ARMZ-Mantra deal revived

22 March 2011

The acquisition of Mantra Resources by Russian uranium miner AtomRedMetZoloto (ARMZ), which had appeared to be scuppered in the wake of the Fukushima nuclear emergency, is back on track after the companies agreed to revise their original agreement.

Last week, ARMZ notified Australia-based Mantra that events at Fukushima in the wake of the 11 March tsunami would be likely to have a detrimental effect on Mantra's business. As a result, a condition relating to 'material adverse change' in the 15 December 2010 implementation agreement could not be satisfied. However, the companies continued to seek out an alternative approach that would let the deal go ahead and have now agreed a revised transaction.

The new version of the agreement will see ARMZ acquire the entire issued share capital in Mantra by way of a so-called scheme of arrangement under which Mantra shareholders will receive a total of A$7.02 ($7.10) per share, made up of A$6.87 paid by ARMZ and a special dividend of A$0.15 per share to be paid by Mantra. This values Mantra at approximately A$1.02 billion ($1.03 billion), down on the terms agreed in December 2010 which saw the company valued at A$1.16 billion ($1.17 billion) but nevertheless representing a 32.7% premium over the latest trading price on the Australian stock exchange. Additionally, ARMZ has agreed to remove the 'material adverse change' condition from the scheme implementation agreement. Mantra's board has recommended its shareholders accept the offer and the transaction is expected to close in July 2011.

The original acquisition agreement included a so-called put/call agreement, giving ARMZ's Canadian subsidiary Uranium One an option to acquire Mantra from ARMZ within 12 months of the original closing date. The amended agreement will allow the put/call option to be extended to up to 24 months, dependent on various conditions.

Mantra's portfolio of uranium projects in southern Africa includes the Mkuju River project in southern Tanzania, with estimated mineral resources (measured, indicated and inferred) of 101.4 million pounds of uranium oxide (39,000 tonnes of uranium). Definitive feasibility studies are currently under way for a mining and heap leaching operation to produce 1400 tonnes of uranium per year.

Researched and written

by World Nuclear News


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