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What do you get when you consolidate two adjacent uranium assets? Possibly one of the largest, most highly prospective uranium districts in the world.
Or at least that’s what Macusani Yellowcake (TSXV:YEL) and Azincourt Uranium (TSXV:AAZ) believed when they signed a letter of intent (LOI) to consolidate their assets in Peru’s Macusani Plateau.
Just months following Azincourt’s acquisition of two assets — advanced-stage Macusani and early-stage Muñani — in Peru, the company has signed a non-binding LOI with neighboring Macusani Yellowcake under which Macusani will acquire all of Azincourt’s land holdings on the Macusani Plateau in exchange for 68,350,000 common shares of Macusani. That represents roughly 30 percent of the outstanding shares of Macusani post transaction.
By consolidating both companies’ assets, Macusani, as the dominant landholder in the region, will control an undeveloped uranium project that hosts large measured, indicated and inferred uranium resources. Within the Macusani Plateau, Macusani, which recently released a positive preliminary economic assessment for its uranium deposits in Peru, holds 31.47 million pounds of measured and indicated contained U3O8. Azincourt, on the other hand, holds 18.2 million pounds of measured and indicated contained U3O8. That makes for a combined measured and indicated resource of 49.67 million pounds of contained U3O8. As for the inferred estimates, Macusani holds 30.09 million pounds of inferred contained U3O8; meanwhile, Azincourt adds a further 17.4 million pounds of inferred contained U3O8 to the equation for 47.49 million pounds of inferred U3O8.
As Macusani’s CEO, Dr. Laurence Stefan, states in a company statement, “[t]his transaction is a natural step in Macusani’s evolution of becoming a developer of one of the largest and most prospective uranium projects in the world.”
And sure enough, the Macusani Plateau is estimated to host roughly 100 million pounds of uranium in a small area. With the combined assets, Macusani will hold 942 square kilometers of land in the region.
Ted O’Connor, CEO of Azincourt, echoed Dr. Stefan’s statement, adding that “[o]nce combined, Macusani will offer one of the largest contiguous uranium resource bases, the potential for substantial synergies from a combined mine plan and exploration upside which is very rare to find.”
As part of the proposed transaction, both companies will see their management teams and boards of directors merge in order to provide Macusani with “deep expertise across key competencies including local operations management in Peru, uranium project development and exploration, relationship management with strategic investors and end-users as well as global finance and capital markets.”
Per the LOI, the combined management structure will see O’Connor appointed as CEO of Macusani and Dr. Stefan serve as president and COO. Also, Ian Stalker, chairman of Azincourt, will join Macusani’s six-member board of directors.
Speaking to the value of the transaction, Dr. Stefan notes that “Macusani over the years has developed an exceptional uranium project and this transaction enhances our project in a very significant manner. I look forward to the completion of this transaction and working with Ted O’Connor in not only advancing our world-class uranium project through feasibility and ultimately into production, but also in raising the market’s awareness about this unique and valuable asset.”
According to the press release, the transaction is expected to be completed in June 2014.
By the end of Thursday’s trading, Macusani shares were up 11.11 percent, at $0.10. Azincourt, on the other hand, traded for most of the day at $0.23, but closed slightly lower, at $0.22.
Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any company mentioned in this article.
