Russia continues to diversify uranium base

15 December 2010

Russia's AtomRedMetZoloto (ARMZ) has further diversified its uranium resources by buying into two prospective deposits, one in Mongolia and one in Tanzania. 

An agreement between Russia and Mongolia will see the formation of a mining company - Dornod Uran - that will develop the Dornod uranium resource in Mongolia. The signing brought together the heads of Rosatom, ARMZ, the Mongolian atomic energy agency (NEA) and Mongolian state-owned company Monatom, and took place before the Russian and Mongolian prime ministers on 14 December.


The company's board will consist of ten members, evenly representing Russian and Mongolian interests. Share allocation will be 49% to ARMZ, and 51% to Monatom, ensuring Mongolian control.


The agreement further thwarts the hopes of Canadian based Khan Resources, which had intended to develop the Dornod deposit after acquiring a mining licence and conducting a feasibility study in 2009. The mining license was then suspended twice as the company became swept up in new ownership laws that require compulsory state ownership of at least 51% of any uranium venture. In a dragged out battle, Khan was then subject to a hostile takeover bid by ARMZ late in 2009, and in April 2010 the NEA ruled that Khan's mining license was invalid, although a later Mongolian high court decision overruled this.  


ARMZ buys Mantra Resources 


ARMZ has also made a $1.2 billion offer to purchase all shares in Australian based uranium mining company Mantra Resources. The friendly bid has been agreed to by the Mantra board, but remains subject to an expert review and Australian government approval. It will effectively give ARMZ control over the Mjuku river project in Tanzania, further adding to its portfolio of uranium assets.


The Mantra and Dornod deals top off an expansive year for ARMZ which has aggressively pursued a strategy of geographic diversification. In a major deal made June this year, ARMZ acquired 51% of the shares of Canadian miner Uranium One, effectively increasing its presence in Kazakhstan and cementing its place in the world's top five uranium producing companies. Pending approvals, the ownership of Mantra will be transferred to ARMZ's Canadian-based subsidiary, Uranium One.
Researched and written
by World Nuclear News