Aura Energy Limited (ASX: AEE), domiciled in Australia, is a mineral company which is engaged in extracting uranium and polymetallic minerals from its projects located in Mauritania (Africa) and Sweden (Europe).
The Tiris Uranium Project is 100% owned by the company. It is located in the major greenfield area of Africa, Mauritania. It currently possesses 49 Mlb triuranium octaoxide (U3O8) from 66 million tonnes at 334 parts per million (ppm) U3O8.
It is a low operating and development capital mining project which does not requires any blast and has negligible overburden and has a range of 335 ppm to 2500 ppm. The production is expected to start in 2020.
The Häggån Project is also 100% owned by the company. It is located in central Sweden with high prospects of vanadium, molybdenum, zinc, nickel, and other Battery Metals. It possesses 15,100 million pounds vanadium pentoxide (V2O5). AEE had started a Scoping Study for the project which is expected to be completed in early 2019.
Today, AEE has announced that it has signed a 7-year binding off-take agreement to sell the uranium which is being extracted from the Tiris Uranium Project. The agreement is signed with a London based metal and mining company, Curzon Uranium Trading Limited (Curzon). Curzon focuses on the front end of the nuclear fuel value chain through its long term off-take agreements with small to medium size junior miners.
Under this agreement, AEE will sell 800,000 pounds of uranium to Curzon at a fixed price and has an option to further sell 1.8 million pounds of uranium at fixed and market pricing. The duration of this agreement is of 7 years which can be further extended by mutual consent. The fixed price is set at an average price above US$44 per pound of triuranium octaoxide as compared to the current spot price of around US$29 per pound. This deal price is above the total operating cost of the project.
It is anticipated that approx. 1 million pounds U?O? per annum will be produced from the Tiris project, and this agreement accounts for 15-30% only leading AEE to be strongly exposed to high uranium prices expected in the future. AEE has recently secured the Exploitation Licence over the project by the Mauritanian Government.
As per the management, after many months of negotiation with Curzon, AEE achieved a milestone by signing this agreement as it will provide a strong level of certainty over the revenue stream from the fixed prices. It will also provide an upside potential through the option volumes at market prices.
Looking at Aura Energy Limited’s stock performance and the return it has posted over the last few months, the stock has generated a negative return of 21.74 % during the past six months. It closed the trading session at A$0.018 on 29 January 2019 with 1.09 billion shares outstanding and a market cap of circa A$19.64 million. The 52-week high and low stands at A$0.035 and A$0.017 respectively.
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