Private equity backed Accord eyes uranium mines

LONDON (Reuters) - A financial crisis with slumping equities creates opportunities to pick up cheap uranium mining firms as the long-term outlook for nuclear power looks bright, said a nuclear-fuel supply company on Wednesday.

Accord Nuclear Resources was set up in August this year in the U.K. and United States as a strategic joint venture with the U.S.-based private equity group First Reserve, which wanted to expand its energy focus into uranium and the nuclear fuel cycle.

"First Reserve have been investing in oil, coal and gas and the infrastructure surrounding that," said Charles Scorer, chief executive officer at Accord Nuclear Resources in London.

"They want to invest in nuclear in a similar strategic way," Scorer, who was previously CEO of U.K.-based Nufcor International Limited, told Reuters in an interview.

Together with his U.S.-based partner, David Sloan, Scorer has several hundred million U.S. dollars from First Reserve to buy uranium mines and if successful more money could be expected.

"We will be looking to acquiring uranium production ... that is the cornerstone," Scorer said, adding Accord would look at firms in production or in near-term production, not explorers.

Accord would later look at opportunities in services and in other areas in the nuclear fuel cycle, Scorer said.

Global financial turmoil has pushed down the value of mining firms creating opportunities to buy uranium assets at lower prices and with a bullish long-term view these could give plenty of possibilities to create solid returns, Scorer said.

"Most of the assets are undervalued because of the credit crunch and the fact that we are being funded gives us good opportunities," he said.

However even if Accord has the money to buy assets, it would also need funding to run the production facilities.

"If you want to bring in debt and have debt finance in order to grow it is going to be challenging," he said.

"But we are not looking at this on a cyclical basis," Scorer said, adding Accord was a true believer in the nuclear renaissance with the share of nuclear power growing globally.

He said the industry would see volatility, but the aim was to see steady growth in the industry, where the price of uranium would support exploration and good quality of production.

"The short-term market is going to bounce around but fundamentally nuclear power is going to have a significant increase in the next 15-20 years."

Weekly uranium spot prices dropped to $44 per lb on October 21, the lowest level since May 2006, after reaching a record $136 in June 2007. This week the price climbed to $55 per lb, according to UxConsulting.

(Reporting by Anna Stablum, editing by Peter Blackburn)