with its increased equity ownership
interest in Uranium One. Uranium One`s existing uranium supply contracts
will not be affected by the transaction. The transaction also does not
affect Uranium One`s existing 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.
Uranium One will be holding consultations with the members of the JUMI
consortium shortly, with a view to determining whether they wish to exercise
their debenture repurchase right on completion of the transaction.
Transaction Process
The transaction constitutes a related party transaction under applicable
Canadian securities legislation. Uranium One has accordingly formed an
Independent Committee of the Board to review the transaction, supervise the
preparation of a formal valuation and to provide the Board with its
recommendations thereon. The Independent Committee has engaged CIBC World
Markets Inc. as its independent financial adviser and has also retained
Cassels Brock & Blackwell as legal counsel.
The transaction is subject to the Independent Committee and the Board of
Directors of Uranium One having resolved to recommend the transaction to
shareholders, to the approval of the Board of Directors of ARMZ, and to the
satisfactory completion of legal due diligence reviews by both parties, in
each case by no later than July 15, 2010. The transaction is also subject to
Uranium One shareholder approval, including majority of minority approval, to
be sought at a shareholders meeting expected to be held in August 2010, as
well as to required Kazakh and other regulatory approvals, and other usual
and customary closing conditions. The transaction is expected to be
completed before the end of 2010.
Uranium One has agreed to customary non-solicitation provisions with ARMZ,
which permit Uranium One to accept a superior transaction, subject to ARMZ
having a five business day right to match and to the payment of a break fee
of $40 million in certain circumstances.
Overview of Akbastau
Akbastau is owned 50% by ARMZ and 50% by Kazatomprom and operates sites 1, 3
and 4 of the Budenovskoye Deposit in southern Kazakhstan. Karatau, in which
Uranium One owns a 50% interest, operates site 2 of the Budenovskoye Deposit.
Production from Akbastau commenced in 2009 and totalled 1.0 million pounds
U3O8. Pregnant solutions from the well fields at site 1 at Akbastau are
currently being treated at the Karatau processing facilities.
Under the terms of its subsoil use agreements, Akbastau has the exclusive
right to carry on exploration, extraction, mining and sales of uranium from
sites 3 and 4 of the Budenovskoye Deposit until 2037 and from site 1 until
2036.
Steady state production from Akbastau is expected to be 7.8 million pounds
U3O8 per year.
According to an independent technical report dated March 2, 2010 prepared
Wayne W. Valliant, P.Geo. and John I. Kyle, P.E. of Scott Wilson Roscoe
Postle Associates Inc. for a wholly owned subsidiary of ARMZ, as at July 1,
2009 Akbastau had Indicated Resources totalling 12.0 million tonnes at a
grade of 0.096% uranium containing 11,453 tonnes of uranium (29.8 million
pounds U3O8), and Inferred Resources totalling 26.5 million tonnes at a grade
of 0.093% uranium containing 24,547 tonnes of uranium (63.6 million pounds
U3O8). 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 Mineral Projects.
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 2009 resource estimate is
based on information from approximately 260,800 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 content.
Overview of Zarechnoye
ARMZ has a 49.67% interest in Zarechnoye. Kazatomprom owns a 49.67% interest
in the joint venture, and an affiliate of the Kyrgyz government owns the
remaining 0.66%. Zarechnoye owns both the Zarechnoye and South Zarechnoye
deposits, located in southern Kazakhstan.
The Zarechnoye deposit was discovered in 1977 and commenced operations in
2007. The South Zarechnoye deposit was discovered in 1989 and is expected to
become operational in 2014.
Production from Zarechnoye during 2008 was approximately 0.4 million pounds
U3O8 and production in 2009 was approximately 1.3 million pounds U3O8.
Zarechnoye is expected to ramp up to full production of approximately 2.5
million pounds U3O8 per year by 2012. Full production from South Zarechnoye
is expected to be approximately 1.6 million pounds U3O8.
Under its subsoil use agreement, the Zarechnoye joint venture has the
exclusive right to carry on exploration, extraction, mining and sales of
uranium until 2027. The South Zarechnoye joint venture has the exclusive
right to carry on exploration, extraction, mining and sales of uranium from
South Zarechnoye until 2037.
Uranium One has engaged Scott Wilson Roscoe Postle Associates Inc. to provide
an independent technical report for Zarechnoye, which the Company expects
will be completed in July 2010.
Other
Uranium One also announced today that it has recently sold substantially all
of its previously acquired shares of Paladin Energy Ltd. The sale proceeds
will supplement the capital resources available to the Company for the cash
outflows contemplated by the proposed transaction.
Advisors
BMO Capital Markets is acting as the financial advisor to Uranium One with
respect to the ARMZ 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 and Aequitas
Law Firm are acting as legal advisors to ARMZ with respect to this
transaction.
Conference Call
Uranium One will be hosting a conference call and webcast for investors and
analysts today, June 8, 2010 at 10:00 AM (Eastern Time) to discuss the
transaction. Participants may join the call by dialling toll-free 1-888-231-
8191 or 1-647-427-7450 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/en/webcast.
A recording of the conference call will be available for replay for a two
week period beginning at approximately 12:00 PM (Eastern Time) on June 8,
2010 by dialling toll-free 1-800-642-1687 or 1-416-849-0833 for local calls
or calls from outside Canada and the United States. The pass code for the
replay is 80491454. A replay of the webcast will be available through a link
on our website at www.uranium1.com.
About ARMZ
ARMZ is the world`s fifth largest uranium producer with operating mines in
Russia and Kazakhstan. During 2009, operations in which ARMZ is involved
produced 12.1 million pounds of U3O8. It is wholly-owned by State Atomic
Energy Corporation "Rosatom", the Russian State Corporation for Nuclear
Energy which consolidates all nuclear assets of the Russian Federation.
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 and Australia.
For further information, please contact:
Jean Nortier
Chief Executive Officer
Tel: +1 778 384-6217
Chris Sattler
Executive Vice President, Corporate Development and Investor Relations
Tel: + 1 416 350-3657
Cautionary Statement
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. Valliant, P.Geo. and John I. Kyle, P.E. of Scott Wilson RPA Inc. - both
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 completion of the transaction described in this press release,
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, 2009, 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.
Sponsor
Nedbank Capital
Date: 08/06/2010 14:30:01 Produced by the JSE SENS Department.
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