RAMPING up its strategy to become one of the world’s top middle-tier uranium suppliers, Toro Energy is set to acquire the Lake Maitland uranium project from Mega Uranium.
The new acquisition is 90km southeast of the first mining targets in Toro’s Wiluna project – the Centipede and Lake Way deposits. Toro will acquire eight exploration licences, two exploration licence applications, three prospecting licences, a granted mining lease and five miscellaneous licences, as well as the uranium rights for a further six exploration licences.
Toro managing director Dr Vanessa Guthrie said the acquisition would support the company’s ability to commercialise the Wiluna project. Through integration into the Wiluna project, it would add economic benefits and increase the mine’s life to more than 20 years.
Toro reported that the all-scrip acquisition deal was valued at $36.9 million and would see Canadian-based Mega gain a 28 per cent stake in Toro. Mega executive vice president corporate affairs Richard Patricio and executive vice president Australia Richard Homsany would join the Toro board. Upon completion of the deal, Toro would also receive a cash injection of $3.5 million.
By integrating the new acquisition into the Wiluna project, Toro expected its regional resource base to increase by 42 per cent to 76 million pounds of uranium oxide.
Based on Lake Maitland’s resources, the acquisition would cost Toro US$1.45 per pound of uranium oxide.
Listed on the Toronto Stock Exchange, Mega Uranium is a leading uranium explorer and developer with projects in Australia and Cameroon, Africa.
“The deal puts Toro not only at the forefront of Australia’s new uranium development sector at a time there will be a supply squeeze from 2015 onwards, but adds bench strength to our share register and our project development endeavours through the strategic relationship with Mega, which has diversified interests in global uranium exploration and development,” Dr Guthrie said in a statement.
“The acquisition of Lake Maitland together with Mega’s recently announced merger with Rockgate, are indicative of the dynamic positioning now taking place in the global uranium industry – and Toro’s move on Lake Maitland is aimed at ensuring Australia has a spearhead in this new momentum.
“Specifically, the Lake Maitland acquisition is a transformative deal for Toro and will further enhance the investment case for prospective partners.”
Dr Guthrie explained that Lake Maitland would be a medium term prospect for Toro, as it still required government environmental approval prior to development. She said significant environmental baseline studies had been completed for the project, but formal documentation for public assessment was not yet underway; Toro expected approvals to take between two and three years from the time of documentation being submitted, but it first needed to undertake a technical study of Lake Maitland.
Additionally, the company planned to undertake an integration study during the remainder of 2013, to optimise the benefits for processing uranium from the Lake Maitland project together with the Wiluna project. Therefore, the company’s immediate focus would remain on the financing, development and commissioning of the already approved Wiluna project. “Toro, as it has evidenced over the past four year approvals process to secure Wiluna’s first stage go-ahead, will continue to work with all governments (local, state and federal) and the local community interests to develop WA’s first uranium mine,” Dr Guthrie stated.
The new asset would be included in the definitive feasibility study for Wiluna, which was scheduled to begin in the second half of 2014.
“As Lake Maitland includes high grade blocks comprising 6.4 million tonnes at 881ppm [parts per million] (500ppm cut-off), we plan to target increasing the overall blended head grade from the Wiluna deposits, which we believe will significantly decrease operating costs particularly in the first 10 years of operations,” she said.
“The resource increase also gives us options on expanding the processing scale of Wiluna above 1.3mtpa and that can only further improve project economics.”
Mega has two strategic partners in the Lake Maitland project – JAURD International Lake Maitland Project (JAURD) and Itochu Minerals & Energy of Australia (IMEA) – which have a pre-existing option to acquire a 35 per cent interest in Lake Maitland for US$39 million and participate in financing and development.
“[The acquisition] also provides Toro with the potential for significant strategic and financial benefit for the development of Wiluna through Toro’s inheritance of the relationship with the project partners,” Dr Guthrie said.
“Upon successful completion of the transaction, we will welcome Mega to our share register and look forward to working closely with JAURD/IMEA as development of Wiluna and Lake Maitland is progressed through existing and required new approvals to respective final investment decisions.”
The acquisition is subject to shareholder and Foreign Investment Review Board approval.
