Strathmore Minerals (TSE:STM)(OTCQX:STHJF) said Monday it has set the largest budget in the company's history for 2012 to aggressively advance its core Roca Honda, New Mexico and Gas Hills, Wyoming, Uranium development projects.
The company said these assets represent two of the most significant conventional Uranium
development projects in the United States in the past thirty years, and
are partnered with Sumitomo, one of the world's largest integrated
trading companies, and Korea Electric Power Corporation (KEPCO), one of
the largest diversified worldwide energy companies, both international
firms that have recognized the need to invest and develop reliable
future Uranium supplies.
The news today follows a recently-concluded strategic investment by KEPCO.
Strathmore's 2012 capital budget is the largest in the company's
history and will total $15.8 million, including $3.0 million from its
partner Sumitomo for the pro-rata share of permitting and development
expenditures at Roca Honda. The Roca Honda budget totals $7.4 million.
The Gas Hills budget has been set at $8 million as part of the
strategic definitive agreement announced with KEPCO, and the company
also set aside $0.4 million for non-core properties in Wyoming and New
In February, Strathmore completed an $8 million private placement
financing with Korean government-backed energy company KEPCO, as part of
an up to $40 million definitive strategic agreement signed last month.
The definitive agreement, from which proceeds will be used to develop the company's Gas Hills Uranium properties in Wyoming, contains an off-take provision for KEPCO to purchase a portion of any future annual Uranium production from Strathmore's properties.
The Gas Hills Uranium district in Wyoming was the second largest Uranium producing region in the United States, having produced 100 million pounds of Uranium concentrates from 1957 to 1989.
Under the terms of the placement, KEPCO acquired 14.6 million shares
of Strathmore common stock at $0.55 per share, for total gross proceeds
of $8.0 million, making it Strathmore's largest shareholder, with an
approximate 14 percent interest in the company.
Strathmore Minerals also outlined Monday a number of corporate milestones for the coming year that it plans to achieve.
The company said it plans to complete the phase I $8 million Gas
Hills drilling and permitting program, which includes first drilling by
Strathmore at the highly prospective Beaver Rim area, to explore and
define the area's Uranium resources.
Strathmore also plans to submit the Gas Hills mine permit application
to the Wyoming Department of Environmental Quality by year-end, as well
as initiate preparation of an environmental impact statement for Gas
Hills, and complete the Roca Honda preliminary economic assessment and
pre-feasibility studies by the third quarter. It also plans to complete a
feasibility study for Roca Honda by year-end.
The company also said it plans to submit the Pena Ranch, New Mexico
NRC mill license application by year-end, and continue working with the
regulatory agencies for the completion of the Roca Honda environmental
impact statement by the end of the year, setting the stage for a mine
permit decision in 2013.
In terms of non-core properties, Strathmore retains eight properties with in-ground Uranium
resources that are available for sale or joint venture, and is
continuing to explore other potential opportunities to enhance
shareholder value, it said.
Strathmore also said it was well positioned in the United States, which remains the largest Uranium consumer in the world, despite ongoing and projected growth internationally.
The 104 nuclear reactors in the nation, which supply approximately 22
percent of the country's electricity, consume 50 to 55 million pounds
of Uranium annually, yet the US produces only 4-5 million pounds annually.
Much of the supply difference is derived from the "Megatons for Megawatts" treaty with Russia, which is set to expire in 2013.
The expiration of this treaty suggests that US-based utilities will eventually need to source long-life Uranium
assets, which contributed to Strathmore taking the long-term approach
by permitting its largest and best conventional projects, as opposed to
its smaller projects, the company said.
Despite the current weak Uranium price environment, the sector will require higher prices to meet future Uranium needs, ensure stability of supply, and stimulate new exploration and mine development.
Strathmore Minerals is a Canadian resource company specializing in the strategic acquisition, exploration and development of Uranium properties in the United States.