THE BOURSE WHISPERER: Toro Energy (ASX: TOE) is to acquire the Lake Maitland uranium project in Western Australia from Toronto-listed Mega Uranium (TSX: MGA).
The deal will result in Mega receiving 415 million fully paid ordinary shares in Toro, giving it a 28 per cent holding, just below that of major shareholder OZ Minerals with 28.5 per cent.
Toro said the acquisition would allow it to increase the operational life of the company’s 100 per cent-owned Wiluna uranium project.
“Lake Maitland adds significant scale to our Wiluna Project and further strengthens the Wiluna investment case,” Toro Energy managing director Vanessa Guthrie said in the company’s announcement to the Australian Securities Exchange.
“We believe the characteristics of the Lake Maitland deposit will provide significant operational and financing benefits to Wiluna.”
Lake Maitland is located 90 kilometres south-east of the proposed site of the processing facility at Wiluna.
Toro anticipates the acquisition to provide a number benefits for the development of Wiluna, such as:
A larger combined resource base.
Lake Maitland will expand Wiluna’s JORC categorised total Mineral Resource base by 42 per cent from 54 million pounds of uranium to 76 million pounds of uranium, which Toro indicated could be potentially sufficient for a minimum 20 year project life at Wiluna.
An improvement in grade and potential to support Wiluna capacity expansion.
The Lake Maitland Mineral Resource includes high-grade material comprising 6.4 million tonnes at 881 parts per million (ppm) – using a 500ppm cut-off – which Toro expects to improve the overall blended head grade from the Wiluna deposits. The increased resources provide an opportunity to investigate an expansion to the planned Wiluna project, subject to government approvals.
Potential to improve Wiluna project economics.
The increase in the Wiluna regional resource (both in tonnes and grade) has the potential to significantly improve the overall project economics, in particular through decreased operating costs particularly in the first 10 years of operations.
Benefit from pre-existing strategic partner relationship.
The existing Lake Maitland strategic partners – JAURD International Lake Maitland project and Itochu Minerals & Energy of Australia (IMEA) – have an option to acquire a 35 per cent interest in Lake Maitland and participate in its financing and development. Toro will inherit the strategic and financial benefits of this pre-existing relationship.
$3.5 million of additional capital committed with the transaction.
$1.5 million of cash reserves are included in the Lake Maitland assets, which will be acquired from Mega as part of the acquisition. In addition, OZ Minerals and Pinetree Capital have each committed to provide $1.0 million in equity subscriptions to Toro to provide further financial flexibility to meet transaction and ongoing costs.
“Upon successful completion of the acquisition we will welcome Mega as a strategic cornerstone investor in Toro and look forward to working closely with JAURD / IMEA as development of Wiluna and Lake Maitland is progressed to a final investment decision,” Guthrie said.