TORONTO (miningweekly.com) – Toronto-listed U3O8 Corp on Monday said it had signed a definitive agreement to acquire all of the shares of exploration junior Calypso Uranium, which would strengthen the company’s land position around the state-owned Cerro Solo and Sierra Pintada uranium deposits, in Argentina.
Under terms of the agreement, the deal would add about $3.3-million in cash in exchange for 20.25-million common shares of U3O8, resulting in Calypso shareholders holding a 13% interest in the company.
Calypso's exploration tenements would extend U3O8's strategic property holdings in the vicinity of the Cerro Solo deposit, in Chubut, which is currently being drilled by the Argentine State.
U3O8 said it believed the Cerro Solo deposit to be part of a larger uranium district, recently demonstrated by Canadian miner Cameco's commitment to a 30 000 m drill programme under way with its joint venture partner in the area.
Calypso's exploration concessions in the Sierra Pintada uranium district, in Mendoza, dovetail with U3O8's already dominant land holdings, and the combined entity would control the property extensions to Argentina's largest and highest-grade uranium deposit.
Argentina is seeking domestic uranium supply to fuel its expanding nuclear generating capacity. When Argentina's third reactor comes on stream this year, 9% of the country's electricity would be derived from nuclear – and construction of a fourth reactor is out for tender.
Merger and acquisition activity in the mining industry is expected to increase over the coming year as junior companies consolidate their positions. In the uranium sector specifically, new midtier companies are expected to emerge as Uranium One was recently taken private and as catalysts drive a market turnaround.
A recent preliminary economic assessment pointed to U3O8's flagship Berlin deposit, in Colombia, being a zero cash-cost uranium producer owing to by-product revenues. U3O8 was also busy with exploration on the near-surface Laguna Salada uranium/vanadium deposit, in Chubut, Argentina, which could employ low-cost continuous mining techniques.
U3O8 said the combined companies would have a cash balance of about $4.5-million to fund exploration and corporate activities.
"With this transaction, U3O8 solidifies its position as a leading uranium company in Argentina at a time when the country is calling for local uranium resources to fuel its growing nuclear reactor fleet. We also consolidate our strategic land holdings that cover likely extensions of Argentina's two largest known uranium deposits," U3O8 president and CEO Dr Richard Spencer said.
The company’s shares traded at 19.5 Canadian cents apiece on the Toronto bourse on Monday afternoon.