Tuesday, August 31, 2010

Northern Uranium China Deal May Face Australian Regulatory Hurdles

SYDNEY (Dow Jones)--Plans by a government-controlled Chinese company to invest in a Western Australian uranium explorer may face significant hurdles before winning regulatory approval in Australia, according to lawyers and takeover experts.

Northern Uranium Ltd. (NTU.ASX) Monday said it has signed a binding letter of intent with Chinese mineral explorer Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co., a unit of the East China Mineral Exploration and Development Bureau, or ECE, a mining agency owned by the Jiangsu provincial government.

Under the terms of the letter, ECE would acquire 51% of Northern Uranium for A$15.7 million.

But foreign investment by Chinese state-owned companies--particularly in sensitive commodities such as uranium and rare earths being explored by Northern Uranium--have run foul of Australia's Foreign Investment Review Board in recent years.

"FIRB doesn't have a rule book for this," says Simon Price, director at Azure Capital, a Perth-based advisory firm that has worked on Chinese resource takeovers. "They used to have fixed principles for investments by state-owned enterprises but they have replaced them with more general concepts."

"The key thing is whether the (suitor) has a standalone governance structure," said one lawyer familiar with FIRB decisions. "The closer they are to the government, the more likely they may be seen as a conduit for gathering information, rather than as an independent mining house."

The FIRB took just a month to approve privately-held Sichuan Hanlong Group Co.'s purchase of a 55% stake in Moly Mines Ltd. (MOL.AU) last November, but state owned companies face a higher bar.

"If this is directly controlled by Jiangsu province, so there's not a lot of separation, that's going to be a factor," said Price.

The level of control in Australia also makes a difference. In a speech to the Australia China Business Council last year, FIRB's executive director Patrick Colmer said the government was "much more comfortable" with foreign investments in new projects below 50%.

China Nonferrous Metal Mining Co.'s proposed A$500 million bid for a 51% stake in rare earths explorer Lynas Corp. Ltd. (LYC.AU) last year collapsed after FIRB insisted China Nonferrous lower its stake below 50% and take less than half of the board seats.

Northern Uranium, however, may have a strategy in place to get around this issue.

George Bauk, Northern's managing director, said the 34.5 million options outstanding on the company would be able to dilute ECE's stake down to 41%.

The options, expiring in March and September 2012, can be exercised for 15 cents and 20 cents respectively, compared to Northern's current price of 10 cents.

"They were looking for a placement of 51% but should the price go up above 15 cents 20 cents there's a mechanism for them to go under 50%," he said.

Under the current proposal, ECE would have three seats on Northern Uranium's nine member board and would choose two more independent directors in cooperation with the current board, Northern said.

But the biggest hurdle may well come down to the nature of the materials being mined.

Uranium's potential military use makes it the subject of close scrutiny, and Australia's exports to China are governed by a cooperation agreement restricting use to civilian power stations overseen by the International Atomic Energy Agency.

But the level of regulation may make uranium deals easier, as evidenced by state owned China Uranium Development Company Ltd.'s purchase of a 70% stake in Perth based uranium explorer Energy Metals Ltd. (EME.AU) for A$100 million last

A person familiar with the deal said that uranium was expected to be "not particularly sensitive", especially as Northern already has an agreement to market all its uranium through French nuclear utility Areva S.A. (CEI.FR).

Northern's rare earths interests may be a bigger concern, said the lawyer familiar with the FIRB.

China holds around 90% of the world's resources of rare earth metals, which have growing uses in electronics, lasers and hybrid car technology.

ECE already holds 22% of Arafura Resources Ltd. (ARU.AU), which is exploring the Nolans Bore deposit north of Alice Springs, one of the world's top half-dozen rare earths resources outside China.

Fears about Beijing's hold over the global rare earths market are likely to have played a part in FIRB's decision over Lynas, which has the most developed resource of the metals outside China.

However, Bauk said that Northern's interests in those commodities were not advanced. "There's some really encouraging rockchip samples but we're in such an early stage there, a lot of work has to come into that."


Friday, August 27, 2010

Paladin Energy Increases Sales Revenue 78% to $204.3Million

Uranium producer Paladin Energy Ltd has dramatically narrowed its full year loss to $US52.9 million ($A59.7 million), from the previous corresponding 12 months, on record sales volumes.

The loss for the year to June 30 compares with a $US480.2 million loss in 2008/09.

RBS Morgans resources analyst Lyndon Fagan said the latest result was a little below his expectations.

Paladin posted record uranium oxide production of 4.32 million pounds, a 60 per cent increase from the prior year.

The company had previously said it planned to expand its uranium production from a targeted seven million pounds in 2011 to 14 million pounds by calendar 2015.

In its report to the stock exchange on Friday, Palandin said it achieved record sales volumes for fiscal 2010, 84 per cent higher than the previous year.

Sales revenue for the year increased 78 per cent to $204.3 million, but the cost of sales more than doubled from $53.0 million to $131.6 million.

"During the year the company continued its strategy of placing more uranium into the term market," Paladin told the stock exchange.

The company made a loss per share of eight US cents, compared to 78 US cents in the 2008/09.


Monday, August 23, 2010

Lynas Corporation acquires key stake in Northern Uranium

Rare earths developer Lynas Corporation (ASX: LYC) has popped up on the share register of Northern Uranium (ASX: NTU) acquiring 9,509,366 shares in on-market purchases in three tranches at $0.12 to $0.135 per share on 19 August 2010.

The share purchases provide Lynas with a 9.44% stake in Northern Uranium.

Interestingly, on 9 August, 2010 Northern Uranium announced it had signed a binding letter of intent with Jiangsu Eastern China Non-Ferrous Metals Investment Holding Co., Ltd, an affiliate of East China Exploration & Development.

Results achieved to date by Northern Uranium at its heavy rare earths project have been very encouraging.

Subject to approval from Northern Uranium shareholders, ECE will invest about A$15.7m in Northern Uranium at a share subscription price of A$0.145 per share.

Northern Uranium owns the Browns Range Rare Earths project which previously formed part of the Gardiner-Tanami Project, but since 2009 has become a focus for the company’s rare earth element (REE) exploration program.

The project consists of two granted exploration licenses and one tenement application. The tenements cover an area of 400 km2 within Western Australia, located adjacent to the WA/NT border approximately 150 km southeast of Halls Creek.

A total of 59 rock chip samples were collected from the Browns Range area, with 11 returning assays with TREE+Y greater than 1% and up to a maximum of 7.95% TREE+Y.

REE distribution is dominated by high value Heavy Rare Earth Elements (HREE), with 65-75% of REE’s being Heavy REE for all except one of the anomalous samples.

Based on the results and the latest Rare Earth prices for oxide FOB China, the range of value of the Brown Range xenotime mineralisation from the above table is US$547 per tonne to US$5,727 per tonne. This is largely due to HREE being over ~70% of all REE in samples.


Deep Yellow Limited (ASX:DYL) Discovers Significant Uranium Intercepts in Alaskite in Namibia

Perth, Aug 2010 (ABN Newswire) - Deep Yellow Limited (ASX:DYL) (PINK:DYLLF) is pleased to announce new drill results with additional significant uranium intercepts from follow-on reconnaissance drilling for alaskite-hosted uranium mineralisation at its Tubas Alaskite project area in Namibia, with exploration conducted by wholly owned subsidiary Reptile Uranium Namibia (Pty) Ltd (RUN).

On 29 April 2010, DYL announced drill results from discovery hole ALAR13 which returned 89 metres at 400 ppm cU3O8 from 128 metres. Since then, follow-on drilling has continued and significantly, four consecutive drillholes on Reconnaissance Line 3 have returned chemical assays of approximately 400 ppm cU3O8 and greater, indicating a potential width of significant mineralisation across strike of at least 300 metres.

Reverse circulation (RC) drillholes ALAR61 through ALAR64, spaced at 90-100 metres, have returned the following uranium intercepts:

- 8 metres at 392 ppm cU3O8 from 83 metres, and
- 8 metres at 401 ppm cU3O8 from 132 metres

- 7 metres at 394 ppm cU3O8 from 62 metres, and
- 15 metres at 449 ppm cU3O8 from 110 metres, and
- 29 metres at 422 ppm cU3O8 from 138 metres

- 10 metres at 411 ppm cU3O8 from 198 metres

- 13 metres at 412 ppm cU3O8 from 179 metres, and
- 7 metres at 402 ppm cU3O8 from 199 metres

Discovery hole ALAR13 was located on Reconnaissance Line 2 which was drilled perpendicular to the strike of a northeast to southwest trending prospective horizon comprising alaskite, granitic gneiss and magnetite. Line 2 is located parallel to and approximately 550 metres southwest of Line 1, and the latest Line 3 is parallel and located approximately 450 metres southwest of Line 2 (Figure 1 - To view all figures and appendix in this announcement, please refer to the link at the bottom of this release). To date a total of 76 holes for 16,029 metres of drilling have been completed on the first three reconnaissance lines. Bar graphs of downhole grade intervals for individual holes in the interpreted mineralised zone on Reconnaissance Lines 1, 2 and 3 are shown in Appendix Figures 5, 6 and 7 respectively.

Figure 2 is a location map for the Tubas Alaskite discovery area relative to RUN's other projects and EPLs and the locations of other alaskite hosted uranium deposits such as at the Rossing Uranium Mine, Extract Resources' Rossing South and Ida Dome Projects and Bannerman's Etango Project. Figure 3 is an aeromagnetic image showing the prospective Alaskite zone trending from the northeast to the southwest and delineated in part by adjacent magnetic strata.

Mineralised intercepts returned from holes ALAR61 through ALAR64 (Table 1 and Appendix Figure 7) and adjacent holes provide confidence in the interpretation of the orientation and continuity of the mineralized trend within the alaskite body between drillholes within a reconnaissance line. In addition, the potential continuity of mineralisation between Reconnaissance Line 2 and 3 can be inferred based on interpreted strike trend.

Additional drilling was also conducted around discovery hole ALAR13 to better understand the lithology and orientation of the mineralised alaskite trend (Table 1 and Appendix Figure 6). The conclusion reached from the detailed drilling is that ALAR13 may have been drilled partially or wholly down-dip of the mineralised occurrence and this may have biased the true width of mineralisation. As a result, in an effort to more accurately represent true widths, subsequent drillholes starting on Reconnaissance Line 3 were drilled in the opposite direction to ALAR13 which was drilled at a 60 degree angle to the northwest.

Presently there are 3 RC rigs and one diamond rig actively drilling on this project. Two additional RC rigs will be added as detailed resource drilling at RUN's INCA Project winds down.

Figure 4 is a graphic comparison between downhole chemical assay grade intervals (cU3O8) and downhole gamma log data (eU3O8) for holes ALAR61 and ALAR62. In general, eU3O8 values are higher than cU3O8 values. Samples were taken and submitted to ANSTO for disequilibrium analyses. Results showed the uranium to be in secular equilibrium. However, RUN has yet to determine suitable statistical factors to apply to downhole logging results to ensure the eU3O8 data is accurate. Consequently, RUN continues to chemically assay all zones of mineralisation as determined from logging and other radiometric tests. To date more than 3,000 chemical assays have been completed on alaskite drill samples.

Diamond core and continuing statistical evaluation will resolve this in time to allow the effective use of the gamma logging data which is collected immediately upon completion of each hole. In the interim, all anomalous zones will be chemically analysed, which may, in the shorter term, slow reporting on this exciting project.

Targeted (resource) drilling on a nominal 100 by 100 metre grid around well mineralised areas such as surrounding, and between, holes ALAR1, 13 and 62 will commence following redeployment of rigs from other project areas.

Another positive observation from the alaskite drilling to-date is the significant amount of sulphides (predominantly pyrite with lesser pyrrhotite) present both within and peripheral to the uranium mineralisation which reaches a visual maximum of approximately 15% (with 5% being common) as depicted in the core photograph below. This has potential economic importance as a source for the generation of sulphuric acid for use in any acid leach uranium plant in the area. The smoky quartz seen in the diamond core is alteration resulting from intense irradiation from high-grade uranium mineralisation, and serves as an indicator of such when diamond core or RC chip samples are geologically logged.


Tuesday, August 17, 2010

Cauldron Energy - CXU makes new high-grade discovery at Yanrey Uranium Project

Cauldron Energy (ASX: CXU) has reported that its initial drilling program has identified significant new uranium targets at its Yanrey Uranium Project in Western Australia.

The first of five targets has been drilled 1.5 km south of the Bennet Well uranium resource, where the company has inferred a resource of 4.8 million pounds eU3O8 at 300 ppm eU3O8, and identified a new zone of high grade uranium mineralisation.

This initial drilling has returned significant results including:

- YNAC 264 1.68 m at 582 ppm eU3O8
- YNAC 277 1.00 m at 699 ppm eU3O8
- YNAC 278 2.18 m at 657 ppm eU3O8
- YNAC 278 1.50 m at 1152 ppm eU3O8

The mineralisation in YNAC 264, 277 and 278 remains open on broad spacing and is already over a strike of 2.5km. 4,000 metres of reconnaissance aircore drilling will test five priority targets over a strike of 40 km. 16 holes for 1,563 metres have been completed.

Terry Topping, managing director, said the company believes the Yanrey Project area, which already hosts the Bennet Well (Cauldron) and Manyingee (Paladin) uranium deposits, has great potential for the development of uranium deposits via insitu recovery mining methods, similar to the Beverley Mine region of South Australia.


Thursday, August 12, 2010

Extract Resources Upgrades Their Namibian Rossing South Project.

EXTRACT Resources continues to strengthen its corporate appeal, with a significant resource upgrade at its Rossing South project.

The upgrade will make it one of the top five uranium deposits in the world.

The emerging uranium miner says the size and grade of the new resource confirms Rossing South as one of the most significant uranium discoveries made in the past decade.

Managing director Jonathan Leslie said the increase in the resource from the original discovery in February 2008 showed the project had "an amazing trajectory".

"The main purpose is to prove up the resource so we can get into mining, but it's also important to make people aware that the whole prospectivity of that area is huge and is now a world-class-ranked deposit in terms of size," he told The Australian.

"The project has been steadily moving up the ranking list and we expect it to go on."

Extract announced yesterday that indicated resources showed 257 million pounds of uranium oxide at zones one and two of the deposit, which is part of its Husab uranium project in Namibia. It added that the overall deposit was upgraded 37 per cent.

The company said the increased resource also established the deposit as one of the highest-grade, granite-hosted uranium deposits in Namibia.

Rossing South neighbours mining giant Rio Tinto's massive Rossing project, which saw the mining major take a 15 per cent stake in Extract in 2008. Extract's stock is tightly held, as Rio also holds an interest in Kalahari Minerals, whose main investment is a 41 per cent interest in Extract.

Japan's Itochu also secured a 10.3 per cent stake in the emerging miner last month, which upped the trading house's interest in the mine, as it also has a 14.9 per cent stake in Kalahari Minerals.

Extract was also the centre of market speculation last month that it could lose the right to mine the massive deposit, after Russia and Namibia signed a five-year uranium co-operation agreement.

Following the signing, it was suggested in Russian news agencies that Russia's state-owned nuclear company Rosatom had applied to develop Rossing South and would be prepared to spend $US1 billion ($1.1bn) on uranium development in the country.

But Namibian officials have since publicly supported Extract's right to the mine the project.

Mr Leslie said yesterday there had been a "hive of activity" on the Namibian site, with 19 drill rigs, to move the confidence of the resource from inferred to indicated, the most accurate broad measure of underground material. "The upgrade is a really important milestone because without it we cannot complete the definitive feasibility study, which is scheduled for completion in the last quarter," he said.


Monday, August 9, 2010

Northern Uranium Limited Lands Chinese Strategic Investor

Northern Uranium (ASX: NTU) has entered into a binding agreement with a leading Chinese mineral exploration company, Jiangsu Eastern China Non-Ferrous Metals Investment - an affiliate of East China Exploration & Development Bureau.

ECE will acquire 108 million Northern Uranium shares at $0.145 per share, raising approximately A$15.7m. The deal was struck at a premium to NTU's last share price trade of $0.135.

ECE will subscribe for ordinary shares in Northern Uranium at an issue price of 14.5c per share, representing a 58% premium to the 1 month VWAP of Northern Uranium’s shares to and including 4 August 2010 (being the last trading day prior to the day on which a trading halt in respect of Northern Uranium shares was requested).

The funds raised will be applied to the accelerated exploration of Northern Uranium’s uranium and heavy rare earth element prospects in Western Australia and the Northern Territory.

Upon completion of the transaction, ECE will hold 51% of Northern Uranium’s share capital on an undiluted basis. It is intended that ECE will be offered three Northern Uranium board seats and will cooperate with current board to choose two independent Directors to be appointed, bringing the total number of directors initially to nine. Mr Kevin Schultz will continue as non executive chairman.

Northern Uranium managing director, George Bauk, said, “this transaction represents a significant milestone for Northern Uranium. The investment by ECE will allow the company to ramp up exploration at the Gardiner-Tanami uranium project and our numerous heavy rare earths projects in the Northern Territory."

Northern Uranium has a strategic alliance with AREVA in the Company’s Gardiner-Tanami uranium assets, and ECE has confirmed its intent to work in close commercial cooperation with AREVA on uranium related developments at the project. ECE said it does not seek to control the sale of future products, the company said.

The deal is subject to a number of conditions including satisfactory completion of confirmatory due diligence by ECE and a review by Northern Uranium; execution of definitive transaction documentation embodying the terms of the Letter of Intent; ECE obtaining the approval of the Jiangsu Provincial People’s Government; ECE receiving notification under the Foreign Acquisitions and Takeovers Act that the Australian Commonwealth Government has no objection to its investment in Northern Uranium; and approval by Northern Uranium shareholders at an extraordinary general meeting.


Thursday, August 5, 2010

ASX- Listed Paladin Energy Signs MOU With Chinese Group CGNPC

Paladin Energy has signed a wide ranging Memorandum of Understanding (MOU) with Chinese based CGNPC Uranium Resources setting up a framework of co-operation for long term sales of uranium.

In a statement Paladin said the agreement could also include potential participation by CGNPC in Paladin's growth strategies and expansion of joint venture relations in the Northern Territory with Energy Metals, in which CGNPC through its subsidiary China Uranium Development holds a 69 per cent interest.

The agreement is a non-exclusive MOU.

CGNPC is a large nuclear utility in China and its expects its reactor build programs will account for about 50 per cent of China's anticipated growth in nuclear power to 2020.

Paladin shares were up 20 cents or 5.24 per cent to $4.02 at 10.45am following the announcement.

See full company statement:

Paladin is pleased to advise that it has signed a wide ranging Memorandum of
Understanding (MOU) with CGNPC Uranium Resources Co., Ltd ("CGNPC-URC"), setting a framework of co-operation for long term sales of uranium, potential participation in Paladin's growth strategies, and possible expansion of joint venture relationships in the Northern Territory with Energy Metals Limited (EME), in which CGNPC-URC, through the subsidiary China Uranium Development Company Limited, holds a 69.34% interest.

Although this MOU is non exclusive, it provides a further platform from which Paladin
can build upon its already impressive growth.

Paladin has a strong project development pipeline and remains the only fully independent publically listed uranium company with a geographically diversified production base.
About China Guangdong Nuclear Power Holding Corporation (CGNPC)

CGNPC-URC is the wholly owned subsidiary of CGNPC.

CGNPC is the premier nuclear utility in China and its reactor build programs will account for about 50% of China's anticipated growth in nuclear power to 2020. CGNPC-URC is a wholly owned affiliate of CGNPC responsible for uranium procurement either through purchase of uranium product or development of new mines.


Wednesday, August 4, 2010

ASX-listed Greenland Minerals and Energy GGG

Australian explorer to meet Greenland Minerals officials
on Uranium Policy

PERTH ASX-listed Greenland Minerals and Energy will meet with top government officials in Greenland next week to clarify claims that the country would adopt a zero-tolerance policy towards uranium mining.

The company has requested a voluntary share trading halt this week, following the speculation, which could affect its Kvanefjeld rare earth elements/uranium/sodium fluoride project in that country.

“While the company does not normally respond to media interpretation, it has taken the proactive step to protect shareholders from market speculation about this sensitive issue, and has requested a voluntary suspension pending meetings with the Prime Minister of Greenland, the Minister of Mines and the Head of the Bureau of Mines and Petroleum to clarify these claims,” said Greenland MD Roderick McIllree on Tuesday.

The meetings were scheduled for August 10 and August 11.

McIllree said that the company’s shares would remain in suspension until then.

“Greenland Minerals is confident that the future work programmes to further evaluate the Kvanefjeld project will proceed as currently anticipated,” he added.

The Kvanefjeld multielement deposit is located near the southwest tip of Greenland. Prefeasibility studies indicate that the vast resources could sustain a large-scale, economically robust mining operation for decades.

The project could potentially supply 20% of global rare-earth element demand at low cost, owing to revenues from uranium and zinc.