U3O8 Corp. looks ahead at 2015
January 15, 2015 (Source: CNW) — U3O8 Corp. (TSX: UWE, OTCQX: UWEFF, SSE: UWE), a Canadian-based company focused on exploration and development of uranium and associated commodities in South America, provides an outlook for the company in 2015.
U3O8 Corp. plans to continue to build value through:
- Showing resource growth potential – the preliminary economic assessment (“PEA”) completed on the Laguna Salada Project in Argentina shows that the deposit would be one of the world’s lowest cost uranium producers and that the project’s economics would be further enhanced on a larger resource. The PEA yielded a net present value (“NPV”) of US$55 million (at a 7.5% discount rate and US$60 per pound uranium price), although U3O8 Corp’s market capitalization is currently around $8 million. Doubling the deposit size and production rate would increase the NPV to an estimated US$184 million. To this end, exploration has been undertaken in the larger Laguna Salada district, results of which are expected to be reported in Q1 2015;
- Attracting strategic partners – based on a signed letter of intent, we are working to establish a local partnership to extend the exploration on the Laguna Salada Project. This partnership could expand the potential resource at Laguna Salada and better position the project for accelerated advancement subject to meeting certain conditions. Laguna Salada is also attracting interest from prospective strategic investors who are looking to secure future uranium supply and could potentially fund the project to production;
- Attracting investors in the region and accessing new capital in Latin America – on January 7, 2015, U3O8 Corp’s shares started trading on the Santiago Stock Exchange (“SSE”) in Chile through a secondary listing. This listing makes it easier for local investors to buy U3O8 Corp’s shares and will expand our South American reach onto MILA – Latin America’s largest trading platform comprising the Chilean, Colombian, Peruvian and Mexican stock exchanges – and could foster local buy-in for our projects and open up alternative financing opportunities for the company; and
- Developing the region’s leading frac sand play – through South American Silica (“SAS”), a strong land portfolio has been amassed near key shale basins, such as the giant Vaca Muerta in Argentina, with access to road, rail and deepwater ports to reach both domestic and overseas markets. Through a local partner, SAS’ first project is advancing towards potential production in 2015. Next steps are to also define initial resources towards proving up the potential of other frac sand projects in Brazil, Uruguay and Argentina. The size potential and quality of SAS’ frac sand targets is attracting the attention of frac sand producers who are essential to funding the development of these projects.
Market Outlook for Uranium and Frac Sand1
Uranium is one of the only commodities whose price is firming in the current resource market: the spot price has risen about 25% to over US$35 per pound (“lb”) from its June 2014 low, while the long-term price has risen 13% to US$49/lb in that same period. The recent price increase in the commodity suggests that utilities are moving to lock-in supply to shore up their dwindling stockpiles and underscores the prospects for U3O8 Corp. to be potentially among a handful of companies that could be in production as world supply is forecast to enter a sustained and growing shortfall from 2019.
The prospects for the frac sand market also remain promising, especially with the growing demand for domestically produced frac sand that will be needed to develop Argentina’s giant Vaca Muerta Shale Basin. Agreements to invest over US$3.9 billion were signed in December 2014 alone on the Vaca Muerta including deals with Shell, France’s Total Austral, Malaysia’s Petronas and Brazil’s Petrobras, showing that these oil majors are taking a longer-term view amid current low oil prices. With nine of the 12 OPEC countries needing oil prices over US$70 per barrel in order to balance their budgets, higher cost crude production would be expected to be cut before significant cuts are made by oil from shale producers. The average production cost of shale oil in the USA is US$50 per barrel, while Chevron has reported production costs of US$58 from its shale oil operation in the Vaca Muerta. While oil companies may drill fewer wells this year, shale production is becoming more efficient. Some of these efficiencies are due to the use of larger amounts of frac sand in each well, to the extent that US Silica estimates that frac sand usage will continue to expand in 2015 in spite of the recent weakness in oil prices. With almost all of Argentina’s frac sand currently imported; there is also an immediate need for local supply, which would contribute to lowering production costs.
Sources: Raymond James, UXC Consulting, Trade Tech, Globe and Mail, Upstreamonline.com, TCE Today, Wall Street Journal, http://www.vacamuertanews.com.ar/
Dr. Richard Spencer, P. Geo, President and CEO of U3O8 Corp. and a Qualified Person as defined by National Instrument 43-101 (“NI 43-101”), has supervised the preparation of, and verified the technical information in this press release relating to the company’s projects and PEAs.
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About U3O8 Corp.
U3O8 Corp. is focused on exploration and development of uranium resources and associated commodities in South America. The company’s uranium resources comprise three deposits defined in accordance with NI 43-101 located in Colombia, Argentina and Guyana:
- Berlin Deposit, Colombia – a PEA shows that Berlin could be a zero cash cost uranium producer thanks to revenue from by-products of phosphate, vanadium, nickel, rare earths (yttrium and neodymium) and other metals occurring in the same deposit;
- Laguna Salada Deposit, Argentina – a recent PEA shows this near surface, free-digging uranium, vanadium deposit is potentially amenable to low-cost mining and processing methods. Uranium would be produced at a cash cost of US$21.62/lb, well within the industry’s lower quartile of uranium cash costs; and
- Kurupung Deposit, Guyana – an initial uranium deposit in a large emerging uranium district.
Certain information in this release are forward-looking statements with respect to the development plans, economic potential and growth targets of U3O8 Corp’s current projects. Forward-looking statements consist of statements that are not purely historical, including statements regarding beliefs, plans, expectations or intensions for the future, and include, but not limited to, statements with respect to: (a) the low-cost, near-term production goal of Laguna Salada, (b) the Laguna Salada and Berlin PEAs, (c) the market opportunities for uranium in Argentina and internationally, (d) the potential of the Kurupung district in Guyana, and (e) the potential development of the frac sand market and SAS’ projects. Basis for such assumptions include that: (i) actual results of our exploration, resource goals, metallurgical testing, economic studies and development activities will continue to be positive and proceed as planned, and assumptions in the Laguna Salada and Berlin PEAs prove to be accurate, (ii) requisite regulatory and governmental approvals will be received on a timely basis on terms acceptable to U3O8 Corp., (iii) investment interest in South America will be positive, and (iv) economic, political and industry market conditions will be favourable. However, such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in the statements, including, but not limited to: (1) that a mine will be achieved on the Laguna Salada Project in compliance with current Chubut mining law, (2) that a mine will be achieved on the Berlin Deposit and other exploration projects, (3) that beneficiation test work will continue to be favourable and results from small scale metallurgical testing can be duplicated on a larger scale, (4) the inherent uncertainties and speculative nature associated with exploration results, resource estimates, potential resource growth, future metallurgical test results, changes in project parameters as plans evolve, (5) volatility of commodity prices; (6) dependence on regulatory approvals and changes in legislation, environmental compliance, community support and the political and economic climate, (7) availability of future financing in North and South America, (8) that production will be achieved on the Argentine frac sand project and frac sand potential will be realized on other targets, and (9) exploration risk and other factors beyond the control of U3O8 Corp. including those factors set out in the “Risk Factors” in our Annual Information Form available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. U3O8 Corp. assumes no obligation to update such information, except as may be required by law. For more information on the above referenced PEAs, refer to the September 18, 2014 technical report titled “Preliminary Economic Assessment of the Laguna Salada Uranium-Vanadium Deposit, Chubut Province, Argentina” and the January 18, 2013 technical report titled “U3O8 Corp. Preliminary Economic Assessment on the Berlin Deposit, Colombia.”
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>