February 22, 1988

Saskatoon, Saskatchewan, Canada

The Canadian and Saskatchewan governments announced today that they have agreed in principle to the merger and privatization of their respective uranium mining companies, Eldorado Nuclear Limited (Eldorado) and the Saskatchewan Mining Development Corporation (SMDC).

The Honourable Barbara McDougall, Federal Minister of State (Privatization) and the Honourable Grant Devine, Premier of Saskatchewan, have signed a letter of intent to form a new Canadian company, to be headquartered in Saskatchewan, through the amalgamation of the assets and operations of Eldorado and SMDC.

"Both governments want individual Canadians to participate directly in the ownership of this world-class uranium mining company," said Mrs. McDougall. "The new company we are creating will be fully privatized through a series of public share offerings. Precisely when all shares in the company are in the hands of private investors will be determined by market conditions. But 100 percent of the company will move from public to private ownership within seven years. At all times, the control of the new company will be in the hands of Canadians.

"At this time, I want to thank Premier Devine and his government for the co-operation and commitment they demonstrated during these complex negotiations. The merger and privatization of two Crown corporations is a complex matter, as you can imagine, but I am impressed by the goodwill and common purpose that characterized the many meetings and countless discussions that led to today's announcement," added Mrs. McDougall.

Western Diversification Minister Bill McKnight noted "I am very pleased to participate in this announcement. One of the goals of Western Diversification is to encourage the initiation of opportunities for the enhancement of the western economy. This merger builds on our strengths and will encourage research and skill development which will have positive effects not only for Saskatchewan's economy but for the western economy as a whole."

Premier Devine said that with approximately $1.6 billion in assets, the new company will be "one of the world's largest integrated uranium mining and processing companies."

"Saskatchewan, and Canada as a whole, is recognized internationally for its strength in the uranium industry. This new entity, building on the strengths of two of our country's top uranium companies, will be a world-class source of uranium," the Premier said.

Mrs. McDougall said that, "During the process leading to full merger, and ultimately privatization, employee interests and employee communications will be given high priority. The new company will have sophisticated facilities and technologies and rich natural resources here in Saskatchewan and Ontario. It will also have as a strength the employees of both Eldorado and SMDC. Human resources have made important contributions to the successes of the two partners, and they can be expected to contribute just as significantly to their new company.

"The chairman of the new company -- whom we expect to name shortly -- will be working with senior management of both companies and a transition team to ensure that employees are treated fairly throughout the entire process."

Premier Devine noted that the new company would benefit from a number of synergies that exist between Eldorado and SMDC. "Better marketing structures and opportunities, the ability to more rationally develop reserves and production, cost reductions and greater opportunities for employees are just some of the benefits of the merger," said Premier Devine.

Established in 1926, Eldorado Nuclear Limited is the oldest company in the uranium business in North America. It is also one of the largest uranium suppliers in North America. The company has been a Canadian Crown corporation since World War II. In 1984, the government said that it was examining the alternatives with respect to the privatization of the company, which owns Canada's only uranium processing facilities in Ontario, and has significant uranium mining interests and operations in Saskatchewan.

The Saskatchewan Mining Development Corporation is a provincially owned Crown corporation that has established itself as the lowest-cost producer of uranium in Canada. Like Eldorado, SMDC has significant uranium mining operations and reserves in Saskatchewan.

 

Contact: Richard R. Bélec Office of Privatization (613) 952-3454

Ron Shorvoyce Government of Saskatchewan and Regulatory Affairs (306) 787-9361