African Mining Network

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AMN - NAMIBIA: Mega Uranium grants royalty option

Mega Uranium Ltd has granted an option to purchase its royalty on Paladin Energy's Langer Heinrich Uranium Project in Namibia to Uranium Royalty Corporation (URC). URC will issue common shares to Mega in payment of the $375,000 purchase price of the option.

URC may exercise the option and acquire the royalty for a price of $1.625 million, payable in cash and/or common shares of URC. This is at URC’s discretion, but only if URC’s shares are publicly-traded at the time of exercise. The option is exercisable for a period of three years.

The royalty is A$0.12 for each kilogram of yellowcake produced and sold from the Langer Heinrich property by certain subsidiaries of Paladin Energy Ltd and was acquired by Mega in 2006 as part of its acquisition of Redport Limited.

Mega Uranium is a Toronto-based mineral resources company with a focus on uranium properties in Australia and Canada and a portfolio of equity investments in uranium-focused public and private companies.

The Langer Heinrich Mine, which is operated by Langer Heinrich Uranium, a member of the Paladin Energy Group, has been transitioned into care and maintenance with a plant cleanout completed in early August.

The mine is at the foot of the Langer Heinrich Mountain in the Namib Desert in western Namibia and is near the major port of Walvis Bay and the tourist town of Swakopmund.

The mine is expected to remain on care and maintenance until the uranium spot price makes it economical to restart on a sustainable basis.

Paladin's primary focus is to maintain plant infrastructure and complete an operation review to assess project optimisation, cost reduction, production capacity and life of mine alternatives to allow for a restart when justified.

Several potential projects will be examined to further optimise the operation, reduce operating costs, extend its productive life and potentially increase throughput.