AZARGA URANIUM CORP. (TSX:AZZ) (“Azarga Uranium” or the “Company”) is pleased to announce that its 70% controlled subsidiary, UrAsia in Kyrgyzstan Limited Liability Company (“UrAsia”), has executed a replacement earn-in agreement (the “Agreement”) with Central Asian Uranium Company Limited Liability Corporation (“Central”), whose representatives were a party to the earn-in agreement announced 2 August 2017. That previously announced earn-in agreement was terminated in accordance with the mechanisms provided for. The new replacement agreement provides Central with an option to earn a 100% interest in UrAsia’s Kyzyl Ompul Project in the Kyrgyz Republic. To maintain the option and earn the 100% interest, Central will pay UrAsia US$5.9 million in cash payments by 1 December 2020 and fund US$1.5 million of exploration and development expenditures on the Kyzyl Ompul Project by the same date.
Azarga Uranium’s President and CEO, Blake Steele, commented: “the execution of this Agreement effectively represents the continuation of the terminated earn-in agreement. UrAsia retains the US$150,000 payment and the benefit of the project costs funded under the previous agreement and continues forward with the representatives of Central, who were a party to the terminated agreement. The Company looks forward to continuing its relationship on this front. The Agreement is expected to provide the Company with significant cash payments, which can be deployed towards core strategic initiatives, such as the Dewey Burdock Project, as well as alleviates the Company of the need to fund exploration and development expenditures at the Kyzyl Ompul Project, thereby freeing up further resources.”
Under the terms of the Agreement, the cash payments are expected to be received as follows: US$120,000 by 23 April 2018, US$60,000 per month commencing 1 September 2018, increasing to US$229,000 per month commencing 1 January 2019, and a final payment of US$223,000 on 1 December 2020. Cash payments received from Central over the course of the Agreement are not reimbursable if Central does not exercise its purchase option. Aggregate exploration and development expenditures are expected to be incurred as follows: US$400,000 by 31 December 2018, US$1,000,000 by 31 December 2019 and US$1,500,000 by 1 December 2020.
Subject to Central completing funding and exercising its option to acquire a 100% interest in the Kyzyl Ompul Project, UrAsia will retain a two percent net smelter royalty. The net smelter royalty is payable on the commencement of commercial production and is subject to a minimum royalty of US$2.5 million and a maximum royalty of US$5.0 million.
If Central fails to make any of the payments under the Agreement, UrAsia will retain its 100% interest in the Kyzyl Ompul Project. No finder’s fees will be paid in connection with this transaction.
About Azarga Uranium Corp.
Azarga Uranium is an integrated uranium exploration and development company that controls six uranium projects, deposits and prospects in the United States of America (South Dakota, Wyoming and Colorado) and the Kyrgyz Republic. The Dewey Burdock in-situ recovery uranium project in South Dakota (the “Dewey Burdock Project”), which is the Company’s initial development priority, has received its Nuclear Regulatory Commission License and draft Class III and Class V Underground Injection Control (“UIC”) permits from the Environmental Protection Agency (“EPA”) and the Company is in the process of completing other major regulatory permit approvals necessary for the construction of the Dewey Burdock Project, including the final Class III and Class V UIC permits from the EPA.
Source: Azarga Uranium Corp.