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.
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Northern uranium is going well as it is going to form a binding with the leading Chinese exploration company.
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