In December 2006, the Company acquired a portfolio of uranium royalties in the Grants Mineral District of New Mexico, USA from United Nuclear Corporation, a wholly owned indirect subsidiary of General Electric Company. The royalty portfolio covers several separate parcels of mineral leases (Section 8, Section 17, and the Mancos area) in the Churchrock area of McKinley County which is located 20 miles northeast of Gallup, New Mexico (the “Churchrock Properties”). The Churchrock Properties are presently owned by a subsidiary of Uranium Resources, Inc. (“URI”), a U.S. publicly traded uranium producer.
SLIDING SCALE ROYALTY STRUCTURE
The royalty is a gross revenue based sliding scale royalty, ranging between 5% and 25% depending on the term price of uranium. For example, at a term price of approximately US$57.00/lb U3O8, the Royalty payments would be 14% of the revenue. The sliding scale Royalty has a maximum royalty rate of 25% if term sales prices reach US$87.41/lb or higher. The portfolio covers the abovementioned parcels on all uranium produced within the mineral lease once the mineral leases reach the production stage. URI’s primary focus in New Mexico is its Churchrock Section 8 property. Laramide’s royalty covers Section 8, which falls within the area covered by URI’s underground injection control permit and Nuclear Regulatory Commission licence.
Under the terms of the acquisition, Laramide must pay US$9.25 million in cash to UNC, structured as follows:
Churchrock: 7.8 million tons @ 0.12% U3O8 = 18.6 million lbs U3O8
Mancos: 5.2 million tons @ 0.11% U3O8 = 11.3 million lbs U3O8
NRC reactivated ISR licence in 2011
Feasibility Study completed on Section 8
URI entered into project consolidation and financing transaction with Resource Capital Funds.