The assets in the transaction include the Piñon Ridge mill license and related assets (the "Piñon Ridge Project") and certain other mining assets located along the Colorado-Utah border, including the Sunday Complex, the Willhunt project, the San Rafael project, the Sage mine, the Van 4 mine, the Farmer Girl project, the Dunn project and the Yellow Cat project (the "Mining Assets"). The Piñon Ridge Project and certain of the Mining Assets will be conveyed to the purchasers through the sale of one of the Company’s wholly-owned subsidiaries, which is also the licensee for the Piñon Ridge Project. The remainder of the Mining Assets will be conveyed to the purchasers through separate asset transactions involving other subsidiaries of the Company.
Upon closing of these transactions, each of which is expected to occur on or before October 15, 2014, the Company will receive in total approximately US$2.05 million, payable in a combination of cash, secured promissory notes, and the assumption by the purchasers of certain existing Company debt. In addition, the purchasers will assume all reclamation obligations and replace all existing reclamation bonds for the Piñon Ridge Project and Mining Assets, totaling approximately US$700,000. The purchasers will also reimburse the Company for certain holding and other carrying costs incurred from March 19, 2014 through closing of these transactions. Finally, the Company will retain a throughput royalty on the Piñon Ridge Project equal to US$3.00 per ton of ore fed through the facility, and a 1% royalty on the market value of all uranium, vanadium and other minerals recovered from the Mining Assets. These transactions are subject to regulatory approvals, including approval by the Colorado Department of Public Health and Environment of the change of control of the licensee of the Piñon Ridge Project.
Through these transactions, the Company expects to realize reductions in holding, permitting, litigation and compliance costs over the next several years related to these assets. The Piñon Ridge Mill is the first new uranium mill to be licensed in the U.S. in over 30 years. However, with the acquisition of the White Mesa Mill in 2012, the Company no longer needs to construct the Piñon Ridge Project in order to meet its planned production.
The Mining Assets include National Instrument 43-101 compliant uranium and vanadium resources, including approximately 4.8 million lbs. of U3O8 contained in 1.15 million tons of measured and indicated resources with an average grade of 0.21% U3O8. The Mining Assets also include additional inferred and historic uranium and vanadium resources.
Stephen P. Antony, the Company’s President and Chief Executive Officer stated, "Energy Fuels is continuing to focus its business strategy on projects that contribute to our ability to significantly increase uranium production as uranium prices recover. As a result, we are disposing of certain non-core assets, like those included in this transaction. We continue to believe in the long-term fundamentals of uranium markets, which will allow us the opportunity to significantly increase production as market conditions warrant. We do not expect the sale of these assets to materially impact the Company’s future production potential or scalability. In addition, we expect to continue our asset rationalization efforts, which may include the sale of additional properties in the future."
