Cameco Corp., the world’s biggest uranium mining company, signed an agreement with Australian explorer U3O8 Ltd. for a joint venture as it seeks to start producing the radioactive metal in the country.

The venture will cover 100 percent-owned licenses held by both companies in the Ashburton region of Western Australia, Perth-based U3O8 said today in a statement to the Australian Stock Exchange. The Australian company will manage the exploration phase of the venture, while Cameco has the right to manage any development project.

Australia has about 40 percent of the world’s known low-cost uranium reserves yet supplies only about 23 percent of world supply because of mining bans in states including Western Australia. The Ashburton region is geologically similar to the Alligator River area of Australia’s Northern Territory, which hosts the Ranger and Jabiluka uranium deposits.

“The combined technical expertise of both parties and U3O8’s knowledge of the area and cost-effective exploration methods will ensure that the joint venture maximizes the chances of commercial success,” U3O8 Managing Director Stephen Mann said in the statement.

U3O8 shares rose 6 cents, or 18 percent, to 40 cents on the exchange in Sydney, while the exchange’s benchmark index closed unchanged.

The partners will seek to confirm at least 25 million pounds of uranium within the 1,200 square kilometer venture area, at which point they may form a separate 50:50 venture managed by the Australian unit of Saskatoon, Saskatchewan-based Cameco with the aim of developing a supply project, U3O8 said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net