All change for uranium project ownership

05 March 2012

First Uranium has announced the sale of its principle South African operating assets to AngloGold Ashanti and Gold One, while Cameco is to secure majority ownership of the Millennium Project in Canada through the purchase of Areva's interest.

Toronto-based First Uranium has entered agreements to sell its Mine Waste Solutions (MWS) tailings recovery project to AngloGold Ashanti for $335 million and its Ezulwini gold and uranium mine to Gold One for $70 million. In addition, Gold One has provided First Uranium with a loan facility of up to $10 million. Both purchasers already own operations close by their new acquisitions and plan to take advantage of new synergies.

Government go-ahead for Talvivaara

The Finnish government has granted a licence for the extraction of uranium as a by-product from the Sotkamo nickel mine operated by Talvivaara Mining Company. The company expects to secure the remaining regulatory approvals needed to begin uranium production from Finnish authorities by mid-2012, and plans to start uranium production this year. Cameco is providing up-front investments of up to $60 million to cover the construction costs of the uranium extraction circuit under off-take agreements signed in 2011.

AngloGold Ashanti will be purchasing First Uranium's wholly owned subsidiary First Uranium (Pty) Ltd (South Africa), which owns the MWS tailing retreatment operation in the Vaal River region. AngloGold's own existing tailings facilities are close by, and AngloGold CEO Mark Cutifani described the purchase as an "excellent add-on opportunity." He said that as well as providing gold and uranium production, the transaction would provide "significant synergies" for the company. 

The MWS project is a gold and uranium recovery operation, comprising tailing deposits from 50 years of gold and uranium operations at Buffelsfontein. The project is estimated to contain some 62.1 million pounds of uranium (nearly 24,000 tU) according to AngloGold. Combined with AngloGold's own tailings facilities in the Vaal River region, the acquisition will give the company a combined mineral resource of 7.7 million ounces of gold and 154.4 million pounds of uranium (nearly 59,400 tU).

According to AngloGold, the purchase enhances the company's position as a "material long term uranium producer" as a byproduct of gold production. The company says it will complete the installation and commissioning of a new uranium circuit in 2014, allowing it to increase its long term uranium production to 3.0-4.5 million pounds (1154-1731 tU) per year. The operation is expected to have a life in excess of 30 years through the processing of tailings facilities from both Vaal River and MWS.

Ezulwini going to Gold One

Gold One is buying the Ezulwini gold and uranium mine and related assets through the acquisition of another First Uranium subsidiary, First Uranium Limited. First Uranium produced its first yellowcake at Ezulwini in 2009 with plans for a seven-year gradual ramp-up to 150 tU per year by 2013, although progress had been taking longer than expected.

The Ezulwini mine is contiguous to the Cooke Operations, which came into Gold One's portfolio when it acquired Rand Uranium in January 2012. According to Gold One, Ezulwini represents an attractive economic proposition in that it provides seamless regional consolidation with Gold One's Cooke Operations. The combination of Ezulwini with Cooke will provide immediate benefits in the realisation of uranium production from the Cooke Operations, the company says.

Gold One president and CEO Neal Froneman described the acquisition as a key component in the realization of synergies across underground operations at Cooke and surface operations at Randfontein. "With immediate access to Ezulwini’s uranium processing facility, we can now look towards unlocking the value of our joint underground resources and begin capitalising on our gold and uranium co-product strategy in the near term," he said.

Cameco takes Millennium

Cameco is set to become the majority shareholder in the Millennium project in Saskatchewan's Athabasca Basin with the announcement of an agreement to purchase Areva Resources Canada's 27.94% interest in the project for C$150 million ($151 million).

The project area is located between existing uranium operations at Key Lake and McArthur River. It is one of twelve claims under the Cree Lake Extension Joint Venture exploration project, currently owned by Cameco (41.96%), JCU (Canada) Exploration Company (30.1%) and Areva Resources Canada (27.94%), and operated by Cameco. Under the agreement, the 500 hectare Millennium claim will be designated as a separate project area under the Cree Lake Extension Joint Venture.

Under the terms of the Cree Lake Extension Joint Venture agreement, JCU has a right of refusal over any transfer. If JCU chooses to exercise its rights, it will stand to gain an additional 11.67% interest and Cameco will acquire an additional 16.27% interest. This would take Cameco's share in the project to 58.23%. If JCU does not exercise its rights, Cameco's acquisition of Areva's entire 27.94% would take its share to 69.9%.

"This agreement gives Cameco majority ownership of Millennium and further strengthens our base of uranium assets in the Athabasca Basin consistent with our growth strategy," said Cameco president and CEO Tim Gitzel. The project has identified indicated resources of 50.9 million pounds of uranium (19,579 tU) and inferred resources of 16.7 million pounds (6423 tU).

The transaction is expected to close no later than 6 June, although it could be completed as early as 15 March depending on the timing of JCU's decision.

Researched and written
by World Nuclear News

Filed under: Mining, Canada, South Africa