| Fri 16 Jul 2010, 9:14 | | UUU - Uranium One Inc - Special committee and Board recommend transaction with |
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UUU
UUU - Uranium One Inc - Special committee and Board recommend transaction with
ARMZ
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
Uranium One Special Committee and Board Recommend Transaction with ARMZ
Vancouver, British Columbia and Johannesburg, South Africa - Further to its
press release of June 8, 2010, Uranium One Inc. ("Uranium One") announced
today that its Board of Directors has approved recommending to shareholders
the acquisition of a 50% interest in the Akbastau uranium mine and a 49.67%
interest in the Zarechnoye uranium mine (collectively, the "Assets") from JSC
Atomredmetzoloto ("ARMZ").
In addition, ARMZ will contribute US$ 610 million in cash, at least US$ 479
million of which will be paid directly to shareholders (other than ARMZ) as a
change of control premium after closing, by way of a special dividend of at
least US$ 1.06 per share.
In arriving at its decision, the Board took into account, among other things,
the recommendation of the Special Committee of independent directors formed to
review the transaction, a formal valuation of the Assets from the Special
Committee`s independent financial advisor, CIBC World Markets Inc. ("CIBC"),
as well as fairness opinions prepared by CIBC and the Company`s financial
advisor, BMO Capital Markets ("BMO"). CIBC`s formal valuation range for the
Assets is US$ 815 million to US$ 1.0 billion. The directors of Uranium One
who are officers of ARMZ, Messrs. Vadim Zhivov and Ilya Yampolskiy, declared
their interest in, and abstained from voting or making any recommendation in
respect of, the transaction.
The Board has accordingly recommended that shareholders of the Company vote in
favour of the transaction at a special meeting of shareholders to be held in
Vancouver, British Columbia on August 31, 2010.
Highlights of the transaction include:
* ARMZ will contribute Assets with an attributable value of US$ 907.5
million (based on the midpoint of CIBC`s formal valuation range)
* In addition, ARMZ will contribute US$ 610 million in cash largely as a
change of control premium
* Most of the cash contributed by ARMZ will be used to fund a special
dividend to shareholders (other than ARMZ) of at least US$ 1.06 per
share, representing a change of control premium
* ARMZ will receive 356 million new common shares of Uranium One
* Creation of the world`s 5th largest uranium producer with pro forma
attributable production of 10.5 million pounds U3O8 in 2011
* Approximately 60% increase in steady state attributable production from
Kazakhstan to approximately 16 million pounds U3O8 per year by 2017
* Industry leading margins with consolidated total cash costs per pound
sold to remain less than US$ 20
* Potential for operational and management synergies upon integration of
the acquired Assets
The foregoing assumes that Japan Uranium Management Inc. ("JUMI") will
exercise 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 definitive transaction documentation 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 shareholders (other
than ARMZ).
Uranium One also announced that the transaction has received all required
formal corporate approvals from ARMZ.
Jean Nortier, Chief Executive Officer of Uranium One said:
"Our due diligence has confirmed the high quality nature of the Akbastau and
Zarechnoye uranium mines. We look forward to completing this transaction by
the end of the year, which will propel Uranium One into the ranks of the
world`s largest uranium suppliers with an attractive consolidated total cash
cost of less than US$ 20 per pound."
Vadim Zhivov, Director General of ARMZ commented:
"From ARMZ`s perspective, this transaction will solidify Uranium One`s
position as a leading uranium supplier. We are committed to supporting
Uranium One in its continued growth strategy, which we expect will benefit all
shareholders of the Company."
Update on Transaction Process
The transaction is no longer subject to legal due diligence review, both
parties having completed their due diligence inquiries to their satisfaction
by July 15, 2010.
The transaction remains subject to Uranium One shareholder approval, including
majority of minority approval, to be sought at a special meeting of
shareholders to be held on August 31, 2010 in Vancouver, British Columbia.
The record date for shareholders entitled to receive notice of and attend the
special meeting is July 26, 2010. A notice of special meeting and management
information circular, including a copy of the CIBC formal valuation and
fairness opinion, is expected to be sent to registered and non-registered
shareholders on or about August 4, 2010.
The transaction, which is also subject to required Kazakh and other regulatory
approvals, and other usual and customary closing conditions, is expected to be
completed before the end of 2010.
Uranium One Board Composition
As previously disclosed, the Board of Uranium One will be reduced in size
following completion of the transaction from 13 to nine directors, five of
whom will be independent directors.
The five independent directors will include Ian Telfer, who will remain as
Independent Chairman of Uranium One. Ken Williamson, Chairman of the
Company`s Compensation Committee, and Andrew Adams, Chairman of the Company`s
Audit Committee, will also continue as independent directors of Uranium One.
The other two independent directors, each nominated by ARMZ, are Phillip
Shirvington, an existing independent director of Uranium One (and previously
CEO of UrAsia Energy Ltd.), and Peter Bowie, who will join the Board after
closing.
Peter Bowie served as the Chief Executive Officer of Deloitte China from 2003
to 2008 and was responsible for leading the strategy and operations of the
firm as it grew from 2,300 employees to over 8,200 employees to become
Deloitte`s third largest member firm globally. He was senior partner and a
member of the board and the Management Committee of Deloitte China until his
retirement from the firm in May 2010. Previously, Mr. Bowie was Chairman of
Deloitte Canada, a member of the firm`s Management Committee and a member of
the Board and Governance committees of Deloitte International. He is a member
of the Board of the Asian Corporate Governance Association and has served on a
variety of boards in the private and NGO sectors.
The balance of the Board will consist of Jean Nortier, the Company`s Chief
Executive Officer, Vadim Zhivov, Director General of ARMZ, Ilya Yampolskiy,
Deputy Director General of ARMZ, and one additional non-independent director
to be nominated by ARMZ before closing.
The foregoing assumes that JUMI exercises its right of repurchase under its
convertible debenture and ceases to be represented on the Uranium One Board
after closing. In the event JUMI continues to be entitled to Board
representation, ARMZ would be entitled to nominate additional independent
directors, to the extent required to ensure a majority of independent
directors.
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: +1 604 601-5642
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.
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
exercise by JUMI of its right of repurchase, the future steady state
production and cash costs of Uranium One, 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 and the realization of synergies relating
thereto, 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
16 July 2010
Date: 16/07/2010 09:14:15 Produced by the JSE SENS Department.
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