Azarga's flagship Dewey Burdock project in South Dakota. (Image: Azarga)

The uranium market is moving in a different direction than other commodities, with the nuclear fuel continuing its move up over the past two weeks on its re-approach to US$40/lb, just yesterday hitting US$37.50/lb again. This is certainly a topical space and we at CEO.CA have been following the relative new comer to the segment, ex-Friedland / Ivanhoe soldier, Alex Molyneux and his Azarga Uranium (TSX: AZZ).

Today Azarga announced a resource upgrade and new PEA for its flagship Dewey Burdock project in South Dakota. The five page announcement was described by Molyneux as “blockbuster” so we made a quick effort to understand what it all means by asking him a few questions.

TH:What does this announcement mean in layman’s terms for the project and the company?

AM: The work we have done in terms of adjusting our mine plan and optimization has actually come out with a transformationally better project. Dewey Burdock was always good but it's really become the undisputed best uranium project out there in the uranium space. The initial capital expenditure was halved to US$27m changing the ramp-up schedule and re-timing the central processing plant construction. That's a lot more ‘bite sized’ amount of capital to raise. With that we build a mine that produces an average of one million pounds of uranium per year for 11-years. The annual cash operating cost will be less than US$19 per pound. It's quite amazing. Overall, Dewey Burdock is a project that as per the new PEA can generate US$30m a year in pre-tax free cash flows for 11 years… so IRRs are robust, even at current low uranium prices. At the current long-term contract price of US$50/lb, the IRR is 41%… but maybe I am getting into the jargon. What this means for Azarga in layman’s terms is that we have a uranium project that can move directly to production without being dependent on any “what ifs” regarding uranium price etc.

TH: How does it compare to competitors?

AM: Relative to the sector, this is a best quartile, possibly best decile project. OK so lets think who are our closest competitors. Would have to be the US ISR guys like Uranerz, Ur-Energy and Peninsula…  their flagship projects are Nichlos Ranch, Lost Creek and Lance. Our Dewey Burdock is the highest grade, by far the lowest initial capex per pound of production, second largest in terms of overall life of mine production and second lowest in costs.

The ongoing cost structure for our Dewey Burdock is lower than Cameco’s Athabasca properties… lower than Paladin’s. Thats the secret of in-situ recovery. I have been banging on about this before as you know.

TH: What's next?

AM: Well we have the Nuclear Regulatory Commission license. We need the EPA permit next, which we hope is coming soon. Then its all about project financing and construction.

For more on Azarga add them to your watchlist (AZZ.T) or check out the website at www.azargauranium.com

Read: Azarga Issues Upgraded Resource and Preliminary Economic Assessment for Dewey Burdock

Related: Azarga primed to ride uranium revival

The information contained in this article is for informational purposes only. It is not intended to provide legal, accounting, tax, investment, financial or other advice to you, and you should not rely upon the information to provide any such advice. This article is not to be construed as a form of promotion, an offer to sell securities or as a solicitation to purchase our securities. This article has been produced as a source of general information only.

Disclaimer for Forward-Looking Information

Certain statements contained herein constitute “forward-looking statements” within the meaning of applicable United States of America securities legislation and “forward-looking information” within the meaning of applicable Canadian securities legislation. All statements that are not historical facts, including without limitation statements regarding future estimates, plans, objectives, assumptions or expectations of future performance, are “forward-looking statements” or “forward looking information”. Such statements reflect the expectations of management at the time the “forward looking information” was posted; however, there is no assurance that these statements will prove to be true. We caution you that such “forward-looking statements” involve known and unknown risks and uncertainties, including: (1) any negative change in the law, regulatory or political environment which would negatively affect the Company’s ability to obtain all necessary environmental and regulatory approvals. licenses and permits, (2) the inherent uncertainties and speculative nature associated with uranium exploration, including the actual results of current exploration activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, possible variations in grade and ore densities or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents or other risks of the mining industry, (3) a decrease in the demand for and/or a decrease in the price of uranium, (4) an increase in the operating costs associated with the extraction and processing of the uranium, (5) any number of events or causes which may delay or cease exploration and development of the Company’s property interests, such as environmental liabilities, weather, mechanical failures, safety concerns and labor problems, (6) the risk that the Company does not execute its business plan, (7) inability to retain key employees, (8) inability to finance operations and growth, including the inability to raise the funding necessary to commence construction and complete the facility at the Dewey-Burdock Project, (9) an extended downturn in general economic conditions in North America and internationally, (10) an increase in the number of competitors with larger resources, and (11) other factors beyond the Company’s control. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in “forward-looking statements” or information, there may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There can be no assurance that any “forward-looking statements” or information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on “forward-looking statements” or information. The Company expressly disclaims any obligation to update any “forward-looking statements” other than as required by applicable law. For additional information regarding assumptions relied upon in making any “forward-looking statements” and on the risks and uncertainties that may cause actual results to differ materially from those anticipated in any “forward-looking statements”, please refer the our public disclosure filed with Canadian securities regulatory authorities on SEDAR at www.sedar.com under our profile, and in particular to the sections entitled “Disclaimer for Forward Looking Information” and “Risks and Uncertainties” in our most recently filed Management Discussion and Analysis, a copy of which is available on SEDAR.

Cautionary Note Concerning Technical Information

Unless otherwise indicated, technical information on this website regarding the Dewey Burdock Property is derived from the Company’s technical report entitled “Updated Technical Report on the Dewey-Burdock Uranium Project Custer and Fall River Counties South Dakota” with an effective date of March 1, 2010 prepared by Jerry Bush P. Geo. Such information is based on assumptions, qualifications and procedures, which are not fully described herein. Reference should be made to the full text of these technical reports, which were filed under the Company’s profile on SEDAR at www.sedar.com, you may also find the report here. Richard Clement is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and is responsible for and has approved the technical disclosure on this website.

Unless otherwise indicated, technical information on this website regarding the Centennial Property is derived from the Company’s technical report entitled “NI 43-101 Preliminary Economic Assessment Powertech Uranium Corp. Centennial Uranium Project Weld County, Colorado” with an effective date of June 2, 2010 prepared by Allan V. Moran, R.G., CPG and Frank Daviess, MAussIMM. Such information is based on assumptions, qualifications and procedures, which are not fully described herein. Reference should be made to the full text of these technical reports, which were filed under the Company’s profile on SEDAR at www.sedar.com, you may also find the report here. Richard Clement is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and is responsible for and has approved the technical disclosure on this website.

Unless otherwise indicated, technical information on this website regarding the Aladdin Property is derived from the Company’s technical report entitled “Technical Report on the Aladdin Uranium Project Crook County, Wyoming” with an effective date of June 21, 2012 prepared by Jerry Bush, P. Geo. Such information is based on assumptions, qualifications and procedures, which are not fully described herein. Reference should be made to the full text of these technical reports, which were filed under the Company’s profile on SEDAR at www.sedar.com, you may also find the report here. Richard Clement is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and is responsible for and has approved the technical disclosure on this website.

Unless otherwise indicated, technical information on this website regarding the Kyzyl Ompul Property is derived from the Company’s technical report entitled “NI 43-101 Technical Report on the Kyzyl Ompul Licence, Kyrgyz Republic” with an effective date of April 14, 2014, prepared by Stephen Hyland P. Geo. and Samuel Ulrich P. Geo. Such information is based on assumptions, qualifications and procedures, which are not fully described herein. Reference should be made to the full text of these technical reports, which were filed under the Company’s profile on SEDAR at www.sedar.com, you may also find the report here. Curtis Church is a Qualified Person under National Instrument 43-101 – Standards of Disclosure for Mineral Projects and is responsible for and has approved the technical disclosure on this website.

Disclosure of Mineral Reserves and Mineral Resources

Readers are advised that National Instrument 43-101 (“NI 43-101”) of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately. Readers should refer to the most recent annual information form of Azarga Uranium Corp. (“Azarga”) and other continuous disclosure documents filed by Azarga, available at www.sedar.com, for this detailed information, which is subject to the qualifications and notes set forth therein.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources

This website uses the terms “Measured”, “Indicated” and “Inferred” Resources. United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. United States investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.