Uranium Royalty Corp. Acquires Additional Royalty on the Churchrock Uranium Project, New Mexico, USA

Rhea-AI Summary

Uranium Royalty Corp (NASDAQ: UROY, TSX: URC) has agreed to acquire an additional royalty on a portion of the Churchrock uranium project in New Mexico, USA, owned by Laramide Resources The royalty is structured as a 6% Gross Overriding Royalty on the 'Mine Price' for 10 patented mining claims in Section 8 of the project. URC will pay US$3.5 million for this royalty, funded from existing cash and liquid assets.

The Churchrock Project is an advanced stage, ISR uranium project with a total Inferred Mineral Resource of 50.8 million pounds U3O8, including 10.22 million pounds on Section 8. A preliminary economic assessment estimates a 32-year mine life with annual production of 975,000 pounds U3O8. This acquisition aligns with recent U.S. legislation aimed at revitalizing domestic nuclear fuel production and phasing out Russian uranium imports by 2028.

Positive

• Acquisition of additional royalty on a large, high-grade undeveloped ISR uranium project in the USA
• Project has a substantial Inferred Mineral Resource of 50.8 million pounds U3O8
• Preliminary economic assessment estimates 32-year mine life with 975,000 pounds U3O8 annual production
• Aligns with US legislation supporting domestic uranium production
• Royalty covers early production years (first 8 years) according to the PEA

Negative

• US$3.5 million cash outlay for the royalty acquisition
• Project is still in development stage with 4 years of preproduction required
• Mineral resources are in Inferred category, considered too speculative for economic considerations
• PEA assumes a static uranium price of US$75/lb, which may not reflect market realities

Insights

Financial Analyst

Uranium Royalty Corp's acquisition of an additional royalty on the Churchrock uranium project is a strategic move that could significantly impact the company's future revenue streams. The US$3.5 million investment for a 6% gross overriding royalty on a portion of the project is relatively modest compared to the potential long-term benefits.

The Churchrock Project's inferred resource of 50.8 million pounds of U3O8, with 10.22 million pounds in the specific section covered by this royalty, represents a substantial uranium deposit. The preliminary economic assessment's projection of 31.2 million pounds of U3O8 production over a 32-year mine life suggests a steady, long-term revenue source for URC.

However, investors should note that the project is still in the development stage and the economic assessment is based on inferred resources, which carry geological uncertainty. The assumed uranium price of $75/lb in the PEA is also a critical factor to monitor, as fluctuations in uranium prices could significantly impact the project's economics and, consequently, URC's royalty returns.

The recent U.S. legislation phasing out Russian uranium imports by 2028 creates a favorable market environment for domestic uranium projects like Churchrock. This policy shift could potentially accelerate the project's development and enhance its economic viability, benefiting URC's royalty position.

Overall, while this acquisition aligns well with URC's strategy and the changing U.S. energy landscape, investors should be aware of the inherent risks associated with development-stage projects and commodity price dependencies.

Energy Policy Expert

The acquisition of this additional royalty by Uranium Royalty Corp (URC) is particularly timely given the recent shifts in U.S. energy policy. The Prohibiting Russian Uranium Imports Act and the Nuclear Fuel Security Act represent significant legislative moves aimed at revitalizing the domestic nuclear fuel cycle in the United States.

These policy changes create a favorable environment for U.S.-based uranium projects like Churchrock. By completely phasing out Russian uranium imports by 2028, the U.S. government is effectively creating a guaranteed market for domestic uranium producers. This could potentially accelerate the development timeline for projects like Churchrock and increase their economic viability.

However, it's important to note that ramping up domestic uranium production to fill the gap left by Russian imports will be challenging. The U.S. uranium industry has been in decline for decades and rebuilding capacity will require significant investment and time. The Churchrock Project, being one of the largest undeveloped ISR assets in the United States, is well-positioned to benefit from this policy shift, but investors should be aware that bringing new uranium projects online is a complex and time-consuming process.

The success of these policy initiatives in stimulating domestic uranium production will depend on various factors, including the speed of implementation, the level of government support and the response of the global uranium market. While the outlook appears positive for U.S. uranium projects, the long-term impact of these policies on the global uranium market and prices remains to be seen.

Mining Industry Analyst

The Churchrock Project's status as an In-Situ Recovery (ISR) uranium project is a significant factor to consider. ISR mining is generally more cost-effective and environmentally friendly compared to conventional open-pit or underground uranium mining methods. The estimated Life of Mine unit operating cost of $27.70/lb U3O8 is relatively competitive in the current market environment.

The project's location in the Grants Mineral Belt, a historically significant uranium-producing region, is advantageous. The existing infrastructure and the fact that Laramide reportedly holds substantially all required permits and licenses to begin uranium production from Section 8 could potentially reduce development time and costs.

However, investors should be aware of potential challenges. The four-year preproduction period for wellfield development indicates a significant lead time before any royalty income can be generated. Additionally, while ISR mining is generally more straightforward than conventional methods, it still requires careful management of groundwater and environmental considerations.

The projected annual production of 975,000 pounds U3O8 upon reaching steady state is substantial, representing about 2% of current U.S. annual uranium requirements. This could position the Churchrock Project as a significant contributor to U.S. domestic uranium supply, especially in light of the new legislation favoring domestic production.

It's worth noting that the resource estimate and economic assessment are based on inferred resources, which have a lower level of geological confidence than measured or indicated resources. While the size of the resource is impressive, further drilling and studies may be required to increase confidence in these estimates before full-scale production can commence.

VANCOUVER, BC, July 29, 2024 /PRNewswire/ - Uranium Royalty Corp. (NASDAQ: UROY, TSX: URC) ("URC" or the "Company") is pleased to announce that it has entered into a binding royalty purchase agreement to acquire an additional royalty on a portion of the Churchrock uranium project ("Churchrock Project" or the "Project") owned indirectly by Laramide Resources Ltd. ("Laramide") in New Mexico, USA. The Churchrock Project is an advanced stage, ISR uranium project located in the Grants Mineral Belt of New Mexico, USA, 12 miles northeast of Gallup, New Mexico. Laramide has disclosed that the Churchrock Project and nearby properties represent one of the largest and highest-grade undeveloped ISR uranium projects in the United States.

 Transaction Highlights:

• The royalty is structured as a Gross Overriding Royalty of 6% "Mine Price", which anticipates recovery of reasonable and actual costs to transport the mineral to the final point of sale. The royalty covers the 10 patented mining claims in Section 8 property (640 acres) that comprise New Mexico Mineral Survey 2220 on the Churchrock Project.
  
  
• Total consideration payable by the Company under the transaction is US$3.5 million, which will be satisfied by the Company on closing by paying US$1.75 million in cash to each of the vendors, each of whom owns an undivided one-half interest in the royalty. The purchase price for the royalty will be funded from cash and liquid assets on hand.
  
  
• The recently released technical report on the Churchrock Project (the "Churchrock Technical Report") highlights a total Inferred Mineral Resource of 50.8 million pounds ("Mlbs") U₃O₈ for the Project, including an Inferred Resource of 10.22 Mlbs U₃O₈ on Section 8 alone. The preliminary economic assessment is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that such preliminary economic assessment will be realized.
  
  
• The Churchrock Technical Report, includes a preliminary economic assessment that estimates a Life of Mine production total of 31.2 Mlbs U₃O₈, with recovered metal per year of 975,000 pounds U₃O₈ from the Crownpoint Central Processing Plant, and a mine life of 32 years.

Scott Melbye, Chief Executive Officer of URC stated: "Laramide's Churchrock Project represents one of the largest undeveloped ISR assets in the United States. We're very pleased to acquire an additional royalty on this asset, as it represents an important future source of U.S. uranium production."

Mr. Melbye continued: "Recent, successful, bipartisan legislation in the U.S. Congress, has sought to revitalize the American domestic nuclear fuel cycle. These bills, signed into law, 'The Prohibiting Russian Uranium Imports Act' and the 'Nuclear Fuel Security Act', provide funding to incentivize the build-out of uranium, conversion, and enrichment capacity in the U.S., and completely phase out Russian imports by 2028. Our enlarging footprints in the uranium royalty sector in the United States as evidenced by the acquisition of the additional royalty on Churchrock fit squarely in support of those initiatives".

Closing of the Transaction is subject to, among other things, the satisfaction of customary closing conditions and is expected to occur before the end of July 2024.

The Churchrock Project

The Churchrock Project is a Development stage, In-Situ Recovery ("ISR") uranium project located on the western end of the Grants Mineral Belt of New Mexico, USA, 12 miles north-northeast of Gallup, New Mexico. The Project is 100% owned by NuFuels, Inc., a wholly owned subsidiary of Laramide. Laramide is a Canadian company engaged in the exploration and development of uranium assets based in Australia and the United States.

Church Rock has publicly disclosed a mineral resource estimate that includes a total inferred resource of 10.22 Mlbs U₃O₈ on Section 8 of the Project. The Company notes that the purchased royalty interest covers only a portion of such section. The preliminary economic assessment disclosed by Laramide (the "PEA") provides for production in Section 8 occurring in the first eight years of production, recovering one million pounds of U₃O₈ per annum upon steady state production assuming well field recovery of 80%.

Four years of preproduction for wellfield development is anticipated in the PEA, but all other infrastructure necessary to resume operations is in place. Laramide also disclosed that it holds substantially all required permits and licenses to begin uranium production from Section 8. Life of Mine unit operating cost is estimated at US$27.70/lb. U₃O₈ the PEA. The study assumed a static uranium price of US$75/lb. U₃O₈.

For further information regarding the Churchrock Project, including the above-referenced PEA and mineral resource estimate, please refer to the technical report titled "Technical Report on the Churchrock Uranium Project, McKinley County, New Mexico, USA", with an effective date of February 22, 2023, prepared for Laramide Resources Ltd., available at www.sedarplus.ca (the "Churchrock Technical Report").

The Churchrock Royalty

Each of the vendors owns an undivided one-half interest in a uranium royalty of six percent (6%) mine price on part of the S2NE4; part of the E2SW4: part of the SE4NW4 and SE4, Section 8, T16N, R16W, N.M.P.M., McKinley County, New Mexico. The royalty covers the 10 patented mining claims in Section 8 that comprise New Mexico Mineral Survey 2220 on the Churchrock Project. 

The royalty is structured as a Gross Overriding Royalty of 6% "mine price", which anticipates revenues based on contract sales and recovery of certain reasonable and actual costs to transport the mineral to the final point of sale.

About Uranium Royalty Corp.

Uranium Royalty Corp. is the world's only uranium-focused royalty and streaming company and the only pure-play uranium listed company on the NASDAQ. URC provides investors with uranium commodity price exposure through strategic acquisitions in uranium interests, including royalties, streams, debt and equity in uranium companies, as well as through holdings of physical uranium. The Company is well positioned as a capital provider to an industry needing massive investments in global productive capacity to meet the growing need for uranium as fuel for carbon-free nuclear energy. URC has deep industry knowledge and expertise to identify and evaluate investment opportunities in the uranium industry. The Company's management and the Board include individuals with decades of combined experience in the uranium and nuclear energy sectors, including specific expertise in mine finance, project identification and evaluation, mine development and uranium sales and trading.

Note on Technical Disclosure

Darcy Hirsekorn, the Company's Chief Technical Officer, has supervised the preparation of and reviewed the technical information contained in this news release. He holds a B.Sc. in Geology from the University of Saskatchewan, is a qualified person as defined in National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and is registered as a professional geoscientist in Saskatchewan.

Unless otherwise indicated, the scientific and technical information herein regarding the Churchrock Project has been derived from the Churchrock Technical Report, and Laramide's other public disclosures, copies of which are available under its profile on SEDAR+ at www.sedarplus.ca.

As a royalty holder, the Company has limited, if any, access to the properties subject to its interests. The Company generally relies on publicly available information regarding these properties and related operations and generally has no ability to independently verify such information. In addition, such publicly available information may relate to a larger property area than that covered by the Company's interests.

Unless otherwise indicated, the technical and scientific disclosure contained or referenced herein has been prepared in accordance with NI 43-101, which differs significantly from the requirements of the U.S. Securities and Exchange Commission applicable to U.S. domestic issuers Accordingly, the scientific and technical information contained or referenced in this press release may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC. "Inferred mineral resources" have a great amount of uncertainty as to their existence and great uncertainty as to ‎their ‎economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ‎ever be ‎upgraded to a higher category.

Forward Looking Statements

Certain statements in this news release may constitute "forward-looking information" and "forward looking statements", as defined under applicable securities laws, including those regarding the disclosed expectations of the operator of the Project, including expectations regarding the Project, including estimates included in Laramide's disclosed PEA. Forward-looking information includes statements that address or discuss activities, events, or developments that the Company expects or anticipates may occur in the future. When used in this news release, words such as "estimates", "expects", "plans", "anticipates", "will", "believes", "intends" "should", "could", "may" and other similar terminology are intended to identify such forward-looking information. Statements constituting forward-looking information reflect the current expectations and beliefs of the Company's management. These statements involve significant uncertainties, known and unknown risks, uncertainties, and other factors and, therefore, actual results, performance or achievements of the Company and its industry may be materially different from those implied by such forward-looking statements. They should not be read as a guarantee of future performance or results and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from such forward-looking information, including, without limitation, any inability to satisfy the conditions to the transaction announced herein, risks inherent to royalty companies, uranium price volatility, risks related to the operators of the projects underlying the Company's existing and proposed interests and those other risks described in filings with Canadian securities regulators and the U.S. Securities and Exchange Commission. These risks, as well as others, could cause actual results and events to vary significantly. Accordingly, readers should exercise caution in relying upon forward-looking information and the Company undertakes no obligation to publicly revise them to reflect subsequent events or circumstances, except as required by law.

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SOURCE Uranium Royalty Corp.

FAQ

What is the value of the royalty acquisition by Uranium Royalty Corp (UROY) for the Churchrock Project?

Uranium Royalty Corp (UROY) is acquiring an additional royalty on the Churchrock Project for US$3.5 million, to be paid in cash from existing funds and liquid assets.

What is the structure of the royalty acquired by UROY on the Churchrock uranium project?

The royalty acquired by UROY is structured as a 6% Gross Overriding Royalty on the 'Mine Price' for 10 patented mining claims in Section 8 of the Churchrock Project.

What are the estimated resources and production figures for the Churchrock Project where UROY acquired the royalty?

The Churchrock Project has an Inferred Mineral Resource of 50.8 million pounds U3O8, with 10.22 million pounds in Section 8. The preliminary economic assessment estimates annual production of 975,000 pounds U3O8 over a 32-year mine life.

How does UROY's royalty acquisition on the Churchrock Project align with recent US legislation?

UROY's royalty acquisition aligns with recent US legislation aimed at revitalizing domestic nuclear fuel production and phasing out Russian uranium imports by 2028, supporting the development of US uranium assets.