Ottawa Allows Australian Firm to Own Canadian Uranium mine

Uranium (Nuclear Minerals) / Exploration, Mining, Marketing, & Acquisitions

Date posted: 06/22/15

Tim Shufelt reports the Canadian federal government has provided a measure of relief to the depressed uranium mining sector, granting an exemption to foreign ownership restrictions on producing mines. The Department of Natural Resources announced a potentially precedent-setting decision to allow Australian Paladin Energy Ltd. majority ownership of a uranium mine in Newfoundland and Labrador. The decision could help draw foreign capital into uranium projects in Saskatchewan, one of the largest producers in the world, said David Talbot, an analyst at Dundee Securities. It may help incentivize foreign entities to come in and take a look at these companies, particularly companies that want world-class assets. Since 1987, Canada has enforced a non-resident ownership policy, preventing non-Canadian companies from having more than a 49-per-cent ownership stake in operating uranium mines. But Paladin was able to demonstrate that there are no Canadian partners that would be interested in leading the development of the proposed Michelin mining project in the Central Mineral Belt of Labrador, Natural Resources Minister Greg Rickford said in a statement. Michelin, which is 100 per cent owned by Paladin, is still in the development stage. The only previous exception to the rule applied to Areva Group, a French company that had already been operating a Canadian uranium mine when the policy was brought into effect. The rule has proven a deterrent to foreign mining companies considering the acquisition of Canadian mining assets, David Sadowski, an analyst at Raymond James, said in a note. He indicated that in his view, it significantly increases takeout potential for nearly all uranium companies with assets in Canada. According to the federal government, the decision to grant Paladin majority ownership of Michelin had the approval of the Saskatchewan government, although it has no stake in the asset, financially or geographically.