The uranium business heated up again Friday after Fronteer Gold Inc. (TSX:FRG) agreed to sell its Labrador projects for $261 million.
In an all-share deal, the Vancouver-based company said it would sell its Michelin uranium project to Australia’s Paladin Energy Ltd. (TSX:PDN) in exchange for 52.1 million shares of Paladin.
The deal gives Fronteer a 6.7% stake in Paladin, making it the Australian company’s largest shareholder.
The assets are being sold through Aurora Energy Resources, a wholly owned subsidiary of Fronteer Gold.
The agreement comes two days after Vancouver-based Uranium One (TSX:UUU) teamed up with a Russian mining giant to gain control of a major uranium project in Tanzania. (See “Uranium One to buy Mantra for A$1.2 billion” – BIV Business Today, December 15.)
Fronteer said the sale of its uranium assets would allow the company to place more focus on its gold projects in Nevada, notably Long Canyon.
Both the Fronteer and Uranium One deals come after China recently announced plans to build more nuclear plants, stepping up demand for uranium.
According to nuclear industry specialist Ux Consulting Co. LLC, uranium prices topped US$61.75 per pound on December 13.
That’s compared with spot prices that languished in the $40-per-pound range between March and June.
“This transaction gives us the option of maintaining exposure to the uranium price through a meaningful shareholding in a high-quality, diversified uranium producer,” said Mark O’Dea, Fronteer’s president and CEO.
“Ultimately, this capital will be deployed to build out our Nevada gold projects, leaving our company in an exceptionally strong strategic and financial position.”
At press time, Fronteer’s shares were up 5.2% to $11.72.