Battle of the uranium titans – Cameco drops bid for Hathor – opens door for Rio Tinto to enter the Athabasca basin in Northern Saskatchewan

Saskatoon-based Cameco Corp. has dropped its bid to take over Hathor Exploration Ltd., leaving mining giant Rio Tinto to acquire the junior mining company. Cameco and Rio Tinto had been in a bidding war for Hathor, which controls the uranium-rich Roughrider deposit in Saskatchewan's Athabasca Basin, since Cameco made a hostile bid for the company in August. Both companies upped their offers for Hathor, with Rio offering $654 million, or $4.70 a share, on November 17, 2011. Cameco president and CEO Tim Gitzel said Rio's offer was too steep to counter.

"We've been working on this project for many months," Gitzel said. "When we went into it, we set certain parameters. We wanted to remain disciplined throughout the process ... Having to top ($4.70) would have gone outside our parameters and that is why we decided to withdraw."

The Roughrider deposit has a current resource of about 58 million pounds of uranium, but it is expected to grow through more drilling. For Rio Tinto, it will be the company's first endeavour into the Athabasca Basin.

Gitzel said Cameco is still committed to doubling its production to 40 million pounds by 2018 from 20 million pounds today.

"We still have our 'Double U' strategy, as we call it, firmly in place," Gitzel said. "We have a lot of work to do in Saskatchewan and around the world to achieve our 40-million pound production goal by 2018."

He said Cameco has a number of other projects that will help it meet its goal.

"The jewel is right here in Saskatchewan, our Cigar Lake mine, that we have been working on for many years now," Gitzel said. "We anticipate first production in mid-2013. That mine, once at full production, will produce 18 millions pounds per year. Probably next to McArthur River, which is also our project in Saskatchewan, it will be the second largest mine in the world."

The bidding war for Hathor also shows there is strong interest in the sector, he said.

"I think the interest shown by Rio, Cameco and other companies shows there is a strong future for uranium. We know that energy needs in the world continue to increase rapidly and we know that nuclear power is going to play an important role in that."

Gitzel estimates there will be 93 net new reactors in the world by 2020.

"That's to add to the 430 that exist today," he said. "Those will all need new uranium and that's why we are so aggressive with our 'Double U' strategy to double our production from 20 million pounds from where we are today to 40 million pounds so that we can supply that new demand."

Source: Star Phoneix November 29, 2011 edition, Scott Larson