Perth-based Anatolia Energy has underlined the viability of its fast-developing Temrezli uranium project in central Turkey with news that the company will be merging with NASDAQ-listed Uranium Resources (URI).

The plan is set to result in a company with a combined market capitalisation of about $US68.1 million, a geographically diversified portfolio of growing assets, a stronger balance sheet and a new global investor base. Both companies have called the move a compelling transaction and have recommended shareholder approval.

With a ready-to-be-developed second tier of US uranium projects, the enlarged company will focus initially on Temrezli, which itself remains on track for first production in the second quarter of next year. The merger with URI is expected to realise up to $11 million of capital savings on the project thanks to the consolidation of assets and expertise. This saving would effectively nullify more than two-thirds of the life-of-mine processing plant costs estimated in prefeasibility work published earlier this year.

Anatolia chief executive and managing director Paul Cronin said that Temrezli’s positive prefeasibility study, along with de-risking metallurgical and hydrological results, was instrumental in attracting the attention of URI.

“They had been looking for a near-term, low-cost project that could be put into production in the current market and then capture the upside of that as uranium prices recover in the medium term,” he told RESOURCESTOCKS.

“They stopped producing in 2009, but their team is still there, and they’ve got a lot of experience in in-situ recovery production.”

The fact that Temrezli is an ISR-ready project was undoubtedly a major drawcard for the Texan operator.

The solution-based production method requires much less surface disturbance than conventional mining, and is widely tipped by analysts as a hallmark of the most economic uranium operations. ISR technology allows for the uranium sector’s lowest operating costs by far, with Temrezli last calculated as capable of achieving an opex rate of $16.89/lb.

“Technically, ISR requires a specific skillset, but if we look around, it counts for more than 50% of global uranium production, so the technical challenges of ISR are continually being better understood,” Cronin said.

“I think we’ll continue to see people looking for ISR-amenable assets which they can bring into production.”
Cronin said that another major distinguishing factor for Temrezli was jurisdiction.

“In 2010, Turkey opened up its mining industry to foreign investment by actively encouraging foreign companies to come in here and explorer and develop,” he said.

“And we’re seeing huge growth in the Turkish mining sector as a result of that. Turkey is building 12 reactors in total, which firmly puts them in the nuclear world. Turkey now has a natural demand for uranium.”

The most concrete impact of the merger on Temrezli will likely be the relocation of URI’s Rosita ISR processing plant from Texas to Turkey. But other enhancements will be delivered via the integration of URI’s wellfield development software, resource definition tools and more experienced uranium team.

“We’ve been running Anatolia as a very lean outfit, but you do get to the point where you need more help, and that help comes in the form of URI’s existing staff,” Cronin said.

“Rather than us going out and hiring people, we’ll already have them, and they’ll be able to hit the ground running. Through their due diligence work, they already understand the Temrezli asset and what it can achieve. They’ve done a wellfield feasibility study, and they’re very comfortable with what they’ve got to work with here. So we’ll get the benefit of the work that they’ve done.”

Cronin added that there were also important benefits for Anatolia in a NASDAQ listing.

“US uranium companies tend to get significantly higher valuations than their Canadian and particularly Australian counterparts,” he said.
“One of the more compelling features is the sheer number of royalties URI has over developing and soon-to-be-developing uranium projects in North America, and the fact that there is near-term cashflow in those projects. Plus, URI stock has tremendous liquidity and always has. It typically trades in the region of $500,000 a day, which is about 20 times more than Anatolia.”

URI was incorporated in 1977 and now controls about 17,000 acres of prospective ISR projects in Texas, along with 195,000 acres of mineral rights in New Mexico, where it recently divested its Roca Honda property for $2.5 million and other considerations.

“What you’ve got to understand about the US market and the way mining is done there is that land ownership and land title are very important,” Cronin continued.

“Where you have tenements or permit areas contiguous with another company, consolidation tends to represent compelling value. We’ve seen that with Roca Honda and I believe we’ll see that with other assets in URI’s basket.

“When you’re dealing with an enlarged company with the ability to monetise assets, it means you do not have to suffer dilution to be able to fund exploration. The monetisation of the assets that URI has can assist both in the reduction in the equity required for project financing at Temrezli and also with development work at Sefaatli.”

Anatolia’s Sefaatli property covers 50sq.km about 40km southwest of Temrezli and represents a potential satellite feed source for Rosita. Recent drilling at the project has confirmed high-grade uranium over a shallow 9km strike length and has suggested resources may be amendable to ISR.

“We’re in an area where there is consistent uranium mineralisation, variable in terms of grade and depth, but we know where the source of that mineralisation is,” Cronin said.

“Based on what we’ve seen at Sefaatli recently, we’re going to continue to find other areas of high-grade mineralisation – we just need to up the exploration effort. We’ll find more on our existing tenements, and when other tenements become available, we’ll be the first ones to jump on them.”

*A version of this report, first published in the July-August 2015 edition of RESOURCESTOCKS magazine, was commissioned by Anatolia Energy.