South Africa: Uranium One Loses Sweetwater

South Africa: Uranium One Loses Sweetwater

RIO Tinto Energy America has changed its mind about selling its Sweetwater uranium mill and associated assets in Wyoming after significant changes in the worldwide market for uranium in the past six months.

Since July, the uranium price has risen 60% to $72/lb.

The price accelerated after October because of flooding at Cameco’s developing uranium mine at Cigar Lake in Canada, which increased fears of future supply disruptions.

Future supplies were already expected to come under pressure from a surge in planned new nuclear energy generation projects around the world and a lack of investment in uranium deposits in the past two decades.

Uranium company sxr Uranium One, which announced in July that it had been named the preferred bidder for Sweetwater’s assets, said yesterday that if Rio Tinto changed its mind in the next two years, it had agreed Uranium One would be invited to re-submit a bid.

Uranium One chief financial officer Jean Nortier said the company would be compensated for its costs in undertaking a due diligence on the assets, and would make copies of the technical reports available to Rio Tinto.

“We are naturally very disappointed with Rio Tinto’s decision to withdraw the Sweetwater assets from sale, particularly at this stage in our negotiations,” Uranium One president and CEO Neal Froneman said.

Uranium One had offered an immediate $110m in cash and shares for Sweetwater, which could rise to $150m with other payments.

Sweetwater’s attractions are enhanced by its possession of an operating licence valid until 2014.

Froneman said Sweetwater was one of the few uranium prospects in the world that was relatively close to production.

Copyright © 2006 Business Day. All rights reserved.

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