Areva to buy East Asia uranium projects in Mongolia

Vancouver — Liking what it sees in neighbour East Asia Minerals’ (EAS-V, EAIAF-O) Ooshiin Govi uranium property, in southeastern Mongolia, French energy giant Areva (ARVCF-O) has inked a deal to purchase it from the junior for $83 million.

Located in the southeastern Mongolian province of Dornogovi, the 2,613-sq.-km Ooshiin Govi tenements were acquired by East Asia less than a year ago, in late 2006, based on three significant radiometric anomalies identified during Russian surveys in the 1990s.

Two of the anomalies are extensions of interpreted favourable stratigraphy extending from Areva’s adjacent property to the north. The other radiometric anomaly is on the southern portion of East Asia’s ground.

East Asia completed a ground radiometric survey late last year confirming the historic airborne work and defined a more than 2-km-wide uranium and total count anomaly extending south from an area of active drilling on Areva’s property. About half of the total anomaly is on East Asia’s property.

A 15-hole drill program by the junior in early 2007 intersected a thick sequence of unconsolidated sand-hosted uranium mineralization with clay and lignitic intervals. Drilling showed a sizable and laterally continuous redox (reduction-oxidation) front with anomalous radioactivity that is beneath the water table. Favourable porous host rock (unconsolidated sand) sandwiched between impermeable stratigraphy (clay layers), and significant size potential shows mineralization may be amenable to low cost in-situ leach (ISL) mining methods.

The model for mineralization at Ooshiin Govi is in a large, flat, buried paleochannel.

Subject to shareholder approval, the $83-million deal will see Areva buy East Asia’s Mongolian subsidiary EAM Energy, which also holds the Bayan Uul, Elgenii, Ikh Khet and Airag-1 uranium tenements.

Certain shareholders of East Asia including directors and officers, representing about 43.8% of the company’s issued and outstanding shares, have entered into irrevocable lockup agreements with Areva subsidiary Compagnie Franaise de Mines et Mtaux to vote in favour of the offer.

East Asia acquired its four Ooshiin Govi tenements in exchange for payments of US$500,000 each for three of the claims and US$750,000 for the forth. Terms also included a signing payment of US$50,000 for each tenement, plus staged annual payments over a 3-year term. The vendor retains a 0.75% net smelter return royalty.

East Asia intends to dividend out at least 85% of the after-tax proceeds of the sale to its shareholders. With about 54 million shares outstanding on a fully diluted basis, shareholders would likely see a cash payout of well over $1.00 per share held.

The junior will retain its Ingiin-Nars and Ulaan Nuur uranium properties in Mongolia, both containing historic resources, and the Enger uranium property, which has shown strong drill results. East Asia also holds the Khok Adar copper project in western Mongolia and is joint ventured in five epithermal gold and porphyry copper-gold projects in Indonesia.

Halted prior to the announcement, shares of East Asia gained 30 to close at $2.10 apiece after coming back to trade.