Kazakhstan's ministry of energy and mineral resources has approved Canada-based Uranium One's previously announced acquisition of a 50% stake in the Karatau uranium project from Russia's Atomredmetzoloto (ARMZ).
In June, Uranium One announced a shares-plus-cash deal with ARMZ to acquire a half share of the Karatau project. The Russian joint stock company thereby enters a strategic relationship with Uranium One, obtaining a 16.6% share of the company plus some $90 million in cash and a further $60 million depending on performance over the next three years.
Part of the deal is an offtake agreement which will give ARMZ an option to purchase up to 20% of Uranium One's production if this is greater than its 50% share from Karatau.
The ministry's approval of the deal includes a waiver of the pre-emptive right of the Kazakh state under the Subsoil Use Law of Kazakhstan. Uranium One said that it expects to close the acquisition around mid-December, subject to approvals from the Kazakh Anti-Monopoly Commission and the Australian Foreign Investment Review Board.
The Karatau project mines the southern part of the Budenovskoye orebody in the northern group of mines in the Chu-Sarysu basin of southern Kazakhstan. The mine has been known as Budenovskoye 2, and started production last year. Karatau was set up in 2005 and since mid-2006 it has been a 50-50 joint venture between KazAtomProm and Russia's Tenex, with that share being taken over by ARMZ, and now sold on to Uranium One.
In 2008, the mine produced 655 tonnes of uranium, and this year it is expected to produce about 1300 tonnes, ramping up to 2000 tonnes per year by 2011. The mine has indicated resources of 11,273 tonnes of uranium and 771 tonnes as inferred resources compliant with the NI 43-101 reporting standard.
Uranium One's share of production at Karatau in 2010 is expected to be 2.3 million pounds U3O8 (885 tU) at an average cash cost of $14 per pound sold. At full production levels, the company’s share of output from Karatau should be 2.6 million pounds U3O8 (1000 tU).
Meanwhile, Uranium One has appointed ARMZ Director General Vadim Zhivov to its board of directors effective on closing and subject to regulatory approval.