Russia drops Mantra uranium deal after Japan quake

17th March 2011, Comments 0 comments

A subsidiary of Russia's atomic energy agency said Thursday it was withdrawing its $1.16 billion offer for Australia's Mantra Resources because of the nuclear power plant problems in Japan.

The Australian company's shares lost about a third of their value on the Toronto Stock Exchange on Wednesday in line with other massive losses suffered by the world's big nuclear energy firms.

The Russian Federal Atomic Agency's ARMZ uranium producer said in a statement that the Japanese nuclear crisis fundamentally altered the Australian company's long-term value.

ARMZ said it had "notified Mantra Resources Limited it felt that the series of serious events in Fukushima, Japan, will probably have a substantial negative impact on Mantra's business."

The Russian company added that it intended to "continue negotiations with Mantra about alternative ways of implementing the deal."

ARMZ had expressed an interest in the Perth-based company because of its flagship Mkuju River project in Tanzania, which has an estimated 39,000 tonnes of uranium reserves.

The initial terms of the takeover agreed in December envisioned the Russian firm building a new uranium plant in Tanzania whose initial annual production run of 1,400 tonnes would eventually be expanded to 2,500 tonnes.

Mantra Resources also has uranium holdings in Mozambique.

ARMZ is the world's fifth-largest uranium producer and also has the world's second largest uranium reserves.

Japan's worst ever earthquake and unprecedented tsunami badly damaged the Fukushima nuclear power complex, leading to a series of blasts and radiation leaks which the authorities are still trying to control.

© 2011 AFP

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