Uranium One (TSX:UUU) has teamed up with a Russian mining giant to acquire Mantra Resources (TSX:MRL) for A$1.2 billion.
Vancouver-based Uranium One said Wednesday the deal means the company would operate the Mkuju River project in Tanzania, increasing its measured and indicated uranium resources by 68%.
In 2009, Uranium One produced 3.6 million pounds of uranium, making it the ninth-largest producer in the world.
The metal is used to power nuclear plants.
But the deal to gain control of Mkuju is somewhat complex.
Russia’s JSC Atomredmetzoloto (ARMZ), Uranium One’s largest shareholder, has agreed to buy Mantra first for A$1.2 billion.
Uranium One and ARMZ have subsequently signed an agreement whereby Uranium One would then buy Mantra from ARMZ for the same amount plus interest.
The Vancouver company said the deal allows it to acquire Mkuju at a fixed cost in a rising uranium price environment, as well as time and flexibility to close the transaction.
“Uranium One believes that the Mkuju River project ranks among the best uranium development projects in the world,” said Jean Nortier, Uranium One’s CEO.
“This transaction highlights our continuing strong support of Uranium One as its majority shareholder,” added Vadim Zhivov, ARMZ director general.
In July, Uranium One and ARMZ signed an agreement that saw the Vancouver company acquire a major stake in two Kazakhstan uranium mines from ARMZ, which will increase its 2011 production by more than 30%.
The deal also saw ARMZ buy 178 million shares of Uranium One for US$610 million.
ARMZ now owns 40.85% of Uranium One.
At press time, Uranium One’s shares were down 6% to $4.40