The Tanzania uranium mining project is back on track after an Australian firm Mantra Resources Ltd agreed to lower its offer to Russia’s JSC Atomredmetzoloto (ARMZ) from $1.16 billion to $944 million.

ARMZ had said last week it had shelved plans to purchase the Mkuju uranium assets in southern Tanzania from Mantra over the recent Japanese nuclear plant crisis.

The transaction, to be closed in July this year, will see ARMZ acquiring all of the issued share capital in Mantra including its flagship Mkuju River project in Tanzania.

Construction of the mining plant in southern Tanzania will start in the first quarter of 2011 with operations beginning in the fourth quarter of 2013.

Last week, ARMZ had given Mantra a notice that the ongoing nuclear crisis in Japan could hurt its operations.

ARMZ, however, indicated that it was willing to explore how the transaction could proceed by way of an alternative approach.

Tony Devlin, managing director of Mantra Tanzania said the revised transaction is in Mantra’s best interest taking into consideration the current global equity market conditions and increased uncertainty for the uranium sector.

Mr Devlin said the capital cost for construction of the mining plant including all associated infrastructure stands at $298 million.

Minister for Energy and Minerals, William Ngeleja, told The EastAfrican that the Mkuju River Project is shaping up into a truly world-class venture and has the potential, in its first phase of development, to position Tanzania as the third, and perhaps even the second largest producer of Uranium in Africa.

Mr Ngeleja said that the pre-feasibility study in March 2010, indicated that, once developed, the mine would produce 1,650 tonnes of uranium oxide a year, thus overtaking the US—which produced 1,560 tonnes in 2009—to become the eighth largest producer in the world.

“Tanzania will produce three times more uranium oxide than South Africa,” he said.

The mining plant will have an average annual production of 1,650 tonnes per annum with the potential to expand production in the second phase of the project.

This will be the first major mining development in south eastern Tanzania, bringing jobs to an under developed region with a foreign direct investment of $450 million generating approximately $250 million in annual foreign currency receipts.

The government expects about $630 million in royalties, income and employee taxes directly from the project based on the 15 year estimated life of the mine.