Russia to buy control of Uranium One

Vancouver-based Uranium One said Tuesday it has agreed to a deal that sells controlling interest to the Russian state-owned uranium mining company JSC Atomredmetzoloto.

In exchange, Uranium One will get interests in two southern Kazakhstan uranium mines.

The deal would have the Canadian company issue 356 million new common shares, worth about $932.7 millionat their most recent market price, to JSC Atomredmetzoloto for stakes in the Akbastau and Zarechnoye joint ventures plus $642 million in cash.

Uranium One would acquire a 50 per cent interest in Akbastau and a 49.67 per cent interest in Zarechnoye.

The Russian company also known as ARMZ would increase its existing 23.1 per cent in Uranium One to at least 51 per cent.

The deal "positions the company to be among the world's top five uranium producers by 2011, as our Kazakh assets ramp up to full capacity," Uranium One CEO Jean Nortier said in a statement.

ARMZ has also agreed not to buy or sell any Uranium One shares for 18 months after closing of the deal, expected before the end of the year.

After closing, Uranium One will pay a special cash dividend of at least $1.12 per share to shareholders other than ARMZ.

The new assets will increase Uranium One's production in Kazakhstan by about 60 per cent to 16 million pounds.

Uranium One shares ended the day down ninecents, or 3.4 per cent, to $2.53 on the Toronto Stock Exchange.

Deal just the latest by state-owned firm

ARMZ is just the latest state-run foreign firm to buy up a large stake in Canada's resource sector.

Chinese companies have been snapping up Canadian mining assets in recent years as that country scours the globe for supplies of oil and metals such as copper, nickel and zinc.

In May, China Investment Corp., a deep-pocketed Chinese investment fund, said it would buy $435 million worth of Calgary-based Penn West units and invest $817 million for a 45 per cent stake in a joint venture to develop oilsands leases.

In April, another Chinese company, state-owned fuel refinery giant Sinopec, spent $4.65 billion US for a nine per cent interest in the Syncrude Canada Ltd. partnership (TSX:IMO), which owns a gargantuan 350,000-barrel-per-day mining operation north of Fort McMurray, Alta.

Also in April, Jinchuan Group, China's largest nickel producer, made a $150-million bid for Toronto-based Crowflight Minerals Inc.

Last summer, China Investment Corp. acquired about 20 per cent of Vancouver-based Teck Resources, Canada's largest publicly traded miner.