VANCOUVER – U3O8 (UWE-T) is adding money to its coffers and new properties to its Argentinean portfolio through an all-share deal to acquire Calypso Uranium (CLP-V).
U3O8 already holds sizeable land packages adjacent to Argentina's largest known uranium deposits, which are the Cerro Solo deposit in Chubut province and the Sierra Pintada deposit in Mendoza province. Both deposits are owned by the National Atomic Energy Commission of Argentina (CNEA).
Calypso's holdings are remarkably synergetic. The junior uranium explorer has a set of tenements near Cerro Solo that are adjacent to U3O8's Cerro Solo property; combining the land packages will give U3O8 a large land position in an area of active uranium exploration. CNEA is currently drilling at Cerro Solo while Cameco (CCO-T, CCJ-N) is funding a 30,000-metre drill program at UrAmerica's Central Plateau project, which surrounds Cerro Solo.
Calypso also holds land near Sierra Pintada, just like U3O8, and combining those land packages will give U3O8 control over all potential extensions of Sierra Pintada mineralization. Sierra Pintada is the largest and highest-grade uranium deposit ever discovered in Argentina.
Calypso also brings roughly $4 million to the table, which means U3O8 will have $4.5 million in cash to finance its ongoing exploration and development efforts. U3O8 does not have any operating mines – the company's most advanced project is the Berlin project in Colombia, where a preliminary economic analysis recently determined that a $400-million investment could build a mine capable of producing 530 tonnes of U3O8 annually for 15 years. Importantly, the cash cost to produce each pound of uranium oxide is nil because the operation would also produce phosphoric acid, nickel, vanadium, and yttrium, the values of which cover the cost of mining and extracting the uranium.
To seal the deal, U3O8 is giving Calypso shareholders 0.4 UWE shares for each CLP share held. After the issuance, U3O8 will have 158.6 million shares outstanding and former Calypso shareholders will own approximately 13% of UWE's outstanding count.
"With this transaction, U3O8 solidifies its position as a leading uranium company in Argentina at a time when the country is calling for local uranium resource to fuel its growing nuclear reactor fleet," said U3O8 president and CEO Richard Spencer in a statement. "We also consolidate our strategic landholdings that cover likely extensions of Argentina's two largest known uranium deposits."
In announcing the Calypso deal, Spencer made sure to emphasize Argentina's growing need for uranium. He pointed out that Argentina's third nuclear reactor is set to come online later this year, at which point nuclear will be responsible for 9% of the country's power needs. The contract to develop a fourth reactor is currently out for tender. In addition, Argentina recently signed nuclear cooperation agreements with China and the United Arab Emirates.
U3O8 investors were nonplussed at the deal and left the company's share price unchanged at 19¢. In recent weeks UWE shares have been languishing near the lower end of their 52-week range, which runs from 19¢ to 45¢. Calypso's share price gained 2¢ on news of the deal to reach 6.5¢.
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