AZARGA URANIUM has announced that its 70% controlled subsidiary, UrAsia in Kyrgyzstan Limited Liability Company (UrAsia), has executed an earn-in agreement with Mining Investment Company Alliance (Alliance).
The Agreement provides Alliance with an earn-in option to acquire a 100% interest in UrAsia's Kyzyl Ompul Project in the Kyrgyz Republic in exchange for project consideration of US$7.6 million and a two percent net smelter royalty of up to US$5.0 million. The US$7.6 million of project consideration consists of: 1) US$6.0 million of cash payments and 2) US$1.6 million of exploration and development expenditures over a three-year period.
Azarga Uranium's President and CFO, Blake Steele, commented: "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 (the "Dewey Burdock Project"), 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 alleviates the Company of the need to fund exploration and development expenditures at the Kyzyl Ompul Project, thereby freeing up further resources. In addition, the Company and our shareholders retain upside from the Kyzyl Ompul Project through the two percent net smelter royalty. Overall, this Agreement helps capitalize the Company over the next three years and reduces the need for potentially dilutive capital raises in the future."
Subject to Alliance acquiring a 100% interest in the Kyzyl Ompul Project for project consideration of US$7.6 million, UrAsia will retain a two percent net smelter royalty. The net smelter royalty is payable on the commencement of commercial production at the Kyzyl Ompul Project and is subject to a minimum royalty of US$2.5 million and a maximum royalty of US$5.0 million. If Alliance fails to make any of the payments under the Agreement, UrAsia will retain its 100% interest in the Kyzyl Ompul Project.
The Agreement is subject to the approval of the Toronto Stock Exchange ("TSX"). No finder's fees will be paid in connection with this transaction.