Uranium Royalty (TSX-V: URC, US: URCCF) announced today that it has entered into a definitive agreement to acquire existing royalty interests on the McArthur River and Cigar Lake uranium mines in Saskatchewan, Canada.
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).
McArthur River and Cigar Lake have a combined total of 557.5 Mlbs of Proven and Probable Mineral Reserves as of December 31, 2020, representing approximately 29% of Global Reasonably Assured Recoverable Resources as stated by the International Atomic Energy Agency for the lowest cost category.
The company acquires 1% Gross Overriding Royalty on an approximate 9% share of uranium production derived from Orano’s ownership interest (~30%) in McArthur River project.
In addition, Uranium Royalty acquires 20% Net Profits Interest on a 3.75% share of overall uranium production derived from Orano’s ownership interest (37.1%) in Cigar Lake/Waterbury project.
Total consideration payable by the company under the transaction is US$11.5 million, which will be satisfied by the company on closing by paying US$10.0 million (approximately C$12.7 million) in cash and issuing 970,017 common shares. The cash portion of the purchase price will be financed through cash and securities on hand.
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, and TEPCO Resources. The mine has been in production since 2015 until Cameco announced that operations were temporarily suspended in both March and December 2020 due to impacts of COVID-19.