12.8.2009: PREVENTING FORSYS METALS PENDING SALE TO GEORGE FORREST INTERNATIONAL DUE TO GFIS IRANIAN

S E C R E T STATE 084119

SIPDIS REL CANADA

E.O. 12958: DECL: 08/12/2019 TAGS: IR, KNNP, MNUC, PARM, PREL SUBJECT: PREVENTING FORSYS METALS PENDING SALE TO GEORGE FORREST INTERNATIONAL DUE TO GFIS IRANIAN TIES (S//REL CANADA)

Classified By: ISN A A/S Vann H. Van Diepen, Reasons 1.4(b) and (d)

1. (U) This is an action request. Please see paragraphs 6 and 7.

2. (S//REL CAN) OBJECTIVES:

-- To provide the non-paper to the Government of Canada (GOC) in paragraph 5.

-- To convey U.S. concerns to the GOC regarding the pending sale by Canada,s Forsys Metals of a uranium project to Belgium,s George Forrest International (GFI) given GFI,s ongoing discussions with senior Iranian officials possibly related to Iran,s efforts to acquire uranium ore.

-- To encourage the GOC to vigorously investigate this matter as soon as possible and (if needed and possible under Canadian law) halt the sale until its investigation is complete.

-- To encourage the GOC to share with the United States any information it learns in the investigation of this time-sensitive matter.

----------------------- BACKGROUND FOR EMBASSY -----------------------

3. (S//REL CAN) Forsys Metals * a Canadian company *currently owns the Valencia uranium mine project in Namibia and plans to sell this project to Belgium,s George Forrest International (GFI) by mid-August. We have information that links GFI to ongoing discussions with senior Iranian officials. These discussions may be related to Iran,s efforts to acquire additional uranium ore. Post should advise Canadian officials that the original intelligence information that led to this demarche is available to the Canadian Intelligence Service. The United States has serious concerns that GFI may intend to contravene prohibitions required by UN Security Council Resolutions (UNSCRs). We are encouraging states to make every effort to support the enforcement of UNSCRs on Iran based on the continued lack of confidence in the peaceful nature and intentions of Iran,s nuclear program.

4. (SBU) Iran does not have sufficient uranium reserves to sustain its planned nuclear power reactor program. Even though it has two uranium mines * Gachine mine in Bandar Abbas and Saghand mine in Ardakan * according to data Iran provided to the OECD and IAEA, Iran,s total known and speculative uranium resources represent less than a quarter of the amount needed to supply the 40-year life-cycle of seven reactors, which was Irans initial stated goal. Additionally, unclassified calculations suggest that Iran will run out of its current stock of uranium ore concentrate (yellowcake) in 2010. Consequently, Iran is actively looking for outside suppliers to build up its stockpile.

------------------------------------- NONPAPER FOR THE GOVERNMENT OF CANADA -------------------------------------

5. (S//REL CAN) BEGIN NON-PAPER

-- Forsys Metals, a Canadian company, currently owns the Valencia uranium project in Namibia and plans to sell this project to George Forrest International by mid-August, according to the Forsys Metals public website. George Forrest International is in the final stages of securing financing to complete this transaction.

-- The United States has information that links George Forrest International to ongoing discussions with senior Iranian officials. These discussions may be related to Iran,s efforts to acquire additional uranium ore.

-- Given the significant threat Iran,s nuclear program poses to international peace and security, extreme vigilance in dealing with Iran and its nuclear program is necessary.

-- We ask that you promise to investigate this time-sensitive matter as it relates to Forsys Metals, and if need be and possible, to halt the sale until your investigation is complete. We will be interested in whatever investigative results you are able to share with us.

END NON-PAPER

6. (S//REL CAN) ACTION REQUEST: Washington requests Post approach host government interlocutors as soon as possible and deliver nonpaper contained in paragraph 5. Post should stress with host government the time-sensitive nature of this issue as noted in the nonpaper. Additionally, if need be, Post should respectfully note that Canada,s intelligence service has access to the full details of the issue described in the nonpaper.



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