Aura Energy’s (ASX: AEE) Häggån uranium and polymetallic project in Sweden has attracted the likes of the €5.47 billion (A$7.2 billion) market capitalised Areva Mines SA (EPA: AREVA) as a potential partner.
The two companies have entered into a binding co-operation agreement under which Areva will undertake an agreed work program in relation to the project over an initial four month period.
The Häggån resource of 803 million pounds uranium places it in the top two largest undeveloped uranium resources that are compliant with ASX or TSX requirements, and Areva’s uranium experience adds significant value to the development potential of the project.
The partnership will assist in the development of Häggån, where Aura plans to begin a Pre-Feasibility Study by the end of 2013.
Significantly, discussions are expected to lead to a project valuation in excess of Aura’s current market value of A$27 million, and Aura retaining a substantial equity in the project.
Areva is a French multinational known mainly for its nuclear power assets, uranium mines in Niger and Canada, as well as other energy interests.
Häggån
The Häggån Inferred Resource was recently expanded to 803 million pounds U3O8 at 160 parts per million.
Aura has defined an additional exploration target of 440 to 840 million pounds U3O8, demonstrating potential for significant additional resource increases.
Drilling that has been used to define the current Resource covers only 25% of Aura’s permit areas at Häggån. The majority of the permits in the district remain untested.
Aura’s main Sweden projects, including Häggån, are based on the Alum Shales, which have been historically known as one of the largest depositories of uranium in the world.
Uranium was mined and extracted from the Shales in the 1960s and the mineralisation also contains significant amounts of molybdenum, vanadium, nickel and zinc.
A previously completed Scoping Study has demonstrated the economic viability of the project, with a net present value of US$1.85 billion and an internal rate of return of 49% for a nominal 30 million tonne per annum operation with a 25 year initial mine life.
The results of the Scoping Study place Häggån in the top five current and planned uranium producing operations.
Agreement terms
During the period of the co-operation agreement, Aura and Areva will work in good faith to finalise a Pre-Feasibility Study work program.
They will also conclude the terms of an Option Agreement and Joint Venture Agreement under which Areva may acquire an interest in the Häggån Project.
Areva’s interest will be earned in stages and will be conditional on paying an option fee and sole funding expenditure towards the Pre-Feasibility Study.
These outlays would imply a project value in excess of Aura’s current market value.
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