BHP to Sell its Rio Algom unit to Uranium Resources

From Staff reports

Uranium Resources Inc. (URRE) agreed to buy a uranium mining company and a mill license from BHP Billiton Ltd. (BHP) for about $126.5 million in cash.

Uranium Resources announced that it would pay $110 million for Rio Algom Mining LLC, whose assets include New Mexico properties with 20 million pounds of U308 uranium ore. The company will pay $16.5 million for a U.S. Nuclear Regulatory Commission (NRC) license to build and operate a conventional uranium mill.

According to published reports, the agreement reached by Uranium Resources calls for the company to assume certain retirement benefits and reclamation liabilities, of which up to $35 million will be pre-funded at closing.

"The purchase of Rio Algom provides one of the key assets we need to achieve our strategic goal to produce 10 million pounds of U3O8 per year by 2014," said Uranium Resources President and Chief Executive Officer Dave Clark. "We believe building a new mill on an NRC licensed site with associated water rights could allow production to begin within four to five years."
The deal should close before June.

Uranium was milled at the site beginning in the 1950s, when Kerr-McGee operated what was then the biggest operating mill in the United States. It was dismantled in 2003.

Uranium Resources is planning to build a new milling facility to process the uranium ore that it will be mining from around the region. The planned mill is expected to process up to 8,000 tons of uranium ore a day, and will employ over 200 people.

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