November 30, 2011 / 10:41 AM / 6 years ago

UPDATE 1-Talvivaara has EU approval for uranium offtake deal

LONDON, Nov 30 (Reuters) - Finnish miner Talvivaara has secured approval from the European Union to sell uranium, it said on Wednesday, allowing it to press ahead with an offtake agreement with Canadian producer Cameco signed earlier this year.

Approval from the Euratom Supply Agency, which is charged with ensuring a regular supply of nuclear fuels to EU users, follows approval from the European Commission and is the first step in the uranium permitting process -- and a requirement as part of the Finnish government licensing procedure.

“We have successfully reached the first milestone in the permitting process and we remain confident that, with final approvals over the coming period, we will soon be able to deliver further value from our ore at Talvivaara through uranium by-product extraction,” Chief Executive Pekka Perä said.

Cameco and Talvivaara had signed an agreement in February for Cameco -- which already supplies uranium to generate clean electricity for Finnish utilities -- to take uranium obtained as a by-product at the Sotkamo mine.

Under the deal, Cameco is to provide an upfront investment of $60 million to cover the cost of building a uranium extraction circuit. The investment will be repaid through deliveries of uranium concentrate.

“To date we have excluded uranium from our earnings forecasts given that permitting was at an early stage,” Liberum analysts said in a morning note. “We calculate Talviaara’s net asset value at 5.67 pounds/share, but including the uranium stream would take this to 6.18 pounds/share or 177 percent above Talvivaara’s current share price.”

Talvivaara’s London shares were trading down 0.5 percent at 222.1 pence at 1030 GMT, outperforming a 2.2 percent drop in the UK mining sector.

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