REG - Aura Energy Limited - Offtake Agreement with Curzon Uranium Limited

Aura EnergyAnnouncement

16/04/2024 07:00

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RNS Number : 7727K  Aura Energy Limited  16 April 2024

 
                                                                                                                                16 April 2024

 

 Offtake restructure delivers significant value to the Tiris Uranium Project

Aura Energy Limited (ASX: AEE, AIM: AURA) ("Aura" or the "Company") and Curzon
Uranium Ltd. ("Curzon") have agreed to a restructure of the historical uranium
offtake agreement 1 , materially increasing the price receivable for planned
uranium production and releasing significant value for the Tiris Uranium
Project.

KEY POINTS:

·      Average fixed price contract price increases 70% to US$74.75/lb
U(3)O(8) from US$44.09/lb U(3)O(8) subject to Final Investment Decision by 31
March 2025

·      Total contracted volumes (fixed and variable priced contracts)
reduce from 2.6Mlbs to 2.1Mlbs over same 7-year term

·      US$41M of additional revenue delivered to the Tiris Project cash
flows at a uranium price of US$80/lb U(3)O(8)

·      Project NPV(8) increases US$22M to US$388M and IRR improves 2% to
36% compared to Front End Engineering Design ("FEED") study economics 2 
delivered in March 2024

·      Restructured offtake to deliver 150,000lbs U(3)O(8) per annum
under fixed price terms averaging US$74.75/lb U(3)O(8) and 150,000lbs U(3)O(8)
per annum at spot less 4% discount over 7 years

·      Restructuring fee of US$3.5M to be paid to Curzon either in cash
or in Aura shares priced at A$0.18 per share

·      Curzon to also take a US$3.5M placement of Aura shares at A$0.18
per share

·      Shares subject to escrow arrangements

·      The placement and settlement will take place at the conclusion of
final documentation and subject to the Company's placement capacity being
refreshed at the upcoming shareholders' meeting

 

Andrew Grove Aura's MD and CEO commented:

"We are very pleased with the cooperation and consideration received from
Curzon - a leading global trader in uranium - on this restructured offtake
agreement and welcome Curzon as an important partner and Aura shareholder for
the development of the Tiris Uranium Project which will have significant
mutual benefits for both parties."

"The restructured offtake agreement releases significant value in the Project
and is another important step in the development of the Tiris Uranium
Project."

Details

Aura is pleased to advise on developments and activities relating to the Tiris
Uranium Project in Mauritania aimed at enhancing value, achieving final
investment decision in 2024 and ultimately delivering a uranium mine at Tiris
for the benefit of all stakeholders.

Aura and Curzon have signed an agreement replacing the existing contractual
arrangements between Aura and a subsidiary of Curzon, with a new take or pay
offtake contract, with pricing terms detailed in Appendix 1. The new agreement
provides Aura, and its subsidiary Tiris Ressources SA, with materially higher
realised uranium prices that will enhance shareholder returns and third-party
financing opportunities, while giving Curzon certainty about its supply
arrangements.

The new contract will provide for a fixed volume of 300,000lbs per annum of
uranium concentrate to be delivered over seven years, totalling 2.1Mlbs
U(3)O(8).

150,000lbs of the annual volume will be priced based on the prevailing uranium
spot price at time of delivery ("Market Price") less a discount, and
150,000lbs of the annual volume will be priced on a fixed basis ("Fixed
Price") to be determined as follows:

•             Case A: If an investment decision on the Tiris
project is made by 31(st) March 2025, Curzon will pay an average Fixed Price
of US$74.75/lb U(3)O(8), Market Price subject to a 4% discount

•             Case B: If an investment decision is made by
30(th) September 2025, Curzon will pay an average Fixed Price of US$72.25/lb
U(3)O(8), Market Price subject to a 4% discount

•             Case C: If an investment decision is made between
1(st) October 2025 and 15(th) August 2030, Curzon will pay an average Fixed
Price of US$65.25/lb U(3)O(8), with a further US$1.25/lb U(3)O(8) decline in
Fixed Price for each year of delay in the investment decision post 2025,
Market Price subject to a 5% discount

•             Case D: If an investment decision is made after
15(th) August 2030, there will be no offtake agreement and Curzon will be paid
a 1% royalty on net revenues up to total value of US$30M

A restructuring fee of US$3.5M will be paid to Curzon either in cash or in
Company's shares, at Curzon's election, priced at A$0.18 per Aura share. These
shares will be subject to escrow until first production from the Project.

Curzon has also agreed to an equity placement in Aura of US$3.5M priced at
A$0.18 per Aura share ("Curzon Placement"). 50% of these shares will be held
in escrow until the earlier of Final Investment Decision ("FID") for the Tiris
Project or 30(th) June 2025.

The Curzon Placement and settlement of the first 50% of shares will take place
at the conclusion of final documentation and subject to the Company's
placement capacity being refreshed at the upcoming Aura shareholders' meeting.

These arrangements cancel and replace all previous agreements between Aura and
the Curzon entities 3 .

Updating the FEED 4  economics with the new offtake pricing results in a
significant increase in revenue of US$41M and increases the NPV(8) to US$388M
from US$366M. IRR also increases by 2% to 36%, as set out in Table 1. All
other inputs into the FEED economics remain unchanged.

 

                                  Units             FEED   FEED
                                  Base Case                New Contract Pricing
 Uranium Price                    US$/lbs U(3)O(8)  $80    $80
 Avg Annual Production            Mlbs pa U(3)O(8)  2      2
 Post-tax NPV(8)                  US$ million       366    388
 Post-tax IRR                     %                 34%    36%
 Average All-in Sustaining Costs  US$/lbs U(3)O(8)  34.5   34.5
 Life of Mine Revenue             US$ million       2,354  2,395
 Initial Life of Mine             Years             17     17
 Capital Expenditure              US$ million       230    230
 Payback period                   Years             2.5    2.5

Table 1: Comparison between FEED economics as published 29 March 2024 and
impact of new offtake pricing.

 

ENDS

 

The Board of Aura Energy Ltd has approved this announcement.

This Announcement contains inside information for the purposes of the UK
version of the market abuse regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").

For further information, please contact:

 Andrew Grove                                   Paul Ryan                                                  SP Angel Corporate Finance LLP

 Managing Director and CEO                      Morrow Sodali                                              Nominated Advisor and Broker

 Aura Energy Limited                            Investor & Media Relations                                 David Hignell

 agrove@auraee.com (mailto:Agrove@auraee.com)   p.ryan@morrowsodali.com (mailto:p.ryan@morrowsodali.com)   Kasia Brzozowska

 +61 414 011 383                                +61 409 296 511                                            Grant Barker

                                                                                                           +44 203 470 0470

About Aura Energy (ASX: AEE, AIM: AURA) 

Aura Energy is an Australian-based mineral company with major uranium and
polymetallic projects in Africa and Europe.

The Company is focused on developing a uranium mine at the Tiris Uranium
Project, a major greenfield uranium discovery in Mauritania. The February 2024
FEED study demonstrated Tiris to be a near-term low-cost 2Mlbs U(3)O(8) pa
near term uranium mine with a 17-year mine life with excellent economics and
optionality to expand to accommodate future resource growth.

Aura plans to transition from a uranium explorer to a uranium producer to
capitalise on the rapidly growing demand for nuclear power as the world shifts
towards a decarbonised energy sector.

Beyond the Tiris Project, Aura owns 100% of the Häggån Project in Sweden.
Häggån contains a global-scale 2.5Bt vanadium, sulphate of potash ("SOP")
and uranium resource. Utilising only 3% of the resource, a 2023 Scoping Study
outlined a 27-year mine life based on mining 3.5Mtpa.

Disclaimer Regarding Forward-Looking Statements

This ASX announcement (Announcement) contains various forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements. Forward-looking statements are inherently subject
to uncertainties in that they may be affected by a variety of known and
unknown risks, variables and factors which could cause actual values or
results, performance or achievements to differ materially from the
expectations described in such forward-looking statements. The Company does
not give any assurance or guarantee that the anticipated
results, performance or achievements expressed or implied in those
forward-looking statements will be achieved.

 

Appendix 1 - Annual pricing terms

Contract term: 7 years

Contract volume: 150,000 lbs pa of U(3)O(8) at Fixed Price and 150,000 lbs pa
of U(3)O(8) at Market Price less a Discount.

 

Case A - FID no later than 31/03/2025

Delivery start year: 2026 or 2027 at Aura's option to nominate no later than 7
days after the FID

Fixed Prices:

 Year 1  US$71.00/lb U(3)O(8)
 Year 2  US$72.25/lb U(3)O(8)
 Year 3  US$73.50/lb U(3)O(8)
 Year 4  US$74.75/lb U(3)O(8)
 Year 5  US$76.00/lb U(3)O(8)
 Year 6  US$77.25/lb U(3)O(8)
 Year 7  US$78.50/lb U(3)O(8)

Discount on Market Price: 4%

 

Case B - FID no later than 31/09/2025

 

Delivery start year: 2027, 2028 or 2029 at Aura's option to nominate no later
than 7 days after FID

Case B Fixed Price: same as Case A minus US$2.50/lb U(3)O(8) in each
respective year

Discount on Market Price: 4%

 

Case C - FID no later than 15/08/2030

 

Delivery start year: 2028, 2029, 2030, 2031, 2032 or 2033 at Aura's option to
nominate no later than 7 days after FID

Case C Fixed Price: same as Case B minus US$7.00/lb U(3)O(8) in each
respective year, plus an additional discount of US$1.25/lb U(3)O(8) for every
additional year in which the FID is taken after the ‌end of 2025

Discount on Market Price: 5%

 

Case D - No FID has been taken by 15/08/2030

 

Royalty: a royalty of 1% of net revenues from Tiris Project up to a total
amount of US$30M

 

 1  ASX Releases: "US$10m Offtake Financing Agreement for Tiris Uranium
Project" 7 October 2021 and "Aura Concludes Offtake Agreement" 29 January 2019

 2  ASX Release: "FEED study confirms excellent economics for the Tiris
Uranium Project" 28 February 2024

 3  ASX Releases: "US$10m Offtake Financing Agreement for Tiris Uranium
Project" 7 October 2021 and "Aura Concludes Offtake Agreement" 29 January 2019

 4  ASX Release: "FEED study confirms excellent economics for the Tiris
Uranium Project" 28 February 2024

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