NYSE American-listed United Energy Corp (UEC) has announced that it will buy the development-stage Roughrider project, in the Athabasca basin of Canada, from diversified major Rio Tinto for $150-million in cash and stock.

Rio Tinto will receive $80-million in cash and 17 805 815 UEC common shares, valued at $70-million based on the five-day volume-weighted average price of $3.93 a share.

The cash component will be fully funded using UEC's existing balance sheet.

President and CEO Amir Adnani points out that 100%-owned, development-stage assets are rare in the Athabasca basin.

Not only does Roughrider add a “world-class project” to anchor UEC’s Canadian high-grade conventional business, it also helps to unlock value from the recently acquired UEX portfolio in the eastern Athabasca basin, providing the company with critical mass to advance its production plans, he says.

The project has a historic resource of 58-million pounds at an average grade of 4.73 U₃O₈.

Since acquiring Roughrider in 2012, Rio Tinto has advanced substantial pre-production and environmental baseline work, including completion of dedicated geotechnical drilling, shaft vs. decline modelling, establishment of hydrogeological monitor wells, terrestrial and aquatic environmental assessments, heritage assessments, species at risk, and conceptual reclamation plan. This provides a strong foundation and substantial value for completion of upcoming technical reports, efficiently moving the project forward to a production decision.

"Our next steps for Roughrider will be to first complete an updated S-K 1300 technical report summary based on over 650 diamond drillholes already completed for a total of approximately 225 000 m of drilling on the project,” says Adnani.

UEC is currently engaging with consultants to develop a technical report update in the next few months.

It also intends to progress permitting and a production study of Roughrider and optimise its integration with UEC's existing Canadian platform. 

“The acquisition builds on our strategic objective to create the leading Western supplier of secure and 100% unhedged uranium with a two-pronged platform: near-term, fully permitted and low-cost US ISR production; and a Canadian high-grade conventional pipeline,” he concludes.