Cameco allies with junior

Vancouver — A newly signed agreement sets the stage for a proposed “strategic alliance” between uranium producer Cameco (COO-T, CCJ-N) and uranium explorer Hornby Bay Exploration (HBE-V, HRBYF-O).

The preliminary agreement calls for Cameco to subscribe for a non-brokered private placement representing about 19.5% of the junior company’s shares, purchased at 40 per share. Hornby Bay has about 94.5 million shares issued and outstanding and currently trades at 55 per share.

The Toronto-based company is exploring uranium properties, mostly in Nunavut, where it has spent more than $11 million to advance various projects in the past two years. The company plans to test at least 18 “high-potential” drill-ready targets this year, with drilling to start in April.

Cameco is one of the world’s largest uranium producers, with operations around the globe, including several high-grade mines in Saskatchewan. The company also holds exploration projects in various parts of Canada, either on its own or with joint- venture partners.

Under the agreement, Cameco and Hornby Bay will each have a right of first refusal to buy any uranium project that the other wishes to sell in a specified area of western Nunavut, or eastern Northwest Territories. Cameco will also have the right to nominate a candidate for election to the board of Hornby Bay, as long as Cameco owns at least 10% of the junior.

Cameco will also have the right to participate in future financings by Hornby Bay, as long as it maintains ownership of at least 16% of the junior’s outstanding shares.

The agreement is still subject to the negotiation and completion of a formal agreement, and various regulatory and board approvals.

Hornby Bay has called a special meeting of shareholders for April 25 to seek approval for a change of name to Unor Inc., or another such name deemed acceptable to directors and regulators.

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