Uranium Energy is pleased to announce that it has now completed its acquisition of the Workman Creek uranium project, previously announced on November 8, 2011, located in Gila County, Arizona (the “Workman Creek Project”), from Cooper Minerals, Inc. (“Cooper”).
President and CEO Amir Adnani stated, “The Workman Creek Project represents the Company’s fourth project in pro-business and mining-friendly Arizona. This acquisition further demonstrates management’s commitment to expanding and diversifying our project portfolio at a viable cost for long-term growth.”
The Workman Creek Project
The Workman Creek Project consists of 176 unpatented lode mining claims covering 3,520 acres. It is located in a remote area of the Dripping Springs Mining District of Gila County, Arizona, about 30 miles north of Miami, Arizona and 85 miles northeast of Phoenix, Arizona. The current claim configuration being acquired by the Company represents the Workman Creek North and South project areas originally held and developed by Wyoming Minerals Corp (“WMC”), a subsidiary of Westinghouse, in the 1970s and 1980s.
In the 1970s, WMC established a significant acreage position in the area and began a systematic development program. Major work conducted by WMC including the drilling of over 400 exploration and development holes, geological mapping, regional and detailed geochemical studies, petrographic studies, mineralogical paragenetic studies, geophysical surveys and metallurgical studies, all of which culminated in a positive feasibility study prepared by Dravo Engineers in 1980.
Based on favorable economics indicated in the Dravo Engineers feasibility study, detailed designs for open pit and underground mining were developed, coupled with a conventional acid leach, solvent extraction and ammonia precipitation process. Metallurgical leaching studies indicated that uranium recovery was in the neighborhood of 94%. The work by Dravo Engineers was further supported and complimented by work performed by Mountain States Research and Development of Tucson, Arizona, and the Colorado School of Mines Research Institute of Golden, Colorado. However, these historical studies pre-date NI 43-101 and should not be treated as current. The Company has not performed the necessary work to verify these historical studies and the results should not be relied upon. By the early 1980s, global and market events led WMC to abandon their mineral claims in the Project.
The Workman Creek Project was staked by Cooper and optioned to Rodinia Minerals (“Rodinia”) in 2004-05. Rodinia maintained the property until 2010 at which time they let their option expire. Recent work performed on the Project by both Cooper and Rodinia include radiometric surveys, geochemical surveys and detailed geologic mapping. All historic and recent data has been obtained by the Company and is currently being evaluated by Company geologists.
The uranium mineralization of the Dripping Springs Mining District is associated with the Upper Member of the Dripping Springs Quartzite of Precambrian age. The mineralized zones can be best described as stratabound which have undergone thermal metamorphism, resulting in the redistribution and concentration the uranium.
Terms of the Agreement
In accordance with the terms of its November 7, 2011 Property Acquisition Agreement, as amended (the “Agreement”), with Cooper, the Company has now issued 300,000 restricted common shares of the Company, at a deemed issuance price of $3.15 per share, and has made payments totaling $84,640, to Cooper to acquire the Workman Creek Project.
In addition, pursuant to the terms and conditions of certain underlying property agreements previously entered into by Cooper, the Company has agreed to provide each of two individuals (collectively, the “Underlying Vendors”) with a royalty interest in the amount of three percent (3.0%) of the net smelter revenue received by the Company in connection with any uranium which is produced and sold from any of the mineral interests in the Workman Creek Project. The Royalty is subject to annual advance royalty payments of $100,000 (the “Advance Royalty Payments”), which Advance Royalty Payments are to be deducted from the payment of the Royalty. The Company has the right, exercisable at any time until January 21, 2024, to reduce the Royalty from three percent (3.0%) to one-and-a-half percent (1.5%) by paying the Underlying Vendors the aggregate sum of U.S. $1,000,000.00.
The Company has also assumed all rights, interests and obligations of Cooper arising from an option granted by Cooper to three individuals (collectively, the “Option-holders”) to acquire a royalty interest in the amount of one-half percent (0.5%) on the same terms and conditions as apply to the Royalty, exercisable at any time until January 21, 2024 by the Option-holders paying to the Company the aggregate sum of U.S. $333,340.
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