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Uranium One Inc.’s joint venture assets face an uncertain future in Kazakhstan after reports suggested that uranium deposits partly owned by the Toronto-based company are under investigation by authorities.

The Canadian-listed miner said yesterday that it has requested a meeting with the new administration of Kazatomprom, a state-owned uranium mining company, following media reports that its Kyzylkum joint venture, of which it owns 30 per cent, could be part of a government probe.

The investigation is tied to the arrest of Mukhtar Dzhakishev, a high-profile industry executive in the former Soviet republic, and head of Kazatomprom.

According to a statement on the website of Kazakhstan’s National Security Committee, the executive is accused of embezzlement by transferring "large uranium deposits" to offshore companies.

Shares in Uranium One tumbled nearly 40 per cent, or $1.30, to close at $1.99 on the Toronto Stock Exchange with 47.7 million shares traded.

However, Uranium One’s chief executive Jean Nortier said in an interview that the company’s stake in the joint venture was acquired in a fair transaction.

"The financial police in Kazakhstan have mentioned that one of the transactions they’re investigating is when Kazatomprom sold a stake in Kyzylkum, he said.

"The financial police also mentioned that the transaction they were talking about involved a sale price of $100,000, and we paid $75 million for our interest."

In late 2005, Kazatomprom sold off its 30 per cent interest in Kyzylkum to UrAsia Energy Ltd car insurance quotes. for $75 million (U.S.), according to Uranium One.

Two years later, UrAsia was acquired by the company in accordance with the local laws and approvals, it added.

However, the local investigators have suggested that UrAsia paid much less for the assets.

"This is just a big misunderstanding, that’s all it is," Nortier said.

In a developing country such as Kazakhstan – which is one of the world’s largest uranium producers – an investigation, and any subsequent fallout, can sometimes take years to wrap up, suggested Dennis Da Silva, managing director of the resource group at Middlefield Capital.

"Bribery, political games dominate the operating sphere there," he said, referring to developing countries where mining operations are prominent.

For now, the company said it will continue to keep its production running, and stick to its guidance for the year.

The Kyzylkum joint venture is shared with a group of Japanese firms, which own 40 per cent of the joint venture, including Toshiba Corp. and Marubeni Corp.

Uranium One is also in the process of finalizing a sale of a 19.95 per cent interest in the company to a Japanese industrial and financial consortium for $270 million.

The group includes Toshiba Corp., Tokyo Electric Power Co. and the Japan Bank for International Co-operation.

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