State-owned China Guangdong Nuclear Power Co (CGNPC) has agreed to acquire a stake of up to 70% in Australian uranium explorer Energy Metals.
|Development of the Bigrlyi deposit could follow the deal (Image: Paladin)
There are no operating uranium mines in the deal - only prospective ones in the form of known (but not JORC-compliant) uranium deposits, studied mainly during the 1970s. Nevertheless, CGNPC subsidiaries will pay a 19% premium on Energy Metals' closing price on 26 August, and a 60% premium to the three-month volume weighted average price up to that date.
A binding implementation deed has been signed with CGNPC Uranium Resources Co under which China Uranium Development (CUD), another CGNPC subsidiary, will make an offer for the 70% stake on the basis of A$1.02 ($0.88) cash per share by means of a proportional takeover bid.
Energy Metals said that it intends to conduct a 1:9 rights issue at A$0.90 ($0.78) per share to raise some A$11.7 million ($10.1 million). CUD is expected to fully underwrite the rights issue. The proceeds raised, Energy Metals said, will be used, "among other things, to accelerate the development of [its] Bigrlyi project," in which it holds a 53.7% stake.
The maximum interest of CUD in Energy Metals following completion of the bid and rights issue, if no other shareholders subscribe under the rights issue, will be 73%.
The transaction is subject to approval by Australian and Chinese regulatory authorities, as well as a minimum acceptance of 50.1%. Jindalee Resources, Energy Metals' largest shareholder with 40% of its issued capital, has stated that it intends to accept the bid, in the absence of a superior proposal.
Oscar Aamodt, chairman of Energy Metals, commented: "The Energy Metals board believes that CGNPC's financial resources, technical expertise and strategic intent to develop its uranium resource portfolio will greatly assist Energy Metals in its transition from explorer to developer and producer."
Energy Metals has nine projects located in Australia's Northern Territory and Western Australia. Most of the projects contain uranium mineralisation discovered by major companies in the 1970s, including the Bigrlyi project in Northern Territory, which is characterised by relatively high uranium. The Bigrlyi project is a joint venture with Paladin Resources' subsidiary Valhalla Uranium (42.1%) and Southern Cross Exploration (4.2%).
CGNPC, established in 1994, now has four operating nuclear power reactors with a total capacity of 4000 MWe at the Daya Bay and Ling Ao plants in China's Guangdong province. Additional reactors under construction at sites around China will give CGNPC a further 20,000 MWe of nuclear generating capacity. URC is responsible for managing all of CGNPC's domestic and foreign uranium trade and uranium resources investment. CUD is an investment vehicle of CGNPC for its foreign uranium resources investment.