Talvivaara signs uranium off-take agreement with Cameco Corporation
Talvivaara Mining Company Plc ("Talvivaara" or the "Company") announces that it has signed an agreement with Cameco Corporation ("Cameco"), the international uranium producer, for the off-take of uranium obtained as a by-product at the Talvivaara mine.
· Cameco is to provide an upfront investment of up to USD 60m to cover the construction costs of the uranium extraction circuit
· Talvivaara will repay the investment through deliveries of uranium concentrate during the initial years of the agreement; once the capital sum has been repaid all uranium concentrate produced thereafter until 31 December 2027 will be bought by Cameco at a price based on market prices at the time of delivery
· Annual uranium production is estimated at 350tU (ca. 770,000 pounds), corresponding to approximately 410t (900,000 pounds) of yellow cake (UO4)
Cameco is already a supplier of uranium fuel to generate clean electricity for Finnish utilities and their customers. Cameco will continue to provide technical assistance to Talvivaara in the design, construction, commissioning and operation of the uranium extraction circuit to be constructed at the Sotkamo mine. Talvivaara plans to start construction of the uranium extraction circuit in the coming months and complete it in 2012.
Under the terms of the off-take agreement with Talvivaara, Cameco will provide an up-front investment, to a maximum of $60 million, to cover the construction cost of the uranium extraction circuit. Cameco's capital contribution will be repaid through deliveries of uranium concentrate in the initial years of the agreement.
Once the capital is repaid, Cameco will purchase the uranium concentrate produced at Sotkamo through a supply agreement that will be in effect until 31 December 2027. This agreement will provide Talvivaara with payment for the uranium, based on a formula that references market prices at the time of delivery.
Cameco will take ownership of the uranium at the Sotkamo site and will have the sole right to market the product to its customers.
The agreements between Talvivaara and Cameco are subject to ratification by the Euratom Supply Agency and the approval of the European Commission pursuant to the Euratom Treaty, as well as to the permits from the appropriate Finnish authorities. Talvivaara and Cameco expect the Euratom approval within a few months. Talvivaara applied in April 2010 to the Ministry of Employment and Economy for a permit to extract uranium as a by-product, in accordance with the Nuclear Energy Act. The Environmental Impact Assessment Process as well as the preparations for submitting the application for the Environmental Permit relating to the uranium extraction process are ongoing at the site.
Talvivaara expects steady state production of uranium at the Sotkamo mine to be approximately 350tU (770,000 pounds), corresponding to ca. 410t or 900,000 pounds per annum of yellow cake (UO4 equivalent). Ultimately, the production capacity for uranium extraction at the Sotkamo mine could be increased with Talvivaara's stated intention to increase production of nickel and zinc products at the mine through use of its unique bioheapleaching process.
Commenting on the announcement, Pekka Perä, CEO of Talvivaara, said:"We are pleased to be partnering with Cameco in developing uranium production at Sotkamo. The uranium found locally is naturally occurring and it makes sense to extract it in the same way as we do with our other metals. Our primary concern in investigating this initiative has been to ensure that we could achieve production safely and securely, and to act in an environmentally sensitive manner. Cameco has the long-standing international experience to assist us in ensuring these conditions."
"This agreement with Cameco provides the upfront funding for the construction of the uranium extraction circuit, whilst not diluting Talvivaara's strong balance sheet. Once the initial capital investment has been paid off Talvivaara will benefit from market prices for uranium, and the Board is confident that with rising demand for uranium around the world the project economics provide for a solid additional revenue stream for the Company."