Vimy Resources may well be sitting on Australia’s largest near-term uranium deposit, but it is also headquartered in a country that has very little sympathy for nuclear energy. By Mark Fraser
As a result, Vimy’s attractiveness as an investment destination has been misunderstood by domestic punters who live in an environment where there is a healthy dose of hostility towards yellowcake.
No doubt these thoughts crossed the company’s mind as it decided to expand its access to the global pool of capital by listing on the US-based OTCQB Venture Market.
Operated by the OTC Markets Group in New York, this mid-tier over-the-counter securities trading platform offers transparent trading for entrepreneurial and development stage companies that – amongst other factors – are current in their financial reporting and have undergone an annual verification and management certification process.
These standards provide a strong baseline of transparency, as well as the technology and regulation to improve the information and trading experience for investors.
Furthermore, there are no additional compliance or regulatory standards over and above Vimy’s compliance with the ASX listing rules.
In addition, OTC trading is non-dilutive to the company’s existing shareholders as no new shares were issued to enable trading on the US-based exchange.
According to Vimy Resources managing director and chief executive, Mike Young, the move to the alternative bourse will enhance the visibility and accessibility of the company to North American shareholders and media partners.
“The start of the OTCQB trading coincides with the best couple of months the uranium equities market has seen since 2007,” he said.
“Trading on OTCQB opens Vimy up to a much larger pool of investors including specialised uranium investors in the USA and Canada – two jurisdictions that not only get nuclear power, but actually use it.
“Since the USA is our target market for future customers of uranium concentrate from our Mulga Rock and Alligator River projects, it makes sense to trade on a North American platform, increasing our exposure to a deeper pool of capital.”
Vimy will continue pushing its two big uranium projects – the flagship Mulga Rock in its home state of Western Australia and Alligator River in the Northern Territory.
Located east-north east of Kalgoorlie-Boulder in WA, Mulga Rock is the most advanced, having had its definitive feasibility due diligence updated in 2020.
The rebooted study demonstrated the 15 year project – which is looking to produce 3.5 million pounds of U3O8 (yellowcake) annually – will generate even stronger financial returns than previously predicted in the original January 2018 appraisal.
Some of the strong project economics include a net present value pre-tax of US$393 million (a 14% increase), an internal rate of return of 31% (up 23%), a capital cost of US$255 million (a 20% reduction), a payback period of 2.4 years (cut by eight months) as well as a free cash flow of US$61 million per annum (a 22% increase).
In addition, the updated documentation delivered some strong operating cost results, including a cash operating cost (C1) of US$23.33 per lb U3O8 over the first five years (an 8% fall), a C1 of US$26.02/lb over life-of-mine (a 7% decrease), an all in sustaining cost of US$28.09/lb over the first five years and a US$31.22 over LOM (an 8% drop in both instances).
Vimy’s second project, the Alligator River Joint Venture with Rio Tinto in the north east NT’s Arnhem Land, has been described as the “Athabasca Basin Down Under” given its geology, structures and mineralisation are similar to those found in the unconformity uranium deposits of Canada’s high-grade Athabasca Basin.
Rio holds 21% of the project, the tenure contains some of the most prospective land in the province (750Mlbs of mined and remnant resources, dominated by the Ranger, Ranger Deeps and Jabiluka deposits) that has undergone very little modern exploration.
The project’s Angularli deposit has an inferred resource of 26Mlbs of yellowcake grading 1.3% U3O8, while metallurgy has confirmed around 98% uranium recovery and low reagent consumption.
When looking at the Vimy story, it is important to take on board a few points raised by Canaccord Genuity in an investment note issued last year.
First, nuclear energy will maintain an important role in reducing carbon emissions (effectively meaning uranium is a critical mineral) while providing affordable baseload power generation. Second, against this backdrop, the global supply of yellowcake is becoming constrained.
Finally, the US remains the world’s largest consumer of nuclear energy, making the North American market a perfect place to be for a formidable Australian uranium developer.