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Cameco to be first foreign uranium explorer in Russia

Cameco Corp. agreed with Russia's state-owned nuclear trader to become the first foreign miner to explore for uranium in the country after prices of the radioactive metal soared.

Cameco Corp. signed a binding agreement with OAO Techsnabexport, also know as Tenex, allowing the two companies to form a venture in Canada and in Russia within three months, said Yekaterina Shugaeva, a spokeswoman for the Moscow-based trader. Financing of the projects will be equally split, she said. „Actual exploration will start this year as there's no point in delaying,” Shugaeva said via telephone in Moscow yesterday. „In Russia, we're looking at totally new areas.”

Canada's Cameco controls Cigar Lake, the world's largest untapped deposit of high-grade uranium with reserves of 232 million pounds, about a sixth of those found in Russia. Flooding at the deposit last year sent uranium prices to record highs. The spot price for uranium, from which fuel for nuclear power plants is made, advanced to $85 a pound earlier this month, 18% higher than at the start of the year, according industry publication Metal Bulletin. The price has surged in part on speculation by investors that there may not be enough of the metal to fuel the next generation of nuclear reactors. Tenex expects prices this year will be between $65 and $85.

Shares of Saskatoon, Saskatchewan-based Cameco gained C$1.24, or 2.8%, to C$44.84 as of 12:53 p.m. in Toronto, giving the company a market value of C$15.8 billion ($13.5 billion). Cameco's venture in Russia will begin exploring in the south of the country in „several new regions deemed to have good prospects for high-grade uranium,” including the Nesoglasiye region, Shugaeva said. Cameco will provide the technology while Tenex will keep the mined ore. In Canada, the two parties will split the mined material equally. Potential regions for exploration will be picked by the summer when plans for mining and processing plants will be completed. „These seem to be long-term projects that would not start uranium production until 2014,” said Marina Alexeyenkova, an analyst with Renaissance Capital in Moscow. The main cost factor in Russia will be infrastructure, she said. Tenex has signed ventures with Russian billionaire Viktor Vekselberg's Renova Holding and Mitsui & Co., Japan's second-biggest trading house, to finance uranium mining. (Bloomberg)