A Hong Kong-listed company with links to China National Nuclear Corp. — China’s former Ministry of Nuclear Industry, which built the country’s first atom bomb — wants to buy Western Prospector Group (WNP-V, WEPGF-O), a Canadian junior with uranium assets in Mongolia.
CNNC International is offering 56¢ per Western Prospector share, valuing Western’s equity at about $31 million.
CNNC International’s bid represents a 51% premium to Western’s closing price of 37¢ on March 24, and a 75% premium to Western’s 20- day volume-weighted average price for the period ending March 24.
CNNC Overseas Uranium Holding, a wholly owned unit of China National Nuclear Corp. (CNNC), holds 74% of CNNC International.
State-owned China National Nuclear Corp. is the country’s largest nuclear power plant builder and has more than 100 subsidiaries and institutes that oversee all aspects of civilian and military nuclear programs.
CNNC was set up in 1988 by government decree and its president and vice-president are appointed by the head of China’s State Council.
Western Prospector’s board and special committee of advisers are unanimously recommending the offer to shareholders.
“Their depth of expertise in the nuclear fuel cycle, their strong financial position and their strong political ties with Mongolia make CNNC an ideal strategic partner for Western going forward,” Eric Bohren, Western Prospector’s president and chief executive, said in a statement.
News of the takeover bid drove Western Prospector’s shares up 43%, or 16¢, to 53¢ per share with 10.3 million shares changing hands.
The Vancouver-based junior has traded in a 52-week range of 10¢- $1.34 per share and has 54.3 million shares outstanding.
The company’s flagship project is Gurvanbulag, a uranium deposit in eastern Mongolia. According to a definitive feasibility study, and based on proven and probable reserves of 5.04 million tonnes grading 0.161% U3O8 (for 17.9 million lbs. contained uranium) at a cutoff grade of 0.08% U3O8, the project would have an estimated pretax internal rate of return (IRR) of 9.2% based on a constant selling price of US$65 per lb. On an after-tax basis, the IRR would amount to 1.3%.
The reserves were generated in the study from a revised resource estimate released in November. According to the new resource, Gurvanbulag has measured and indicated resources of 4.28 million tonnes grading 0.189% U3O8 plus 795,000 tonnes grading 0.126% U3O8 in the inferred category.
The feasibility study indicated the deposit could produce an average of 1.85 million lbs. of uranium oxide annually as calcined yellow-cake for a nine-year production life. (A radiometric sorting plant is projected to remove 620,000 tonnes of low-grade rock and feed a nominal 500,000 tonnes a year to the process plant with a head grade of 0.179% U3O8.)
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