International Consolidated Uranium Enters the U.S. Uranium Sector with Transformational Acquisition and Strategic Alliance with Energy Fuels
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Acquires Portfolio of Projects in the U.S., including Three Past Producing Mines; Enters into Toll-Milling and Operating Agreements -
VANCOUVER , BC and LAKEWOOD, Colo. , July 15, 2021 /CNW/ - International Consolidated Uranium Inc. (" CUR ") (TSXV: CUR) (OTCQB: CURUF) and Energy Fuels Inc. (NYSE American: UUUU) (TSX: EFR) (" Energy Fuels ") are pleased to announce that CUR has entered into a definitive asset purchase agreement (the " Purchase Agreement ") with certain wholly-owned subsidiaries of Energy Fuels (collectively, the " EF Parties ") whereby CUR will acquire a portfolio of conventional uranium projects located in Utah and Colorado (the " Projects ") from the EF Parties (collectively, the " Transaction "). In connection with the closing of the Transaction, the companies have also agreed to enter into toll-milling and operating agreements with respect to the Projects which positions CUR as a potential near-term US Uranium producer subject to an improvement in uranium market conditions and/or CUR entering into acceptable uranium supply agreements.
Transaction Highlights:
New Entrant into the U.S. Uranium Sector – The acquisition and alliance is expected to establish CUR as a new player in the U.S. uranium sector. The U.S. is currently the largest generator of nuclear power in the world and, by extension, the largest consumer of uranium. At the same time, domestic production of uranium is almost non-existent due to low prices and anti-competitive practices by foreign suppliers. In late 2020, the U.S. government approved the proposed establishment of a U.S. national strategic uranium reserve. Uranium mined by CUR, at one of the acquired Projects, and processed into natural uranium concentrates at Energy Fuels' White Mesa Mill located near Blanding, Utah , is expected to qualify for the proposed reserve. Unlocks the Value of Past Producing Mines, Permitted and Well-Positioned for Rapid Restart – The portfolio of Projects being acquired pursuant to the Transaction includes, among other assets, the following three permitted, past-producing mines in Utah , which are expected to be the immediate focus of CUR: Strategic Alliance with Energy Fuels, the Leading U.S. Uranium Producer – With the toll-milling agreement for production from the Projects to be executed on closing of the Transaction, CUR will become the only current U.S. uranium developer (other than Energy Fuels) with guaranteed access to Energy Fuels' White Mesa Mill, which is the only permitted and operating conventional uranium mill in the U.S. Further, the operating agreements will allow the Projects to continue to be managed by the experienced team at Energy Fuels, ensuring a smooth transition. Compelling Acquisition Terms and Structure – The consideration payable to Energy Fuels for the acquisition of the Projects and for securing the toll-milling and operating agreements includes US$2 million payable at closing, Cdn$6 million of deferred cash payable over time, Cdn$5 million of deferred cash payable on commencement of commercial production, and such number of CUR shares that results in Energy Fuels holding 19.9% of the outstanding CUR common shares immediately after closing. CUR will also pay Energy Fuels a management fee, along with a toll milling fee for ore produced at the Projects in the future. Board of Directors Strengthened with Addition of Mark Chalmers . On closing, it is expected that Mark Chalmers , President and CEO of Energy Fuels, will join the CUR Board of Directors. Mr. Chalmers, a mining engineer by training, is a recognized leader in the uranium sector, both in the US and globally, and will bring decades of experience in uranium project development and mining to CUR.
Philip Williams , President and CEO of CUR commented, "We could not be more excited about today's announcement. Our strategy has been to acquire uranium projects around the world, create critical mass, and target the acquisition of larger, more advanced projects. While the recently announced acquisition of the high-grade Matoush Project in Quebec was a big step forward for CUR, today's acquisition and alliance with Energy Fuels represents a giant leap. In one transaction, we are entering the important U.S. uranium sector by acquiring past producing mines which are permitted and well positioned for a rapid restart when market conditions are right. And, with the toll-milling agreement for the Projects, we are now the only company other than Energy Fuels to have secured guaranteed access to the White Mesa Mill. This is a truly unique position for CUR. Add to that the operating agreements, which allow us to benefit from the decades of experience that the Energy Fuels team has with these projects, and the addition of Mark Chalmers to the board, and the benefits to CUR and its shareholders are substantial."
Mark Chalmers commented, "This transaction has all the hallmarks of a true win-win for both parties. Energy Fuels currently holds the largest and highest quality portfolio of uranium production, development, and exploration projects in the U.S. The assets we are selling to CUR are proven U.S. uranium mines, and in fact production from these mines since 2006 has accounted for over 1,050,000 lbs of US uranium production, which would rank those mines as fifth among all current uranium producers in the US over those years. However, because Energy Fuels is focusing its attention on its core projects – the Nichols Ranch and Alta Mesa ISR properties and the Pinyon Plain, La Sal and other conventional properties, we do not believe markets have properly valued the Projects within our expansive portfolio of exceptional assets. We believe that, in order to realize the full value of our expansive portfolio, certain assets, such as the Projects, can be repositioned to the benefit of Energy Fuels and its shareholders, provided we find the right vehicle to unlock the value of these assets. In this transaction, we believe we have found that vehicle in CUR. Having known and worked with the team behind CUR for almost 15 years, I have watched keenly as they have gained market support for their consolidation strategy. This is why we have structured the transaction to provide Energy Fuels with significant exposure to the future share price performance of CUR through a 19.9% equity interest and speaks to our belief in and our commitment to these assets. My joining the CUR board, as well as Energy Fuels' entering into the toll-milling and operating agreements for the Projects, should also be strong signals as to how important we view our alliance with CUR for these assets."
Terms of the Asset Purchase Agreement
Pursuant to the Purchase Agreement, CUR will acquire from the EF Parties 100% of the Tony M, Daneros and Rim mines in Utah , as well as the Sage Plain property and eight DOE Leases in Colorado , for the following consideration:
the payment of US$2.0 million in cash, payable on closing of the Transaction; the issuance of that number of CUR shares that results in Energy Fuels holding 19.9% of the outstanding CUR common shares immediately after closing of the Transaction; the payment of Cdn$3.0 million in cash on or before the 18-month anniversary of closing of the Transaction; the payment of an additional Cdn$3.0 million in cash on or before the 36-month anniversary of closing of the Transaction; and the payment of up to Cdn$5.0 million in contingent cash payments tied to achieving commercial production at the Tony M Mine, the Daneros Mine and the Rim Mine.
The Purchase Agreement includes provision for the return of the Projects to Energy Fuels in the event that CUR does not make the deferred cash payments as described above.
Closing of the Transaction is subject to satisfaction of certain closing conditions including, among other things, CUR receiving approval of the TSX Venture Exchange. All securities issued in connection with the Agreement are subject to a hold period expiring four months and one day from the date of issuance.
The Strategic Alliance
The strategic alliance between CUR and Energy Fuels for the Projects involves three key components:
1. The Toll-Milling Agreement – Under this agreement, the EF Parties will toll-mill ore mined from the Projects at the White Mesa Mill, subject to payment by CUR of a toll-milling fee and certain other terms and conditions. 2. The Operating Agreements – Under these agreements, the EF Parties will provide ongoing services for a fee to maintain the Projects in good standing, as well as additional services as agreed to by the parties. 3. The Investor Rights Agreement – Under this agreement, for so long as Energy Fuels' equity ownership in CUR remains at or above 10%, it will be entitled to equity participation rights to maintain its pro rata equity ownership in CUR and to appoint one nominee to the CUR Board of Directors. Energy Fuels has also agreed to certain resale restrictions on the shares of CUR it will hold and to provide voting support in certain circumstances.
Strengthening the Board of Directors
In accordance with the terms of the investor rights agreement to be entered into on closing of the Transaction, for so long as Energy Fuels maintains its equity ownership in the common shares of CUR at or above 10%, Energy Fuels is entitled to nominate one member to the CUR Board of Directors. On closing of the Transaction, it is expected that Energy Fuels will nominate Mark Chalmers , its current President and CEO, to the CUR Board of Directors. Mr. Chalmers has spent nearly his entire career in the uranium industry, taking the role of President and Chief Executive Officer of Energy Fuels on February 1, 2018 . He returned to Energy on July 1, 2016 after 15 years working in the uranium sector in the Southern Hemisphere. From 2011 to 2015, Mr. Chalmers served as Executive General Manager of Production for Paladin Energy Ltd., a uranium producer with assets in Australia and Africa , including the Langer Heinrich and Kayelekera mines where, as head of operations, he oversaw sustained, significant increases in production while reducing operating costs. He also possesses extensive experience in ISR uranium production, including management of the Beverley Uranium Mine owned by General Atomics ( Australia ), and the Highland Mine owned by Cameco Corporation ( USA ). Mr. Chalmers has also consulted to several of the largest players in the uranium supply sector, including BHP Billiton, Rio Tinto, and Marubeni and, until recently, served as the Chair of the Australian Uranium Council, a position he held for 10 years. Mr. Chalmers is a registered professional engineer and holds a Bachelor of Science in Mining Engineering from the University of Arizona .
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The Tony M Mine
The Tony M Mine is located in eastern Garfield County, Utah approximately five miles north of Ticaboo, Utah and approximately 127 road miles west of the White Mesa Mill. The deposit currently forms part of the Henry Mountains Complex.
Uranium mineralization on the property is hosted by favorable sandstone of the Salt Wash Member of the Morrison Formation, a principal uranium host in the US. Mineralization primarily consists of coffinite with minor uraninite, which usually occurs in close association with vanadium mineralization.
The Tony M Mine was originally developed by Plateau Resources Ltd. (" Plateau ") in the late 1970s to provide a nuclear fuel supply to its parent company Consumers Power Company (Consumers) of Michigan . In 1984, operations were suspended.
In February 2007 , Denison Mines Corp. (" Denison ") acquired the Tony M property and, following rehabilitation work and re-establishment of surface facilities in 2006, received the necessary operational permits for the reopening of the Tony M underground workings, after which it commenced mining activities in September 2007 . Denison operated the mine from September 2007 to November 2008 . The following table sets forth the historic production from the Tony M Mine by Plateau and Denison:
| Tony M Historic Production | | | | | Company | Tons (000s) | %U 3 O 8 | Lbs U 3 O 8 (000s) | | Plateau (1979-1984) | 237 | 0.12 | 569 | | Denison (2007-2008) | 162 | 0.13 | 422 | | Totals | 399 | 0.12 | 991 |
In 2008, the Tony M Mine was placed on care and maintenance, and in June 2012 , Energy Fuels acquired all of Denison's uranium properties in the United States , including the Henry Mountains Complex. Since acquiring the Henry Mountain Complex, Energy Fuels has not carried out any further exploration work nor conducted any further mine development at the Tony M Mine. The Tony M Mine is currently being maintained in a ready state with all required permits in place to resume operations as market conditions warrant.
In June 2012 , Roscoe Postle Associates Inc. prepared a technical report entitled "Technical Report on the Henry Mountains Complex Uranium Property, Utah U.S.A. " for Energy Fuels, which detailed the mineral resource estimate set out in the table below for the Tony M Mine. This mineral resource estimate is considered to be a "historical estimate" for CUR as defined under NI 43-101 – _Standards of Disclosure for Mineral Projects _(" NI 43-101 "). A Qualified Person has not done sufficient work to classify the historical estimate as a current Mineral Resource, and CUR is not treating the historical estimate as a current Mineral Resource. See below under "Technical Disclosure and Qualified Person".
| Tony M Mine Historical Mineral Resource Estimate | | | | | Category | Tons (000s) | %U 3 O 8 | Lbs U 3 O 8 (000s) | | Indicated | 1,690 | 0.24 | 8,130 | | Inferred | 860 | 0.16 | 2,750 |
| Notes: | | | 1. | Mineral Resources were classified in accordance with CIM Definition Standards. | | 2. | Cut-off grade is 0.10% eU 3 O 8 over a minimum thickness of 2 ft. for the Tony M-Southwest deposit. | | 3. | Mineral Resources have not been demonstrated to be economically viable. | | 4. | All mine production by Plateau and Denison has been deducted. |
Following closing of the Transaction, CUR intends to undertake a program to verify the historical estimate as a current mineral resource estimate and complete a preliminary economic assessment to quantify the cost, development activity and time required to bring the mine back into production.
The Daneros Mine
The Daneros Mine is located on the Colorado Plateau in San Juan County, Utah approximately 70 miles west of the White Mesa Mill. The property is in the Red Canyon portion of the White Canyon Mining District.
Major uranium deposits in the White Canyon District occur at or near the base of the Upper Triassic Chinle Formation, in fluvial channel deposits of the Shinarump Member, the basal member of the Chinle Formation. Uranium mineralization appears to be related to low-energy depositional environments in that uranium is localized in fluvial sandstones that lie beneath organic-rich lacustrine-marsh mudstone and carbonaceous delta-front sediments.
The Daneros Mine operated from 2009 until October 2012 when the mine was placed on standby. Initially, White Canyon Uranium Limited (" White Canyon ") brought the mine into production by sending millfeed to the White Mesa Mill under a toll-milling agreement with Denison. Daneros was White Canyon's principal asset. Denison acquired White Canyon in June 2011 for AU$57 Million in cash and continued to operate the mine until its U.S. operations were acquired by Energy Fuels in June 2012 . The following table sets forth the historic production from the Daneros Mine:
| Daneros Historic Production | | | | | Project | Tons (000s) | %U 3 O 8 | Lbs U 3 O 8 (000s) | | Daneros (2010-2013) | 120 | 0.26 | 628 | | Other Mines 1 | 73 | 0.22 | 314 |
| Notes: | | | 1) | Other Mines include the Cove (Lark), Bullseye and Spook former mines. These former mines are located on claims obtained as part of the Transaction. |
In March 2018 , Peters Geosciences produced a technical report entitled "Updated Report On The Daneros Mine Project, San Juan County, Utah , U.S.A." for Energy Fuels, which detailed the mineral resource estimate set out in the table below for the Daneros Mine. This mineral resource estimate is considered to be a "historical estimate" for CUR as defined under NI 43-101. A Qualified Person has not done sufficient work to classify the historical estimate as a current Mineral Resource, and CUR is not treating the historical estimate as a current Mineral Resource. See below under "Technical Disclosure and Qualified Person".
| Daneros Mine Historical Mineral Resource Estimate | | | | | Project | Tons (000s) | %U 3 O 8 | Lbs U 3 O 8 (000s) | | Indicated | 20 | 0.36 | 142 | | Inferred | 7 | 0.37 | 52 |
| Notes: | | | 1) | Mineral Resources were classified in accordance with CIM Definition Standards. | | 2) | Mineral Resources are estimated at a cut-off grade of 0.23% eU 3 O 8 . | | 3) | Mineral Resources are estimated using a long-term uranium price of $55 per pound U 3 O 8 . | | 4) | A minimum thickness of 1 foot was used. | | 5) | Bulk density is 0.07143 ton/ft3 (14 ft3/ton). | | 6) | Mineral Resources are exclusive of Mineral Reserves and do not have demonstrated economic viability. | | 7) | Numbers may not add due to rounding. |
The Daneros Mine remains fully permitted and well-positioned for restarting operations on an expeditious basis as market conditions warrant. Following closing of the Acquisition, CUR intends to perform surface drilling to verify the historical estimate as a current mineral resource estimate and connectivity of resources. Following mine restart, CUR expects to perform underground long hole drilling to determine the likely location of any mineral resources and where to drive mine headings to best access these resources.
Rim Mine
The Rim Mine is a permitted, formerly producing mine located 15 miles northeast of Monticello, Utah in San Juan County , approximately 62 road miles from the White Mesa Mill. The property consists of 26 unpatented lode mining claims, a private lease, and a Utah State Mineral Lease totaling about 1,100 acres. The mine has operated historically on a periodic basis starting in the mid-1960s. Mining last occurred in early 2008 by Denison and ceased in late 2010. Energy Fuels acquired the property in 2012 and has maintained it on care and maintenance since that time, such that it can be restarted with relatively little permitting or development costs as market conditions warrant.
A previous internal resource estimate by Energy Fuels (this estimate was not completed in accordance with the disclosure standards of NI 43-101), indicated that the project has high vanadium grades at 1.83% V 2 O 5 and a ~9.15:1 uranium-to-vanadium ratio, and the table below sets out the previous resource estimate (using categories other than those set out in section 1.2 and 1.3 of NI 43-101). This estimate is considered to be a "historical estimate" for CUR as defined under NI 43-101. A Qualified Person has not done sufficient work to classify the historical estimate as a current Mineral Resource, and CUR is not treating the historical estimate as a current Mineral Resource. See below under "Technical Disclosure and Qualified Person".
| Rim Mine Historical Mineral Resource Estimate | | | | | | | | Tons (000s) | %U 3 O 8 | Lbs U 3 O 8 (000s) | %V 2 O 5 | Lbs V 2 O 5 (000s) | | Inferred | 82 | 0.20 | 327 | 1.83 | 3,028 |
| Notes: | | | 1) | The historical estimates for RIM do not comply with CIM Definition Standards on Mineral Resources and Mineral Reserves as required by NI 43-101 and have no comparable resource classification. | | 2) | Mineral Resources are estimated at a cut-off grade of 0.10% U 3 O 8 . | | 3) | A minimum thickness of 3 feet was used. |
Sage Plain
The Sage Plain Property is located about 16 miles northeast of Monticello, Utah and approximately 54 road miles from the White Mesa Mill. The Sage Plain District (also referred to as the Egnar District or Summit Point District) is a portion of the greater Slick Rock District. It is the southwest continuation into Utah of the prolific Uravan Mineral Belt.
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