media coverage from minesite, page-5

Just who cares ...

A summary of the chronological sequence of Uramin takeover by Areva... From the EXT-Scene thread to Share ....

I'm curious how this will be once the expiry of a possible takeover...

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Will History Repeat Itself? Overview of Uramin

This is a chronological order of key data and events for Uramin prior to its acquisition by Areva.
Date Remarks
February 2005 Stephen Dattels forms the Uramin company with the aim of acquiring and developing uranium deposits throughout the world
May 2005 SRK Consulting (US) Inc. is employed retained to prepare a Definitive Feasibility Study on the Trekkopje Project, expected to be completed in the third quarter of 2007
April 2006 Company is admitted to AIM and also lists on Toronto Stock Exchange in December 2006
November 2006 - The Ministry of Mines and Energy ('MME') formally grants
Uramin Namibia an Exploration Licence covering the 37,368ha of the
Trekkopje Project area. In addition, an EPL was granted covering 91,611ha of surrounding area with highly prospective exploration potential. Thus by November Uramin holds the following key uranium projects:
Trekkopje deposit in Namibia
Bakouma in Central African Republic (potentially 41Mlbs @ 0.27% U3O8). Uramin commenced a two year feasibility study in August 2006 and drilled 9,400m. Potential production ~2,600tpa. Bakouma deposit consists of 10 separate deposits in close proximity. Areva plans to start production ~2014-2015 time period.
Ryst Kuil in South Africa (potentially 64Mlbs @ 0.1% U3O8). Potential production of 2.6 3Mlbs/annum with open pit mining. DFS was scheduled to be completed in March 2008. Areva plans to start production about 2016-2017 period.
Total attributable resources for all these deposits were reported to be about 236Mlbs as of May 2007 though only one of these resources (i.e. Trekkopje) was 43-101 compliant. The other two were only partially compliant
November 2006 Company undertakes fundraising and obtains US $300M to advance their 3 main projects
November-December 2006 SRK published its interim technical report for Trekkopje project which demonstrates the potential to be a simple and cost-effective open pit mining operation, as 80% of the known mineralisation is shallower than 15 metres, below a nominal 2 metre alluvial surface. Heap leach was recommended as the preferred processing technology following successful initial test work that indicated recoveries of approximately 75%. On this basis, SRK has predicted a production profile for Trekkopje rising to 8.4 million lbs U308 per year. A trial mine was planned for the fourth quarter of 2007 and commercial production planned for late 2008 with an initial estimated production rate of 4.2 million lbs in 2009 scaling up to 8.4 million lbs in 2011 for total production of 61 million lbs U3O8 and 20 million lbs V2O5. SRK estimated operating costs of US$18.07 per lb U3O8 after credit (US$20.08 per lb without V2O5 credit) and estimated start up capital expenditure of approximately US$0.5bn.
2006 - 2007 Namibia becomes saturated with numerous exploration applications/plays hoping to capitalize on the countrys uranium resources and relaxed environment. Consequently, the Namibian Minister of Mines and Energy moved to suspend the countrys exploration permitting.
December 2006 The market is starting to recognize Uramins potential. However, at the start of December, Uramins EV is still only at $2.48/lb based on the total resources of all three projects and $3.71/lb based only on the compliant Trekkopje resources. Note: that average EV of other pure U companies with demonstrated reserves and resources at that time was in the range $14-$15/lbs.
February 2007 Bankable feasibility study interim progress update report released
February 2007 Russias second-largest bank Vneshtorgbank and Russias state-run nuclear exporter Tekhsnabexport announced they are considering a joint venture to operate in Namibia through licenses (3 EPLs) they directly hold and through investments in other companies which have obtained licenses in Namibia
February 2007 Chinese President Hu Jintao visited Namibia to sign an economic deal with Namibia giving the country a grant of US$4.3 million and an interest-free loan
March 2007 Russian Prime Minister Mikhail Fradkov announces that his country is prepared to build nuclear plants in Namibia
April 2007 Preliminary assessment report on Trekkopje mine released
April 2007 Initial media speculations of Uramin becoming possible T/O target
May 8th 2007 Uramin releases announcement regarding Trekkopje deposit compliant DFS resource increasing to 110Mlbs of measured and indicated resources.
May 15th 2007 Media reports confirm that China National Nuclear Corporation (CNNC) was in talks with UraMin for either a takeover or a joint uranium venture in Africa
10th of June Company confirms that they are in talks with undisclosed buyer (although media widely speculates that it is Areva) regarding possible takeover. Share price rises above $8.0
15th June 2007 Areva trumps Russian and Chinese negotiations with Uramin by making cash offer ($7.75/share) with 21% premium to Uramin's 20 day average share price. Uramins board of directors state that the offer is in the best interest of the Uramin shareholders and recommend that it be accepted. The announcement states that all directors and certain shareholders representing 25% of the outstanding shares had entered into lock-up agreement with Areva and had agreed to tender all their shares
Note: - Areva already owned 5% of Uramin shares prior to T/O announcement.
31st of July 2007 Areva raises its holding in Uramin to 93%
August 2007 Uramin signs takeover transaction with Areva (i.e. in late stages of the DFS program)

June 2008 Areva obtains a mining license for Trekkopje mine.
Note:
July 2007 - Chief Executive Officer of Itochu Corporation announces that they recently acquired a 20 percent equity holding in the Kudu Gas project. He also made statement that his company is willing to develop a new uranium mine in Namibia.

Summary

a. The battle between Russia and China over Namibian uranium has started already in 2007. Considering the size and strategic nature of Rossing South resources this struggle between China and Russia is likely only to intensify.
b. Areva/French have shown that they are prepared to pay top $ for strategic deposits. I expect that French/ Areva will be strongly motivated by the Niger troubles to add resources in a stable country particularly where Areva already invested +$200M in a desalination plant. I also believe that this time around both Russia and China will be more determined/cautious not to be outmanoeuvred by French. Hence, the games/politics being played could become quite ugly and prolonged. This will place a lot of pressure on EXT/KAH management and shareholders (particularly Polos as its stake and resolve could determine who wins the battle).
c. It is unlikely that any T/O offers for EXT will be forthcoming before the release of resource statement and more likely not until the end of the DFS program (i.e. possibly around October - November time). I expect EXT share price to continue lingering in the $7 - $8 range until resource upgrade announcement is made in September. It is unlikely that EXT and its key shareholders would want the share price to peak too early as this could lead to significant price retracement particularly if negotiations with potential partners or T/O bidders were stalled or delayed. However, following resource upgrade announcement, the share price should start heading very quickly north on the back of the following:
intrinsic valuations of increased resource base,
positive exploration news,
increased media/broker information flow (I expect Minesite magazine led by J Mellon to play its due role),
DFS report and
T/O media speculations.
I expect the rise in EXT share price to be significantly higher then that achieved by Uramin after their announcement of increased resources at Trekkopje deposit. By maintaining sustained positive news flow (as mentioned above) the company will maximise share price upward momentum and drive it towards $12 - $15 range. This share price level would be good springboard for T/O price negotiations.
d. The average price paid by Areva for Uramin was US10.6/lb of total attributable resources (i.e. resources that are located in 3 different countries each requiring significant capital expenditure with Trekkopje mine alone costing >US$900M). However, I want to emphasise that Uramin was purchased primarily for its Trekkopje deposit. Thus Areva effectively paid US$15.86/lb uranium in the ground for a project with a measured indicated and inferred resource of 563mt at a grade of 130-140ppm, or 158mmlbs of uranium.
e. The main reason why Uramin was bought in a hurry by Areva is because the Cigar Lake mine partly owned by Areva was flooded and could not begin production. At the time it was imperative for Areva to secure another source of uranium urgently so as to validate a contract to sell two EPRs to China. Whilst this time around, Areva/French are under less pressure, there are number of reasons why French will be determined to gain control of Rossing South. These are:
Guarantee of lifetime supply of uranium forms integral part of their offerings for nuclear reactor tenders/business
Areva has been selected/gained status as one of the preferred nuclear reactor vendor for US and UK. It is also expected to build many of new nuclear plants in Europe (i.e. Italy, Sweden, Finland etc) and Middle East
EDF has recently stated that their objective is to become second major energy supplier in Europe with Russia concentrating on gas supply and France on nuclear energy. Please note that two weeks ago EDF has obtained 20% stake in European South Stream Gas Pipeline in a sudden turn around by Russians. Russians have strongly and persistently objected against this deal for the last 2 3 years. Also note that two weeks ago (i.e. during Sarkozys visit to Russia) French and Russians have also signed new nuclear technology cooperation agreement which supposedly includes nuclear fuels deals (I wonder if this has got anything to do with Russians stating that they are prepared to work with other parties mining uranium in Namibia but RIO Tinto)
In March 2010, EDF has signed agreements with China National Nuclear Corporation and China Guangdong Nuclear Power Holding Company (CGNPC) to become preferred partner in Chinas nuclear programme.
In February 2010, Nuclear Power Corporation of India Ltd (NPCIL) signed MOU with Areva which provides for engagement of NPCIL and Areva into the discussion for preparing the contract and related detail of setting-up of two to six 1,650 megawatt each EPRs including lifetime fuel supply for these reactors.
With China and India going to move strongly toward nuclear energy (as well as other countries), it makes absolute sense for French/Areva to secure a supply of uranium, especially with a potential stockpile worth well in excess of $60Billion. Note that Russians are talking of uranium prices + $100/lb in the next 5 10 years (hence its unsurprising that they are making EXT play Russian roulette). Its also worth noting that Areva sold 49% of Uramin to CGNPC for $1.8 Billion (one year later), hence their 51% has effectively cost them only $700M.
f. Considering that the long term U contract prices are currently ~$60/lb compared to ~$95/lb in 2007 (see attached Figure), EV of US6.5 - $7.0/lb of indicated and measured resources may be considered to be reasonable expectation for EXT. However, premium should also apply for additional inferred resources (which could run into several hundred millions lbs) and strategic nature of the deposit.
g. Itochus 15% stake in Kalahari appears to have its roots from its longstanding ambition to acquire and develop uranium mine in Namibia. Japan is aggressively hunting uranium on a global scale to power its 54 reactors and the 10 more it plans to bring on line over the next decade. However, Japanese privately owned utilities will require greater support from the government if they are to effectively compete for uranium mines against state backed consortiums (i.e. China, Korea, France, Russia).
h. Following the release of positive technical report for Trekkopje deposit and successful capital raising, Uramins share price has largely languished for the next ~5 months (i.e. very similar pattern as for EXT). It is worth noting that things have moved very quickly after Uramin has released the resource upgrade and then confirmed that they are in talks with Chinese and Areva. Within 5 6 weeks it was all over.
i. As in Uramins case, it is possible that EXT major shareholders could also use the lock-up agreement to ensure that Rossing South is sold to preferred bidder.