While it is very rare for the government to intervene, under the Investment Canada Act, the federal government can only allow a takeover bid by a foreign company to proceed if it deems that a deal would bring a “net benefit” to Canada. The uranium assets are located in the highly prospective Central Mineral Belt of Newfoundland and Labrador in Eastern Canada. Some analysts suggest the deal is quite lucrative for Paladin with the company paying a mere $1.90 per pound for an estimated 130 million pound resource, compared with recent precedents of $6-11 per pound. Last week, Russia's ARMZ announced a $1.6 billion or $10 per pound for Mantra Resources, which owns the Mkuju River project in Tanzania.
A preliminary economic assessment released in September of 2009 supported a combination open pit and underground uranium mining operation and milling facility, which could process 10,000 tonnes of mineralization per day and produce an average of approximately 5.7 million pounds of uranium per year sustainable over a 17-year life of the mine with potential for growth. The assessment came in with expected average cash costs of $28.57 per pound of uranium. (more)