Vancouver – A hot uranium market has prompted Rio Tinto (RTP-N, RIO-L) to pull the proposed sale of its Sweetwater assets in Wyoming to sxr Uranium One (SXR-T, SXRFF-O, SXR-J) and contemplate whether it should develop the project itself.
The major’s change of heart comes after watching U3O8 spot prices rally about 60% (from the US$45 per lb. level to the current US$72 per lb. price) since entering the agreement last-July.
Held through a wholly owned subsidiary, Rio Tinto was looking to sell the Sweetwater uranium mill and a significant land package in the basin including the Jackpot deposit (historic resource of 14.8 million tonnes of 0.195% U3O8).
Uranium One eyed the potential acquisition as a beachhead into the U.S. uranium industry and would have held one of only four conventional uranium mills within the country. The Sweetwater mill is a 2,700-tonne-per-day, acid leach facility that operated from 1981-to-1983, processing about two million tonnes of ore to produce almost 1.3 millions lbs. of U3O8.
After emerging as the preferred bidder, Uranium One entered into an exclusivity agreement with Rio Tinto and paid US$1 million for 9 months of review time to conduct due diligence and strike a deal. A proposed transaction could have seen Uranium One pay US$65 million plus issue 6.1 million shares and 2.5 million warrants for the assets.
Countering the blow, Uranium One has extended its exclusivity agreement with U.S. Energy (USEG-Q) and Crested Corp (CBAG-O) relating to the possible acquisition of the of the duo’s Shootaring Canyon uranium mill in southeastern Utah and uranium properties in Arizona, Colorado, Utah and Wyoming.
The Shootaring mill is a permitted 750-ton-per-day processing facility with a stockpile of about 240,000 lbs. of contained U3O8 onsite. Operational plans call for an annual production rate of about 1.5 million lbs. of U3O8. The complex has an estimated replacement value of US$80 million.
Uranium One also recently closed a major financing $155.25-million total principal amount of convertible unsecured subordinated debentures. Funds are primarily earmarked for construction of its Dominion uranium mine in South Africa.
Shares of Uranium One fell about 8% on the news of Rio Tinto retracting the Sweetwater assets, closing down $1.13 at $13.35 apiece.
Be the first to comment on "Rio Tinto rethinks Sweetwater uranium sale"