Azarga Uranium Corp’s 70%-owned subsidiary, UrAsia in Kyrgyzstan Limited Liability Company, has executed an earn-in agreement with Mining Investment Company Alliance covering the Kyzyl Ompul Uranium Project in the Kyrgyz Republic.
The agreement provides Alliance with an earn-in option to acquire a 100% interest in Kyzyl Ompul in exchange for consideration of US$7.6 million and a 2% net smelter royalty of up to US$5 million.
The US$7.6 million consists of US$6 million of cash payments and US$1.6 million of exploration and development expenditures over a three-year period.
Subject to Alliance acquiring a 100% interest in the Kyzyl Ompul project for project consideration of US$7.6 million, UrAsia will retain a 2% net smelter royalty. This is payable on the commencement of commercial production at Kyzyl Ompul and is subject to a minimum royalty of US$2.5 million and a maximum royalty of US$5 million.
If Alliance fails to make any of the payments under the agreement, UrAsia will retain its 100% interest in the project.
Azarga Uranium’s president and CFO Blake Steele said, “The execution of this agreement further demonstrates the company’s strategic focus on its initial development priority, the Dewey Burdock In-Situ Recovery Uranium Project in the US, which the company continues to advance towards construction.
“The agreement provides the company with significant cash payments over a three-year period, which can be deployed towards core strategic initiatives, such as the Dewey Burdock project, as well as alleviating the company of the need to fund exploration and development expenditures at Kyzyl Ompul, thereby freeing up further resources.
“In addition, the company and our shareholders retain upside from the Kyzyl Ompul project through the 2% net smelter royalty. Overall, this agreement helps capitalise the company over the next three years and reduces the need for potentially dilutive capital raises in the future.”
Azarga Uranium is an integrated uranium exploration and development company that controls six uranium projects, deposits and prospects in South Dakota, Wyoming and Colorado in the US and in the Kyrgyz Republic.
The Dewey Burdock project in South Dakota, which is the company’s initial development priority, has received its Nuclear Regulatory Commission Licence and draft Class III and Class V Underground Injection Control (UIC) permits from the Environmental Protection Agency and the company is completing other major regulatory permit approvals necessary for the construction of the project, including the final Class III and Class V UIC permits from the EPA.