Uranium Energy’s (NYSEMKT:UEC) share price was up 12.5 percent at close of day Tuesday (May 9) after the company announced that it has purchased the Reno Creek ISR project in Wyoming’s Powder River Basin.
According to a press release, the company has entered into a definitive share purchase agreement under which it will acquire all of the issued and outstanding shares of Reno Creek Holdings from Pacific Roads Resources Funds. Once the transaction is complete, Pacific Roads will have about a 9-percent stake in Uranium Energy.
Explaining the significance of the purchase, Uranium Energy President and CEO Amir Adnani said, “the acquisition of Reno Creek creates an industry-leading diversified pipeline of low-cost in-situ recovery (ISR) uranium projects when combined with our production-ready South Texas hub-and-spoke operations and exploration/development portfolio in Paraguay.”
Reno Creek a “strategic asset”
Reno Creek hosts a measured and indicated resource of 27.47 million tons grading 0.041 percent U3O8 and yielding 21.98 million pounds U3O8 at a grade-thickness cut off of 0.2. According to Uranium Energy, it could be expanded with additional drilling.
Pacific Roads completed a prefeasibility study for the project in 2014, but Uranium Energy plans to conduct a new prefeasibility study. The US Nuclear Regulatory Commission issued an operating license for Reno Creek in February, and it permits production of up to 2 million pounds of U3O8 per year.
Commenting further, Adnani said that Reno Creek “presents a rare opportunity to acquire a large, fully permitted, construction ready, and strategic low-cost ISR asset located in the United States.” Reno Creek is located 30 kilometers from Uranium One’s (TSX:UUU) Willow Creek project, and also shares the Powder River Basin with Cameco (TSX:CCO,NYSE:CCJ).
As mentioned, Uranium Energy has a number of other projects as well. Two ISR exploration projects are in Paraguay: the larger Oviedo project, which covers 500,000 acres in central Paraguay, and the Yuty project, which spans 290,000 acres. The firm’s Hobson processing plant is central to its assets in Texas, which also include the producing Palangana ISR mine and other sites in various stages of development.
The uranium market today
As uranium market watchers well know, the space suffered after the 2011 Fukushima nuclear power plant disaster in Japan. However, according to the World Nuclear Association there are now 60 reactors under construction in 15 countries. Most are in Asia, though there are major projects planned in Russia.
Overall, many believe a slow recovery is underway and expect 2017 to be better for uranium prices than 2016; Adnani himself has made similar comments. As of May 1, a pound of uranium was priced at $22.50, down $0.25 from April 24.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.