UPDATE 2-Uranium One stock plunges on Kazakhstan probe

* Kazakhstan investigating past sales of uranium assets

* Uranium One co-operating with investigation

* Shares plunge 38 percent in high volume (Adds details, analyst reaction; in U.S. dollars unless noted)

TORONTO, May 27 (Reuters) - Shares of miner Uranium One UUU.TO plunged 38 percent on Wednesday after Kazakhstan said it was investigating past sales of the country's uranium assets to foreign companies.

Uranium One, which is based in Vancouver and Johannesburg and owns assets in the Central Asian country, said it was co-operating with the Kazakh investigation, which appeared to involve at least one deal connected with the company.

The former Soviet republic, which is home to a fifth of global uranium reserves, has accused a former head of state-owned uranium producer Kazatomprom, Mukhtar Dzhakishev, of illegally selling deposits to foreign companies.

Kazakhstan has indicated that one deal in question was the sale of a 30 percent stake in the owner of the country’s largest uranium mine, Khorasan, although it did not specify the buyer. It said the stake was sold for 15.6 million tenge ($104,000)

Uranium One owns a 30 percent stake in that mine, while a group of Japanese firms owns another 40 percent. The rest is owned by Kazatomprom.

Uranium One said its Kazakh assets, which also include stakes in the Akdala and South Inkai mines, were acquired in 2005 by UrAsia Energy, which Uranium One bought in 2007.

“UrAsia paid full value for these assets, including $75 million for its 30 percent interest in (Khorasan),” Uranium One said in a statement.

It said the purchases were done in accordance with Kazakh law and approved by Kazakh authorities.

In a note, Canaccord analyst Orest Wowkodaw put his rating and target on Uranium One under review “until we receive more clarity on the issue and can more accurately assess the financial impact (if any) to Uranium One.

He noted that reports suggest the issue revolves around the validity of the ownership rights of the sellers and not the actions of Uranium One.

Operations at Uranium One’s Kazakh projects are continuing, and production remains in line with the company’s guidance for the year, it said, adding that it has requested a meeting with the new administration of Kazatomprom.

The company expects to produce 3.5 million pounds of uranium this year, according to a May 11 statement.

Uranium One’s shares were down C$1.26 at C$2.03 on the Toronto Stock Exchange. By mid-afternoon, more than 40 million shares had been traded, more than double the next most active TSX-listed stock.

($1=150 Kazakhstan tenge)

$1=$1.11 Canadian Reporting by Cameron French