What’s the value of a historic deposit within the Athabasca Basin of Saskatchewan? If you’re Uranium Energy Corp (NYSE: UEC), about $150 million, evidently.
UEC this morning announced that it has met an agreement with Rio Tinto to acquire the Roughrider property from Rio Tinto in a cash and stock deal pegged at $150 million. The purchase is said to be fully funded with cash on hand.
The Roughrider property, found in the Athabasca Basin, is said to have a historic resource estimate, assembled in 2011, of 58 million pounds of uranium at a grade averaging 4.73%. This is based on the West Zone, which has an indicated historic resource of 17.21 million pounds U3O8 at 1.98%, and an inferred historic resource of 10.60 million pounds U3O8 at 11.03%. The East Zone meanwhile has an inferred historic resource of 30.13 million pounds U3O8 at 11.58%.
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Referred to as a development project, Rio Tinto has reportedly gone as far as submitting a 101-page advanced exploration program proposal to the Ministry of Environment, which would have began an environmental impact assessment. A further decision to proceed however was not made by Rio Tinto at the time, despite receiving the approval to proceed.
With the project now under UEC’s control, the company intends to complete an updated S-K 1300 technical report on the project, which will utilize 650 drill holes completed on the property. After this, the firm will look to conduct a production study and “optimize its integration” with its other Canadian projects.
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“With this accretive fully funded acquisition of the Roughrider Project, we’re able to achieve multiple objectives: 1) 100% owned, development-stage assets are rare in Canada’s Athabasca basin, and we’re adding a world-class project to anchor our Canadian high-grade conventional business; 2) unlock value from the recently acquired UEX portfolio in the eastern Athabasca Basin as we now have critical mass to advance our production plans; and 3) accelerate production plans for our Canadian high-grade conventional business given the advanced stage of Roughrider and the first-tier ESG, geotechnical and permitting work completed by Rio Tinto since 2012,” commented UEC CEO Amir Adnani.
The purchase will be facilitated via a cash payment of $80 million, and the issuance of 17.8 million shares at a price of $3.93 per each, based on the five day volume weighted average price of Uranium Energy Corp.
Once completed, the transaction will make the company the third largest landholder in the Athabasca Basin, after Cameco Corp and Orano. The transaction is expected to close before the months end.
Uranium Energy Corp last traded at $3.84 on the NYSE.
Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
