Cameco, M'bishi to buy Rio Tinto uranium mine
News from Reuters
Cameco, M'bishi to buy Rio Tinto uranium mine
10/07/08
TOKYO (Reuters) - Canada's Cameco Corp and Japan's Mitsubishi Corp <8058.T> said on Thursday they will jointly acquire Kintyre uranium exploration project in Western Australia from Rio Tinto Ltd for $495 million.
Cameco will take a 70 percent interest in the project for $346.5 million while the Japanese trading house will acquire the remaining stake through its Sydney-based wholly owned unit Mitsubishi Development Pty Ltd.
Based on its due diligence, Cameco, the world's top uranium producer, said the Kintyre project may have potential deposits ranging from 62 to 80 million pounds of uranium.
"The Kintyre project is an ideal fit with Cameco's strategy to expand our base of quality uranium assets," Cameco Chief Executive Jerry Grandey said in a statement. "It adds potential for low-cost open pit production and further diversifies our uranium business geographically."
Guy Elliott, Rio Tinto chief financial officer, said the sale brings the Australian mining giant closer to achieving its asset sale target of $10 billion in 2008. He said the Kintyre project was the third sale under a planned program to divest at least a total of $15 billion in assets.
Rio added that there is no financing condition.
Earlier this year, Rio said it sold the Greens Creek mine in Alaska for $750 million and its interest in the Cortez operation in Nevada for $1.695 billion.
As soaring oil prices and international attempts to reduce greenhouse gas emissions have put the spotlight back on nuclear energy, Japanese trading houses are also moving to take upstream equity stakes in natural uranium production.
Mitsubishi last year took a 50 percent stake in a uranium mining project in Canada from CanAlaska Uranium Ltd .
Under the Kintyre project, uranium was first discovered in the area in 1985 but after extensive exploration that identified eight deposits it was placed in care and maintenance in 1988, when uranium prices declined below $12 per pound.
Rio Tinto put the property, 1,250 km (775 miles) northeast of Perth, up for sale in 2007. It covers about 52 square km (about 20 square miles).
Rio said it was also exploring options to divest its Rio Tinto Energy America (coal), Rio Tinto Minerals talc and borates businesses, Rio Tinto Alcan Packaging, Rio Tinto Alcan Engineered Products, Rio Tinto's interest in the Northparkes copper mine in Australia and Rio Tinto's Sweetwater uranium assets in the United States.
Cameco said the deal is expected to close in August and is subject to ministerial approval in Western Australia and the execution of certain agreements with the Martu people, who are the traditional owners of the land.
Cameco said it has experience working with the Martu through its ongoing exploration programs.
(Reporting by Yuko Inoue in Tokyo, Frank Pingue in Toronto and Carole Vaporean in New York; Editing by Walter Bagley)
© Reuters Limited. All Rights Reserved.
Reproduction or redistribution of Reuters content, including framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.