ARMZ Uranium Holding Co. Announces Acquisition of 51% Interest In Uranium One Inc.
June 8, 2010 Moscow, Russia – JSC “Atomredmetzoloto” (”ARMZ”) hereinafter referred to as ARMZ, the mining arm of Rosatom State Corporation, today announced the signing of a definitive purchase and subscription agreement with Uranium One Inc. (UUU – Toronto Stock Exchange, Johannesburg Stock Exchange), (“Uranium One”) under which ARMZ will contribute its 50% interest in the JSC Akbastau Uranium Mine (“Akbastau”) and 49.7% interest in the JSC Zarechnoye Uranium Mine (“Zarechnoye”), both located in southern Kazakhstan, and US$610 million in cash, in return for 356 million new common shares of Uranium One. Upon completion of the transaction, ARMZ will own not less than a 51% interest in Uranium One. ARMZ currently holds 23.1% of Uranium One’s outstanding common shares.
Upon completion of the transaction, ARMZ will own a controlling interest in one of the world’s largest uranium mining corporations with low production cash costs (less than US$20 per pound U3O8 on a consolidated basis). In connection with the transaction, Uranium One and ARMZ have also agreed to amend the existing offtake agreement between the parties, to provide ARMZ with increased offtake rights commensurate with its increased equity ownership interest in Uranium One.
Recognizing the importance of world class corporate governance in a publicly traded company the Parties have agreed to a package of minority protections and that, upon completion of the transaction, the Board of Uranium One will be reduced from thirteen to nine directors but continue to have a majority of independent directors (a total of five, two of whom will be nominated by ARMZ), including Ian Telfer, who will continue as Chairman, and that Jean Nortier will continue as Chief Executive Officer. ARMZ will also be entitled to three additional nominees to the Board of Uranium One.
The transaction is subject to the required regulatory approvals of the Republic of Kazakhstan (the Ministry of Industry and New Technologies, the Competition Protection Agency), approval under the Investment Canada Act, clearance by the Committee on Foreign Investment of the United States, TSX and JSE approvals and other usual and customary closing conditions, including anti-trust approvals in a number of jurisdictions. The transaction is expected to be completed before the end of 2010.
Rosatom State Corporation has been actively increasing its activity in the international arena: it presently ranks first in the world in the number of nuclear power plants simultaneously under construction outside of Russia, provides 40% of global services in uranium enrichment and represents 17% of the world’s nuclear fuel fabrication capacity. Bettering Rosatom’s uranium mining asset portfolio will ensure adequate feedstock catering for the needs of the nuclear industry.
Vadim Zhivov, Director General of ARMZ, commented:
“Developing and operating projects in the Republic of Kazakhstan – in full cooperation with ARMZ’s strategic partner Kazatomprom – is a priority for ARMZ. We are confident that Rosatom’s controlling interest in Uranium One will allow it to further strengthen its excellent relationship with its partners in Kazakhstan and to open up new promising avenues for cooperation”.
Overview of Akbastau
Akbastau is owned 50% by ARMZ and 50% by Kazatomprom and operates sites 1, 3 and 4 of the Budenovskoye deposit in southern Kazakhstan. Karatau, in which Uranium One owns a 50% interest, operates site 2 of the Budenovskoye deposit.
Production from Akbastau commenced in 2009 and totalled 390 tons U. Pregnant solutions from the well fields at Akbastau are currently being treated at the Karatau processing facilities.
Under the terms of its subsoil use agreements, Akbastau has the exclusive right to carry on exploration, extraction, mining and sales of uranium from sites 3 and 4 of the Budenovskoye deposit until 2037 and from site 1 until 2036.
Steady state production from Akbastau is expected to be 3,000 tons U per year.
Overview of Zarechnoye
ARMZ has a 49.7% interest in Zarechnoye. Kazatomprom owns a 49.7% interest in the joint venture, and an affiliate of the Kyrgyz government owns the remaining 0.7%. Zarechnoye owns both the Zarechnoye and South Zarechnoye deposits, located in southern Kazakhstan.
The Zarechnoye deposit was discovered in 1977 and commenced operations in 2007. The South Zarechnoye deposit was discovered in 1989 and is expected to become operational in 2014.
Production from Zarechnoye during 2008 was 167 tonnes U and production in 2009 was 494 tons U. Zarechnoye is expected to ramp up to full production of 955 tons U by 2012. South Zarechnoye is expected to commence production in 2014 and full production is expected to be 600 tons U per year by 2017.
Under its subsoil use agreement, the Zarechnoye joint venture has the exclusive right to carry on exploration, extraction, mining and sales of uranium until 2027. The South Zarechnoye joint venture has the exclusive right to carry on exploration, extraction, mining and sales of uranium from South Zarechnoye until 2037.
About Uranium One
Uranium One is one of the world’s largest publicly traded uranium producers with a globally diversified portfolio of assets located in Kazakhstan, the United States and Australia.
ARMZ is the world’s fifth largest uranium producer with operating mines in Russia and Kazakhstan. During 2009, operations in which ARMZ is involved produced 12.1 million pounds of U3O8 (4,624 tons of Uranium). It is wholly-owned by State Atomic Energy Corporation "Rosatom", the Russian State Corporation for Nuclear Energy which consolidates all nuclear assets and controls all nuclear activities of the Russian Federation. In addition to its commercial activities, Rosatom also acts as the Russian government agent responsible for all activities related to the nuclear and atomic industries.
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