Western Prospector Group has announced an offer by a China National Nuclear Company subsidiary to buy all of its common shares in a deal worth about C$31 million ($25.3 million). Vancouver-based Western Prospector owns the Gurvanbulag uranium project in Mongolia.
Western Prospector president and CEO Eric Bohren described the all-cash offer as excellent value for shareholders,
|The headframe at Gurvanbulag
with the added bonus of being supported by a "well-established company in the international uranium marketplace." The company's board is unanimously recommending that its shareholders accept the offer. Hong Kong-listed CNNC International is 74% owned by CNNC Overseas Uranium Holding Ltd, itself a wholly owned unit of Chinese uranium and nuclear fuel company China National Nuclear Cooperation (CNNC).
Western Prospector had been set for a takeover by Hong Kong-based Tinpo Holdings Industrial Company last year but that offer was withdrawn in October 2008, with Tinpo citing a Mongolian government directive to explore nationalisation of the country's uranium industry. The CNNC International offer is less than half the estimated C$74 million ($60.4 million) that the Tinpo offer would have been worth, but Western Prospector has demanded that CNNC International place C$3 million ($2.5 million) in an escrow account to be payable if it breaches the terms of its agreement.
Extensive underground development work was carried out at Gurvanbulag during the Soviet era. Western Prospector has held the deposit since 2004, and a definitive feasibility study on the project released earlier this year suggested that the mine could produce 700 tonnes of uranium per year over nine years at costs that would be economically viable, although it would cost about $280 million to develop the mine. The study suggested that production could start by January 2012 if the necessary government permits were in place by the end of May 2009.
China meets about half of its current uranium needs from domestic production, but with plans for massive increases in its nuclear generation capacity it looks set increasingly to rely on imported uranium to fuel its nuclear program. As well as working to develop uranium mining in China, Chinese organisations and companies are also involved in uranium exploration and mining efforts in other countries through cooperation agreements, joint ventures and equity investments in several Central Asian and African countries. CNNC has also commissioned Canadian company Sparton Resources to undertake advanced trials on leaching uranium from coal ash.