Canadian mining group SXR Uranium One said it was buying competitor UrAsia Energy for 3.9 billion dollars (3.0 billion euros), to create a global uranium powerhouse.

The two groups together would be capitalized at about 5.0 billion US dollars, establishing “one of the worlds largest uranium companies,” they said in a joint statement.

Uranium One, which is quoted on the stock markets in Toronto and Johannesburg, has significant interests in South Africa.

The combined entity will be “the only company in the uranium sector with production and asset exposure to each of the world’s five largest resource jurisdictions,” namely Kazakhstan, South Africa, Australia, the United States and Canada.

The price of uranium has risen strongly in recent months because of a resurgence of global demand for nuclear power driven by other fuel prices, energy diversification efforts and countries seeking to reduce carbon emissions.

Uranium One said that under an agreement between the two companies, it would offer shareholders in UrAsia Energy 0.45 of its own shares for each UrAsia share held, representing a value of 7.05 Canadian dollars (6.01 US) per share based on its closing share price on Friday.

The exchange price represents a 13 percent premium on UrAsia’s closing share price in Toronto on Friday.

“As a result of this acquisition, the competitive advantages of the new Uranium One will be significant, as we will have the technical and financial capabilities to pursue further value enhancing growth opportunities, both organically and through further consolidation,” said Uranium One chief executive Neal Froneman.

Froneman will continue as president and chief executive officer of the combined company.

“The new Uranium One will be the pre-eminent growth company in the sector, with an unrivalled production growth profile,” added Phillip Shirvington, UrAsia chief executive.

With five mines in operation by the first quarter of 2008, the combined company is expected to produce 7.0 million pounds or uranium (U-3O8) annually.

It also claims attributable proven and probable reserves of 49 million pounds of U-3O8, indicated resources of 102 million pounds of U-3O8 and inferred resources of 269 million pounds of U-3O8.

After completion of the transaction, it is expected that current Uranium One shareholders will own approximately 40 percent of the combined company and current UrAsia shareholders will own approximately 60 percent.

The combination was unanimously approved by the boards of both companies, but is subject to approval by a two-thirds majority of UrAsia shareholders at a meeting on May 15, and regulatory approvals.

If the transaction is not completed, UrAsia has agreed to pay Uranium One 90 million dollars.

source news : news.yahoo.com

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