PERTH (miningweekly.com) – Dual-listed Laramide Resources has entered into a definitive share purchase agreement to buy Uranium Resources’ subsidiary Hydro Resources, in a deal valued at $12.5-million.

Hydro Resources holds the Churchrock and Crownpoint properties, in the US state of New Mexico.

Under the terms of the agreement, ASX- and TSX-listed Laramide would pay $5.25-million in cash to Uranium Resources, along with a $7.25-million promissory note, secured by a deed of trust or mortgage over the properties.

The note would have a three-year term and would carry an initial interest rate of 5%, which would increase to 10% should Laramide make a commercial production decision on the Churchrock asset.

Principal payments of $2.4-million were due on the anniversary of the transaction in 2017, 2018 and 2019, and interest would be payable on a quarterly basis, provided that no other interest would be payable prior to the first principal payment in 2017.

Laramide pointed out that the projects had previously been burdened by significant net smelter royalties, specifically a sliding scale royalty held by Laramide, of up to 25% of the gross revenue covering certain areas of the property.

The transaction was thought to provide both companies with an opportunity to realise value from the assets, while providing Laramide with a low-cost production opportunity in a tier-one jurisdiction.

Nasdaq- and ASX-listed Uranium Resources CEO and president Christopher Jones told shareholders on Monday that with the significant royalties that Laramide already owned over the Churchrock project, the transaction was a positive development for Uranium Resources and raised new capital in a nondilutive manner.

“The significant steps that Uranium Resources have taken over the past year to realign its project portfolio towards lowest-quartile cost assets, including entry into this agreement, have put the company on a clear path for the future, which coincides with the widely forecast positive outlook for uranium.”

Jones noted that the company had a clear focus in moving towards near-term, low-cost uranium production, saying that the transaction would strengthen Uranium Resources' financial position as the company accelerated down this path.

Uranium Resources was working to bring its Temrezli project, in Turkey, towards a development decision and subsequent construction in the first half of 2017.

The agreement with Laramide was subject to a number of conditions, including the completion of financing and regulatory approval.