| Tue 11 Jul 2006, 16:31 | | sxr Uranium One Inc. - News Release |
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SXR
SXR
sxr Uranium One Inc. - News Release
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 - Toronto Stock Exchange, Johannesburg Stock Exchange
NEWS RELEASE
July 11, 2006 Toronto, Ontario
Uranium One Enters into a Term Sheet and Exclusivity Agreement to Acquire
U.S. Energy"s Shootaring Canyon Uranium Mill and U.S. Uranium Properties
Toronto, Ontario and Johannesburg, South Africa -- sxr Uranium One Inc. (TSX
and JSE: SXR) today announced the signing of a term sheet and exclusivity
agreement with U.S. Energy Corp. and its affiliate, Crested Corp.
(collectively, "U.S. Energy"), for the acquisition of the Shootaring Canyon
Uranium Mill in Utah and the vendors" interests in a substantial land
package comprising 40,589 acres of uranium properties in Utah, Wyoming,
Arizona and Colorado.
Under the exclusivity agreement, in consideration for a US $750,000
exclusivity fee, Uranium One has been given the exclusive right to negotiate
definitive acquisition documentation consistent with the term sheet and to
carry out a detailed due diligence on the Shootaring Canyon Mill and the
U.S. Energy properties for a period of six months (which may be extended to
nine months).
Today"s agreement with U.S. Energy follows yesterday"s announcement by
Uranium One of the signing of an exclusivity agreement with Rio Tinto to
negotiate the acquisition of the Sweetwater Uranium Mill and its associated
uranium properties. The Sweetwater Mill and the Shootaring Canyon Mill are
two of the only four conventional uranium mills in existence in the entire
United States.
Neal Froneman, Chief Executive Officer of Uranium One, said: "The
acquisition of U.S. Energy"s Shootaring Canyon Mill and uranium property
interests is another significant step in our company"s rapidly developing
U.S. growth strategy. These assets, while attractive on their own, have the
added benefit of fitting extremely well with the Sweetwater Mill and its
land package. Together, the two acquisitions add up to more than the sum of
their parts and give us a strong foundation for the growth and expansion of
our U.S. uranium business."
Term Sheet
The term sheet provides for the payment on closing of US $50 million (less
the US $750,000 exclusivity fee) by way of the issuance of approximately 6.6
million Uranium One common shares (representing the volume weighted average
closing price of Uranium One"s shares on the TSX for the ten days
immediately preceding the signing of the exclusivity agreement). In
addition, Uranium One will pay US $20 million in cash to the vendors upon
achieving commercial production from the Shootaring Canyon Mill and US $7.5
million in cash upon the first delivery of mineralized material to the Mill
from any of the acquired properties. The term sheet also provides for a
royalty equal to 5% of the gross proceeds of the sale of commodities
produced from the Mill, to a maximum amount of US $12.5 million.
The purchase transaction is subject to, among other things, 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 the vendors, and to the receipt of all required
governmental and regulatory approvals, including acceptance by the Toronto
Stock Exchange.
The Shootaring Canyon Mill
The Shootaring Canyon Mill, located approximately 60 miles southeast of
Hanksville, Utah, was the last conventional uranium mill to be built in the
United States. The Mill was commissioned and operated for a period of four
months in 1982, meeting all applicable performance guarantees.
Approximately 30 tons of U3O8 was produced and shipped before the Mill was
mothballed due to declining uranium prices. The Mill has been maintained in
excellent condition since being placed on standby.
The Mill is an acid leach facility with a 750 ton per day throughput
capacity that could be upgraded to an estimated throughput rate of 1,000
tons per day. There is also potential to add a vanadium processing circuit
to the existing mill infrastructure using technology that has been used
successfully at other mill facilities. The Mill currently has a reclamation
license granted by the U.S. Nuclear Regulatory Commission. U.S. Energy is
working to convert the reclamation license to an operating license, and it
is anticipated that an operating licence will be granted in due course.
In October 2005, U.S. Energy reported that independent consultants Behre
Dolbear & Company had estimated the replacement value of the Shootaring
Canyon Mill to be US $80.5 million.
The U.S. Energy Uranium Properties
The U.S. Energy uranium properties consist of a land package of some 40,589
acres comprising eight separate claim groupings in the states of Utah,
Wyoming, Arizona and Colorado. Four of these claim groups (White Canyon,
Henry Mountain, Lisbon Valley and Sage Plains) are wholly-owned by U.S.
Energy; the other four (Sheep Mountain, Green River North and South, Burro
Canyon and Breccia Pipe) are held by U.S. Energy in joint venture with
Uranium Power Corporation (UPC). The acquired assets also include an
extensive database containing historical data from past producing uranium
mines, as well as exploration data from uranium projects ranging from
grassroots to advanced exploration status.
Sheep Mountain Claims
The most advanced of the U.S. Energy properties are the Sheep Mountain
claims in Wyoming. This claim group, which is held in a 50/50 joint venture
with UPC, consists of a land package of 72 federal lode mining claims
covering some 1,475 acres and one 640 acre state lease in the Crooks Gap
mining district, strategically located 30 miles to the north of the
Sweetwater Mill, immediately adjacent to Green Mountain. Uranium
mineralization is similar to Rio Tinto"s Jackpot Deposit, hosted within 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.
In 1999, Watts, Griffiths and McOuat estimated an historical resource at
Sheep Mountain of 1.66 million tons grading 0.258% U3O8, containing 8.6
million lbs of U3O8. This resource was based on a 0.15% U3O8 cut-off grade
and a minimum 3 feet thickness.
Other Properties
The other claim groups included in the assets to be acquired from U.S.
Energy, and the extent of U.S. Energy"s interest therein, are as follows:
- the White Canyon Project (100% interest), comprising 125 lode mining
claims covering 2,582 acres in the past-producing White Canyon district
of Utah within 85 miles of the Shootaring Canyon Mill;
- the Henry Mountain Project (100% interest), comprising 380 lode mining
claims covering 7,850 acres in the historic uranium-producing Henry
Mountains district of Utah within 40 miles of the Shootaring Canyon
Mill;
- the Green River North Project (50% interest) and Green River South
Project (35% interest, with an option to increase to 42.5% interest),
comprising, in the case of Green River North, 10 lode mining claims
covering 207 acres, and, in the case of Green River South, 456 mining
claims, covering 9,420 acres, plus 5 state mining leases covering some
2,900 acres, in Utah"s San Raphael mining district, some 100 miles from
the Shootaring Canyon Mill;
- the Lisbon Valley Project (100% interest), comprising 374 lode mining
claims and 12 patented claims covering some 7,975 acres in the Big
Indian District of the past-producing Lisbon Valley in Utah, 170 miles
from the Shootaring Canyon Mill;
- the Burro Canyon Project (50% interest), comprising 78 leased lode
mining claims and 50 owned claims covering some 2,645 acres in total,
in the past-producing Uravan Mineral Belt in Colorado, 200 miles from
Shootaring Canyon Mill;
- the Breccia Pipe Projects (50% interest), comprising 64 lode mining
claims covering 1,322 acres in the past-producing Arizona Strip in
Arizona, 485 miles from the Shootaring Canyon Mill; and
- the Sage Plains Project (100% interest), comprising 53 lode mining
claims and 2 state mining leases in Utah and 50 claims in Colorado
covering in total some 2,848 acres in the southern portion of the
Uravan Mineral Belt in Utah and Colorado, 165 miles from Shootaring
Canyon Mill.
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 Shootaring Canyon Mill and the U.S. Energy
uranium properties can be found on our website at www.uranium1.com.
BMO Capital Markets is acting as financial advisor to Uranium One with
respect to the company"s acquisitions in the United States, including the
U.S. Energy transaction described herein as well as the acquisition of the
Sweetwater Uranium Mill and associated assets from Rio Tinto Energy America
announced on July 10, 2006.
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: 11/07/2006 04:31:40 PM Produced by the JSE SENS Department
