Uranium One has entered into a definitive agreement with US Energy Corp and its affiliate, Crested Corp, for the purchase of the Shootaring Canyon uranium mill in Utah, USA, as well as a land package comprising some 15,686 ha of uranium exploration properties in Utah, Wyoming, Arizona and Colorado and a substantial database of geological information with respect to an additional 640,227 ha in an 8 km zone surrounding the purchased properties.
Neal Froneman, CEO of Uranium One, said: “The execution of this agreement marks a major step forward in our US growth strategy. The acquisition of the Shootaring Canyon mill and related uranium property interests will serve as the foundation for our growth in the US. We look forward to closing this transaction and to expanding our US business in line with our growth strategy.”
The asset purchase agreement follows a period of detailed due diligence conducted by Uranium One under an exclusivity agreement entered into between the parties on July 10, 2006. Under the agreement Uranium One has agreed to purchase the Shootaring Canyon mill and related property interests for 6.6 million Uranium One common shares plus $750,000 in cash. Uranium One has agreed to pay US Energy $20 million upon the Shootaring Canyon mill reaching commercial production and $7.5 million on the first delivery to the mill after commercial production of mineralized material from any of the purchased properties; US Energy will also receive a royalty equal to 5% of the gross proceeds from the sale of commodities produced at the mill, to a maximum amount of $12.5 million.
The purchase agreement provides for the assignment of US Energy’s right to receive $4.1 million in cash and 1.5 million common shares of Uranium Power Corp (UPC) after closing under a purchase and related joint venture agreement between US Energy and UPC relating to certain of the purchased properties for a cash payment equal to a 5.25% annual discount rate applied to $4.1 million plus the value of such shares. In addition, in accordance with the provisions of the exclusivity agreement, Uranium One will reimburse US Energy for certain exploration expenditures relating to the purchased properties and incurred with Uranium One’s approval since July 2006.
The purchase agreement also provides that Uranium One and US Energy will enter into an agreement on closing under which Uranium One will be given the first opportunity to earn into or fund uranium property interests which may in the future be owned or acquired by US Energy outside the 8 km area surrounding the purchased properties for a period of two years after closing. Under this agreement, Uranium One will also have access without charge for a period of three years to the database of geological information assembled by US Energy on properties in the western US beyond the purchased properties and the area of interest surrounding them.
The Shootaring Canyon mill was the last conventional uranium mill to be built in the US and is situated amongst several known uranium deposits. The mill was commissioned and operated for a period of four months in 1982. Some 30 t of U3O8 were produced and shipped before the mill was mothballed due to declining uranium prices. The mill has been maintained in excellent condition since being placed on standby.
The mill is an acid leach facility with a 750 t/d throughput capacity that could be upgraded to an estimated throughput rate of 1,000 t/d. There is also the potential to add a vanadium processing circuit to the existing mill infrastructure. The mill currently has a reclamation licence, which US Energy is working to convert to an operating licence subject to applicable regulatory approval.
March’s issue of International Mining includes a special World Prospects feature on uranium.
