Timing! Azincourt Uranium (AAZ.V) options 70% of Athabasca project next to AREVA

Well, that happened.

Not even 24 hours after an Equity.Guru story noting tired old Azincourt Uranium (AAZ.V) seemed to be receiving undue attention from the market, it has announced a big deal.

The company will take up to 70% of a Skyharbour (SYH.V)/Clean Commodities (CLE.V) Western Athabasca property that rubs right up alongside a larger property that French uranium giant AREVA tied up recently.

The East Preston project has received a lot of attention of late, but AREVA landing in the neighbourhood set tongues waging, as the big player had, until recently, moved away from prospecting. Their leap into the Preston was their first move back to exploring, and brings with it the likelihood of expansive work being done in the region.

Why does Azincourt like the play? I’m guessing all of this:

  • The Preston Project is one of the largest tenure land positions in the Paterson Lake region and currently consists of 121,148 hectares strategically located near NexGen Energy Ltd’s high-grade Arrow deposit, Fission Uranium Corp’s Triple R deposit and AREVA/Cameco/Purepoint’s joint venture (Spitfire).
  • AREVA recently optioned 49,635 hectares of the Preston Project for up to $7.3 million in exploration expenditures (see Skyharbour News Release dated March 9, 2017)
  • Over CDN$2 million in exploration expenditures on the East Preston Project over the past three years.
  • Several high priority drill targets identified within multiple prospective exploration corridors delineated through recent geophysics and ground evaluation.

In a nutshell, they can roll right into already delineated drill targets in what amounts to perhaps the ultimate ‘me too’ project. They’re quite literally surrounded by monsters. Arrow is a beast. Spitfire has some seriously heavy shoulders behind it. Fission just doesn’t stop drilling off the chart numbers.

So here’s what likely happens next:

AREVA drills hot and heavy and either finds great stuff, in which they’ll come hunting for AAZ to tie up the area, or they get numbers that are meh enough to keep at it. A full-on miss seems unlikely, as we know this area is the Persian Gulf of Uranium.

Azincourt, in the meantime, drills on the cheap to earn in, and they either hit great numbers and someone (AREVA or otherwise) comes knocking, or they hit meh numbers and keep looking.

The old Vancouver mining strategy is to not spoil a property by actually putting drill holes in it, but Azincourt needs to do so in order to earn up their 70%, so we’re going to get data. There’s no airborne needed as that’s been done, so they’ll have a good idea of where to stick their hardware already.

$4.7 million has been spent on Preston exploration to date, with almost half of that spent on the East plot Azincourt just nabbed.

AREVA’s involvement in this play is no small thing. In fact, should things take off and others decide they want to buy in, AREVA has a right of first refusal to take more of the deal.

Mostly, it means tired old Azincourt, which had floated about the Athabasca on its back for the last year-plus with no news and no prospects other than to wait for Fission to work its deal, is back in the game.

What’ll it cost?

Under the terms of an option agreement (the “Option Agreement”) entered into with the Property Owners, Azincourt has been granted the option to acquire a seventy per cent (70%) interest in the East Preston Project by incurring an aggregate of CDN$2,500,000 of staged expenditures and paying an aggregate of CDN$1,000,000 in staged cash payments as follows:

DateConsiderationWork Obligation
On execution of Option Agreement$150,000Nil
On or before March 27, 2018$150,000$250,000
On or before March 27, 2019$300,000$750,000
On or before March 27, 2020$400,000$1,500,000
TOTAL$1,000,000$2,500,000

Additionally Azincourt has agreed to issue to the Property Owners an aggregate of 4,500,000 common shares upon receipt of regulatory approval to the Option Agreement. These common shares will be subject to a restriction on resale for a period of approximately one year from their date of issuance.

The stock raced today to $0.265, before a late day sell-off by folks taking profits (the stock was under $0.10 in January) knocked it down a few cents from the high.

I bought back at $0.20, when it was showing a bit of wriggle after months of coma, so today’s news is nice. Marking this one up as good DD. Hope you got to benefit.

One side note: Clean Commodities made some coin out of this deal, especially as its grabbing a bunch of AAZ stock in the deal. With an existing market cap of just $4.5 million, and having also benefited from AREVA’s buy in, I would expect that’s a straight up arbitrage deal at current valuation.

— Chris Parry

FULL DISCLOSURE: I bought AAZ stock on the open market. They are not a client.

 

Leave a Reply

Be the First to Comment!

Notify of
avatar
wpDiscuz