Cameco to take the reins at Millennium uranium project
Cameco aims to buy a 16 or 28% stake in the Millennium uranium project in the Athabasca Basin for up to C$150 million from Areva. Also mulls Kintyre!
Posted: Friday , 02 Mar 2012
HALIFAX, NS (MINEWEB -
Top uranium producer Cameco (TSX: CCO) is set to become the majority owner of the Millenium uranium project in Saskatchewan. Areva, a nuclear power heavyweight, agreed to sell its 27.94 percent stake in the Millennium project to Cameco for $150 million, Cameco said on Friday morning.
That would bring Cameco's stake in the Millennium project to 69.9 percent from the 41.96 percent it already owns.
Whether Cameco gets the 69.9 percent interest is now in the hands of Japan-Canada Uranium, which is owned by Itochu, OURD, Mitsubishi and Mitsubishi Materials. Japan-Canada Uranium, through subsidiary JCU Exploration, owns 30.1 percent of Millennium and has the right of first refusal on ownership transfers.
If it uses the right, JCU can get a further 11.67 percent stake in the Millennium project, Cameco said. In this case Cameco would end up with an additional 16.27 percent of Millennium.
However it could be some time before JCU's owners decide whether to exercise or waive their rights to Millennium. Cameco said the transaction could close as early as March 15 but as late as June 6.
Either way, though, Cameco would go from controlling to majority shareholder of Millennium. If JCU pulls the trigger on the right of first refusal Cameco still ends up with 58.23 percent of the Millennium project.
And Areva isn't signing off all its ties. If production exceeds 63 million pounds uranium concentrate at Millennium, Cameco said Areva gets a four percent royalty on 27.94 percent of project revenue.
While Cameco has yet to say for sure if it will go ahead at Millennium - right now it is working on a feasibility of the project - it has stated that it is a key part of its strategy to replace reserves and grow uranium production. Cameco president and CEO Tim Gitzel put Millennium on a list of two projects beyond expansion of mining operations that Cameco was looking to as a means to achieve such growth in comments he made just days ago at the BMO Global Metals & Mining conference.
As Gitzel noted, one of the key advantages to Millennium is its proximity to Cameco's operating mines in northern Saskatchewan.
"If this project moves to development," he said, "it would allow us to capitalize on our existing milling capacity available in the Athabasca Basin." Indeed, Millennium, to be a high-grade underground mine, is just 36 kilometres north of Cameco's Key Lake mill, which is undboutedly where the would-be mine's ore would end up.
Indicated resources at Millennium are 508,000 tonnes @ 4.55 percent U3O8 for about 51 million pounds U3O8.
The other development asset Gitzel put at the top of Cameco's list was the Kintyre project in Western Australia.
Another project Cameco tried to get in the development pipeline was Hathor Exploration's exceptionally high grade Roughrider project in the Athabasca Basin.
In the second half of last year Cameco squared off with Rio Tinto in a bidding war for Hathor. But Rio trumped Cameco's offer of C$4.50 a share in cash - valuing Hathor at around C$625 million - with C$4.70 a share, also in cash.