Vancouver — Saskatchewan-based Cameco (CCO-T, CCJ-N) plans to sell its entire 6.7% interest in Energy Resources of Australia (ERA-A), one of the world’s top five uranium producers.
Cameco is the world’s largest uranium producer and a sizable gold producer. The company owns and operates uranium mines in Nebraska, but its core operations are the high-grade McArthur River, Key Lake and Rabbit Lake mines in northern Saskatchewan.
Since 1981, Energy Resources has mined uranium ore to produce uranium oxide at the Ranger mine, 250 km east of Darwin, in Australia’s Northern Territory. The company also holds title to the undeveloped Jabiluka deposit, 22.5 km north of the Ranger mine.
A unit of Rio Tinto (RTP-N) owns 68.4% of Energy Resources and has an operating agreement with the company. Cameco acquired its stake in the company indirectly, through the 2003 acquisition of Uranerz Exploration and Mining.
In a prepared statement, Cameco President Jerry Grandey said the decision “to exit a passive equity investment” was based on a strategy to re-deploy resources to operations “where we have greater control and receive production rather than dividends.”
Based on the six-month trading range of Energy Resources, Cameco’s 6.7% equity investment indicates a value of between $102 million and $213 million. The company and two other minority shareholders plan to jointly offer their shares for sale to professional investors in Australia and other jurisdictions (excluding the United States).
Cameco and the other minority shareholders must convert their unlisted shares into class A shares, and meet various other regulatory conditions, before the share offering can proceed.
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