March 11, 2010 / 4:26 PM / 7 years ago

Uranium One eyeing African assets

4 Min Read

TORONTO (Reuters) - Uranium One is eyeing acquisition opportunities, primarily in Africa, in order to continue its rapidly expanding uranium production growth and feed a growing appetite for nuclear fuel, the company's chief executive said on Thursday.

"We are looking at a number of opportunities. Most of those opportunities currently find themselves in Africa and a little bit in Europe," CEO Jean Nortier told Reuters.

Assets in Namibia, Niger, Tanzania, and Zambia have caught Nortier's eye, and he said the company would pursue both development assets or mines in early production.

Uranium One has about $250 million in cash earmarked for takeovers, and would consider using equity as well, he said.

The company, which currently has most of its production in Kazakhstan, reported a 2009 net loss of $36.5 million late on Wednesday. But it said it expects uranium production to nearly double to 6.8 million pounds this year from 3.6 million last year, as production increases at the South Inkai and Karatau mines in Kazakhstan,

Output is seen at 8.0 million pounds in 2011, as production should begin at the Powder River Basin in the United States.

Cameco, the world's top publicly traded uranium miner, produces just over 20 million pounds a year.

Feeding the Nuclear Renaissance

Both Uranium One and Cameco are aggressively raising production to meet increasing demand for nuclear fuel as several countries -- led by China, Russia, India, and the United States -- plan to increase nuclear power capacity.

With secondary uranium sources, including uranium derived from decommissioned Russian nuclear weapons, expected to decline after 2013, a yawning gap between supply and demand is seen.

Uranium One has in the past year sold shares to units of the governments of Russia and Japan, and also has close ties to the government of Kazakhstan, which is expected to supplant Canada as the world's top producer of uranium this year.

However, the sailing in Kazakhstan has not been entirely smooth.

A Kazakh government investigation last year into past uranium assets sales -- including a current Uranium One mine -- prompted a selloff in the company's shares, as investors worried that the terms of the company's agreements with the country could be changed.

The former head of the Kazakh state nuclear company Kazatomprom, Mukhtar Dzhakishev, has since been arrested on accusations of corruption, theft and illegal sales of uranium assets to foreign companies.

Nortier said, however, that Uranium One's Kazakh assets are not in danger, and noted the company was never investigated in the matter.

"In 2009, we had a few questions, but all of that has stopped and it's been business as normal from (the fourth quarter) last year for us," he said.

The company's shares were up 4 Canadian cents at C$2.85 on the Toronto Stock Exchange.

Nortier said the relationships formed with governments -- key in an industry with tight regulations and where buyers are often public utilities -- could also pay dividends in the search for assets.

"The Russian government, as well as the Japanese government, is very well respected in Africa, so the few opportunities we've been looking at so far, we've found that having a strong government backing has been beneficial for us," he said.

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