Cameco Corp. and Vena Resources are selling their 50-50 partnership in a Peruvian uranium company to Canadian venture company Azincourt Uranium Inc.
Azincourt CEO and president Ted O'Connor, a former director of Cameco's corporate development group, says the acquisition of Minergia SAC will provide Azincourt with two exploration projects in a region of Peru with potential for low-cost uranium mining.
Minergia SAC, which owns the advanced stage Macusani and early-stage Munani uranium exploration projects, spent more than $12 million on exploration between 2007 and 2011.
Minergia's mineral resources are estimated at 18 million pounds of U3O8 — a uranium oxide sometimes called yellowcake.
To acquire Minergia SAC, Azincourt will issue a total of $2 million in cash and stock to Cameco and Vena.
Vena said in separate release that it will receive three-quarters of its $1-million payment in stock, and $250,000 in cash. Juan Vegarra, Vena's chairman and CEO will become a director of Azincourt after it takes a stake in the company.
Vena takes stake in Azincourt
Vena said it has also negotiated rights to acquire the Azincourt shares that Cameco Global Exploration Ltd. receives as part of the sale.
"The divestment of Minergia is part of our strategy to spin off our uranium assets and combine them with other assets in other countries with significant upside," Vegarra said in a statement.
The price of uranium has plunged 40 per cent to $34.75 since March 2011, when a tsunami wrecked Japan’s Fukushima nuclear plant and spilled radioactive water in the country. Japan has shut many of its nuclear plans and other countries have been discouraged from investment in nuclear.
The bright spot in the uranium industry is China, where Cameco made a sale earlier this year. But lower-cost uranium is more likely to be developed.
O'Connor was responsible for overseeing Cameco's significant investment in Minergia and he's well-regarded in the uranium industry.
"Vena believes that its stake in Azincourt will result in significant upside to Vena shareholders in the coming years," Vegarra said.