Cameco to buy nuclear fuel broker Nukem Energy

TORONTO (Reuters) - Cameco Corp CCO.TOCCJ.N said on Monday it will pay $136 million to buy nuclear fuel broker Nukem Energy GmbH from private equity firm Advent International as Canada's top uranium miner looks to tie up more uranium supply.

Cameco will also assume Nukem’s net debt of $164 million, although cash generated from ongoing activities is expected to reduce that balance before the deal closes, likely in the fourth quarter.

Shares of Cameco, the world’s largest publicly traded uranium producer, closed 2 percent lower at C$21.14 on the Toronto Stock Exchange on Monday amid a broad selloff in mining stocks .

“This acquisition really strengthens our position in nuclear fuel markets,” Cameco Chief Executive Tim Gitzel told Reuters. “It gives us some access to secondary and unconventional sources of supply, which will provide more options for us and our customers.”

Secondary uranium includes highly enriched uranium (HEU), or weapons-grade uranium that has been downgraded for use in nuclear reactors. Russia currently supplies HEU material for the market under a deal that is set to expire at the end of 2013.

Cameco will gain the rights to some of that HEU material through the Nukem deal as well as access to offtake agreements for natural uranium mined in Uzbekistan.

Nukem - which has offices in Alzenau, Germany, and Danbury, Connecticut, and has been in business for 50 years - brokers and trades nuclear fuel products. The company sold 12 million pounds of uranium in 2011 and sales are expected to be in the 10 to 15 million pounds range in 2012. Cameco expects the acquisition to have a positive impact on Cameco’s earnings starting in 2013.

After the deal closes, Nukem will continue to operate as an independent company. The agreement includes provisions to provide Advent with a share of Nukem’s earnings until the end of 2014.

Saskatoon, Saskatchewan-based Cameco owns uranium projects in Canada, the United States, Kazakhstan and Australia. The company plans to produce 21.7 million pounds of uranium in 2012, with sales of 31 to 33 million pounds.

($1=$1.00 Canadian)

Reporting by Julie Gordon; Editing by Peter Galloway