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Uranium fears shake up negotiated takeover

Trucks carry rocks containing uranium at the Arlit mine in Niger.


In the face of plunging uranium stocks and immense backlash against nuclear power after Japan's devastating earthquake, Russian state entity ARMZ has negotiated a revised takeover bid for Mantra Resources Ltd.

The original $1.16-billion (Australian) deal was originally signed in December but late last week ARMZ announced that the Japanese developments are likely to have a material adverse effect on the business, which can sometimes allow you to get out of a deal. On Monday, the two companies announced they reached a settlement and Mantra has agreed to a lower takeover price.

ARMZ initially bid $8 a share in cash, but that has now been reduced to $7.02 in total, with $6.87 paid in cash plus a $0.15 cash dividend. Mantra's directors have approved the offer, and Highland Park S.A., Mantra's largest shareholder, did too.

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Uranium One is tangentially affected. Originally Uranium One had a call option to purchase Mantra from ARMZ within 12 months of the closing of the ARMZ-Mantra takeover, and ARMZ had a put option to sell the company to Uranium One after 12 months. Uranium One can now extend its option to 24 months, provided that it purchases about 15 per cent of Mantra for $150-million (U.S.) within six months of ARMZ's takeover.

Talk about a lot of moving parts.

Mantra's share priced soared 25 per cent on the news, after falling about 40 per cent after the earthquake. Uranium One is also up 11 per cent on the day, but that rise partly stems from a rebound in uranium stocks. Cameco , for instance, is also up 9 per cent today.

Mantra's main asset is the Mkuju River development project.

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About the Author
Reporter and Streetwise columnist

Tim Kiladze is a business reporter with The Globe and Mail. Before crossing over to journalism, he worked in equity capital markets at National Bank Financial and in fixed-income sales and trading at RBC Dominion Securities. Tim graduated from Columbia University's Graduate School of Journalism and also earned a Bachelor in Commerce in finance from McGill University. More

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