By Dorothy Kosich, Mineweb.com
After years of expressing the company's desire to get out of the gold business, uber uranium producer Cameco announced Tuesday that it is finally getting out of Centerra Gold with the sale of its 48.5% stake in the gold miner.
A syndicate of underwriters, led by CIBC World Markets and RBC Capital Markets, have agreed to purchase 88,618,472 Centerra shares held by Cameco at the price of Cdn$10.25 per share.
The remainder of the total of 113.9 million Centerra shares held by Cameco (25,300,000 shares) will be transferred to state company Kyrgazaltyn JSC. In April Centerra said it had reached an agreement with the Kyrgyz Republic which stipulated Cameco transfer to the government up to 25,320,000 common shares of Centerra or between 10 to 25% of its stake in Centerra.
At the time of the announcement analysts predicted that resolving the Kumtor investment agreement should result in a near-term divestment of Cameco's interest in Centerra.
The offering is expected to provide Cameco with net proceeds of Cdn$872 million (US$821.2m) prior to payment of expenses. The company said it intends to use the net proceeds for general corporate purposes, "primarily to grow its core uranium business as it pursues its target of doubling uranium production."
Centerra Gold will not receive any of the proceeds from the share sale. However, the departure of Cameco will also give Centerra management a new freedom not currently found in the bureaucracy of one of the world's top uranium miners.
Cameco spun off its gold holdings as Centerra in 2004.Centerra operates mines in both the Kyrgyz Republic and Mongolia.
The decision by Cameco to sell its Centerra stake comes on a day when the gold price dropped US$20.60 to close at US$1,142.80 per ounce.