Uranium One receives regulatory approval to acquire 50% interest in Karatau Uranium from JSC Atomredmetzoloto

Update on November 15, 2009:

Uranium One, Inc., a Canada-based uranium producing company, has received clearance from the Kazakh Ministry of Energy and Mineral Resources to acquire a 50% interest in the Karatau Uranium Mine in Kazakhstan from JSC ARMZ Uranium Holding (formerly JSC Atomredmetzoloto). ARMZ Uranium is a Russia-based uranium mining company.

The transaction is expected to close on or about December 15, 2009.

Announcement (June 15, 2009):

Uranium One has signed a definitive agreement to acquire a 50% interest in the Karatau Uranium Mine in Kazakhstan from ARMZ.

The purchase price will be paid by way of the issuance of 117 million common shares of Uranium One and a cash payment of $90 million (or equivalent promissory note). The agreement also provides for a contingent payment to ARMZ of up to $60 million, payable in three equal tranches over the period between 2010 and 2012 subject to certain post-closing tax related adjustments. The transaction is valued at approximately $451 million, based on the closing share price of Uranium One on June 12, 2009.

Concurrently with the purchase agreement, Uranium One has also entered into a long-term off-take agreement and a framework agreement with ARMZ. Under the off-take agreement, ARMZ has an option to purchase on an annual basis, a greater of 50% of Karatau's annual production and 20% of Uranium One's available attributable production from assets in respect of which it has the marketing rights.

Upon closing of the Karatau acquisition, ARMZ will hold an indirect 16.6% interest in Uranium One. ARMZ has agreed to a standstill covenant under which it may not, without Uranium One's prior consent, for a period of at least five years from closing acquire more than 19.95% of Uranium One's outstanding common shares.

Fasken Martineau DuMoulin, LLP and Macleod Dixon LLP are acting as legal advisors to Uranium One, and BMO Capital Markets is acting as the financial advisor to Uranium One. Goldman Sachs International is acting as the financial advisor to ARMZ and Stikeman Elliott, LLP, Allen & Overy LLP, Aequitas Law Firm and Blake Dawson are acting as legal advisors to ARMZ on the transaction.

Deal Value (US$ Million) 451
Deal Type                Acquisition
Sub-Category             Asset Purchase
Deal Status              Announced: 2009-06-15

Deal Participants

Target (Company)   Karatau Uranium Mine - Kazakhstan
Acquirer (Company) Uranium One, Inc.
Vendor (Company)   JSC ARMZ Uranium Holding (formerly JSC Atomredmetzoloto)

Deal Rationale

The acquisition will strengthen Uranium One's portfolio, enhance its production profile, and cement its position of leadership in the Kazakh uranium mining industry.

% Acquisition 50%

Related terms: acquisition, advisor, canada, energy, kazakhstan, law, legal, mining, note, russia, tax