Despite uranium spot prices currently trading at below $US50 a pound, Canadian company Cameco Corp., the world's third-largest uranium miner, remained confident demand for the yellowcake nuclear fuel will bounce back.
After 30 years, Australia's Queensland state will resume uranium mining again as the state's Premier Campbell Newman surrendered to pressure to lift the policy in support to the Australia Prime Minister's desire to sell uranium to India.
Over the weekend, Cameco Corp acquired from global miner BHP Billiton its Australian Yeelirrie uranium deposit for $430 million, as the latter offloads assets to build up cash in the face of the deteriorating commodity market. Just last week, BHP Billiton announced it was scrapping the $30-billion expansion of its Olympic Dam copper and uranium mine mega project in South Australia, all in line to an earlier announcement to hold on to some $80 billion initially planned for new mining projects by 2015.
Touted as Australia's second-biggest unmined uranium deposit and the biggest in WA, Yeelirrie holds about between 115 million and 145 million pounds of uranium, according to Cameco Australia managing director Brian Reilly.
"There are very few deposits (of this size and quality) on a global scale undeveloped," he said in The Australian. "Our corporate development team scours the globe regularly looking for these opportunities.
"We see this as a real gem and we think it's a good fit for Cameco."
The Canadian miner remained certain demand for the yellowcake will surge back in light of the numerous nuclear power reactors under construction in the world right now.
"There is tremendous growth in the nuclear industries of China, India, South Korea and the Middle East," Mr Reilly said.
In June, Amir Adnani, chief executive of Uranium Energy Corp., said the energy requirements of emerging economies in Asia will propel back nuclear power, and consequently, demand for uranium.
Mr Adnani said that of the total 65 number of nuclear power reactors currently under construction in the world right now, only 3 per cent come from the G7 countries.
Subject to the approvals from the government of Western Australia and the Australian Foreign Investment Review Board, Cameco Corp expects the transaction to close by end 2012.
"Yeelirrie represents an attractive deposit that fits well with Cameco's vision and corporate strategy," Tim Gitzel, chief executive officer of Saskatoon, Saskatchewan-based Cameco, said in a statement on Monday.
BHP Billiton decided to divest the Yeelirrie uranium deposit to concentrate on more profitable projects.
"We can't pursue all of the growth operations that are before us, and we need to develop the ones with the best returns," said BHP spokesman Antonios Papaspiropoulos.
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