The world’s biggest nuclear reactor manufacturer, and one of its largest uranium miners, AREVA, is looking to swallow a junior uranium company with significant assets in Africa — UraMin (UMN-T, UMN-L).
The offer is a friendly, all cash deal, that values UraMin at US$2.5 billion, or US$7.75 per shares or $8.28 a 21% premium over UraMin’s 20-day weighted average trading price ending June 8.
But early indicators from the market suggest that premium might not be enough to secure the emerging uranium producer.
News of the offer sent UraMin shares up over 10% or 85 to $8.79 on 27.3 million shares traded, indicating that investors expect a higher bid.
The board of directors at UraMin, however, found the deal favourable enough to give it their endorsement. Those directors, along with some other investors — totaling 25% of all UraMin shareholders — agreed to tender their shares to AREVA.
That support comes with an agreement that gives AREVA the right to match any superior offers and it includes a break-fee of US$75 million.
AREVAs interest in the African-focused UraMin is said to stem from its desire to diversify its sources of U3o8. It needs to do so in order to meet long term increases in demand that are projected in connection with the resurgence in nuclear reactor construction.
UraMins main projects are in South Africa, Namibia, and Central African Republic (CAR), and three of them are slated to go into production by 2009.
Interestingly, AREVA once held UraMins Bakouma project in the CAR. It drilled the site back in the 1970s when the company was known as Cogema.
Once developed, UraMin’s deposits are estimated to add 15.4 million lbs of U3o8 to AREVAs production.
With AREVA at the helm, UraMin says its projects will move rapidly towards commission.
“UraMin’s potential production capability gives AREVA the opportunity to strengthen its position as one of the largest uranium producers in the world. Stephen Dattels, UraMin’s founder and executive deputy chairman said in a statement. Combined with the integrated business model of AREVA all along the nuclear value chain, access to long-term sources of uranium will reinforce AREVA’s ability to provide security of supply to its costumers.
On June 4 UraMin announced it was joint venturing properties in Niger with Northwestern Mineral Ventures (NWT-V, NWTMF-O).
News of the AREVA offer had a positive spillover effect on Northwestern as it shares climbed 27% or 23 to $10.8 on 6.6 million shares traded.
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