Alligator Energy Ltd (ASX:AGE) is set to accelerate its transition from a junior explorer and development company into a bona fide uranium producer with a global supply profile and a matching market cap.
This will be made possible with the development of its strategic relationship with Traxys North America LLC, the US arm of global commodities trading group and one of the top 10 global uranium covering the Americas, Europe, Australia and Asia.
With Traxys, Alligator has one of the most experienced uranium management, advisory and board teams on the ASX.
Traxys strategic partnership
Alligator CEO Greg Hall said: “This exciting strategic partnership with Traxys will provide expanded opportunities for Alligator in the project development, uranium offtake and targeted acquisition arenas.
“ … the Traxys agreement adds exceptional experience towards our goal of becoming a future uranium producer.”
Under an agency agreement signed in May, Traxys will provide uranium marketing services for future uranium production, long-term offtake contracting, project development financing and assist in uranium project acquisition opportunities.
Alligator believes the agreement will provide substantial value to shareholders through:
➢ Support to accelerate Alligator’s development of the Samphire Uranium Project in Australia and contract sales book;
➢ Leveraging Traxys’ market intelligence, financing strength and customer relationships with nuclear utility uranium buyers to maximise future product pricing and project revenues;
➢ Working with Alligator on continued evaluation of external uranium resource opportunities to develop a future supply pipeline;
➢ Potential for uranium oxide (U3O8) inventory finance and logistics support;
➢ Consideration of project development finance up to US$15 million to support project start-up;
➢ In combination with Alligator’s management, board and advisory team, this creates one of the most capable and experienced physical uranium investment ‘partnerships’ on the ASX.
Uranium market
The Sprott fund increased its at-the-money (ATM) capital raising facility from US$300 million to US$1.3 billion during the quarter, prompting a flurry of buying activity of both equities, spot uranium and spot UF6 (converted uranium).
This highlights the relatively reduced quantities currently available through traditional spot market sources.
In a research note, Morgan Stanley (NYSE:MS) highlighted its forecast mine supply of 128 million pounds (Mlbs) U3O8 for 2021, while it is expected nuclear power plants will consume 182 Mlbs, therefore 54 Mlbs will have to be drawn from inventories and secondary sources.
There are significant policy changes within the US and the EU, which now define nuclear as a low carbon electricity source, and a number of countries have outlined clear aims for net-zero emissions, with timing ranging from 2030 to 2050.
France and Finland have outlined plans for future carbon-free energy - an expansion of civilian nuclear generation, including new modern large reactors and SMR reactors.
The UK has announced plans to investigate the potential for new small modular reactors (SMR) to support its existing nuclear fleet and Poland has also declared a range of MoUs signed for the evaluation of SMRs.
About 55 large reactors are under construction globally, with 18 in China and hundreds more planned and proposed.
Placement to accelerate key projects
Alligator Energy undertook a A$10 million placement to institutional, sophisticated and professional investors to fund key work on the Samphire Project this year and extend and expand this into further advanced pre-development project work during 2022/23.
The additional funds will also enable the company to fast-track work on the key target project in the Alligator Rivers Uranium Province (ARUP).
Alligator Rivers Uranium Province
The company is also developing the Nabarlek North Project within the ARUP in Australia's Northern Territory.
Planned geophysics (IP and ground gravity) are now being targeted for early dry 2022 with preferred contractors unavailable this year.
This delay will give the opportunity for the full support of the Samphire drill program and allow utilisation of preferred geophysics methods and contractors.
A Mine Management Plan has been lodged with the NT Department of Industry Travel and Trade (DITT) to facilitate these works in 2022.
Alligator is confident the combination of previous datasets with upcoming IP and gravity survey data will facilitate targeted and cost-effective RAB and reverse circulation (RC) drilling in the Nabarlek North area.
It believes there is significant potential in the Nabarlek area, combined with more effective and efficient exploration due to the reduced sandstone cover.
Alligator’s belief is that the second phase of discoveries will come from the shallow subsurface using modern exploration techniques.
Samphire Uranium Project
The company has already started the pre-planning work for the proposed resource drilling to enhance the existing Blackbush deposit resource.
It has identified two key areas of work, which will be completed over the next two years.
The first area of work is to progress the current year’s planned resource drilling program, ANSTO test work on recovered core, and finalisation of a scoping study during the first half of 2022.
The second area of work is to plan and establish a Samphire uranium extraction in-situ field leach trial during 2022 and into 2023, along with increased resource and exploration drilling while starting initial environmental studies coupled with the early initiation of project approvals.
Immediate work underway includes:
➢ Sonic core drilling at Blackbush to commence, followed by rotary mud drilling and downhole logging;
➢ Drill core for ANSTO testing, with results targeted for A1 2022; and
➢ Updated Blackbush JORC compliant resource statement and scoping study in the first half of 2022
Big Lake Uranium
During the upcoming quarter, Alligator will commence integration of the Big Lake Uranium EM survey interpretation with other publicly-available datasets, including geology logs and downhole geophysics from historic uranium drill holes and petroleum wells, together with the plethora of seismic data gathered in the project area by the Cooper Basin oil and gas explorers.
Alligator sees opportunities in reprocessing deep seismic data to resolve the shallow geology of the Tertiary cover sediments that host uranium deposits elsewhere in South Australia.
The ultimate aim is to resolve and map the 3D geology of sand bodies, including palaeochannels, which could potentially host mineralisation above the Cooper Basin oil and gas fields, akin to the uranium-producing Chu-Sarysu Basin in Kazahkstan (40% of world uranium production in 2020).
Once the basin architecture is established, Alligator will plan drill holes to systematically test the Tertiary sediments for roll-front uranium.
A decision to acquire the project and issue previously approved shares for 100% ownership is to be made by the end of December 2021.
Piedmont Project
It has continued discussions with strategic partners throughout the quarter to identify a pathway for progressing exploration and evaluation of the project in Italy, with one group visiting the site post-quarter end.
An initial site visit by potential geophysics contractors for logistics assessment was also arranged during the quarter and conducted in mid-October investigating the potential use of ground EM and drone magnetics across the prospect to delineate existing mineral occurrences undercover and at depth.
Drilling permits have been approved within Alpe Laghetto licence and on-ground prep work for ground EM and drone magnetics are underway and ready for the next field season in 2022.
Alligator believes the vastly under-explored Piedmont nickel-cobalt region, with its historical high grades within and around old workings, has strong potential.
It also noted the very supportive EU policies for EV and critical minerals within Europe.
Alligator has joined the European Battery Alliance, which aims to establish a domestic battery value chain within Europe.
Key global uranium index
Alligator Energy has been included on the Solactive Global Uranium and Nuclear Components Total Return Index (SOLURANT), one of the most important uranium and nuclear industry indexes globally.
Alligator CEO Greg Hall said: “The inclusion of Alligator Energy on the SOLURANT Index, which underlies the Global X Uranium ETF, is a significant and valuable recognition of the recent growth strategy and value of Alligator.
The SOLURANT index is tracked by Global X Uranium ETF, which is the largest exchange-traded fund in the uranium sector with net assets of about US$645 million.
Plans for coming quarter
Plans for the forthcoming quarter include:
➢ Final planning, preparations and infrastructure work for initial Blackbush drilling with planned to commence during the first week of November;
➢ Initial program of up to 14 sonic core holes for geochemical analysis and met testing – to provide best quality information to tie in historical data, with planned rotary mud and logging holes to follow;
➢ Alligator’s environmental consultant is working with the local pastoralists around Samphire regarding native seed collection, rangeland seeding, and native tree planting;
➢ Piedmont geophysics and logistics planning and site visit by UK contractor to plan work for ground EM and drone magnetics for northern spring; and
➢ Finalise Big Lake Uranium EM survey interpretation, adding some additional public seismic data interpretation work, followed by drilling plans. The decision to acquire project and issue previously approved shares for 100% ownership to be made by the end of December 2021.