Writes Leo Odera Omolo.

The latest reports emerging from Dar Es Salaam says the Tanzanian uranium mining project is back on track after an Australian firm Mantra Resources Ltd agreed to lower its offer to Russian Russia’s JSC Atomredmentzoloto {ARMZ} from USD 1.16 billion to USD 944 million.

ARMZ had said last week it had shelved plan to purchase the Mkuju River uranium assets in Southern Tanzania from Mantra over the recent Japanese nuclear plant crisis.

The transaction, to be closed in July this year, will see ARMZ acquiring on of the issued share capital in Mantra Ltd including Mkuju River project in Tanzania.

Construction of the mining plant in Southern Tanzania will start in the first quarter of 2011 with operations beginning in the fourth quarter of 2013.

Two weeks ago, ARMZ had given Mantra Ltd, a notice that the on-going nuclear crisis in Japan could hurt its operations. ARMZ, however, indicated that it was willing to exlo5re how the transaction could proceed by way of an alternative approach.

The Chief Executive Officer of the Mantra Ltd in Tanzania, Tony Devlin said the revised transaction is in the Mantra’s best interest taking into consideration the current global equity market condition and increased uncertainty for the uranium sector.

Devlin further stated that the capital cost for the construction of the mining plant including all associated infrastructure stands at USD 298 million.

Tanzania’s Minister for Energy and Minerals William Ngeleja was quoted this week by the influential EASTAFRICAN regional weekly as saying that the Mkuju River Project is shaping up into a truly world-class venture and has the potential in its first phase of development to position the country as the third and perhaps even the second largest producer of uranium in Africa.

Minister Ngeleja said the pre-feasibility study in March 2010 indicated that, once developed the mine would produce 1,650 tones of uranium oxide a year thus overtaking the US – – which produced 1,560 tones in 2009 – – to become the eighth largest producer in the world. Tanzania, he added, “will produce three times more uranium oxide than South Africa.”

The mining plant will have an average annual production of 1,650 tones per annum with the potential to expand production in the second phase of the project And this will be the second major mining development in South Eastern Tanzania, bringing jobs to an underdeveloped region with a foreign direct investment of USD 450 million generating approximately USD 250 million in annual foreign currency receipts.

The government of Tanzania expects about USD 630 million in royalties, income and employee taxes directly from the project based on the 15 year estimated life span of the mine.

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Writes Leo Odera Omolo

Information emerging from the Tanzanian capital, Dar Es Salaam, that Russian state-owned nuclear energy firm JSC Atomredumentzoloto [ARMZ} is shelving its plan to acquire the USD 1.16 billion Mkuju River Uranium assets in Southern Tanzania, due to the recent Japanese nuclear plant crisis.

The move comes only a month after the Russian firm had obtained a takeover approval from the Tanzanian government, under the fair Competition Act it had enacted in 2003, as the law regulating the prospecting and mining of uranium in the country.

The Tanzanian government had said it would start higher grade uranium mining early 2012 at Mkuju River following the completion of the feasibility study and the approval of the environmental impact assessment for the area.

The capital cost for the project estimate at USD 298 million in which USD 140 million will be used for the processing plant and USD 158 million for the project infrastructure.

Mr Artem Gorbachev, the Chief Press Officer of ARMZ Uranium Holding Company was last week quoted by the local and regional newspapers as saying his firm is suspending its agreement with Mantra Resources over recent crisis in Japan nuclear plant.

He said the ARMZ consider that the condition preceding into the scheme’s implementation agreement {SLA} dated December 15, 2010 between ARMZ and Mantra in relating to a material adverse change is not capable of satisfaction. “JSC Atomredumentzoloto has notified Mantra Resources Ltd that it believes that the series of incidents at the nuclear power plants in Pukushima, Japan are likely to have a material adverse effect on the business.”

The incident in Japan is likely to have a material adverse effect on the business, results of operations assets or liabilities, financial position of prospects d Mantra Resources. But that ARMZ intend to continue discussions in an effort to explore how the transaction may proceed.

Tanzania’s Minister for Energy and Mineral Resources William Ngeleje was quoted by the EASTAFRICAN WEEKLY as having said in Dar Es Salaam that Tanzanian government will continue to go ahead with the mining of uranium starting next year.

The project has the capacity to generate pre-tax cash margins of approximately USD 115 million per uranium at an average uranium price of USD 60 per pound over the life of the mine.

The Minister said that all the necessary processes required with respect to Special Mining Project license are also complete.

“The project has been advised that all the process by the Tanzania legislation for the issue of environmental impact assessment {EIA} certificate are well advanced,” said the Minister, adding that the government said the publication of the Uranium Regulations has been completed and that these have been included in the country’s proposed new mining regulations.

Prof Iddi Mkilaha, the director general the Tanzania Atomic Energy Commission {TAEC}, however, countered this by telling the local media that the regulatory authority has not issued any uranium mining license for Mantra Resources to start its work on the mining site.

Prof Mkilaha said there are still lots of regulations that need to be followed and TEAC will not issue any license in the near future for foreign or local firms unless proper procedures have been followed.

“There has been increasing regulatory concern all over the world to protect the safety of workers, public and the environment, prior to mining,” he added.

There are more that 108.9 million tones of mineral resource estimated at Mkuju River capable of producing an average annual production of 3.7 million pounds Triuranium actoxide {U3O8} over the minimum of 12 years the mine life.

Mkuju River Uranium Project was targeted to produce approximately 3.7 million pounds of uranium a year using the Res-in-Pulp metallurgical process.

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