Toro Energy has revealed proposals to spin out its portfolio of non-core nickel, gold, and base metal assets in Western Australia to focus solely on uranium.
Projects flagged for the spin out into a brand new IPO include Toro’s wholly owned Dusty Nickel project, 50km east of the town of Wiluna and the Yandal gold and base metals project.
Toro says the proposed demerger follows a detailed review of its asset base and the results returned from its Lake Maitland uranium deposit scoping study.
Lake Maitland is part of the company’s flagship Wiluna uranium project in Western Australia. Impressive metrics from the scoping study define a stand-alone project with a pre-tax net present value of $610 million and an internal rate of return of 41 per cent, based on a triuranium octoxide (U3O8) price of $70 per pound.
The study estimates capital expenses at a manageable US$189 million with a 2.5-year payback period. All-in sustaining costs of just US$28.02 per pound compare well against spot prices of about US$90 a pound and are expected to deliver an EBITDA of almost $1.77 billion over the life of the mine.
Management has further indicated that there is likely to be an increase in the value of Lake Maitland once an update to the scoping study is completed.
Toro Energy’s Executive Chairman Richard Homsany said: “With strong financial metrics highlighted by the Lake Maitland Uranium Scoping Study, and the expected transformational increase in NPV following a soon to be completed refresh, we believe it is the right time to consider demerging our non-core projects to allow Toro to focus solely on expediting the development of our globally significant uranium assets. Toro believes a demerger and anticipated IPO of the demerged company provides a compelling opportunity to unlock the considerable underlying value of these highly prospective nickel, gold, and base metal assets, while allowing Toro to aggressively pursue the development of its Wiluna Uranium Project.”
The Wiluna uranium project, about 750km north-east of Perth, is fully owned by Toro. Its total mineral resource estimate sits at 52 million tonnes grading at 548 parts per million uranium for 62.7 million pounds. There is also an extra vanadium resource of 96.3 million tonnes grading 322ppm for 68.3 million pounds of vanadium.
Uranium is back in vogue again due to the expected future demand for clean energy and with Australia’s ability to provide “yellowcake” to energy-hungry nations, this plan may well put Toro in the driver’s seat to help meet that demand.
Management says any demerger is expected to be conducted by way of an equal capital reduction in Toro and an in-specie distribution of its shares in the spun-out entity to its shareholders.
One of the projects to go into the new float will be Toro’s Dusty Nickel project about 50kms to the east of Wiluna in WA. Toro says it has already identified about 15kms of strike where it says massive nickel sulphides are potentially lurking.
The Yandal gold and base metals project south east of Wiluna is just 20kms north east of the revered Bronzewing gold mine and a number of other solid deposits. Toro says the project already has some 70 targets on its books and these will be explored by the new IPO company.
Toro shareholders may end up with the best of both worlds from the latest corporate play with a swag of shares in the new float and a gold project to explore at a time when gold prices are touching its highs. And with uranium similarly in historically elevated pricing territory, Lake Maitland may well end up being a company maker in its own right.
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By Matt Birney
