This is an edited version of a monthly column published 12/16/09 in Fuel Cycle Week V8:N357 by International Nuclear Associates, Washington, DC.
Cameco sells gold mine shares to focus on uranium
Cameco (TSX:CCO), one of the world's largest uranium producers, will reap estimated net proceeds of [cdn] $872 million by divesting its position in Centerra Gold. The announcement was accompanied by a promise to shareholders it will stick to priorities in uranium mining and nuclear energy.
Cameco said in a statement it plans to use the net proceeds "primarily to grow its core uranium business as it pursues its target of doubling uranium production."
Cameco will dispose of its entire interest in Centerra, consisting of 113,918,472 common shares, or 48.5% of the outstanding common shares. At market open on Dec 14, Centerra (TSE:CG) traded at $10.45 making the stake being divested by Cameco worth $1.19 billion.
Lyle Krahn, a spokesman for Cameco, told FCW that there are, in effect, two transactions to divest Cameco's interests in the gold mining venture. The first will involve offering 88.6 million shares of Centarra for public sale in Canada and by private placement elsewhere.
The second transaction involves the transfer of 25.3 million common shares of Centerra to Kyrgazaltyn JSC pursuant to an agreement which Cameco entered into with the Government of Kyrgyz Republic on April 24, 2009.
A uranium industry executive familiar with the gold mine operation told FCW the payoff will satisfy the Kyrgyz government's claims that it didn't get full value from its deal with Cameco given the rapid rise in gold prices over the past year due to the global financial crisis.
He added that getting out of the gold mine is a "good deal for Cameco. The regulatory issues associated with the min, now resolved, would have been hard to litigate in that country and could have become a major distraction for Cameco's managers.
He noted that the gold mine was beneficial to Cameco because it buffered the company's finances in the 1990s when uranium prices were much lower. The net effect of divesting itself from Canterra is that Cameco no longer has political risks for its non-uranium investments related to unstable politics in regimes with closed societies.
Krahn pointed out the proceeds from the public sale of Centerra shares will be used by the firm to support its goal of doubling uranium production from 20 million pounds a year to 40 million pounds a year by 2018.
Asked whether Cameco will use the proceeds from sale of Centerra stock to fund acquisitions, Krahn told FCW, "we have the financial flexibility to look for opportunities to increase uranium production."
An industry executive familiar with the company told FCW that one of Cameco's targets could be the British government's interest in Urenco which reportedly will be offered for sale. This assumes the Dutch and German governments don't exercise their rights first. However, Urenco's current owners might have questions about Cameco's 24% $125 million stake in Ge-Hitachi's laser enrichment process.
The executive also said rumors Cameco might buy a stake in Palladin, or the whole company outright, don't make financial sense due to the cost.
The executive added that Cameco doesn't yet have a stake in Africa which he feels is going to be the next major source of production. "You have to be there," he said. "The only question is what is the right project?"
Overall, the executive said, Cameco will now have enough cash to make a number of choices including just buying uranium on the spot market.
In August 2008, Cameco completed the acquisition of a 70% interest in the Kintyre uranium exploration project in Western Australia. A joint venture comprised of Cameco (70%) and Mitsubishi Development Pty Ltd (30%) purchased the Kintyre project from Rio Tinto. Also during 2008, the company acquired 24% interest in Global Laser Enrichment (GLE) based in North Carolina. GLE is focused on developing an uranium enrichment process using laser technology.
The Vancouver Sun reported Dec 9 that Cameco chief executive Jerry Grandey, who highlighted Paladin as an attractive takeover candidate in November, suggested that Cameco will also consider acquisitions and joint ventures with customers in Asia. The Sun reported extensive speculation by numerous investment analysts for a variety of target opportunities, but none of them provoked comment from Cameco.
Bayswater provides NI 43-101 resource estimate for Anna Lake
Bayswater (CVE:BAY) announced the results of an NI 43-101 Mineral Resource Estimate for its 100% owned Anna Lake Deposit located in the Central Mineral Belt (CMB) of Labrador. The Anna Lake estimate indicates an inferred resource of 4.91 million pounds U3O8 using a 0.030% cutoff (5.06 million tonnes averaging 0.044 % U3O8). Also contained within this resource are an estimated 1.56 million pounds of molybdenum.
Bayswater CEO George Leary said in a statement additional exploratory drilling will be needed to move the deposit into the measured and indicated categories. No economic feasibility studies have been completed for the site which is near Fronteer's Jacques Lake deposit. Both open pit and underground mine operations will be assessed for the project.
Crosshair discovers new uranium find in Labrador
Crosshair Exploration & Mining (TSE:CXX) announced discovery of several new uranium targets in the Central Mineral Belt (CMB) Joint Venture uranium project in central Labrador. Exploration activities in 2009 resulted in discovery of four new uranium targets as well as confirming the presence of historic high grade mineralized material at the CMB-East property. The best new result is 2.19% U3O8.
The CMB property is directly west and adjoins the Jacques Lake Deposit controlled by Fronteer Development Group. The CMB project is a joint venture with Crosshair (60%) Silver Spruce Resources (CVE:SSE) which owns the other 40%.
Crosshair also announced Nov 20 that it had closed a private placement for $2.3 million to support further exploration of vanadium properties in the Central Mineral Belt of Labrador.
Uracan discovers new uranium mineralization in Quebec
Uracan reports on channel assay results from the Summer 2009 exploration program at its 100% owned North Shore Project in Quebec. Highlights include samples graded at 3.48 pounds U308 per ton of ore (0.174%). A total of 42 channels containing 376 samples were taken in seven separate zones in the exploration area. The results of two of these zones, the Grandroy and Turgeon zones, were previously released on August 26th and September 29th, 2009.
On Nov 16 Uracan closed a $5.1 million private placement the proceeds of which will be used to continue development of the company's properties in Quebec and Saskatchewan.
Uravan takes land position in Athabasca basin
Uravan Minerals (CVE:UVN) has started acquiring a land position in the Athabasca Basin, Saskatchewan. This is a significant first step in obtaining a major position in this uranium endowed district. The firm is identifying additional acquisition opportunities.
Larry Lahusen, Uravan CEO, told FCW the reason for the move is "there are too many headwinds with aboriginal land claims that are not getting resolved by the federal government."
He said it takes too long for a junior uranium company to wait around while complex land issues are pending. "We're tired of it," he said."
"If you can't get a drill on the land, your investment there is worthless."
He said the firm is also being buffeted by environmental issues that don't make any sense. For example, he said that environmental groups have claimed the drill rigs will disrupt caribou calving grounds.
"Drills don't bother caribou," he said.
To resolve these issues, the firm would have to pay for expensive environmental impact statements with no guarantee they could proceed with exploration.
"We're not going to do it. It is untenable," he said. "As a uranium junior our investors have no patience with these kinds of delays."
"The reason we're going to Saskatchewan is that we know we can go there and be successful without all this other stuff."
Uravan has three projects in Canada. Two uranium projects in the Thelon Basin in Northwest Territories (NT) and Nunavut (NU); and the high-grade Rottenstone nickel-copper-PGE property in northern Saskatchewan.
Protests erupt over uranium mining in Quebec's north shore
While there are no active uranium mines in production in Quebec, the Toronto Globe & Mail tallied more than 80 exploration projects in various stages in the province in its editions for Dec 11. That level of activity, which has increased since last year, has set off a call for a "national debate" on uranium mining in Canada.
A group calling itself Sept-lles Sans Uranium sparked a reported protest by 23 area physicians who threatened to leave the area. They said a drilling exploration project being operated by Terra Ventures (CVE:TAS) at Lake Kachiwiss 13 km from the town of Sept-lles was a threat to drinking water supplies. The site is 900 km northwest of Montreal.
Marc Fafard, a spokesman for the uranium protest group, said his organization feels a national referendum on uranium mining is the only way to get attention to their issues. Getting one on the ballot he said means "the government will no longer be able to ignore us."
Fafard has been active for some time in his cause to stop uranium exploration in Quebec. What's different this time is that on Dec 13 he led a march of over 1,000 people through the town against uranium mining.
The doctors were reportedly joined by the local chamber of commerce and city council in a protest march through the town Dec 13. However, the Quebec College of Physicals called on the doctors not to make good on their threat to leave the area saying it would constitute a threat to public health.
Steve Aplin, VP for Energy & Environment at The HDP Group in Montreal, told FCW the protest by the doctors looks like "copy cat environmentalism."
"Something is definitely afoot in Quebec. Whatever organized effort is happening in Sept Iles, it’s working. The town council adopted two resolutions for a moratorium on exploration. Plus, the official opposition party in Quebec, the Parti Quebecois, is now officially anti-nuclear. "
"The mainstream media in Canada always watches and reports on this kind of thing, and always does the both-sides-of-the-story thing, even if one of the sides has less facts than the other. But the doctor thing usually wears a bit thin. Most people can sniff out an ideological bias, even in a doctor."
The Quebec Mineral Exploration Association issued a statement critical of the protest. It said the doctors failed to back up their concerns with scientific data. It added that the exploration activities pose no threat to anyone's health.
Jean-Pierre Thomassin, director general of Quebec's mining exploration association told Canadian wire services, "This is strictly a fear campaign. The doctors probably have cottages near the site and don't want to be bothered."
He also believes a province-wide ban on uranium minig is unlikely due to potentially expensive compensation the province would have to pay to companies who have already invested in explorations.
"There would be consequences," he said. "If the government doesn't compensate the companies, it's over. No one will come to Quebec for exploration."
John Kotek, a partner with the public relations firm Gallatin Group based in Boise, Ida., told FCW his experience with mining projects is that in such cases it’s incumbent on the project proponents to engage in a broad-based communication effort. He said the best sources of information will come from medical and environmental experts who can explain what is real and what is imagined when it comes to potential risks of the project to human health and the environment.
Kotek added that the proponent must then go to great pains to explain the steps it will take to mitigate those concerns that are real.
"At the same time the proponent must reach out to its core base of supporters and enlist their help in explaining the benefits and addressing the concerns about the project. It is complicated and time intensive but it can be done."
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