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Cameco
(TSX:CCO - News) (NYSE:CCJ - News) has signed two agreements
to buy uranium produced at the Sotkamo nickel-zinc
mine in eastern Finland owned by the Talvivaara
Mining Company Plc. (LSE:TALV
- News)
"Cameco is already a supplier of uranium fuel to generate
clean electricity for Finnish utilities and their customers," said Cameco CEO Jerry Grandey.
"Cameco`s strategic goal is to double uranium
production from our existing assets by 2018. Our deal with Talvivaara will provide Cameco
with an additional source of uranium supply over and above what we expect to
produce from our properties."
Talvivaara
expects production of uranium at the Sotkamo mine
to be approximately 900,000 pounds (U3O8 equivalent) or 350 tU per year once the mine ramps up to full production.
The production capacity for uranium extraction at the Sotkamo
mine could be increased if Talvivaara proceeds with
its stated intention to increase production of nickel and zinc concentrate at
the mine through use of its unique bioheapleaching
process.
Cameco
has and 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
operation. Talvivaara plans to start construction
of the uranium extraction circuit in the coming months and complete it in
2012. Proceeding with construction and operation of the uranium circuit
requires a number of permits that Talvivaara is seeking
from Finnish regulators.
Under
the first agreement with Talvivaara, Cameco will provide an up-front investment, to a maximum
of $60 million (US), to cover the construction cost of the uranium extraction
circuit. Cameco's capital contribution will be
repaid through the initial deliveries of uranium concentrates under the first
agreement.
Once
the capital is repaid, Cameco will purchase the
uranium concentrates produced at Sotkamo through a
second agreement that ends on December 31, 2027. The second agreement will
provide Talvivaara payments 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 has the sole right to market the product to its customers.
Under
the Euratom Treaty, the agreements with Talvivaara are subject to the concurrence of the Euratom Supply Agency and final approval by the European
Commission.
Finland
produces about a third of its domestic electricity each year through nuclear
power production at four existing reactors operated by two Finnish utility
companies. A fifth reactor is under construction and two others are planned.
"The
fact that uranium will be produced in Finland for the first time in 50 years
meshes well with Finland's plan to produce an increasing percentage of its
domestic electricity from clean nuclear power in the years ahead," Grandey commented.
About
Talvivaara
Talvivaara
Mining Company Plc is an internationally
significant base metals producer with its primary focus on nickel and zinc
using a technology known as bioheapleaching to
extract metals out of ore. Bioheapleaching makes
extraction of metals from low grade ore economically viable. The Talvivaara deposits comprise one of the largest known sulphide nickel resources in Europe. The ore body is
sufficient to support anticipated production for at least 46 years. Talvivaara has secured a 10-year off-take agreement for
100 per cent of its main output of nickel and cobalt to Norilsk Nickel and
entered into a long-term zinc streaming agreement with Nyrstar
NV. Talvivaara is listed on the London Stock
Exchange Main Market and NASDAQ OMX Helsinki and is included in the FTSE 250
Index. Further information can be found at http://www.talvivaara.com/
About
Cameco
Cameco,
with its head office in Saskatoon, Saskatchewan, is one of the world's
largest uranium producers. The company's uranium products are used to
generate electricity in nuclear energy plants around the world, providing one
of the cleanest sources of energy available today. Cameco's
shares trade on the Toronto and New York stock exchanges.
As
used in this news release, "Cameco" or
the "company" means Cameco Corporation, a
Canadian corporation and its subsidiaries and affiliates unless stated
otherwise.
Caution
Regarding Forward-Looking Information and Statements
Our
strategic goal to double uranium production by 2018 is considered to be
forward-looking information and statements under Canadian and US securities
laws. This goal is based upon a number of material assumptions, and its
achievement is subject to a number of material risks, which are discussed in
our annual management's discussion & analysis (MD&A), including under
the headings "Our strategy" and "About forward-looking
information". We will not necessarily update this information unless we
are required to by securities law.
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