URC has acquired a sliding scale 10% to 20% NPI on a 7.5% share of overall uranium production from the Dawn Lake project lands. This royalty was previously subject to an option held by the Company
Uranium Royalty acquires Dawn Lake Royalty. (Credit: WikiImages from Pixabay )
Uranium Royalty Corp. (NASDAQ: UROY) (TSXV: URC) (“URC” or the “Company”) is pleased to announce that it has notified Orano Canada Inc. (“Orano”) of URC’s election to receive royalty proceeds from the recently re-started world-class McArthur River mine through delivery of physical uranium. URC’s royalty interest applies to Orano’s 30.195% ownership interest in the McArthur River Project which is operated by Cameco. Cameco currently plans to produce 15 million pounds of U3O8 (100% basis) per year from the operations starting in 2024.
URC further announces that it has completed the indirect acquisition of an existing royalty on the Dawn Lake project, located in the Athabasca Basin uranium district in Saskatchewan, Canada.
Scott Melbye, Chief Executive Officer of URC stated: “By electing to receive physical uranium under this royalty interest, URC provides shareholders with unhedged exposure to future uranium price upside. In addition, it represents pounds sourced from a geopolitically stable jurisdiction, in one of the world’s premier uranium mining districts, by an operator with an outstanding safety and environmental record.”
Mr. Melbye continued: “The Dawn Lake project, while early stage, covers multiple areas of significant uranium mineralization, including 17.9 Mlbs of indicated resources at the Tamarack deposit, as well as the historically mineralized areas at Dawn Lake and La Rocque Lake. The project also potentially covers the immediate strike extension of IsoEnergy Ltd.’s Hurricane deposit.”
Re-start of McArthur River
On November 9, 2022, Cameco announced that the first pounds of uranium ore produced from the McArthur River mine had been milled and packaged at the Key Lake mill, marking the initial production from McArthur River as it transitions back to normal operations. Cameco stated that McArthur River/Key Lake are expected to produce up to 2 million pounds (100% basis) of uranium concentrate (U3O8) in 2022. It further disclosed that, starting in 2024, Cameco plans to produce 15 million pounds of U3O8 (100% basis) per year from the operations. As of December 31, 2021, Cameco reported estimated: (i) proven and probable mineral reserves of 393.9 Mlbs of U3O8 at an average grade of 6.58% U3O8; and (ii) measured and indicated resources, exclusive of reserves, of 9.0 Mlbs at an average grade of 2.26% U3O8 and inferred resources of 2.6 Mlbs at an average grade of 2.85% U3O8. URC’s current royalty represents a 1% Gross Overriding Revenue Royalty (“GORR”) on a 9.063% share of uranium production from the McArthur River project derived from Orano’s current 30.195% production interest in the project.
The Dawn Lake Project
The Dawn Lake project is an early-stage exploration project located near Waterbury Lake in northern Saskatchewan, Canada approximately 700 km north of Saskatoon. The Dawn Lake property is operated by Cameco in partnership with Orano. The project grounds cover an area approximately between the McClean Lake mill and Cigar Lake mine in the Athabasca Basin uranium district. The Dawn Lake Royalty does not apply to the entirety of the project lands but covers approximately 99% of the project area and the Company believes that the Dawn Lake Royalty applies to substantially all areas of the project underlying the estimate of mineral resources. As of December 31, 2021, Cameco disclosed estimated indicated resources, exclusive of reserves, of 17.9 Mlbs at an average grade of 4.42% U3O8 and inferred resources of 1.0 Mlbs at an average grade of 1.02% U3O8, for the Tamarack deposit which is located in the Dawn Lake project area.
The Dawn Lake project area also potentially covers the immediate strike extension of IsoEnergy Ltd.’s (“IsoEnergy”) Hurricane deposit. In a news release on July 18, 2022, IsoEnergy disclosed estimated Indicated Mineral Resources for the Hurricane deposit of 48.61 million lbs. of U3O8 based on 63,800 tonnes grading 34.5% U3O8 and Inferred Mineral Resources of 2.66 million lbs. of U3O8 based on 54,300 tonnes grading 2.2% U3O8. For further clarity, the royalty does not cover the Hurricane resources as outlined above, only the potential western extension of the mineralized zone on the adjacent Dawn Lake project claims.
In addition, the Dawn Lake project hosts several other significant historical mineralized areas, including the 11, 11A, 11B and 14 Zones of the Dawn Lake deposit, La Rocque Lake (29.9% U3O8 over 7 m in hole Q22-040), Natona Bay (5.56% U3O8 over 5.25 m in hole Q27B-030), and Thorburn Lake (3.2% U3O8 over 8.8 m in hole Q14A-026) areas. These historical uranium occurrences do not have resources assigned to them by Cameco under the framework of NI-43-101.
The Dawn Lake Royalty is a sliding scale 10% to 20% NPI on a 7.5% share of overall uranium production from the Dawn Lake project lands. The sliding scale royalty percentage for the Dawn Lake Royalty is based upon historical production and recoverable reserves of the combined Waterbury/Cigar Lake and Dawn Lake project lands, with the royalty rate having already achieved the maximum of 20% as the Cigar Lake mine has achieved such production and reserve threshold. The sliding royalty percentage will decrease to 10% after the combined production on both Waterbury/Cigar Lake and Dawn Lake projects reach a production hurdle of 200 Mlbs of U3O8 (Cameco has reported a total of 105.0 Mlbs production as at December 31, 2021). As a profit-based NPI interest, this royalty is calculated based upon generated revenue, with deductions for certain expenses and costs, which include cumulative expense accounts, including development costs. As such and given the significant total of expenditures on the project, the Dawn Lake Royalty will only generate revenue to the holder after these cumulative expenses are exhausted.
Source: Company Press Release