TORONTO (miningweekly.com) - Uranium CEO Jean Nortier was adamant on Wednesday that the cacophony of reports that Kazakhstan may declare the sale of some uranium assets “illegal” had nothing to do with his company.

“It is all a big misunderstanding,” he said in a telephone interview. "That is all there is to it."

The drama erupted earlier in the day with a report that the financial police in Kazakhstan are investigating the sale of a 30% stake in the Kyzylkum joint venture (JV) by State uranium company Kazatamprom.

“Well, we do own a 30% stake in Kyzylkum, but we most certainly did not buy it from Kazatomprom,” a patently frustrated Nortier said.

"We are not worried about this at all.”

The Kyzylkum JV owns the Kharasan uranium mine, which was officially opened last month and is currently ramping up.

TSX- and JSE-listed Uranium One acquired the asset when it bought Canada's UrAsia Energy in 2007.

UrAsia bought the Kyzylkum stake from a group of private investors for $75-million, and both transactions were approved by the government at the time, Nortier said.

He pointed out that, according to reports, the security service said the 30% stake in Kyzylkum under investigation was sold for just 15,6-million tenge, or around $103 700.

However, investors were still clearly spooked by the reports.Trading in the shares of Uranium One was halted in Toronto on Wednesday morning, after the company's stock plunged 29,5% by 9:45 local time.

The decline continued after the halt was lifted at 13:00, with shares in the company falling to C$1,99 apiece by 16:57 ET, a loss of 39,51% for the day.

Earlier on Wednesday, newswire Reuters quoted Kazakhstan's National Security Committee (KNB) as saying that foreign firms had “illegally” bought stakes in the country's uranium deposits, and citing the Kyzylkum uranium JV as an example.

State-owned uranium company Kazatomprom owns 30% of the JV and a Japanese consortium owns the remaining 40%.

Last week, the KNB arrested Mukhtar Dzhakishev, a long-serving head of Kazatomprom, along with seven other executives.

"Preliminary results of the investigation show that Mukhtar Dzhakishev and other managers ... squandered State property in the form of Kazakhstan's largest uranium fields by handing them to a number of offshore companies," Reuters quoted KNB as saying.

Besides Kharasan, Uranium One also owns 70% in the Betpak-Dala JV in Kazakhstan. The JV, in which Kazatomprom holds the other 30%, owns the Akdala and South Inkai uranium mines.

"UrAsia paid full value for these assets, including $75-million for its 30% interest in Kyzylkum, which operates the Kharasan uranium project, and $350-million for its 70% interest in the Betpak Dala joint venture," the company said on Wednesday.

"UrAsia's acquisition of these assets, as well as Uranium One's subsequent acquisition of UrAsia, were completed in accordance with the requirements of Kazakh law, and both transactions were approved by the Kazakh authorities."

REQUESTS HIGH-LEVEL MEETING

Meanwhile, Vancouver-based Uranium One also said on Wednesday that senior officials from the company have asked for a meeting with the new administration of Kazatomprom next week in Kazakhstan.

The company is aware that the Kazakh authorities are conducting an investigation into "certain of the activities of Kazatomprom".

The terms of reference of the investigation have not been disclosed, but Uranium One and its Kazakh JV are cooperating with the authorities in their investigation.

"We provide free and unfettered access to our records and sites to the police," Nortier added.

"If they want to see a file, they have it."

More than one-fifth of the world's uranium reserves are located in Kazakhstan.

Uranium One is also building a mine with Japan's Mitsui in Australia, and hopes to start producing uranium in the US within the next couple of years.

The firm closed its only South African mine, Dominion, last year, and announced three months ago that it would sell a 19,9% stake for C$270-million to a group comprising Tokyo Electric Power Company, Toshiba Corporation and the Japan Bank for International Cooperation.

The deal is expected to close by midyear.