VANCOUVER, BC, May 10, 2021 /PRNewswire/ - Uranium Royalty Corp.
(TSXV: URC) (Nasdaq: UROY) ("URC" or the "Company") is pleased to
announce it has completed the previously announced acquisition of
royalty interests on the McArthur River and Cigar Lake Mines in
Saskatchewan, Canada. In addition,
pursuant to the transaction the Company acquired an option to
acquire a royalty on the Dawn Lake project, located in Saskatchewan, Canada.
Highlights
- Royalty exposure to world-class and long-life mines: The
McArthur River and Cigar Lake mines rank as the two largest
high-grade uranium mines in the world, with ore grade 100 times
world averages as disclosed by Cameco. Based on disclosed
production capacities, the mines have the combined capacity equal
to 21% of global forecasted uranium demand (2021)1;
- Embedded exploration upside to a substantial land package in
Canada's leading uranium
district: The acquisition provides royalty exposure to over
300,000 hectares of ground in the highly prospective Athabasca Basin, with well respected
operators, and in one of the top mining jurisdictions in the
world.
- Dawn Lake Project : URC acquired an option to purchase an
additional 20% net profit interest (NPI) on a 7.5% share of overall
uranium production from the Dawn Lake project lands. The royalty
rate adjusts to 10% in the future upon production of 200 Mlbs from
the combined royalty lands of the Dawn Lake and Waterbury/Cigar
Projects (93 Mlbs produced to date according to Cameco's
disclosure).
Amir Adnani, Chairman of URC,
commented: "Canada's Athabasca Basin of Northern Saskatchewan remains a key production
center to provide uranium fuel to meet the growing global demand
for zero carbon emission nuclear power. Along with the 1.97% Net
Smelter Royalty on Rio Tinto's nearby Roughrider project, URC has
gained exposure to long-life assets with existing infrastructure
and exploration upside in this important region. With major
producers as operators, we are able to work with companies with
strong environmental, social and corporate governance (ESG)
practices and proven operational ability."
Scott Melbye, Chief Executive
Officer of URC stated: "These royalties enhance URC's exposure to
potential near- and long-term cash flow from existing world-class
operations. The additional option to acquire the Dawn Lake royalty
interest as part of this acquisition provides additional exposure
to this early stage project. We believe these exploration lands are
in a prime geological setting with proven prospectivity, all within
trucking distance of two existing mills. This transaction provides
URC with over 300,000 hectares of royalty exposure in the
world-class Athabasca Basin. URC
also values its increased exposure to projects owned and operated
by industry leaders, Cameco and Orano."
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1 UxC Q1 2021 Market Outlook – Base case 2021 demand
projection
Status of the McArthur River and Cigar Lake Mines:
- McArthur River Mine is operated
by Cameco in partnership with Orano. The mine was in production
since 1999 until placed on care and maintenance in 2018 due to
uranium market conditions. According to Cameco, the restart of the
mine is a commercial decision that will be based on Cameco's
ability to commit production from the operation under acceptable
long-term contracts.
- Cigar Lake Mine is operated by Cameco in joint venture with
Orano, Idemitsu Canada Resources Ltd., and TEPCO Resources Inc. The
mine commenced production in 2015. In December 2020, Cameco announced the temporary
suspension of production at the mine due to risks posed by
COVID-19. Cameco announced on May
7th, 2021 that production at the Cigar Lake mine
had resumed, with the first shipment of ore sent to the McClean
Lake mill at the end of April. Cameco stated that they were unable
to provide additional production outlook for 2021 until the rate at
which they will be able to sustainably operate the Cigar Lake mine
is known.
The Transaction
Pursuant to the Agreement, URC acquired the royalties and
royalty options from Reserve Industries Corp. and Reserve Minerals
Inc. for a total consideration of US$11.5
million, satisfied by cash and common shares. This involved
drawing down US$5.0 million from the
previously announced margin loan facility with the Bank of
Montreal for a portion of the
purchase price.
The royalty interests and options to be acquired consist of the
following:
- McArthur River - 1% GOR on an approximate 9% share of overall
uranium production, drawn from Orano's 30.195% ownership interest.
The royalty includes the option to elect to receive physical
uranium "in kind" on notice. While the McArthur River mine has been
idled since 2018 The royalty has provided consistent exposure to
the mine's 18-year production history and should continue to
provide regular royalty payments over the projects remaining
23-year mine life in the event of a restart.
- Cigar Lake – 10 to 20% sliding scale NPI on a 3.75% share of
overall uranium production from the project lands, drawn from
Orano's ownership interest (37.1%). The royalty rate adjusts to 10%
in the future upon production of 200 Mlbs from the combined royalty
lands of the Dawn Lake and Waterbury/Cigar Projects (93 Mlbs
produced to date). As a profit based interest, this royalty will
begin to generate revenue after cumulative expense accounts,
including development costs, are exhausted.
- Dawn Lake: Option to acquire a 10 to 20% sliding scale NPI on a
7.5% share of overall uranium production from the project lands.
The royalty rate adjusts to 10% in the future upon production of
200 Mlbs from the combined royalty lands of the Dawn Lake and
Waterbury/Cigar Projects (93 Mlbs produced to date). As a profit
based interest, this royalty will begin to generate revenue after
cumulative expense accounts, including development costs, are
exhausted. The option is exercisable at any time until May 7, 2024 upon notice and payment of
$10 to the existing holder.
The Dawn Lake Project
The Dawn Lake project is a large early exploration stage project
located in northern Saskatchewan
in Canada, approximately 700 km
north of Saskatoon. The project
grounds cover an area approximately between the McClean Lake mill
and Cigar Lake mine.
The following map outlines the location of the Dawn Lake
project:
The Dawn Lake project has been active since 1977, with resources
currently outlined for the Tamarack deposit, currently listed by
Cameco as having 17.9 Mlbs U3O8 of indicated
resources at an average grade of 4.42% U3O8,
and a further 1.0 Mlbs of inferred resources.
This deposit is an unconformity-related deposit at approximately
175 to 200 m depth, located 10 km to
the southwest of the McClean Lake mill. In 1978,
unconformity-associated uranium mineralization was intersected on
the project which later became known as the 11, 11A, 11B and 14 Zones of the Dawn Lake deposits.
Development drilling on the Dawn Lake deposits occurred between
1978 and 1982. The Dawn Lake deposits do not currently have any
mineral resources assigned to them by Cameco. In addition to the
resources outlined above, significant uranium mineralization has
been discovered at the La Rocque Lake (29.9%
U3O8 over 7 m
in hole Q22-040), Natona Bay (5.56%
U3O8 over 5.25
m in hole Q27B-030), and Thorburn
Lake (3.2% U3O8 over 8.8 m in hole Q14A-026) areas. These historical
deposits do not have resources assigned to them under the framework
of NI-43-101.
About Uranium Royalty Corp.
Uranium Royalty Corp. is a pure-play uranium royalty company
focused on gaining exposure to uranium prices by making strategic
investments in uranium interests, including royalties, streams,
debt and equity investments in uranium companies, as well as
through holdings of physical uranium. The Company's strategy
recognizes the inherent cyclicality of valuations based on uranium
prices, including the impact of such cyclicality on the
availability of capital within the uranium sector and the current
historically low uranium pricing environment. The Company intends
to execute on its strategy by leveraging the deep industry
knowledge and expertise of its management team and the Board to
identify and evaluate investment opportunities in the uranium
industry. The Company's management and the Board include
individuals with decades of combined experience in the uranium and
nuclear energy sectors, including specific expertise in mine
finance, project identification and evaluation, mine development
and uranium sales and trading.
Note on Technical Disclosure
Darcy Hirsekorn, the Company's
Chief Technical Officer, has supervised the preparation of and
reviewed the technical information contained in this presentation.
He holds a B.Sc. in Geology from the University of Saskatchewan, is a qualified person
as defined in National Instrument 43-101 and is registered as a
professional geoscientist in Saskatchewan.
Except where otherwise stated, the Company's disclosure herein
relating to properties subject to the Company's royalties is based
primarily on information publicly disclosed by the owners or
operators of such properties, as is customary for royalty portfolio
companies of this nature. Specifically, as a royalty holder, the
Company has limited, if any, access to the properties subject to
its interests. The Company generally relies on publicly available
information regarding these properties and related operations and
generally has no ability to independently verify such information.
In addition, such publicly available information may relate to a
larger property area than that covered by the Company's
interests.
Unless otherwise indicated, the scientific and technical
information disclosed herein is based upon Cameco's Annual
Information Form for the Year Ended December
31, 2020 and Cameco's other public filings and, in the case
of the Dawn Lake Project, also the historical uranium deposit
information outlined in the Saskatchewan Mineral Deposit Index
(SMDI).
Forward Looking Statements
Certain statements in this news release may constitute
"forward-looking statements", including those regarding
expectations regarding projects in which the Company has an
interest. Forward-looking statements are statements that address or
discuss activities, events or developments that the Company expects
or anticipates may occur in the future. When used in this news
release, words such as "estimates", "expects", "plans",
"anticipates", "will", "believes", "intends" "should", "could",
"may" and other similar terminology are intended to identify such
forward-looking statements. Forward-looking statements reflect the
current expectations and beliefs of the Company's management. These
statements involve significant uncertainties, known and unknown
risks, uncertainties and other factors and, therefore, actual
results, performance or achievements of the Company and its
industry may be materially different from those implied by such
forward-looking statements. They should not be read as a guarantee
of future performance or results, and will not necessarily be an
accurate indication of whether or not such results will be
achieved. A number of factors could cause actual results to differ
materially from such forward-looking statements, including, without
limitation, any inability of the operator of the McArthur Mines to
restart the currently idled mine, delays in the restart of the
Cigar Lake mine, risks inherent to royalty companies, uranium price
volatility, risks related to the operators of the projects
underlying the Company's existing and proposed interests and those
other risks described in the Company's Annual Information Form for
the year ended April 30, 2020 and
other disclosure documents, available on SEDAR
at www.sedar.com. These risks, as well as others, could cause
actual results and events to vary significantly. Accordingly,
readers should exercise caution in relying upon forward-looking
statements and the Company undertakes no obligation to publicly
revise them to reflect subsequent events or circumstances, except
as required by law.
Neither the TSX-V nor its Regulation Services Provider (as
that term is defined in policies of the TSX-V) accepts
responsibility for the adequacy or accuracy of this
release.
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SOURCE Uranium Royalty Corp.