TORONTO (CP) -- Southern Cross Resources Inc. [TSX:SXR] has signed a stock swap deal to acquire Aflease Gold and Uranium Resources Ltd. of South Africa.
The two companies announced late Wednesday they had signed a definitive agreement that will combine Aflease's South African uranium and gold assets with the Australian and Canadian uranium businesses of Southern Cross.
Aflease and Southern Cross had signed an agreement in principle in July that was subject to a due diligence review.
Besides developing its uranium business, the new company will also have an 80% stake in Aflease Gold, an entity formed to develop the pure gold assets of Aflease and Sub Nigel, an affiliate.
Southern Cross said the new uranium producer is planning to begin production in the first quarter of 2007 and expects to produce more than four million pounds of uranium and 90,000 ounces of gold a year from its current projects by 2010.
''We welcome the signing of this agreement, which marks an important step forward in our corporate strategy, and we look forward to joining forces with Southern Cross,'' said Aflease's chief executive Neal Froneman.
''Once this transaction is completed, the combined company will have quality assets on three key uranium producing continents, and will be positioned to become an important player in the global uranium market. Investor interest in uranium in North America is strong and growing, and this transaction will ensure we have improved access to the international capital markets which we require to bring our Dominion uranium mine into operation.''
Southern Cross CEO Mark Wheatley said the deal creates ''a unique mid-tier uranium company with tremendous growth potential, at a time when uranium supply and demand fundamentals are very positive.''
Aflease's recently announced gold strategy, with plans to create a self-sufficient, separately-listed gold vehicle, has been well received by investors and will allow shareholders of the combined company to achieve maximum value from the development of Aflease's pure gold assets.''
The acquisition agreement includes a 5:1 consolidation of the common shares of Southern Cross.
Aflease owns the Dominion and Rietkuil uranium properties, and the Bonanza South gold mine, located near Klerksdorp, South Africa, as well as the Modder East gold project located near Johannesburg.
Southern Cross owns the Honeymoon uranium project and the Goulds Dam and Karkarook exploration projects in South Australia. The Toronto-based company also has interests in the uranium exploration properties in the Athabasca Basin of Saskatchewan, which holds some of the largest and highest-grade uranium deposits in the world, including Cameco Corp.'s Cigar Lake and McArthur River mines.
In trading on the Toronto Stock Exchange on Wednesday, Southern Cross shares rose four cents to C$1.27, a gain of 3.25%.
(c) The Canadian Press 2005