Battery metals player Hylea Metals (ASX:HCO) likes the uranium market so much it is buying Paladin Energy’s (ASX:PDN) stake in the Kayelekera uranium mine in Malawi for $10m.

Investors loved the news, with shares surging over 130 per cent to 3c on Monday morning.

Paladin will sell its 85 per cent stake, but Hylea will only take 65 per cent initially and the other 20 per cent will be owned by the company’s joint venture partner Chichewa.

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Hylea has the option to acquire Chichewa’s 20 per cent stake at a later date.

Managing director Simon Andrew said the acquisition was an “excellent opportunity” for Hylea.

“Kayelekera is a world class uranium asset that has produced over 10.9 [million pounds] of uranium and represents an opportunity to use the past production information to re-engineer certain mining and processing processes in order to reduce the overall capex and opex of the operations,” he said.

“We are optimistic about the global uranium market and the outlook for firmer pricing.”

So why is Paladin selling?

Well, the company wants to solely focus on its other African uranium mine — Langer Heinrich in Namibia.

“The sale is a positive result that will enable Paladin to focus all of its resources on restarting our flagship asset Langer Heinrich by releasing restricted cash resources of approximately $US10m and realising significant care and maintenance cost savings of approximately $US5m per annum,” Paladin CEO Scott Sullivan.

“It is consistent with our stated strategy of focusing on the re-development of Langer Heinrich whilst preserving our capital and developing opportunities to monetise
non-core assets.

“With this structure, we also keep some exposure to the upside of this transaction through the $4.8m in share placements early in the development cycle.”

Paladin will also receive a 3.5 per cent royalty based on revenues derived from future production at Kayelekera, capped at $5m.

There has been a lot happening in the uranium space in the past few years, but it is still yet to really take off.

However, there seems to be a wave of optimism among industry watchers that a shortage of projects and rising demand is setting the uranium industry up to go for a run.

The spot uranium price hit a record high of $US135 ($195) a pound in 2007, but the price of the commodity took a massive dive following the Fukushima nuclear disaster in Japan in 2011.

The price went as low as $US18/lb in 2017 before creeping back up to $US29/lb late last year and most recently back to just under $US25/lb on the short-term market.

>>Read: Uranium stocks guide: Here’s everything you need to know


In other uranium news today:

Boss Resources (ASX:BOE) has tapped international uranium expert Bryn Jones to join the team as its technical director. The company needs his expertise to help bring its Honeymoon mine in South Australia into production.

Jones is an industrial chemist with more than 20 years of experience in the Australian uranium industry. He spent nearly 10 years in roles with uranium producer Heathgate Resources, the owner and operator of the Beverley and Beverley North uranium mines in South Australia — Australia’s only other producing in situ recovery uranium mine.