U3O8 snapping up Calypso

VANCOUVER — U3O8 (UWE-T) is adding cash to its coffers and new properties to its Argentine portfolio through an all-share friendly deal to acquire Calypso Uranium (CLP-V).

U3O8 already holds sizeable land packages adjacent to Argentina’s largest-known uranium deposits: the Cerro Solo deposit in Chubut province and the Sierra Pintada deposit in Mendoza province. Both deposits are owned by the National Atomic Energy Commission of Argentina (CNEA).

Calypso’s holdings fit nicely with U3O8’s, with tenements near Cerro Solo that are adjacent to U3O8’s Cerro Solo property. Combining the property packages would give U3O8 a large land position in an area of active uranium exploration. CNEA is drilling at Cerro Solo, while Cameco (CCO-T, CCJ-N) is funding a 30,000-metre drill program at privately held UrAmerica’s Central Plateau project, which surrounds Cerro Solo.

Calypso also holds land near Sierra Pintada, as does U3O8, and combining these land packages would give U3O8 control over all potential extensions of Sierra Pintada’s mineralization. Sierra Pintada is the largest and highest-grade uranium deposit ever discovered in Argentina.

Calypso also brings $4 million to the table, which means U3O8 would have $4.5 million in cash to finance its ongoing exploration and development efforts.

U3O8 does not have any operating mines — the company’s most advanced project is the Berlin project in Colombia, where a preliminary economic analysis recently determined that a $400-million investment could build a mine capable of producing 530 tonnes of U3O8 annually for 15 years. The cash cost to produce each pound of uranium oxide would theoretically be nil, because the operation would also produce phosphoric acid, nickel, vanadium and yttrium, the values of which cover the cost of mining and extracting the uranium.

U3O8 is offering Calypso shareholders 0.4 U3O8 shares for each Calypso share held. After the issuance, U3O8 would have 158.6 million shares outstanding, and former Calypso shareholders will own about 13% of U3O8.

“With this transaction, U3O8 solidifies its position as a leading uranium company in Argentina at a time when the country is calling for local uranium resource to fuel its growing nuclear reactor fleet,” U3O8 president and CEO Richard Spencer says. “We also consolidate our strategic landholdings that cover likely extensions of Argentina’s two largest-known uranium deposits.”

Spencer pointed out that Argentina’s third nuclear reactor is set to come online later this year, at which point nuclear will be responsible for 9% of the country’s power needs. The contract to develop a fourth reactor is out for tender. In addition, the Argentine government recently signed nuclear co-operation agreements with China and the United Arab Emirates.

U3O8 investors were nonplussed about the deal and left the company’s share price unchanged at 19¢.

In recent weeks U3O8 shares have languished near the lower end of their 52-week range, which runs from 19¢ to 45¢.

Calypso’s share price gained 2¢ on news of the deal to reach 6.5¢.