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Cameco Corp. and Orano Canada Inc. agreed to buy out a Japanese energy company’s last five per cent stake in a uranium mine in northern Saskatchewan.
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The deal would make Saskatoon-based uranium giant Cameco and French mining multinational subsidiary Orano jointly own the entirety of the Cigar Lake mine.
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“Scarce licensed (and) permitted assets like Cigar Lake (are) playing an essential role in fueling global ambitions to expand nuclear energy generation,” Cameco’s chief executive Tim Gitzel said in a release.
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Cameco will pay the Tokyo electric company’s Canadian subsidiary, TEPCO Resources Inc., approximately $115.75 million, increasing its stake by nearly three per cent. The deal would mean its majority share in the mine increases to more than 57 per cent.
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Orano, which did not disclose the dollar value of its purchase, would raise its ownership in the mine to nearly 43 per cent.
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The acquisition is expected to close in the third quarter of this year.
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A note from analysts at TD Cowen suggests the uranium giants appear to be expanding their ownership stake at bargain prices.
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The analysts estimate Cameco’s current majority stake is worth roughly $3.2 billion, which suggests its acquisition of TEPCO’s shares would be worth $173 million, almost a third more than what it’s spending, according to the TD Cowen analysts, led by Craig Hutchison and Ernad Sijercic.
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The mine operator Cameco expects that it will produce between 17.5 million and 18 million pounds of uranium concentrate at Cigar Lake this year. It’s also working to extend the life of the mine until 2036.
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Orano also owns a 30.2 per cent share in McArthur River and 16.7 per cent in Key Lake, which are both operational Cameco mines. It also operates and jointly owns McClean Lake.
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Cameco’s stock was up by seven per cent to $166.92 per share in early trading on Tuesday.
