| Mon 10 Jul 2006, 16:42 | | sxr Uranium One Inc - Enters into an Exclusivity A |
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SXR
SXR
sxr Uranium One Inc - Enters into an Exclusivity Agreement with Rio Tinto
to Acquire the Sweetwater Uranium Mill and Green
Mountain Uranium Properties
sxr Uranium One Inc
(Formerly Southern Cross Resources Inc.)
(Incorporated in Canada)
(Registration number: 15096422420)
Share code on the JSE: SXR & ISIN: CA87112P1062
Share code on the TSX: SXR & ISIN: CA87112P1062
("Corporation")
26 Wellington Street East, Suite 820
Toronto, Ontario M5E 1S2
Trading Symbol: SXR - The Toronto Stock Exchange
NEWS RELEASE
July 10, 2006 Toronto, Ontario
sxr Uranium One Enters into an Exclusivity Agreement with Rio Tinto to
Acquire the Sweetwater Uranium Mill and Green Mountain Uranium Properties
Toronto, Ontario and Johannesburg, South Africa -- sxr Uranium One Inc. is
pleased to announce that it has been selected by Rio Tinto Energy America,
Inc. ("RTEA"), a wholly-owned subsidiary of Rio Tinto plc, as the preferred
bidder for RTEA"s Sweetwater Uranium Mill and associated Green Mountain
uranium properties located in south-central Wyoming.
Uranium One and RTEA have also entered into an exclusivity agreement under
which Uranium One, in consideration for the payment of a US $1 million
exclusivity fee, has been granted the exclusive right to negotiate
definitive acquisition documentation consistent with the terms of its offer
and to carry out detailed due diligence on the Sweetwater Mill and Green
Mountain Properties for a period of six months (which may be extended to
nine months with the agreement of the parties).
Offer Terms
Under the terms of its offer, Uranium One will pay RTEA US $110 million on
closing, of which US $65 million will be payable in cash and US $45 million
will be paid by way of the issuance of approximately 6.1 million Uranium
One common shares. In addition, Uranium One will issue to RTEA on closing
2.5 million common share purchase warrants, exercisable between September
1, 2007 and September 30, 2010 at an exercise price of approximately Cdn
$9.50 (representing a 15% premium to the volume weighted average trailing
price of Uranium One"s common shares in the 10 day period ending prior to
the signing of the exclusivity agreement). The offer includes a 1% gross
royalty payable to RTEA on revenue generated from the sale of uranium
produced from the acquired assets.
In addition, Uranium One will make one-time payments to RTEA depending on
the level of uranium prices over the first five years of commercial
production from the acquired uranium assets. The maximum value of these
payments is equal to US$ 40 million.
The purchase transaction is subject, among other things, to the completion
to Uranium One"s satisfaction of its due diligence investigations, to the
execution of definitive documentation and to the approval of the boards of
directors of Uranium One and Rio Tinto plc, and to the receipt of all
required governmental and regulatory approvals, including acceptance by the
Toronto Stock Exchange.
Neal Froneman, CEO of Uranium One, commented: "Today"s announcement is a
significant step towards one of the key strategic goals we set for
ourselves as a company in 2005 - acquiring the capacity to mine and process
uranium in the United States.
The U.S. is the world"s largest consumer of U3O8, accounting for
approximately 26% of annual global production, more than 96% of which comes
from non-U.S. sources. Competition for U3O8 is becoming more intense, as
the U.S. and other countries around the world turn increasingly to nuclear
power for their energy requirements. Against this backdrop, secure sources
of supply and milling capacity in the United States will become
increasingly attractive for U.S. utilities. The acquisition of the
Sweetwater Mill - one of only four conventional uranium mills in the entire
United States - and the Green Mountain uranium deposits will enable us to
play a significant role in meeting U.S. energy needs in the years ahead,
and contribute significantly to our growth as a company."
The Sweetwater Mill
The Sweetwater Mill is located some 65 km northwest of the Town of Rawlins,
in south-central Wyoming"s Great Divide Basin. The Mill is an acid leach
facility, with a 3,000 ton per day throughput capacity. The Mill was built
at a cost of US $123 million, equivalent to about US $300 million in
today"s dollars. The Mill operated between 1981 and 1983 and has been on
standby status since mid-1983. During its three years of operation, the
Sweetwater facility produced a total of 1,292,000 lbs U3O8 from a total of
2,340,535 tons of ore (sourced from an adjacent, now depleted orebody which
has since been reclaimed), at a reported recovery rate of 90%.
The Sweetwater Mill has been professionally mothballed and is in excellent
condition; the Mill also holds a performance-based operating licence from
the U.S. Nuclear Regulatory Commission, which was renewed in 2004 for a 10-
year term.
The Green Mountain Properties
The Green Mountain Properties comprise some 19,000 acres of land holdings,
consisting of 2,000 acres of patented claims, 12,000 acres of unpatented
claims and leases from the State of Wyoming covering some 5,000 acres
located in the Great Divide Basin. Several uranium deposits have been
identified by previous operators within this land package, the largest of
which is the Jackpot Deposit, located some 30 km north of the Sweetwater
Mill. Uranium deposits owned or controlled by third parties are located
elsewhere in the Great Divide Basin; several of these are in close
proximity to the Sweetwater Mill.
The Jackpot Deposit
Uranium mineralization in the Great Divide Basin occurs mainly in the
Battle Spring geological formation, a Tertiary age formation consisting of
fluvial stream deposits of thick, medium to very coarse-grained, poorly-
sorted arkosic sandstones and conglomerates. At Jackpot, uranium
mineralization occurs in the Battle Spring formation below Green Mountain.
Jackpot mineralization occurs as dark grey to black interstitial fillings
and impregnations; the principal uranium minerals are uraninite and
coffinite.
In 1992, Mineral Resources Development, Inc. confirmed an historic resource
estimate for Jackpot prepared in 1990 by Anaconda Minerals Company of 14.8
million tonnes at 0.195% U3O8, containing some 57.7 million lbs U3O8 based
on a cut-off criteria of 6 feet of 0.10% U3O8. The estimate was based on
historical drilling, including 100 drill holes completed on approximately
400-foot centres in the 1980"s and an additional nine holes drilled in
1992. The historical resource estimate is considered to be reliable and is
relevant to Uranium One"s assessment of the property and its exploration
potential; however, it does not incorporate the resource categories defined
in National Instrument 43-101 and has not been independently verified by
Uranium One"s Qualified Person for this property.
In the late 1990"s, the operators of the Jackpot property developed a mine
plan based on twin 8,800 foot declines, which were driven some 2,000 feet
into Green Mountain before work was halted in 1998 due to falling uranium
prices. The declines have since been plugged and the portals reclaimed.
Phase II, Desert View and Jan
The Green Mountain land package also includes the Phase II, Desert View and
Jan properties where previous operators have estimated historic uranium
resources. These estimates pre-date 43-101, and Uranium One is not in a
position to verify or comment on these estimates. While the historic
resource estimates may be indicative of the potential of these properties,
no reliance is being placed by Uranium One thereon.
All resource estimates quoted herein are based on prior data and reports
obtained and prepared by previous operators and pre-date NI 43-101.
Uranium One has not completed the work necessary to verify the
classification of the mineral resource estimates. Uranium One is not
treating the mineral resource estimates as NI 43-101 defined resources
verified by a qualified person. The historical estimates should not be
relied upon. The Green Mountain properties will require considerable
further evaluation, which Uranium One intends to carry out in due course.
The Qualified Person responsible for the preparation of information of a
scientific and technical nature contained herein is Ms. Jennifer Smith,
P.Geo., Senior Vice President, Corporate Development, sxr Uranium One.
A map showing the location of the Sweetwater Mill and the Green Mountain
Uranium Deposits can be found on our website www.uranium1.com
About sxr Uranium One
sxr Uranium One Inc. is a Canadian uranium and gold resource company with a
primary listing on the Toronto Stock Exchange and a secondary listing on
the JSE Limited. The Corporation owns the Dominion Uranium Project in South
Africa and the Honeymoon Uranium Project in South Australia, and is
actively pursuing growth opportunities in the western United States. The
Corporation holds a 79% interest in Aflease Gold Limited, which owns the
Modder East gold project in South Africa. Through a joint venture with
Pitchstone Exploration Ltd., the Corporation is also engaged in uranium
exploration activities in the Athabasca Basin of Saskatchewan.
For further information please contact:
Neal Froneman Chris Sattler
Chief Executive Officer Vice President, Investor
Relations
Tel: + 27 11 482 3605 Tel: +1 416 350-3657
Cautionary note concerning forward-looking statements and disclosure of
mineral resources: Statements in this release that are not historical facts
are "forward-looking statements" involving known and unknown risk and
uncertainties which are beyond the ability of the Corporation to control or
predict and which could cause actual events or results to differ materially
from those anticipated in such forward-looking statements.
To receive the Corporation"s news releases by email, contact John Fraser,
Corporate Communications at john@uranium1.com or Chris Sattler, Vice
President, Investor Relations, at chris@uranium1.com. The TSX has neither
approved nor disapproved of the information contained herein.
Date: 10/07/2006 04:42:30 PM Produced by the JSE SENS Department
