British Columbia-based uranium explorer and developer Azarga Uranium Corp. (AZZ:TSX; AZZUF:OTCQB), announced in a news release that "it has filed its National Instrument 43-101 (NI 43-101) independent technical report and preliminary economic assessment (PEA) on its Gas Hills In-Situ Recovery Uranium project in Wyoming, U.S., following the company's press release dated June 29, 2021."
Azarga Uranium stated that it is now concentrating its collective efforts on growing the ISR-amenable resources at the Gas Hills Project and moving forward to the final stages of the permitting process.
The company indicated that the Gas Hill PEA calls for a total of 6.5 million pounds of U3O8 production over the course of 7 years with production being spread out fairly evenly at a rate of about 1.0 million pounds annually.
The PEA forecasts that the initial capital expenditures required for the Gas Hills ISR Project will total around US$26.0 million. The project is expected to be cash flow positive in the 1st year of production coming just two years following the start of construction.
The project's base case outlined in the PEA utilized an 8% discount rate resulting in an estimated pre-income tax net present value (NPV) of US$120.9 million and an after-income tax NPV of US$102.6 million. Over the 7-year production life, the project is expected to provide a pre-income tax internal rate of return (IRR) of 116% and a post-income tax IRR of 101%.
The company listed that the calculations used in the PEA consider a base uranium price of US$55 per pound. The report estimates that direct cash operating costs are expected to be US$11.52 per pound and that the combined total pre-income tax cost of uranium production is estimated to be US$28.20 per pound of production.
Azarga Uranium advised that historically numerous companies have explored and produced uranium in the Gas Hills area including on those lands that the company now controls. The company wrote that five uranium mills have been operated in or near the district and were fed by ore mined from the Gas Hills district. The firm noted that to date, greater than 100 million pounds of uranium have been produced from the Gas Hills district with the majority of it coming from open-pit mining, with a lesser portion coming from underground and ISR mining methods.
Azarga is a U.S.-focused uranium exploration and development firm that oversees 10 uranium projects and prospects in Colorado, South Dakota, Utah and Wyoming. The company concentrates its work on in-situ recovery uranium projects. The firm advised that its main objective is developing the South Dakota Dewey Burdock ISR uranium project. Azarga mentioned that it previously received the licenses and permits needed from the Nuclear Regulatory Commission and the Environmental Protection Agency and is now diligently working on securing additional permits needed to begin construction at the property.
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