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Hathor Door Not Shut on Cameco, according to Reuters Analysis

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Rio Tinto's battle to secure its foothold in Canada's uranium-rich Athabasca region has only just begun now that it has apparently won a bidding war to gain control of Hathor Exploration (HAT.TO), according to Reuters analysis.

While the path is now clear for Anglo-Australian giant to acquire the exploration-stage company, a whole new set of rules will apply to Rio once Hathor's flagship Roughrider project nears production, it said.

Cameco was down 7 cents at $18.15 late Tuesday afternoon. Hathor was down 1 cent to $4.68, having fallen this week from above $5.10.

Under current Canadian law, foreign companies are barred from owning more than 49% of an operating uranium mine. That could throw a wrench in Rio's plans to turn Roughrider into a producing asset, Reuters said.

"They have two options," Salman Partners analyst Raymond Goldie reportedly said. "Either they hope that the law changes, or they hope that they will find a Canadian partner to own 51%."

If it is the latter, that would be good news for Cameco Corp (CCO.TO), Canada's top uranium producer, Reuters said. Even though it backed out of the bidding war for Hathor, the company could end up owning half of Roughrider, located just 25 kilometers (15 miles) from its Rabbit Lake mill in Saskatchewan, it added.

In partnering with Cameco, Rio could comply with ownership restrictions, while gaining access to a mill with spare capacity to process ore from Roughrider, Goldie reportedly said. "I would be willing to make the bet that when the mine comes into production, Cameco will own more than half of it," he is quoted as saying.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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