Acquisition

RNS Number : 4027C

Niger Uranium Limited

01 September 2008

 

For immediate release

1 September 2008

NIGER URANIUM LIMITED

('Niger Uranium' or 'the Company')

Acquisition of the Henkries uranium project

Highlights

• Niger Uranium to purchase 74% of Namakwa Uranium (Proprietary) Limited (Namakwa), owner of the Henkries uranium deposit (Henkries Deposit) under prospecting license (885/2007PR) (Prospecting License). The Company is confident that the Henkries Deposit will become South Africa's first open pit uranium mine with an internal target date of late 2011.

• The Henkries Deposit, previously explored by Anglo American, includes a historical non code compliant resource estimate of 4.18 million tonnes at 405 ppm U3O8 containing 3.72 Mlbs U3O8, using a 100 ppm cut-off grade.

• Anglo Operations Limited ('AOL') conducted its feasibility study in 1979 on the project and in addition to the resources above, identified a 5km by 1.3km zone of mineralisation referred to as Henkries North, along strike from the existing project area; initial geological modeling and limited drilling in this area confirms this mineralised zone of  U3O8.

• As the results of the comprehensive historical exploration have been determined by MSA Geoservices (MSA) to be credible, Niger Uranium believes that it should be able to fast track the Henkries Deposit to production in the medium term.

Acquisition summary

The Board of Niger Uranium is pleased to announce that it has signed a share purchase agreement (the 'SPA') for the acquisition of URU Henkries Limited ('URU Henkries'), a private company which, on completion of the acquisition by Niger Uranium will have a 74 per cent. interest in the Henkries uranium project located in the Northern Cape province of South Africa.

Immediately prior to completion, URU Henkries (a newly formed company which has not traded to date) will acquire 74 per cent. of the issued share capital of Namakwa Uranium (Proprietary) Limited ('Namakwa') from Aardvark Uranium Limited ('Aardvark'), a private uranium exploration company incorporated in the British Virgin Islands. Namakwa is a South African private limited company which holds the Henkries project prospecting license. 

Henkries Project Status

The Henkries Prospecting License (885/2007PR) covers 58,375 hectares of ground, and includes a historic (non-code compliant) inferred resource estimate prepared by AOL in 1979 of 4.18 million tonnes at 405 ppm U3O8 containing 3.72 Mlbs U3O8, using a 100 ppm cut-off grade. The Board of Niger Uranium intends to verify this estimate by additional exploration in order to upgrade it to a JORC compliant resource estimate in accordance with the AIM Rules. The Henkries deposit occurs very close to surface and a strip ratio of 2.35:1 was previously calculated. Uranium mineralisation is hosted by recent fluvial and lacustrine sediments. The main body of mineralisation is contained within a well defined palaeochannel approximately 2000 metres wide, and the average depth to the base of the ore body is 10 metres. 

A feasibility study was completed by AOL on the Henkries Project in 1979. Drilling of over 7,500 metres was completed and in addition detailed metallurgical studies were carried out. All data and reports pertaining to this work are available to Niger Uranium. Metallurgical test work carried out determined that a simple process route would allow recoveries of at least 81 per cent. Niger Uranium hopes to increase this recovery rate, as the subsequent advancement in technologies allows similar operations around the world to deliver final recoveries of over 88 per cent.

MSA  has provided a technical review of the geological and resource aspects of AOL's feasibility study over the Henkries Project as well as exploration potential of surrounding areas and considers these to be technically sound. MSA has provided Niger Uranium with recommendations on how to verify the feasibility study data and will be providing technical input and assistance to Niger Uranium, so that a code compliant resource estimate at the Henkries Project can be quickly established.

On receipt of the necessary regulatory approvals, Niger Uranium will initiate an exploration programme to verify the historical resource numbers so that a code-compliant resource statement can be established. Some 500 metres of triple-tube diamond core verification drilling is planned with an additional 4,000 metres of resource delineation drilling in the Henkries North area. In addition, the property includes potential for up to a 30 kilometre extension of the palaeochannel. Niger Uranium plans to systematically explore and test this area.  

The Henkries Project is located 80 kilometers north of the regional centre of Springbok and is easily accessed by well maintained roads. A 22 kVA power line and a major water pipeline from the Orange River pass within 2 kilometres of the deposit. 

Consideration and conditions

Niger Uranium will acquire the entire issued share capital of URU Henkries, for an initial consideration of US$1.75 million in cash together with 8,500,000 new Niger Uranium ordinary shares (representing 7.5 per cent. of the enlarged issued share capital of Niger Uranium). There is also a deferred consideration payable based on Niger Uranium establishing in due course a JORC Code compliant 'Indicated' and 'Measured' uranium resource for the Henkries Project. The maximum additional consideration amounts to a further US$5.5 million in cash and a further 1,500,000 new Niger Uranium ordinary shares. Accordingly, the aggregate maximum consideration to be paid by Niger Uranium amounts to 10.0 million new Niger Uranium ordinary shares (representing 8.7 per cent. of the second enlarged issued share capital of Niger Uranium) and US$7.25 million in cash. The initial cash consideration will be financed from Niger Uranium's existing cash resources. Any deferred cash consideration that might become payable in the event that a resource is established, which the Directors of Niger Uranium do not anticipate would arise before the middle of 2009, would subsequently be financed by a fundraising at that time or a realisation of the Company's other investments as appropriate.

The SPA is subject to regulatory approval in the form of the consent of the South African Minister of Minerals and Energy (the 'Minister') as required in terms of Section 11 of the South African Mineral and Petroleum Resources Development Act, No. 28 of 2002 (MPRD Act) pursuant to a 'change of control' occurring in respect of control of the prospecting license resulting from the acquisition. 

In accordance with the terms of the SPA, the Initial Cash Consideration  will be transferred to Conyers Dill & Pearman, solicitors based in the BVI to be held in escrow. Application will be made for the Initial Consideration Shares to be admitted to AIM, and on admission, these will be issued and allotted to Conyers Dill & Pearman's nominee also to be held in escrow. On receipt of the consent of the Minister in accordance with section 11 of the MPRD Act, the Initial Cash Consideration and Initial Consideration Shares shall be transferred to Aardvark. Until such time as the consent is received, all rights and dividends deriving from the Initial Consideration Shares shall accrue for the benefit of Aardvark. In accordance with the terms of the escrow agreement with Conyers Dill & Pearman, if the consent of the Minister is not received, or if the transaction is unable to complete in accordance with the terms of the SPA, the Initial Cash Consideration shall be repaid to Niger Uranium and the Initial Consideration Shares shall be sold on the open market through the Company's broker with the proceeds returned to Niger Uranium.

Namakwa's black economic empowerment ('BEE') partner, Gilstra Exploration cc, owns the remaining 26 per cent. of Namakwa.  AOL has  a 10 per cent. free-carry interest in the Henkries Project. 

Background financial information on Namakwa

To date, Namakwa has conducted limited exploration on the property. The Company expects that the total exploration costs in respect of Henkries will amount to approximately US$1.8 million over the next 12 months. To date Namakwa has only generated costs in relation to the administration of the license which have been borne by Aardvark through inter-company loans. These loans will be written off on completion. The accounts for Namakwa are currently unaudited but audited accounts are expected to be released by 30 September 2008. In the year ended 28 February 2008, Namakwa's un-audited loss before taxation amounted to ZAR630,000 (equivalent to US$79,000) and net assets amounted to ZAR53,000 (equivalent to US$7,000). 

John Sanders, Director and CEO of Niger Uranium, said:

'We are delighted to have entered into this agreement with Aardvark Uranium Limited and believe that the previous work done on the project in the late 1970's, will allow the Company to fast track the preparation of its own feasibility study, including confirmation drilling and possible strike extensions. The partnership to be formed with our BEE partners Gilstra and the access to historical data and advice from Anglo Operations Limited should enhance the probability of success.'

Dr Norman Lock, (CGeol FGS, PrSciNat, MGSSA), Consulting Coordinator at MSA Geoservices, is the qualified person responsible for Niger Uranium and has supervised Messrs M Venter, M Hall and R Wadley who verified the data reported above. MSA Geoservices is a consultant to Niger Uranium, with no interest in the company and has consented to the inclusion in this announcement of its name in the form and context in which it appears. Exploration data is acquired by Niger Uranium using best practice quality assurance and quality control protocols. 

GLOSSARY

Feasibility Study

A comprehensive study of a deposit in which all geological, engineering, operating, economic and other relevant factors are considered in sufficient detail for it to reasonably serve as the basis for a final decision by a financial institution to finance the development of the deposit for mineral production.

JORC

Australasian Joint Ore Reserves Committee

Lacustrine sediments

Sediments deposited in a freshwater lake environment

Lbs

Pounds

Paleochannel

An ancient, currently inactive river and stream channel system.

Uranium

Heavy silvery-white metallic element found in several minerals, notably uraninite and carnotite.

U3O8

Triuranium Octaoxide

For further information:

John Sanders, Chief Executive Officer

Gordon Cassidy, Finance Director

Tel: [phone]

Beaumont Cornish Limited
Michael Cornish

Tel: [phone]

Forward-Looking Statements:

This press release contains statements that are 'forward-looking'. Generally, the words 'expect,' 'intend,' 'estimate,' 'will' and similar expressions identify forward-looking statements. By their very nature, forward-looking statements are subject to known and unknown risks and uncertainties that may cause our actual results, performance or achievements, or that of our industry, to differ materially from those expressed or implied in any of our forward-looking statements. Statements in this press release regarding the Company's business or proposed business, which are not historical facts, are 'forward looking' statements that involve risks and uncertainties, such as estimates and statements that describe the Company's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition or result to occur. Since forward-looking statements address future events and conditions, by their very nature, they involve inherent risks and uncertainties. Actual results in each case could differ materially from those currently anticipated in such statements.

These forward-looking statements speak only as of the date they are made.

 

END

 

 

ACQUUUBPBUPRUQG