Senior miners buddy up with juniors

19 September 2007

Two of the world's leading uranium miners have taken steps to secure a foothold in possible future discoveries in Africa and South America through collaboration with junior exploration companies.

Bermuda-based Zambezi Resources has signed a letter of intent with Rio Tinto covering uranium rights at Mulofwe Dome in Zambia, under which Rio Tinto will commit to spending at least $1 million to assess uranium mineralization over 1250 square km. Rio Tinto may then elect to spend a further $5 million to earn 51% of the project's rights, in which case the two parties would incorporate a joint venture. Rio Tinto will manage the exploration program as well as any joint venture.

Separately, Canadian uranium giant Cameco announced that it had acquired 10.4% of junior exploration company Cue Capital, and advanced a strategic alliance for continued uranium exploration and development in Paraguay. The acquisition was the first part of a three-stage equity private placement by which Cameco also gains the right to own up to 60% of a joint venture to develop uranium discoveries on the Yuty project in south-east Paraguay.

Cameco paid $4.5 million for its 10.4% of Cue, and agreed to acquire additional shares and share purchase warrants for $15 million in the remaining stages, subject to Cue meeting certain milestones.

Cameco also signed an alliance agreement with Vena Resources of Peru earlier this month to create a jointly-owned company callen Minergia to explore and develop Vena's project areas. Cameco have the option to invest $10 million over four years in Minergia, to obtain up to 50%. After a feasibility study Cameco could increase its ownership to 60%, and to 70% should mine development commence.

"Given current valuations, strategic alliances with quality exploration companies offer the most economic path toward Cameco's goal to increase uranium production," said Jerry Grandey, Cameco's President and CEO, noting that the company has entered a total of five strategic alliances or investments with other exploration companies over the past year.

Cameco is the world's largest uranium producer, with a share of 21% of world uranium production in 2006. It has four operating uranium mines in Canada and the USA, and is developing two new mines in Canada and Kazakhstan.

Rio Tinto bills itself as one of the world's leading mining and exploration companies, with projects including aluminium, copper, diamonds, energy products, gold, industrial minerals and iron ore. Through its interests in the Ranger uranium mine in Australia and the Rossing mine in Namibia, currently ranked second and third in the in terms of output, it produced 18% of the world's uranium in 2006.

Further information

Cameco
RioTinto
ZambeziResources

WNA's Uranium in Africa information paper

WNN: Vena-Cameco sign Peruvian agreement

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