Cameco Agrees to Sell Full Stake in Centerra Gold

By Christopher Donville

Dec. 8 (Bloomberg) -- Cameco Corp., the world’s second- largest uranium producer, agreed to sell its stake in Centerra Gold Inc. for about C$872 million ($820 million), fulfilling a pledge to focus on uranium and nuclear energy.

The transaction includes the sale of 88.62 million Centerra shares to the public at C$10.25 through underwriters led by CIBC World Markets and RBC Capital Markets, Saskatoon, Saskatchewan- based Cameco said today in a statement.

The companies have faced regulatory obstacles in the Kyrgyz Republic, home to Centerra’s Kumtor mine, and in Mongolia where the gold producer operates the Boroo mine. The Kyrgyz government has sought a stake in Centerra while Mongolia temporarily suspended Boroo’s operating permits in June and July.


“The big political issues that have hung over Centerra like a plague have been resolved,” David Davidson, a Toronto- based analyst at Paradigm Capital Inc., said today in a telephone interview.

Cameco Chief Executive Officer Jerry Grandey said last month the company was undecided about whether to sell the stake in Toronto-based Centerra to a strategic buyer or through a secondary offering.

“The thing that probably pushed them to do a deal now was the realization that gold isn’t going up in a straight line,” Davidson said.

Gold Falls

Gold fell today, capping the steepest three-day drop since October 2008, as an advancing U.S. dollar curbed demand for precious metals as alternative investments. The most-active contract on the New York Mercantile Exchange’s Comex division dropped 6.1 percent in the past three sessions after touching a record $1,227.50 on Dec. 3.

Cameco declined C$1.54, or 4.7 percent, to C$31.17 at 3:36 p.m. on the Toronto Stock Exchange before trading was halted pending the announcement. The shares have risen 48 percent this year. Centerra fell C$1.41, or 11 percent, to C$11.19.

Cameco also said today it will transfer 25.3 million shares to Kyrgazaltyn JSC under an April agreement with the Krygyz government.

Cameco intends to use the net proceeds “primarily to grow its core uranium business as it pursues its target of doubling uranium production,” the company said in the statement.

London-based Rio Tinto Group was the world’s largest uranium producer by 2008 production, the World Nuclear Association said on its Web site.

To contact the reporter on this story: Christopher Donville in Vancouver at cjdonville@bloomberg.net.

Last Updated: December 8, 2009 17:49 EST

Source:www.bloomberg.com
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  1. VHGI Gold Files 8k Regarding $50,000,000.00 Treasure Gulch Gold Reserves http://finance.yahoo.com/news/VHGI-Gold-Files-8K-Regarding-prnews-1509726505.html?x=0&.v=1

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