Reno Creek is an advanced, near–surface uranium project at the permitting/feasibility stage located in the Powder River Basin in northeastern Wyoming, a uranium development region. The project comprises NI 43-101 compliant resources of 10.96 million pounds of U3O8 at an average grade of 0.066% U3O8 measured and indicated and 4.73 million pounds of U3O8 at an average grade of 0.063% U3O8 inferred.
In addition, Reno Creek contains approximately 8.41 million pounds of U3O8 in historical resources grading approximately 0.083% U3O8. The Reno Creek Project comprises approximately 17,500 acres of claims and leases, including 563 unpatented mining claims, four Wyoming State mineral leases, four fee (private) mineral leases, and five surface access agreements.
The aggregate purchase price to acquire 100% interest in the Reno Creek Uranium Project is $32m. The acquisition price is equivalent to approximately $2.04 per pound of NI 43-101 U3O8 compliant resources. The transaction is subject to financing, approval of applicable regulatory authorities, and approval of Bayswater shareholders, if required, and is projected to close by mid-December, 2009.
Of the aggregate purchase price, $30m in cash is payable to Strathmore for 100% interest in the property, AUC and all related assets, and $2m, payable $1m in cash and $1m through the issuance of common shares of Bayswater, is to be paid to American Uranium in exchange for its option rights to the property and a large data base plus a UIC (deep well injection) permit. A non-refundable deposit of $250,000 in cash has been paid to Strathmore in conjunction with the signing of the letter of intent, which is credited against the $30m purchase price.
Strathmore and American Uranium had entered into a joint venture agreement to develop the property. Bayswater’s purchase of the project would terminate the Strathmore/American Uranium joint venture. Bayswater has conducted a preliminary in-house economic evaluation of the Reno Creek Project, including an ISR facility and central processing plant producing up to 2 million pounds of U3O8 per year.
The project assets being acquired also include a deep well injection permit for two disposal wells for the wastes from the ISR operation, plus an abandoned dry oil well that would serve as one of the deep injection wells. Also included in the project assets are electronic and paper logs on approximately 1100 drill holes, additional data on around 900 more drill holes, as well as several geologic, hydrologic, and engineering studies on the Reno Creek and Reno Creek Southwest deposits.
Bayswater plans to bring Reno Creek into production by 2015, subject to positive feasibility results. The Project should advance to the feasibility stage during 2014 with construction to follow and production to commence in 2015.
George M. Leary, president of Bayswater, said: “The Reno Creek Project is at the permitting/pre-feasibility stage and would be Bayswater’s flag-ship project with a time-line to production within 5 years—commencing with completion of base line environmental and engineering studies to be initiated upon closing of the acquisition. The Company also plans to bring its nearby Elkhorn/Alzada Project to the feasibility stage over the same period of time.”
In connection with the acquisition, Bayswater would enter into a consulting agreement until closing of the transaction with American Uranium for services to facilitate the completion of the transaction at a cost of $30,000 per month and intends to enter into a further consultancy agreement with American Uranium for the marketing of uranium produced from the Reno Creek Uranium Project.
Financing of around CDN$50m is required to complete the acquisition of the Reno Creek Project and for related working capital in order to advance the project pursuant to the production time-line. To raise the required capital, Bayswater plans to undergo a restructuring, including a consolidation of the company’s share capital. Any consolidation of Bayswater’s share capital would be subject to regulatory and shareholder approval.
