Russia has redirected the $US1 billion it was ready to invest to secure uranium supply from Namibia into Tanzania - and low-profile Perth-based explorer Mantra Resources.
ARMZ, a wholly owned subsidiary of the Russian State Atomic Energy Corp (Rosatom), announced yesterday an agreement to acquire Mantra for $1.16 billion through a scheme of arrangement.
Mantra's main asset is the Mkuju River project in southern Tanzania, which contains a resource of 84.3 million pounds of uranium oxide.
Earlier this year Rosatom's attention was focused on a Namibian uranium asset owned by an Australian company, Extract Resources' Rossing South project.
But rather than acquire it through traditional means, the state-owned company sent an application to develop Rossing South to the Namibian government in the apparent hope it would be stripped from Extract.
At the time, Rosatom head Sergei Kiriyenko was quoted as saying the company had $US1 billion to invest in uranium deposits in Namibia and it could bring Rossing South into production quickly and efficiently.
Yesterday's move on Mantra appeared to signal it had given up on snatching the project off Extract.
Subject to an independent expert determining it is in the best interests of shareholders, and in the absence of a superior proposal, ARMZ's offer of $8 a share has been unanimously recommended by the Mantra board.
The price represents a 15.5 per cent premium to Mantra's 20-day volume weighted average share price. But, more importantly, it values Mantra at $US10.26 per pound of resource.
By comparison, Extract is valued at $US5.80 per pound of resource and Berkeley Resources, another ASX-listed uranium explorer with projects in Spain, is valued at $US3 a pound.
"If you compare it with those two, it looks like a knockout blow," Argonaut Securities analyst Tim Serjeant said. Shares in Mantra gained 34 to $7.92 yesterday, suggesting that investors are not expecting a competing offer.
Mr Serjeant noted the exploration upside at Mkuju River and Mantra's clean corporate structure would have been two factors appealing to the Russians.
Unlike Extract, Mantra has no strategic shareholders or companies on its share register.
Its largest shareholder, Highland Park SA, which owns a 13.5 per cent stake, has indicated it will vote in favour of the ARMZ deal in the absence of a superior proposal.
The deal will be subject to approval from Australia's Foreign Investment Review Board, but as Mantra's main asset is in Tanzania, it is unlikely to oppose on national interest grounds.
The Australian Financial Review PUBLISHED : PRINT EDITION : 16 Dec 2010
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