Paladin Energy has agreed to sell a 25% stake in its Langer Heinrich uranium mine in Namibia to China Uranium Corporation Limited for $190 million.
China Uranium Corporation Limited is a wholly owned subsidiary of China National Nuclear Corporation (CNNC), one of China's major nuclear investors, technology developers and operators.
Paladin Energy said the joint venture "represents a formidable partnership focused on advancing global uranium production."
The offtake component of the agreement will allow CNNC to purchase its pro-rata share of product at the prevailing market spot price.
"Having already developed a solid relationship with what is currently the world's largest nuclear utility Electricite de France (EdF) [with an offtake agreement covering delivery of 13.73Mlb U3O8 from 2019 to 2024], Paladin has now established an important strategic long term relationship with CNNC, which will become a major participant on a global scale in the nuclear electrification industry," said Paladin Managing Director/CEO, John Borshoff.
The acquisition is subject to approval from Chinese regulators, including the National Development and Reform Commission, which Paladin said are expected to be obtained by the middle of 2014. Routine consents for the transaction are also needed from Paladin's project financiers and the Bank of Namibia.
CNNC has agreed to pay a $20M non-refundable deposit to Paladin. The company's Director-in-General, Department of Geology and Mining of CNNC, Du Yunbin said: "I do believe, through the investment in the Langer Heinrich project, CNNC and Paladin will develop a long-lasting business relationship which is beneficial to each other and also bring long-term influence to the global uranium mining industry."
Langer Heinrich began uranium production in 2007 and has subsequently undergone two stages of expansion to reach its current design capacity of 5.2Mlb of uranium concentrate per year.
Paladin Energy said that it is targeting 5.7Mlb of production in FY2014. Looking further ahead and given "sufficient uranium price incentive," production could be expanded to 8.5Mlb per year.
Photo: Langer Heinrich uranium mine (Source: Paladin Energy)