SXR Offers $110 Million for Rio Uranium Mill, Deposit

SXR Offers $110 Million for Rio Uranium Mill, Deposit

SXR Uranium One Inc., which is developing South Africa’s largest uranium resource, offered $110 million to buy Rio Tinto Group’s Sweetwater Uranium Mill and Green Mountain deposit in Wyoming.

This “is a significant step toward one of the key strategic goals we set for ourselves as a company in 2005 — acquiring the capacity to mine and process uranium in the U.S.,” Neal Froneman, chief executive of the Toronto-based company, told reporters today in Johannesburg.

Froneman, a former gold miner, wants to gain a foothold in the U.S., which accounts for more a quarter of world uranium demand. The company is already digging one mine in South Africa, plans to develop a second in Australia and is searching for deposits in Canada as it seeks to benefit from a more than sixfold jump in uranium prices over the past six years.

Power plants use most of the 175 million pounds of the metal consumed each year, while mines produce 105 million pounds. That supply deficit will widen as new reactors are developed in Russia, India and China.

SXR said it expects six to 10 new nuclear reactors to be built in U.S.

Uranium traded at $46 a pound today, according to Metal Bulletin. It averaged $27.94 a pound last year, $18.06 in 2004 and traded as low as $6.95 in November, 2000.

SXR expects the mothballed Sweetwater mill, which has a license until 2014, to produce uranium by 2009. Rio’s U.S. uranium deposits contain 200,000 metric tons of the metal, the company added.

“There’s nowhere else in the world where you find assets like these in America,” Froneman said in an interview.

SXR, which was one of 10 bidders, was advised by BMO Nesbitt Burns. The transaction is subject to due diligence investigations that may take as long as six months, SXR said.


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