Talvivaara Mining has signed off-take agreements with Cameco Corp. for uranium produced at Talvivaara’s Sotkamo mine in eastern Finland. As part of the agreement, Cameco will provide an upfront investment of up to $60 million to cover construction costs of a uranium extraction circuit in the Sotkamo processing plant, which primarily recovers nickel, zinc and copper from bio heap leach process solutions. Uranium grade in the Talvivaara ore averages 15 to 20 ppm, and uranium concentration in the heap leach solutions is low, at about 25 mg/l. However, Talvivaara has developed a solvent extraction process that can economically extract uranium from these solutions.

Talvivaara will repay Cameco’s investment through deliveries of uranium concentrate during the initial years of the agreement. Once the capital sum has been repaid, Cameco will buy all of the mine’s uranium production through the end of 2027 at a price based on market prices.

Cameco will provide technical assistance to Talvivaara in the design, construction, commissioning and operation of the uranium extraction circuit at the Sotkamo mine. Talvivaara plans to start construction of the circuit in the coming months and to complete it in 2012. Annual uranium production at Sotkamo is expected to total about 350 mt, corresponding to about 410 mt of yellowcake. Uranium production could increase if Talvivaara proceeds with plans to increase production of nickel and zinc concentrate at the mine.

Cameco is already a supplier of uranium fuel to Finnish utilities. Cameco will take ownership of the Sotkamo uranium production at the Sotkamo mine site and will have the sole right to market the product to its customers.

The agreements between Talvivaara and Cameco are subject to ratification by the Euratom Supply Agency and the approval of the European Commission pursuant to the Euratom Treaty, as well as to the permits from the appropriate Finnish authorities. Talvivaara and Cameco expect the Euratom approval within a few months. Talvivaara applied in April 2010 to the Finland’s Ministry of Employment and Economy for a permit to extract uranium as a by-product, in accordance with the nation’s Nuclear Energy Act.

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