Strathmore Minerals benefits from ties to Bayswater Uranium and Peninsula Energy
There is evidence of uranium making a bullish comeback in the next few years. Prices should return to pre-Fukushima levels or about USD$ 68/lb. China plans to build 100 reactors by 2020 and Japan has just elected a pro-nuclear Prime Minister; that this should happen in the land of the Fukushima disaster suggests that more uranium will be needed to meet an inevitable rise in uranium demand. One of the emerging uranium plays already benefiting from the forthcoming uranium demand surge is Strathmore Minerals Corp (‘Strathmore’, TSX: STM). Strathmore has secured important off-take and supply agreements, pointing to favorable long term prospects for the project. South Korea’s ‘Korea Electric Power Corp.’ (KEPCO) has recently signed a joint venture agreement to develop the Gas Hills Project (an open pit mine) in Wyoming. Strathmore also has a joint venture with Japan’s Sumitomo, known as the Roca Honda (RHR LLC) underground uranium district in New Mexico, for which it recently announced a favorable PEA. Roca Honda is one of the largest uranium projects in the United States. Strathmore will also benefit from previous projects in which it has maintained a position.
Strathmore has worked on other uranium developments such as the Pine Tree-Reno Creek project in Wyoming. Strathmore sold this project to Bayswater Uranium Corporation (“Bayswater”). At the time of the sale Strathmore retained a 5% gross production royalty (which Bayswater could repurchase, as stipulated then, for USD$10 million. That transaction also resulted in Strathmore owning 4,422,807 common shares of Bayswater, or about 20% of Bayswater issued and outstanding shares of Bayswater. The deal, at the time, helped to enhance Strathmore’s working capital, giving the company the ability to advance the Roca Honda, New Mexico and Gas Hills projects. Yesterday, Bayswater Associate (TSX.V: BYU) has announced the completion of a new NI 43-101 Technical Report fort its Reno Creek Project with Measured and Indicated Resources doubling to 21.9 Million Pounds of Uranium while the “Inferred” resource is 1.6 million tons at an average grade of 0.050%, containing 1.6 million pounds of U3O8.
The uranium resources are found in five Resource Units: North Reno Creek, Southwest Reno Creek, Moore, Bing, and Pine Tree. The findings of the Technical Report represent an approximate doubling of the Measured and Indicated resources for the Reno Creek Project compared to previous reports by Charles D. Snow, in September, 2009 and by Bayswater. The increase is attributed to a re-estimation of some Inferred resources in the Snow reports to the Indicated resources as well as the discovery of substantial new resources, mainly in the Southwest Reno Creek Resource Unit, as a consequence of AUC drilling 905 holes since 2010.
The Reno Creek Project is located approximately 40 miles south of Gillette, Wyoming and it is within a geologic horizon of two operating ISR uranium facilities (with three more in construction). Meanwhile, in 2009, Strathmore sold seven state uranium mineral leases to Strata, receiving 5,000,000 common shares in Peninsula in return for leases covering 5,640 acres in northeastern Wyoming. Peninsula retained an option to purchase a part of or the whole Strathmore royalty. The Peninsula Royalty value is 4% and it has a purchase optio price of USD$ 4 million over a period of three years.The sale was, as in the Bayswater case, prompted by Strathmore’s decision to advance its main uranium projects at Roca Honda and Gas Hills. On December 10, 2012, Peninsula Energy Ltd. (Peninsula) announced it had raised $36 million from Blackrock and Pala to fund construction at its uranium Lance Projects. Under the agreement, BlackRock will hold 10% of Peninsula’s share capital. The proceeds from the issue of the Notes and Shares will be used to complete the pre-SML construction from deep disposal wells to the central processing plant (CPP) and ancillary roads. Peninsula has also applied for Industrial Development Bonds (IDB’s) from the Wyoming Business Council for US$70 million; the application has been supported, meaning the bonds will complete the debt financing requirements for the Lance Project, enabling completion of the central processing plant (CPP), CPP expansion, satellite ion exchange plant and well-field development.
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