Uranium firm considers Aust withdrawal

Premier Alan Carpenter's election pledge to legislate a uranium ban may cost the country some $200 million in investment as one Canadian company considers a withdrawal from its Australian assets.

Toronto-listed Mega Uranium Ltd said it is reassessing its plans for the development of its Australian uranium assets, including the Lake Maitland project in Western Australia, and other assets which have an in-ground value of over $3 billion.

Mr Carpenter has consistently opposed uranium mining but until last week maintained there was no need for legislation.

He said he had changed his mind after speaking with groups opposed to uranium mining which convinced him of the need to enshrine the policy in law.

Mega said it had been in advanced discussions with a number of parties involving off-take agreements and funding ventures to develop the projects.

"In light of the Western Australian Premier's comments, these high level negotiations with some of Australia's largest trading partners have now stalled and, if as proposed, the legislation to ban uranium mining in WA is passed, they will be terminated," Mega said in a statement.

Mega has spent over $130 million acquiring and exploring over the past two years.

The Canadian company also said Mr Carpenter's uranium opposition has put into jeopardy the federal government's Uranium Industry Framework which encourages companies to work with Indigenous groups.

"The legislation proposed by Premier Carpenter destroys some of the best opportunities in WA to achieve the desired outcomes of this policy," Mega said.

Mr Carpenter's back-flip has prompted outcry from several representative groups which have labeled the pledge as "disappointing",

The Western Desert Lands Corporation (WDLAC) which acts on behalf of the Martu people, who hold land rights over the major Kintyre uranium deposit, said the pledge will rob Indigenous people the right to earn a living and potentially achieve and equity stake in a major project.

Below is the full Mega announcement:

Canadian based uranium company, Mega Uranium Limited, is reassessing its plans regarding the development of its Australian uranium assets in light of Western Australian Premier Alan Carpenter's comments Monday (25 August), that, if elected, he will legislate against uranium mining in his state.

Mega has substantial uranium resource projects and exploration operations in Australia covering about 27,000km2 of ground in Queensland, South Australia, Northern Territory and Western Australia. The resource projects, Lake Maitland in Western Australia, Ben Lomond and Maureen in Queensland, have in-ground values in excess of A$3 billion and upon development would have resulted in direct project investment in excess of A$200 million, as well as significant direct and indirect employment opportunities, royalty payments, etc.

The company has spent over A$100 million acquiring these assets, or companies that controlled these assets, and in the past two years has spent in excess of A$30 million on exploration and development activity. The company planned to spend at least this amount on project exploration and development in the coming two years.

In Western Australia, Mega owns 100 per cent of the Lake Maitland uranium project, located in the Northern Goldfields region approximately 130 km southeast of Wiluna. Its exploration projects include the Kintyre Rocks project, which is adjacent to the Kintyre uranium resource that was recently acquired from Rio Tinto by Cameco-Mitsubishi. The company has been diligently developing these projects in line with world social, environmental and mining standards.

Importantly, Mega has been working with aboriginal groups on JV arrangements to develop mines on their Native Title land and has progressed these agreements to the point where they would be activated by a change in policy to allow uranium mining in Western Australia.

These are commercial arrangements and provide significant employment, training and contract opportunities for aboriginal groups in remote areas. The Commonwealth Government's Uranium Industry Framework initiative specifically encourages uranium mining companies to work with Indigenous groups in this way.

The Rudd Government's Election Policy - Indigenous Economic Development Strategy - endorsed by Labor and supported in particular by cabinet Ministers Ferguson, Macklin and Garrett, also encourages this activity. The legislation proposed by Premier Carpenter destroys some of the best opportunities in WA to achieve the desired outcomes of this policy.

Mega is also well advanced in negotiations with potential uranium off-take partners and parties willing to jointly fund the eventual development of its Australian uranium assets. In light of the Western Australian Premier's comments yesterday, these high level negotiations with some of Australia's largest trading partners have now stalled and, if as proposed, the legislation to ban uranium mining in WA is passed, they will be terminated.

As a listed company in Canada, Mega cannot continue to invest in projects/ jurisdictions in which it has little (or no) chance of a return. As such, the company is reviewing its entire Australian uranium portfolio with a view to reinvesting its exploration and development spending in jurisdictions in which it can ensure a return to shareholders.