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Cameco To Sell 88.62 Mln Shares Of Centerra For C$872 Mln - Update

cameco CGTO 120909

Nuclear energy company Cameco Corp. (CCJ,CCO.TO) and gold producer Centerra Gold Inc. (CG.TO) Tuesday said a syndicate of underwriters agreed to purchase about 88.62 million common shares of Centerra, now held by Cameco, on a bought deal basis, at C$10.25 per share for sale to the public. The syndicate is being led by CIBC World Markets Inc. and RBC Capital Markets.

Cameco is expected to receive net proceeds of about C$872 million from the offering, prior to payment of expenses, which is expected to further strengthen the company's capital position. Centerra will not receive any proceeds from the offering.

Cameco 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.

Cameco agreed to pay customary costs and expenses associated with the offering, other than underwriters' out-of-pocket costs and their costs of counsel.

Concurrent with the closing of the offering of 88.62 million common shares, Cameco will also transfer 25.3 million common shares of Centerra to Kyrgazaltyn JSC pursuant to the Agreement on New Terms, which Cameco entered into with the Government of Kyrgyz Republic on April 24.

It was revealed on April 24 that Cameco, Centerra and the Government of the Kyrgyz Republic reached an agreement that resolves all existing disputes between Centerra and the Government with respect to the Kumtor mining project in that country.

One of the clauses of that agreement was that Centerra would issue to the Government 18.23 million common shares from its treasury, and Cameco would transfer to the Government up to 25.3 million common shares of Centerra. These shares were to be released to the Government on certain conditions, including if Cameco's interest in Centerra falls below 10.8 million common shares of Centerra and until that time Cameco retains voting control over about 52.7% of the issued and outstanding shares of Centerra.

As a result of the sale and the related transfer, Cameco will dispose of its entire interest in Centerra, which consists of 113.92 million common shares, or 48.5% of the outstanding common shares.

Closing of the offering is expected to take place by December 30.

CIBC World Markets Inc. and RBC Capital Markets acted as exclusive financial advisers to Cameco.

CCJ closed Tuesday's regular trade at $29.29, down $1.80 or 5.79%, on 4.27 million shares.

CCO.TO ended the regular trade on the TSE at C$31.17, down C$1.54 or 4.71%, on 1.42 million shares.

CG.TO settled on the TSE Tuesday at C$11.19, down from the prior close of C$12.60, on 712,400 shares.

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