Cameco to boost Athabasca assets with stake buy from

Fri Mar 2, 2012 12:40pm EST
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(Reuters) - Cameco Corp (CCO.TO: Quote) agreed to buy Areva Resources Canada's entire 27.94 percent stake in the northern Saskatchewan-based Millennium project for C$150 million, to boost its assets in Athabasca basin, the world's highest-grade uranium district.

Buoyant demand and steady spot prices of the radioactive heavy metal have spurred deals in the sector in recent times.

On Thursday, Uranium Resources (URRE.O: Quote) said it would acquire private uranium explorer Neutron Energy, while Extract Resources EXT.AX, which owns one of the world's largest uranium mines, backed a takeover offer from China Guangdong Nuclear Power.

"We expect that M&A activity will continue, as junior companies with large prospective deposits fall into the hands of better-capitalized entities," Dahlman Rose's Anthony Young said in a note to clients.

Young said more M&As are likely in this space over the course of the year.

"We could see value in investors purchasing a basket of high quality junior uranium mining companies, with the likely outcome being that a few of these companies may be acquired," said Young, for who Cameco remains the top pick in the sector.

Cameco, Canada's largest uranium miner, has struggled with delays at its Cigar Lake project in Saskatchewan and with permitting issues at its U.S. assets.

Last year, the company had backed out of a bidding war with Rio Tinto (RIO.AX: Quote) for Hathor, which controls the advanced exploration-stage Roughrider project in the Athabasca region.

The Millennium project, a proposed uranium mine in the Athabasca basin, has indicated resources of 50.9 million pounds of uranium and inferred resources of 16.7 million pounds.   Continued...