SXR Uranium One Update

Bloomberg:

SXR Uranium One Inc. agreed to buy UrAsia Ltd. for $31 billion, to form the world's second largest uranium producer as rising demand for nuclear fuel drives price records.

SXR, owner of South Africa's largest undeveloped uranium deposit, offered C$7.05 (6.01 USD) a share in stock for Vancouver based Urasia, which owns uranium mines in Central Asia. That's 13 percent more than UrAsia's Feb. 9 closing price in Toronto, the companies said today. SXR's stock rose 6.8% percent to a record.

The combined company, once all its mines are operating, will trail only Cameco Corp. in production and be the only producer in Kazakhsta, South Africa, Australia, the U.S., and Canada, the five largest holders of Uranium deposits. Uranium prices jumped more than 10-fold in five years as demand from utilities surged and stockpiles fell, spurring exploration and mine development.

"This deal is turning SXR into one of the biggest uranium companies in the world," Nick Goodwin, an analyst at Johannesbyrg based Tlotlisa Securities Ltd., said in an interview. The combined company will have a total resource of about 400 million pounds of uranium, he added.

Uranium One will have estimated production of more than 7 million pounds of uranium in 2008 from five projects, at cash costs of about $10-$12 per pound, SXR's executive vice president for Australia and Asia, Greg Cochran, told reporters in Sydney.

"The new Uranium One will be an exciting, low-cost, growth-orientated uranium company with five mines in operation by the first quarter of 2008," SXR CEO Neal Froneman said in the statement.

Side note: This is good new as things progress in the uranium market. I have it, on a good source that uranium is trading at $80 /lb. We will see if Trade Tech makes it official. SXR is one of my favorite long term hold here.