Cameco eyes Uranerz units

Uranium miner Cameco (CCO-T) has entered into an agreement-in-principle to acquire the two North American-based subsidiaries of German-based Uranerzbergbau.

The deal will see Uranerzbergbau, which is jointly owned by the German firms Preussag and Rheinbraun, sell subsidiaries Uranerz Exploration & Mining of Saskatoon, Sask., and Uranerz USA of Denver, Colo., for a total of $483 million.

If the transaction is approved, Cameco will acquire the Saskatoon company’s 33.3% interests in the Key Lake and Rabbit Lake uranium mines and its 27.9% stake in the McArthur River project. All three projects are in northern Saskatchewan. The purchase also includes a 57.69% interest in the Crow Butte uranium mine in Nebraska plus uranium and gold exploration properties in Saskatchewan, the U.S. and Kazakstan.

“Cameco is uniquely positioned to realize maximum benefits from this acquisition because it is already the operator of the principal assets,” says President Bernard Michel.

The deal would see Cameco assume full ownership of Key Lake and Rabbit Lake, which translates into a 30% boost in uranium reserves and production levels.

Combined, the mines cranked out 26.1 million lbs. in 1997.

The acquisition of the additional 27.9% stake in McArthur River brings Cameco’s interest to 83.8%. The property, currently under development, is said to be the world’s largest high-grade uranium deposit. Proven and probable reserves stand at 417 million lbs. U3O8 at an average grade of about 15%. Production is expected to begin in the autumn of 1999.

The acquisition of the 57.7% interest in the Crow Butte in situ leach uranium production centre in Nebraska boosts Cameco’s ownership to 90% and raises the company’s U.S. reserve base by roughly 23 million lbs.

Cameco will also add to its in situ leach reserve base by gaining a one-third interest in the Inkai uranium joint venture project in Kazakstan, which is ready for development. The company will now own two-thirds of that project; the Kazakstani government holds one-third.

In addition, Cameco will gain 20% of the Midwestern uranium project in northern Saskatchewan, which has been approved by the federal and provincial governments.

Pending various approvals, the company agreed to buy a 6.45% interest in Energy Resources of Australia, which operates the Ranger uranium mine in that country.