Thursday, May 14, 2009

Uranium Topic of the Day Thursday [Maybe]

By John Crane

Published: May 14, 2009

Virginia Uranium Ltd. hopes to formalize its merger with Canadian-based Santoy Resources Ltd. during a meeting next Thursday in Chatham. That’s the same day a state subcommittee convenes in Richmond to mull the final draft of a study that would determine whether uranium mining can be done safely in the commonwealth.

Walter Coles Sr., chairman of Virginia Uranium Inc., said the meeting among VUL shareholders was planned prior to the announcement of the subcommittee’s date and will probably be rescheduled.

“It was set long before the subcommittee (meeting),” Coles said Thursday. “We may change it.”

A 300-page circular for the meeting also gives notice of a regular meeting of Santoy’s shareholders on the same day. VUL’s meeting in Chatham will be closed to the public.

Virginia Uranium Ltd. is the funding arm for Virginia Uranium Inc.’s proposed project at Coles Hill, where VUI hopes to mine and mill a 119-million pound uranium ore deposit about six miles northeast of Chatham. Virginia has had a moratorium on uranium mining since 1982.

The Virginia Coal and Energy Commission’s Uranium Mining Subcommittee is overseeing a study, to be conducted by the National Academy of Sciences, to determine whether the practice can be performed safely in the state. The subcommittee is holding a meeting at 2:30 p.m. Thursday in Room D at the General Assembly Building in Richmond.

Once the merger between Virginia Uranium Ltd. and Santoy Resources Ltd. is finalized, the merged company will be referred to as Newco and will appear on the Toronto Stock Exchange. It will provide funding for Virginia Uranium Inc.

A 300-page circular, outlining the merger’s aspects, including risks, was drawn up for the meeting. The circular mentions that Virginia Uranium Holdings, or Holdco, which owns 100 percent of VUI, has bought and has an option to buy more properties surrounding Coles Hill to provide “sufficient setback from local residents” to minimize impact of mining operations on those areas.

Coles said there are no plans in the near future to purchase additional land around Coles Hill, and they would depend on how the uranium mine and mill would be designed. Coles said a circular is routinely provided during mergers to outline all aspects of the transaction to shareholders, including investment risks such as possible drops in share prices, project delays and other issues.

A wide range of risks is included in a circular to make sure the transaction is not fraudulent, Coles said.

“In this day and age of full disclosure, it’s important to be upfront and conservative,” said Patrick Wales, VUI geologist and spokesman.

Eloise Nenon, a board member of Southside Concerned Citizens, which opposes uranium mining, said it was “strange” that VUL would schedule its meeting the same day as the subcommittee’s. She said Santoy is investing in uranium mining here because there is a strong push to ban the practice in Canada.

The Coles and Bowen families currently own 78 percent of Holdco, but will have 71 percent after the merger is finalized, Coles said. VUL currently has 12 percent ownership of Holdco. After the merger, Newco will have a 20 percent share in Holdco, which owns all of Virginia Uranium Inc.

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