Alexander Molyneux

Azarga Uranium Corp Chairman Alexander Molyneux – Photo: Jerome Favre/Bloomberg

The Toronto Stock Exchange will have a new diversified uranium play if a proposed combination of publicly traded Powertech Uranium (TSX:PWE) and privately held Azarga Resources goes to plan, forming Azarga Uranium Corp.

Powertech is currently advancing the Dewey Burdock ISR Uranium project in South Dakota, and Azarga is Powertech’s largest shareholder, with 45%. Following the combination, Azarga will own 77% of the combined entity, with Powertech’s shareholders holding 23%.

The proposed combination will bring Azarga’s $2.1 million in cash and $11 million in undrawn convertible credit facilities to Powertech (converting at $.15 p/s, whereas Powertech last traded at $.08), and will see three new projects enter the company, providing diversification away from permitting risk at Dewey Burdock.

We spoke to Alexander Molyneux, Chairman of Azarga Resources, by phone late Tuesday afternoon. Mr. Molyneux was formerly head of Metals & Mining Investment Banking, Asia, at Citigroup, and is known to have deep connections in the Far East. He was also formerly CEO of SouthGobi Resources, the largest coal producer in Mongolia.

Molyneux tells us that Dewey Burdock is the next ISR mine to be built in the USA. It has the highest grade of all potential projects, and is due for permitting in the next 90 days.

Richard Clement, who is CEO of Powertech, will lead the combined company, with Mr. Molyneux becoming Chairman.

Three other assets will come into the fold via the Azarga side, which owns 80% of Kyzyl Ompul, the largest uranium deposit in the Kyrgyz Republic, just a stones throw from Kazakhstan’s uranium assets. Kyzyl Ompul has a historical, Soviet era resource estimate of 47 million pounds, which the company will attempt to upgrade to 43-101 compliance in the coming weeks.

Azarga also brings a 34% interest in Black Range Minerals, an Australian listed company which is developing the 90 million pound Taylor Ranch deposit in Colorado, U.S.A. Mr. Molyneux tells me Black Range is gathering environmental data before it can apply for its permits in a couple of years time.

The combined company will also own a 12% interest in Anatolia Energy’s Temrezli Project in Turkey, which received its mining license in September of last year. Temrezli has the potential to be a low cost uranium producer with cash costs estimated at $22.30 per pound. Molyneux told me he would like to increase Azarga’s interest in Anatolia if the opportunity presents itself.

In today’s news release, Alexander Molyneux, Azarga’s Chairman, stated, “The scale, diversification and committed financing associated with this Transaction creates a uranium play that provides shareholders with diversified exposure to a recovering sector.”

Powertech will call a meeting of its shareholders to seek approval for the proposed combination.

Read: Powertech Uranium Corp. to Merge With Azarga Resources Limited to Create Azarga Uranium Corp.