Sinosteel and Monaro to assess Kyrgyz uranium projects

Tuesday, 5 February 2008

China's state-owned Sinosteel Corp has signed a memorandum of understanding (MoU) with Monaro Mining NL of Australia under which it could eventually own up to 60% of two new uranium mines in Kyrgyzstan.

 

Mr Zhimin Li, Vice President of Sinosteel Corp and Mr Warwick Grigor, Chairman of Monaro Mining exchange the signed MoU documentation

Monaro says it has seven "highly prospective" uranium properties in Kyrgyzstan: Aramsu, Utor, Naryn, Sumsar, Sogul, Djurasay and Hodjaakan. Under the terms of the MoU, Sinosteel will work with Monaro to assess and potentially develop each of these projects. The agreement will initially cover all of Monaro's uranium properties, but assessment work is expected to result in the selection of two projects for feasibility and development studies. This initial stage is expected to cost Sinosteel between $3-5 million. The Chinese company would receive a 40% interest in the two projects selected.

 

If Sinosteel decides to complete feasibility studies on the development of the two selected uranium projects, which would cost a further $4-8 million, the company's interest in each of the projects would be increased to 60%.

 

The MoU also provides for a development programme for Monaro's remaining Kyrgyz uranium projects. Sinosteel may earn up to a 60% interest in each of the projects provided that the company has spent a specified amount of money on each project.

 

Monaro said the deal will allow it to: benefit from Sinosteel's previous uranium exploration and mining experience; profit from low-cost Chinese engineering and production technologies; finance ongoing exploration and assessment expenditure; and sign agreements to purchase uranium on commercial terms.

 

The agreement, under which Sinosteel could also become a shareholder in Monaro, is subject to approval by the governments of China and Kyrgyzstan.

 

In April 2007, Sinosteel received approval to invest in a South Australian uranium company. The Australian Foreign Investment Review Board (FIRB) said it had no objections in terms of the government's foreign investment policy for Sinosteel to invest in PepinNini Minerals Ltd's Curnamona Province project in South Australia, which comprises the Crocker Well and Mount Victoria uranium deposits. Under the deal, Sinosteel will acquire a 60% interest in the assets of PepinNini Resources Curnamona, a wholly-owned subsidiary of PepinNini Minerals. Sinosteel has the option to take all of the uranium produced, should a mine be developed.

 

Australia and China ratified the Australia-China Nuclear Transfer Agreement and the Nuclear Cooperation Agreement on 5 January 2007, clearing the way for the export of Australian uranium to China. In February, Sinosteel agreed to link up with China National Nuclear Corp (CNNC) to accelerate exploration and development of overseas uranium resources.