Okapi Resources Ltd (ASX:OKR) (FRA:26O) shares surged as high as 55% intra-day on Monday after signing a transformational binding agreement to acquire 100% of Tallahassee Resources, which holds a portfolio of large, high-grade uranium projects in the US.
Tallahassee has a 100% interest in mineral rights that cover about 7,500 acres in the Tallahassee Creek Uranium District of Colorado (Tallahassee Uranium Project) together with an option to acquire 100% of the Rattler Uranium Project.
The Tallahassee Uranium Project contains a JORC 2004 resource estimate of 26 million pounds of uranium (U3O8) at a grade of 540ppm U3O8, with significant exploration upside.
The Rattler Uranium Project includes the historical Rattlesnake open pit mine from which 285,000 tonnes of ore was mined between 1948 and 1954 at grades of 2,800ppm U3O8 and 10,000ppm vanadium (V2O5) for 1.6 million pounds of U3O8 and 4.5 million pounds of V2O5.
High-impact work programs to commence in 2H 2021
Okapi will pay the vendors of Tallahassee Resources 33.5 million new Okapi shares and 16.75 million options as consideration for the deal, subject to shareholder and statutory approvals.
The company has already received firm commitments from sophisticated and professional investors to raise about $2.84 million at 20 cents per share via a share placement.
Okapi will be well-funded with about A$6.3 million in cash and cash equivalents upon completion of placement with high-impact work programs to commence in 2H 2021.
Okapi executive director David Nour said: “This is a transformational opportunity for Okapi to become one of the most prominent uranium developers in the world.
“Through this acquisition, Okapi is perfectly placed to capitalise on the strengthening uranium market.”
The greater Tallahassee Creek Uranium District hosts more than 100 million pounds of U3O8 with considerable opportunity to expand the existing resource base by acquiring additional complementary assets in the district.
The Rattler Uranium Project is just 85 kilometres from the White Mesa Uranium Mill, the only operating conventional uranium mill in the US hence provides a near-term, low-capital development opportunity.
Rationale for the acquisition
US President Joe Biden’s administration has embraced nuclear energy to achieve its goal of a net zero carbon economy by 2050.
Okapi’s strategy is to become a leader in North American carbon-free nuclear energy by assembling a portfolio of high-quality uranium assets through accretive acquisitions and exploration.
The acquisition of Tallahassee provides Okapi immediate leverage to several large, high-grade North American uranium projects, together with direct access to a team who has in-depth knowledge of, and experience operating in, the North American uranium sector.
Carbon-free energy
Major forecasters expect electricity demand will grow an incremental 55% by 2035 as electric vehicle penetration continues to accelerate.
Electric car registrations increased by 41% in 2020 with 10 million electric cars on the world’s roads at the end of 2020.
As electricity demand increases, so does the need for reliable, emission free base load power.
Electricity generation is the largest and fastest-growing contributor to global carbon dioxide (CO2) emissions.
Nuclear power is one of the few energy sources capable of delivering baseload carbon-free energy around the clock and currently accounts for 55% of carbon-free electricity in the US.
National, strategic uranium reserve
Owners and operators of US nuclear power reactors purchased the equivalent of about 48 million pounds of uranium in 2019 with less than 12% purchased from domestic sources while a combined total of 42% was purchased from Russia (15%) Kazakhstan (18%) and Uzbekistan (9%).
In late 2020, the US Senate Committee on Environment and Public Works approved, with bipartisan support, a bill that advances a federal initiative to establish a national, strategic uranium reserve.
Forward work plan – Tallahassee Uranium Project
Tallahassee Resources is working towards declaring a 2012 JORC Mineral Resource estimate for the Tallahassee Project in the coming months.
Tallahassee anticipates then embarking upon a circa 10,000 metres drilling program to:
Expand the existing resource base;
Improve confidence in the existing resource base; and
Acquire samples that can be used for initial metallurgical test-work.
Depending on the results of this work, initial conceptual mine design work may be undertaken to help determine the most appropriate work programs to implement thereafter.
Tallahassee also considers there are opportunities to acquire additional mineral rights in close proximity to those it currently holds, with such areas providing opportunity to:
Expand the resource base through either discovery of additional resources on previously underexplored property or through acquisition of properties that contain known mineralisation, including, in some cases, historical resources; and
Enhance the economics of developing a stand-alone mining operation by expanding the project’s resource base.
Forward work plan – Rattler Project, Utah
Tallahassee intends undertaking initial reconnaissance work at Rattler in the coming months to endeavour to determine where historic drilling has been undertaken (based on ground disturbance).
If historical drilling data cannot be located, initial drilling programs are expected to target areas where high-density historical drilling is evident, as this is likely to correspond with trends of high-grade mineralisation.
Tallahassee also intends pursuing acquisition of additional mining claims in neighbouring areas.
Board appointment
The Tallahassee Uranium Project was previously under former ASX-listed explorer Black Range Minerals’ banner.
Between 2007 and 2014, Black Range carried out multiple drilling programs with more than 2,220 holes in the district for about 350,000 metres of drilling.
Black Range’s exploration work resulted in a JORC 2012 resource estimate within its landholdings of 90.4 million pounds of uranium oxide from ore grading an average 600 ppm uranium oxide.
Okapi’s purchase of Tallahassee Resources has been backed by previous founders and management of Black Range.
Former director and head of exploration in the US for Black Range, Ben Vallerine, will join Okapi’s board as a non-executive technical director.
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