TORONTO, March 23, 2017 /CNW/ - U3O8 Corp.
(TSX: UWE), (OTCQB: UWEFF) ("U3O8 Corp." or the
"Company") reports on progress achieved in the quarter towards
driving down production cost estimates on its priority project, the
Laguna Salada Deposit in Argentina. The Company also reports
that it has decided, under IFRS rules, to write down the value of
its Colombian deposit in its 2016 year-end financial
statements. This is an accounting measure that reflects the
limited work undertaken in Colombia under the difficult conditions in the
uranium resource sector over the last three years, while available
funds have been focused on advancing the Laguna Salada Deposit in
Argentina. The Berlin Deposit in Colombia remains in good standing and will be
reactivated by the Company as soon as adequate funding becomes
available.
Prioritization of the Laguna Salada Deposit in Argentina
With the limited funding that has been available to the Company
during the downturn in the resource sector, and while uranium
prices sunk to their lowest levels in a decade in December 2016, the Company focused its
expenditure on its priority project, advancing it towards a
feasibility study in a cost-effective manner. The Laguna
Salada Deposit in Argentina is
considered the Company's top priority asset under current market
conditions for the following reasons:
- The deposit is flat-lying and shallow, with the
uranium-vanadium layer exposed at surface in some areas and
extending to a depth of only three metres in others. The
advantage of this geometry is that it allows for mining to begin in
the richest part of the deposit, where margins are highest,
resulting in a quick payback of the capital borrowed for
construction of the mine and plant, and freeing up cash flow to be
returned to shareholders as soon as possible;
- The Preliminary Economic Assessment1 on Laguna
Salada estimated cash costs of production of approximately
US$12 per pound of uranium in year
one, while the highest grade material is mined. New
discoveries of uranium and vanadium elsewhere in the Laguna Salada
Project area (see press releases dated January 11, January
19 and February 7, 2017)
returned grades that are similar to, or higher than, the grade of
the material modeled to be mined in year one. Hence, this
newly discovered material has potential to add to the Deposit's
resource and to improve its economics;
- Refinements to the way in which the uranium coating is removed
from pebbles and sand grains in the gravels offer potential for
greater efficiencies and lower production cost estimates.
Additional test work is currently being undertaken in Australia on this aspect of the Deposit.
Results of this test work are expected shortly;
- Environmental restoration would be done at the same pace as
mining. Once the bulk of the uranium is removed from the
gravel, the gravel would be replaced and replanted with indigenous
species – the aim being to leave the land in a better condition
than it was prior to mining, to the long-term economic benefit of
the landowners;
- There is a possibility that at least part of the power
requirement of the project could be generated by wind turbines
since Patagonia has an excellent wind resource. This creates
potential for U3O8 Corp. to provide uranium that is produced with a
low-carbon footprint that may provide marketing leverage in some
jurisdictions; and
- Argentina is a country that is
steadily increasing the proportion of electricity generated from
nuclear plants. All of the uranium used in Argentina is imported and the country would
benefit from security of local supply, the creation of jobs and tax
income from local production.
Write-down of Colombian Property for Accounting
Purposes
U3O8 Corp. has decided, in compliance with International
Financial Reporting Standards ("IFRS"), to take an impairment
charge of $7.7 million on its Berlin
Project in Colombia in its
year-end financial statements for 2016. One consideration
under IFRS rules is that impairment should be considered if there
has been less than optimal spending over the previous three year
period, which is the case on the Berlin Project since available
exploration funds have been prioritized for advancement of the
Laguna Salada Deposit. Significant future expenditure on
the Berlin Project may allow the Company to reverse the impairment
charge.
The Board and Management of U3O8 Corp. believe that Berlin is an exceptional deposit, containing a
unique suite of commodities which are in demand by the clean energy
industry including: uranium for nuclear energy; nickel, vanadium
and phosphate for batteries; and rare earth elements for use in
low-energy lighting and high-efficiency electric motors and
generators.
Exploration concession fees have been paid and the Berlin
Project is in good standing. The next critical step for the
advancement of the Deposit is pilot plant test work on the
efficiency of nanofiltration to concentrate the metals and
phosphate from the liquid into which these commodities are
dissolved from the mineralized rock. The Company has not had
the required $1.1 million in funds to
commit to this work. If the test work is successful, the use
of nanofiltration in the processing plant design may significantly
reduce the capital cost estimated for the Project in the
PEA2. Operating costs would also be expected to
fall and metal recoveries increase. Positive results from the
test work could markedly improve the economic robustness of the
Project.
Technical Information
Dr. Richard Spencer, P.Geo.,
C.Geol., President and CEO of U3O8 Corp. and a Qualified Person as
defined by National Instrument 43-101, has approved the technical
information in this news release.
About U3O8 Corp.
U3O8 Corp. is focused on exploration and development of deposits
of uranium and associated commodities in South America.
Potential by-products from uranium production include commodities
used in the energy storage industry – in the manufacture of
batteries - such as nickel, vanadium and phosphate. The
Company's mineral resources estimates were made in accordance with
National Instrument 43-101, and are contained in three
deposits:
- Laguna Salada Deposit, Argentina – a PEA shows this near surface,
free-digging uranium - vanadium deposit has low production-cost
potential;
- Berlin Deposit, Colombia – a PEA shows that Berlin also has low-cost uranium production
potential due to revenue that would be generated from by-products
of phosphate, vanadium, nickel, rare earths (yttrium and neodymium)
and other metals that occur within the deposit; and
- Kurupung Deposit, Guyana – a uranium resource has been
estimated in four veins within a uranium-zirconium vein
system. Resources have been estimated on four veins, while
consistent mineralization of the same type has been intersected in
scout drilling of an additional six veins, while yet other veins
require first-time exploration drilling.
Information on U3O8 Corp., its resources and technical reports
are available at www.u3o8corp.com and on SEDAR at
www.sedar.com. Follow U3O8 Corp. on Facebook:
www.facebook.com/u3o8corp, Twitter: www.twitter.com/u3o8corp
and Youtube: www.youtube.com/u3o8corp.
Forward-Looking Statements
This news release includes certain "forward looking
statements" related with the development plans, economic potential
and growth targets of U3O8 Corp.'s projects. Forward-looking
statements consist of statements that are not purely historical,
including statements regarding beliefs, plans, expectations or
intensions for the future, and include, but not limited to,
statements with respect to: (a) the low-cost and near-term
development of Laguna Salada, (b) the Laguna Salada and Berlin
PEAs, (c) the potential of the Kurupung district in Guyana, (d)
impact of the U- pgradeTM process on expected
capital and operating expenditures, and (e) the price and market
for uranium. These statements are based on assumptions, including
that: (i) actual results of our exploration, resource goals,
metallurgical testing, economic studies and development activities
will continue to be positive and proceed as planned, and
assumptions in the Laguna Salada and Berlin PEAs prove to be
accurate, (ii) a joint venture will be formed with the provincial
petroleum and mining company on the Argentina project, (iii)
requisite regulatory and governmental approvals will be received on
a timely basis on terms acceptable to U3O8 Corp., (iv) economic,
political and industry market conditions will be favourable, and
(v) financial markets and the market for uranium will improve for
junior resource companies in the short-term. Such statements are
subject to risks and uncertainties that may cause actual results,
performance or developments to differ materially from those
contained in such statements, including, but not limited to: (1)
changes in general economic and financial market conditions, (2)
changes in demand and prices for minerals, (3) the Company's
ability to establish appropriate joint venture partnerships, (4)
litigation, regulatory, and legislative developments, dependence on
regulatory approvals, and changes in environmental compliance
requirements, community support and the political and economic
climate, (5) the inherent uncertainties and speculative nature
associated with exploration results, resource estimates, potential
resource growth, future metallurgical test results, changes in
project parameters as plans evolve, (6) competitive developments,
(7) availability of future financing, (8) exploration risks, and
other factors beyond the control of U3O8 Corp. including those
factors set out in the "Risk Factors" in our Annual Information
Form available on SEDAR at www.sedar.com. Readers are cautioned
that the assumptions used in the preparation of such information,
although considered reasonable at the time of preparation, may
prove to be imprecise and, as such, undue reliance should not be
placed on forward-looking statements. U3O8 Corp. assumes no
obligation to update such information, except as may be required by
law. For more information on the above-noted PEAs, refer to the
September 18, 2014 technical report titled "Preliminary Economic
Assessment of the Laguna Salada Uranium-Vanadium Deposit, Chubut
Province, Argentina" and the January 18, 2013 technical report
titled "U3O8 Corp. Preliminary Economic Assessment on the Berlin
Deposit, Colombia."
___________________________
1
September 18, 2014 Technical
Report: "Preliminary Economic Assessment of the Laguna Salada
Uranium Vanadium Deposit, Chubut Province, Argentina.
2 January 18, 2013 technical report: "Berlin
Project, Colombia – Preliminary
Economic Assessment, NI 43-101 Report."
SOURCE U3O8 Corp.