Valor Resources has entered into a binding agreement with ASX-listed Firetail Resources to offload an 80 per cent interest in its Peruvian copper assets for an upfront cash payment of $750,000 and a package of 15 million shares and 20 million performance rights in the junior explorer.
Interestingly, the share placement will earn Valor more than 20 per cent ownership of Firetail and will also give its executive chairman George Bauk a seat at Firetail’s boardroom table.
Under the agreement, Firetail is set to inherit Valor’s experienced in-country management and technical team, in addition to the recently-announced earn-in agreement with leading global gold and copper producer Barrick Gold Corporation covering the Charaque project.
The Barrick deal will see a tidy US$800,000 (AU$1.2 million) being tipped into the till with a guaranteed exploration expenditure of US$3 million (AU$4.5 million) over five years. Barrick will pick up a 70 per cent interest in the operation for its role in the operation.
Valor says its strategic divestments are a win-win. The company maintains an ongoing interest in its prospective copper assets at a time when demand is set to skyrocket amid a looming shortage of the red-metal that is instrumental in the green-energy revolution.
And while it sits back and watches Firetail and Barrick do all the heavy lifting, the funds raised from the asset sales will be used to accelerate its uranium hunt in Canada’s world-class Athabasca Basin as uranium prices rise and investor interest surges.
The Athabasca Basin is the world’s highest-grade source of uranium, with an average grade of 2 per cent diuranium pentoxide – more than 10 times the global average.
Valor Resources executive chairman George Bauk said: “Having identified significant potential across both the Picha and Charaque Copper Projects over the past few years, we believe that the best way to move these assets forward is via the divestments to Barrick and Firetail. This will allow us to focus on our high-potential Canadian uranium portfolio while retaining exposure to the upside in Peru via a free-carried interest in these assets. We believe that this structures the Company appropriately of the future while crystallising value for shareholders from our efforts in Peru over the past few years.”
Uranium investment has been the chagrin of many nations because of a wrestle between the source’s ability to generate clean and reliable energy amid the potential dangers associated with nuclear accidents, and the disposal of nuclear waste.
But nuclear power remains an important part of the global energy mix in the quest to reach net zero by 2050.
While some countries are phasing out their nuclear power plants following the Fukushima disaster in 2011, others are investing in new ones. China is leading the charge, building more nuclear power plants than any other nation and with plans to increase its nuclear capacity by more than 50 per cent in the next decade.
In that time, the International Atomic Energy Agency (IAEA) predicts that global uranium demand will increase by more than 25 per cent.
Uranium prices hit a 14-month high of US$57.75 (A$86.37) per pound last month, spurred on by the ongoing Ukrainian-Russian war and looming shortages, with some leading forecasters suggesting prices could hit highs of up to US$75 (A$112) per pound later this year.
It suggests Valor’s timing could be spot on as it refocuses its attention on the yellowcake.
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