A new uranium junior to watch

POSTED ON February 26, 2014 BY Tommy Humphreys
CATEGORY Azarga Uranium,

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.

Tommy Humphreys

Tommy Humphreys, 30, is an entrepreneur, investor and writer from Vancouver, Canada. He founded CEO.CA, a popular junior mining and Canadian finance blog, in 2012. He has been the president of Pacific Website Company Inc., a private marketing and web development company, since 2007. Tommy has authored articles for Globe and Mail, Financial Post and others. He speaks at select conferences. Reach him by email: tommy@ceo.ca. Follow him on Twitter: @TommyHump More →

Twitter: @tommyhump

tommyhump@gmail.com

Tommy Humphreys

Twitter: @tommyhump

tommyhump@gmail.com

Disclaimer:

Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The owner, editor, writer and publisher and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any significant positions will be disclosed explicitly. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. Thomas Humphreys, Pacific Website Company Inc., and other entities in which he has an interest, employees, officers, family, and associates may from time to time have positions in the securities or commodities covered in these publications or web site. We reserve the right to buy and sell such securities or commodities without notice to readers. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Thomas Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in these publications or web site.

Forward-Looking Statements: This article may include certain "forward-looking information" within the meaning of Canadian securities legislation. Forward-looking statements include predictions, projections and forecasts and are often, but not always, identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "forecast", "expect", "potential", "project", "target", "schedule", budget" and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions and includes the negatives thereof. All statements other than statements of historical fact included in this release, including, without limitation, statements regarding the potential of the Company's properties are forward-looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Forward-looking statements are based on a number of material factors and assumptions. Important factors that could cause actual results to differ materially from Company's expectations include actual exploration results, changes in project parameters as plans continue to be refined, future metal prices, availability of capital and financing on acceptable terms, general economic, market or business conditions, uninsured risks, regulatory changes, delays or inability to receive required approvals, and other exploration or other risks detailed herein and from time to time in the filings made by the Company with securities regulators. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ from those described in forward-looking statements, there may be other factors that cause such actions, events or results to differ materially from those anticipated. There can be no assurance that forward-looking statements will prove to be accurate and accordingly readers are cautioned not to place undue reliance on forward-looking statements which speak only as of the date of this article. The Company disclaims any intention or obligation, except to the extent required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Always do your own due diligence. We seek safe harbor.