Following a bidding process, the Kintyre uranium deposit - potentially ready for development - has been bought from Rio Tinto by a Cameco and Mitsubishi joint venture for $495 million.
The Kintyre deposit (Image: UIC)
Canada's Cameco will own 70% of Kintyre and will operate the project. Mitsubishi of Japan, through its Sydney-based Mitsubishi Development Pty Ltd (MDP) subsidiary, will hold the remaining 30%.
The Kintyre uranium project, covering some six square kilometres, lies on the edge of the Great Sandy Desert in the Eastern Pilbara region of Western Australia, about 1250 kilometres northeast of Perth and 150 kilometres from Lake Disappointment.
The Kintyre orebody was discovered by Rio Tinto Exploration in 1985 through surface follow up of a number of radiometric anomalies which had been detected during an airborne survey of the company's leases in the Rudall region. Ground surveys and initial drilling established the presence of a significant orebody at Kintyre, identified from a very small surface outcrop.
The tenements include four granted mining leases and four mining lease applications. Uranium reserves of 24,000 tonnes U3O8 and inferred resources of 12,000 tonnes at relatively high grades were identified by Rio Tinto in 1988, though these are not claimed as JORC-compliant. The vein-type nature of the orebody makes it possible to use radiometric ore sorting so that the mill feed is effectively very high grade, resulting in low processing costs and a compact treatment plant. However, beyond paying $346.5 million, Cameco is cautious about the resource prospects.
Rio Tinto came close to opening an 1800-2000 tonnes U3O8 per year mine in the mid 1990s, but due to low uranium prices put the site on care and maintenance in 1998 and then decommissioned it in 2002. It was put on the market last year.
Jerry Grandey, president and CEO of Cameco, said: "The Kintyre project is an ideal fit with Cameco's strategy to expand our base of quality uranium assets. It adds potential for low-cost open pit production and further diversifies our uranium business geographically."
"This sale brings us closer to achieving our asset sales target of $10 billion in 2008, and is the third under a planned programme to divest of at least $15 billion of assets in total," said Guy Elliott, chief financial officer of Rio Tinto.
The purchase is expected to close in August subject to ministerial approval in Western Australia and the execution of certain agreements with the Martu traditional land owners. The Martu declared that they "are pleased with the process undertaken by Rio Tinto in the sale" and thanked them for their support to Martu.
Any mining of the Kintyre deposit would be subject to approvals by the state government of Western Australia and the Martu people. The current Western Australian government permits uranium exploration, but continues to oppose new mine development. However, Australian governments and political parties generally are becoming more supportive of uranium mining.