Cauldron Energy (ASX:CXU) has received $2 million in placement funds and will now resume drilling at its wholly-owned Bennet Well uranium deposit in Western Australia.
A resource update is also expected in early July based on results from drilling carried out in late 2014.
The funds were received from director and major long term Chinese shareholder Derong Qiu.
This underlines shareholder confidence in the company as demand for nuclear power increases in China.
Cauldron has also received a $0.8 million tax rebate under the Federal Government’s Research and Development Tax Incentive Scheme.
The company now plans to resume the drilling program in early August 2014. Subject to the results of this drilling, a second resource update is expected.
Tony Sage, executive chairman, said:
“We welcome this funding, as it allows Cauldron to progress this exciting uranium project to coincide with the planned growth in nuclear power from the developing world.”
Drill Program
The company had previously drilled 6,319 metres of a planned 10,000 metres exploration drilling program at Bennet Well in late 2014.
It now plans to resume the remaining drilling in early August 2015.
Subject to the results of this drilling, a second resource update is expected along with an Exploration Target for the region.
Bennet Well will also be funded next year to conduct the initial field leach trial for the final test for use of in-situ recovery mining.
Funding
Cauldron has received A$1.71 million in cash from Qiu with the balance of A$0.29 million planned to settle outstanding director fee payments owing to him in respect of his past services.
In accordance with the Placement Agreement, the shares to be issued to him are subject to shareholder approval.
During June 2015, the company received A$0.8 million from the Australian Taxation Office under the Research and Development Tax Incentive Programme relating to the 2014 financial year.
Chinese Demand
China’s confidence in uranium resources is understood to be based on the exponential growth in nuclear power both in China and in the developing world.
The published Chinese plans to expand its nuclear power base from the current approximate 2% of total energy mix to above 20% represents a substantial increase in uranium usage in the 1-2 decades against a background of 7% annual Gross Domestic Product growth.
Sourcing sufficient supply for this expansion is a significant risk to China’s growth plans.
Cauldron’s low cost medium term potential production from Bennet Well combined with the blue sky upside from the Yanrey region is viewed by the company to be of high value to the Chinese nuclear industry.
The exploration intellectual property gained at Bennet Well can now be leveraged into the prospective Yanrey region.
Analysis
Cauldron Energy is now funded to resume drilling at its Bennet Well uranium deposit in Western Australia.
Already, the company expects a resource update to be released in early July with a further update possible from the upcoming drilling program.
The company is also active in Argentina where the changing political mood is expected to generate positive news flow.
Given successful project hurdles achieved, Cauldron is well funded for its projects next year, with drilling and other activity to provide news flow into 2016.
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