Ownership Stake Includes the Wheeler River and Millennium Development Projects
Saskatoon, Saskatchewan, April 22, 2021 – UEX Corporation (TSX:UEX, OTCQB:UEXCF)(“UEX” or the “Company”) is pleased to announce that the Company has signed a definitive purchase agreement with Overseas Uranium Resources Development Co., Ltd. (“OURD”) to acquire 100% ownership of OURD’s wholly-owned subsidiary, JCU (Canada) Exploration Company, Limited (“JCU”).
JCU has a long history in the Canadian uranium exploration and development sector dating back to 2000, when it acquired a portfolio of Canadian uranium exploration and development assets from PNC Exploration (Canada) Co., Ltd. (“PNC Canada”), a wholly-owned subsidiary of Power Reactor and Nuclear Fuel Development Corporation (“PNC”). JCU’s key exploration projects cover an area of 139,346 ha and include a 10% ownership position in the Wheeler River Project (Denison Mines Corp. 90%), a 30.099% ownership stake in Cameco Corporation’s (“Cameco”) Millennium Project (Cameco 69.901%), a 33.8123% ownership in the Kiggavik Project (Orano Canada Inc. 66.1877%), and a 34.4508% interest in UEX’s Christie Lake Project. JCU also owns a minority equity stake in eight other grassroots and mid-stage exploration projects within the Athabasca Basin (see Table 1 and Figure 1).
The combination of UEX and JCU will create a compelling mid-size uranium development company with exposure to near-term uranium production with a solid pipeline of advanced resource and mid-stage exploration projects.
By acquiring JCU’s mineral property portfolio comprised of an indicated historic resource of approximately 79 million (M) pounds (lbs) of U3O8, and an inferred historic resource of approximately 18 M lbs of U3O8, (see Table 2 for tonnages and grades) the combined companies will make UEX the second largest junior uranium resource owner in Canada. These are historic resource estimates taken from the sources listed in Table 2 (attached). A qualified person has not done sufficient work to classify these historical estimates as current mineral resources. The Company is not treating this information as current mineral resources, has not verified this information and is not relying on it. The Company currently does not plan to conduct any work to verify the historical estimates other than using them to guide its exploratory and possible development work.
“UEX is honoured by OURD’s trust of UEX as their selected steward of JCU and its Canadian exploration and development projects, which have been thoughtfully cultivated over the past 20 years. We are excited about what benefits this transaction will bring to UEX shareholders. The combination of JCU and UEX will be transformational, forming a unique Canadian focused uranium development and exploration company. The resulting portfolio will have a significant resource base, and ownership interests in two Tier 1 Athabasca uranium development projects, Wheeler River and Millennium, both of which have production visibility within the next uranium upswing. Shea Creek, Kiggavik, Horseshoe-Raven and Christie Lake will provide the Company with a range of solid future development projects and UEX shareholders will continue to have exposure to resource growth through our portfolio of mid-stage and resource exploration projects.”
Roger Lemaitre, President & CEO, UEX Corporation
The Transaction
Through this transaction, UEX will acquire 100% of the shares of JCU from OURD by making cash payments of up to C$12.5 million and assuming JCU’s existing liabilities. UEX’s cash payments will consist of C$10 million on closing and up to C$2.5 million which is expected to be paid within 45 days of the closing date, subject to adjustment based upon JCU’s actual working capital on the closing date. It is anticipated that JCU will have cash in its treasury after closing which will be retained by JCU under UEX’s management.
Both UEX and OURD Board of Directors have voted in favour of this transaction. The transaction is subject to approval of OURD shareholders at a meeting scheduled for June 18, 2021. OURD is a private Japanese company with 29 shareholders comprised of some of the major companies in Japan. Closing is subject to UEX securing the necessary purchase financing and obtaining any required regulatory approvals. The transaction is expected to close on or prior to June 29, 2021.
UEX has committed to retaining JCU as a corporate subsidiary in order for JCU to meet its joint venture commitments.
JCU’s Liabilities
Other than the usual trade payables and current obligations under its joint ventures, JCU has an outstanding liability to the Japan Atomic Energy Agency (“JAEA”) as a result of a transaction in November 2000 pursuant to which JCU acquired the Canadian exploration assets of PNC Canada. JAEA is the successor company to PNC and PNC Canada.
Under the JCU-PNC Canada transaction, JCU acquired the Canadian uranium exploration assets of PNC Canada. The purchase price paid to PNC Canada was not funded in cash, but rather through an agreement to make payments from free cash flow derived from future production of uranium from the acquired projects. As of December 31, 2020 the liability, comprised of the purchase price plus accrued interest, totals $34.5 million.
JCU is required to provide JAEA with annual payments equal to 10% of free cash flow from any projects in the JCU portfolio that have entered commercial production. None of JCU’s projects are currently in commercial production. The requirement for future cash flow payments to JAEA ceases on the earlier of payment of all outstanding liability (including accrued interest) and the termination date of March 31, 2030 at which time all financial obligations to JAEA are deemed to have been paid and are fully extinguished.
UEX has committed to JAEA that it will ensure that JCU honours its commitments to JAEA under the JCU-PNC Canada transaction.
Qualified Persons and Data Acquisition
The technical information in this news release has been reviewed and approved by Roger Lemaitre, P.Eng., P.Geo., UEX’s President and CEO who is considered to be a Qualified Person as defined by National Instrument 43-101.
About UEX
UEX is a Canadian uranium and cobalt exploration and development company involved in an exceptional portfolio of uranium projects, including a number that are 100% owned and operated by UEX, one joint venture with Orano Canada Inc. (“Orano”) and ALX Uranium Corp. (“ALX”) that is 51.43% owned by UEX, as well as eight joint ventures with Orano, one joint venture with Orano and JCU (Canada) Exploration Company Limited, which are operated by Orano, and one project (Christie Lake), that is 65.55% owned by UEX with JCU (Canada) Exploration Company Limited which is operated by UEX.
The Company is also leading the discovery of cobalt in Canada, with three cobalt-nickel exploration projects located in the Athabasca Basin of northern Saskatchewan, including the only primary cobalt deposit in Canada. The 100% owned West Bear Project was formerly part of UEX’s Hidden Bay Project and contains the West Bear Cobalt-Nickel Deposit and the West Bear Uranium Deposit. UEX also owns 100% of two early stage cobalt exploration projects, the Axis Lake and Key West Projects.
Our portfolio of projects is located in the eastern, western and northern perimeters of the Athabasca Basin, the world’s richest uranium belt, which in 2019 accounted for approximately 12.6% of the global primary uranium production. UEX is currently advancing several uranium deposits in the Athabasca Basin which include the Christie Lake deposits, the Kianna, Anne, Colette and 58B deposits at its currently 49.1%-owned Shea Creek Project (located 50 kilometres north of Fission’s Triple R Deposit and Patterson Lake South Project, and NexGen’s Arrow Deposit), the Horseshoe and Raven deposits located on its 100%-owned Horseshoe-Raven Development Project and the West Bear Uranium Deposit located at its 100%-owned West Bear Project.
About JCU
JCU is a private company that is actively engaged in uranium exploration and development in Canada. JCU is owned by Overseas Uranium Resources Development Co., Ltd. (“OURD”) who acts as the manager of JCU. JCU has partnerships with UEX, Orano, Cameco, Denison and others on uranium exploration and development projects in the Athabasca Basin of Northern Saskatchewan including Millennium and Wheeler River and the Kiggavik project in the Thelon Basin in Nunavut.
Advisors
Koffman Kalef LLP is acting as legal advisor to UEX in connection with this transaction and DLA Piper (Canada) LLP is acting as legal advisor to OURD in connection with this transaction.
Source: UEX Corp.