www.unuudur.com » Uranium One winning over some skeptics

Uranium One winning over some skeptics

[Нийтэлсэн: 13:27 25.06.2010 ]


It was one of the more controversial mining deals in recent memory. And while the initial reaction from shareholders was quite negative, Jean Nortier claims they are coming around.

“It’s a transaction that needed some explanation,” the chief executive of Uranium One Inc. said in an interview. “But now that we’ve been on the road and explained it, people understand the strategy.”

Earlier this month, Uranium One unveiled a complex deal in which it agreed to sell a controlling stake in itself to state-owned Russian uranium miner JSC Atomredmetzoloto (ARMZ). It is a subsidiary of Rosatom, the world’s biggest integrated nuclear firm.

In return, Uranium One receives stakes in two Kazakhstan uranium assets and US$610-million in cash, allowing it to pay a hefty dividend to shareholders of at least US$1.06 a share. The deal would also make the company one of the five biggest uranium producers in the world.

But for many investors, only one word mattered: Russia. They worried that the Russian government would have much different objectives for the company than minority shareholders.

“The reality of it is, do you really trust Russian control of the company? It adds another level of risk,” said Paradigm Capital analyst Dave Davidson.

To sell the deal to skeptics, Mr. Nortier pointed out that there are many safeguards to protect minority investors. Those include a board of mostly independent directors, an agreement that Russia will pay market rates for Uranium One’s production, and a standstill agreement to prevent ARMZ from buying or selling shares for 18 months. The Russians have also spoken to Uranium One’s shareholders to try to reassure them.

Uranium One shares initially fell 14% after the deal was announced, but they have recovered as some shareholders came around and others bought in for the first time. The deal looks like it will probably be approved by investors.

But some are still unhappy about it.

“As a shareholder, I’m unhappy because I basically have sold control of this company for no premium,” said Rob Lauzon, a fund manager at Middlefield Capital. While he acknowledged the dividend could represent a takeover premium, he said it depends how the stock trades after the deal closes.

Mr. Davidson said the actual metrics of the transaction look good. He pointed out that it is a hefty dividend for a stock that trades at less than $3 a share. As well, the deal gives shareholders access to the rest of the nuclear fuel cycle through Rosatom.

Of course, there are some people who simply do not trust Russia.

One issue that concerns them is the recent woes of Khan Resources Inc., a Canadian junior miner working in Mongolia.

ARMZ made a takeover offer for Khan, but was outbid by a Chinese state-owned company.

Meanwhile, Russia cut a deal directly with the Mongolian government to develop the country’s uranium deposits.

Khan lost its uranium licences, and its shareholders got nothing. The company blamed Russia for squeezing it out of the picture.


Read more: http://www.financialpost.com/Uranium+winning+over+some+skeptics/3193833/story.html#ixzz0rq7WgK8k


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