Uranium Energy (NYSE American: UEC) has delivered an economic initial assessment on its 100% owned Roughrider project in northern Saskatchewan, confirming what the company calls an "an elite underground development project" near its other existing properties in the McClean Lake/Rabbit Lake area.
Using an 8% discount rate and a long-term uranium price of US$85/lb. of U3O8, the project is assessed a post-tax net present value of US$946 million, an internal rate of return of 40%, and a payback period of 1.4 years.
The assessment is based on an estimated production of 61.2 million lb. U3O8 over a nine-year mine life, averaging 6.8 million lb. U3O8 per year. The life-of-mine average mill feed grade is 2.36% U3O8, with an a recovery rate of 97.5%.
Initial capex is estimated at US$545 million, including a proposed mill with a nominal throughput of 400 tonnes per day. This, says UEC, would give Roughrider one of the lowest capex profiles in all of Canada. The project's all-in sustaining cost is pegged at US$20.48/lb. U3O8.
"This initial economic assessment marks a pivotal milestone for Roughrider, validating it as a top-tier, high-margin operation with a clear path to development into a world-class mine and mill," commented Uranium Energy's CEO Amir Adnani.
Roughrider represents a conventional uranium project covering 6 sq. km. of the eastern Athabasca Basin region that hosts a cluster of other uranium development/exploration projects. UEC estimates that there are 20 uranium deposits, four current and historically producing mines, and two uranium mills within 100 km of Roughrider, with the closest being Orano’s McClean Lake mill about 13 km to the east.
Roughrider was previously the flagship asset of Hathor Exploration Ltd., which made the uranium discovery in 2008 and later was acquired by Rio Tinto for US$550 million. The following years, Rio Tinto made substantial progress on Roughrider's pre-development and environmental baseline work.
In 2022, the Australian miner decided to sell the project to UEC for US$150 million, less than a third of what it paid for and one-sixth of the project's after-tax NPV calculated under the current environment.
Since acquiring the project, UEC has focused on updating its resource estimate, which, as of Nov. 5, 2024, totalled 699,000 tonnes grading 1.81% U3O8 for 27.9 million lb. U3O8 in the indicated category and 620,000 tonnes grading 2.45% U3O8 for 33.4 million lb. U3O8 in the inferred category. This estimate was included in the initial assessment.
On top of the economics and resources outlined in the assessment, the company also noted the potential for further value creation through recent exploration drilling and the discovery of the Roughrider North deposit.
Shares of Uranium Energy were down 2.9% to US$7.74 by 11:45 a.m. ET Friday, dropping the company's market capitalization to US$3.2 billion.
November 12, 2024
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