* ARMZ to pay A$8.00/shr for Mantra in A$1.2 billion deal
* Option could boost Uranium One's resources by 68 pct
* Shares of Uranium One fall 3.41 pct to C$4.53 on TSX
* Shares of Mantra closed up 4.49 pct at A$7.92 on ASX
(Adds CEO and analyst comments; in U.S. dollars unless noted)
By Julie Gordon and Alfred Kueppers
TORONTO/MOSCOW Russia's ARMZ has offered to buy
Mantra Resources MRU.AX for A$1.2 billion ($1.19 billion) in
a cash deal that would expand the state-owned uranium miner's
reach in Africa.
The deal gives Uranium One UUU.TO, a Canadian-based miner
controlled by ARMZ, a one-year option to buy Mantra from the
Russian company for the purchase price plus 2.65 percent
With the addition of the Mantra assets, notably the Mkuju
River project in Tanzania, Uranium One would boost its reserves
by 68 percent, and production will increase by 30 percent to up
to 26 million pounds a year.
"They're growing the company - it's great," said GMP
Securities analyst David Wargo. "Uranium One has the option to
acquire what we believe is the best emerging uranium producer
in the space, period."
Even so, Uranium One's shares tumbled nearly 8 percent
after it disclosed the arrangement in a press release on
Some analysts said Uranium One's shares may have dropped on
fears of Russian influence over the Canadian mining company.
ARMZ agreed to buy all the issued shares of Mantra for
A$8.00 per share. Mantra's Toronto-listed shares rose 3.69
percent to C$7.87 in early afternoon trade.
In a conference call, Uranium One Chief Executive Jean
Nortier said the Uranium One board will seek shareholder
approval to purchase Mantra from ARMZ.
"ARMZ does have the cash now; we don't," said Nortier. "So
they've stepped up and they helped us."
Nortier said Uranium One would have about 18 months to put
together the financing for the deal.
Mantra's board has approved the deal with ARMZ, and that
transaction is expected to close in the second quarter of
At stake is the Tanzania project's measured and indicated
resource of 65.5 million pounds of uranium, an inferred
resource of 35.9 million pounds and exploration potential. ARMZ
is also involved in an exploration joint venture in Namibia.
Uranium One will become the operator of the Mkuju River
project as soon as the ARMZ deal closes.
Some analysts said ARMZ and Uranium One may have acted
quickly to lock down Mantra before the competition could put
together a rival bid.
In a note to clients, Octagon Capital analyst Robert Gibson
said that Paladin Energy (PDN.AX) or Cameco (CCO.TO) might
consider bids, and added "state owned organizations from India,
China and Korea might also give Mantra a good look."
NUCLEAR FUEL DRIVE
With nuclear energy gaining in popularity, the demand for
uranium is set to grow by 32 percent in the next four years,
according to RBC Capital Markets.
China is expected to increase its nuclear capacity to
70-112 gigawatts of electricity by 2020, up from a current
capacity of just 11 gigawatts.
The Asian nation alone will need an additional 82 million
pounds of uranium to start and fuel those new reactors.
ARMZ, a division of Russian state-owned nuclear giant
Rosatom, is in the midst of an aggressive expansion drive as it
seeks to tap growing demand for the nuclear fuel.
Last month, the uranium miner gained final approval to take
a 51 percent stake in Uranium One in exchange for $610 million
in cash and stakes in two mines in Kazakhstan. [ID:nN24218636]
Shares of the Canadian uranium producer tumbled 7.61
percent on the news to C$4.33 on the Toronto Stock Exchange,
but later parred losses to C$4.53.
(Editing by Frank McGurty)