U3O8 Corp.Signs Agreement for Near-Term Production Potential of
Frac Sand from Its Carina Property in Argentina
Opportunity to generate cash flow in the short-term from
non-core asset
TORONTO, ONTARIO--(Marketwired - Jan 16, 2014) - U3O8 Corp.
(TSX:UWE) (OTCQX:UWEFF), a Canadian-based company focused on
exploration and development of uranium resources and associated
commodities in South America, has granted rights to a 100 hectare
("Ha") area of its Carina property in Chubut Province, Argentina
(Figure 1) to an Argentine operator for which U3O8 Corp. will
receive annual cash option payments and a 7.5% gross royalty on
production ("NSR"). The Carina property contains silica sand for
potential use in the production of oil and gas from shale.
"The frac sand opportunity on the Carina property provides U3O8
Corp. with potential for modest cash flow in the short-term without
further expenditure from us, while giving our shareholders exposure
to a fast-growing market; frac sand production in the US has
increased almost 500% between 2009 and 2013 to 31 million tonnes
("t") per annum," said Dr. Richard Spencer, U3O8 Corp's President
and CEO. "The Carina concession could be one of the closest known
potential sources of frac sand to the Vaca Muerta basin in
Argentina, which is considered one of the largest oil shale fields
in the world and has attracted significant investment from major
oil companies in the latter half of 2013. Although we are
evaluating all options related to this non-core asset, the Carina
property is likely to be vended to a company focused on frac sand
to maximize this opportunity. U3O8 Corp's core business remains the
development of its uranium projects with our priority being to
finalize the definitive joint venture agreement with Petrominera
Chubut S.E., the provincial mining company, and completing the
preliminary economic assessment ("PEA"), both of which are targeted
for Q1 2014 in order to position the Laguna Salada Deposit in
Argentina as a potential low-cost, near-term uranium producer."
Carina Property - Frac
Sand Opportunity1
Frac sands are made up of tiny silica beads that are pumped down
production wells to hold induced fractures in shale open so that
oil and gas can seep out of the otherwise impermeable rock. Frac
sands are critical to the shale oil industry with each well
typically requiring around 2,000t of frac sand to maintain
production. In Wisconsin, which accounts for 75% of the US market,
frac sand-mining has grown to be a $1 billion per annum industry
over the last three years.
U3O8 Corp's Carina concession is located approximately 900
kilometres ("km") by road along National Routes 3 and 22 from the
Vaca Muerta oil shale basin in Neuquen Province, Argentina (Figure
1). The Vaca Muerta is about the size of Connecticut and estimated
to contain 22.5 billion barrels of unconventional oil, which could
make it one of the largest oil shale fields in the world
(www.vacamuertashale.com). After the nationalization of YPF in
early 2012, over which the Argentine government has now made an
offer for compensation, government initiatives to attract
investment in the oil sector have resulted in an influx of foreign
companies to Argentina. As a result, major oil companies such as
Chevron, Brazil's Petrobras, China National Oil Corp., France's
Total SA, Wintershall Holding GmbH (Germany's largest oil company)
and Pan American Energy (a subsidiary of BP) have partnered with
YPF and the Neuquen provincial government, for the exploration of
the Vaca Muerta shale.
Frac sands for Argentina's emerging shale oil and gas industry
are primarily imported from Brazil and the US with minor local
production estimated to be around 500t per month. As a major
untapped source of shale oil, the Vaca Muerta basin provides a
large developing market for domestically produced frac sand.
U3O8 Corp. has signed an agreement with an Argentine operator
over a 100Ha section of the Carina property. The operator is
obliged to reach a minimum production of 1,000t of frac sand per
month by January 2015, 2,000t by January 2016 and 3,000t by January
2017 for which U3O8 Corp. will receive nominal annual cash option
payments and a 7.5% NSR. The operator will bear all costs
associated with the development of the 100Ha area including plant
construction, transportation fleet and obtaining the environmental
permit for production.
The quartz sand that contains the silica beads at Carina is
exposed at surface over an area of approximately 500Ha in a bed
that averages approximately 10 metres thick with potential to
extend further beneath younger cover. The sand would be excavated
in a quarry in which no blasting nor crushing would be required.
The sand would be screened to concentrate and extract the silica
beads of the required size. The screening is done with water - no
chemicals are used. Indications are that beneficiation of the
Carina sand by more stringent screening could result in a product
that has all the optimal characteristics required for frac sands
under ISO 13503-2 standards.
(1) Sources: Hart Energy, Madison, Daily Resource Hunter,
YPF, Bloomberg, Chevron, TNPetroleo, Interfaxenergy, Buenos Aires
Herald and other news outlets.
To view Figure 1 - Location of the Carina Concession
Relative to the Vaca Muerta Shale and the Deep Water Port of Puerto
Madryn in Argentina, please visit the following link:
http://media3.marketwire.com/docs/922087-fig1.pdf
About U3O8
Corp.
U3O8 Corp. is focused on exploration and development of uranium
resources and associated commodities in South America. The
company's uranium resources comprise three deposits defined in
accordance with National Instrument 43-101 located in Colombia,
Argentina and Guyana:
- Berlin Deposit, Colombia - a recent PEA shows that Berlin could
be a zero cash cost uranium producer thanks to revenue from
by-products of phosphate, vanadium, nickel, rare earths (yttrium
and neodymium) and other metals occurring in the same deposit;
- Laguna Salada Deposit, Argentina - a near surface, free-digging
uranium, vanadium deposit that is potentially amenable to low-cost
mining and processing methods; and
- Kurupung Deposit, Guyana - an initial uranium deposit in a
large emerging uranium district.
Additional information on U3O8 Corp., its mineral resources and
technical reports are available at www.u3o8corp.com???. Follow U3O8
Corp. on Facebook: www.facebook.com/u3o8corp, Twitter:
www.twitter.com/u3o8corp and Youtube: www.youtube.com/u3o8corp.
Below
Forward-Looking Statements
Certain information in this release are forward-looking
statements with respect to the proposed joint venture and
development plans, economic potential and growth targets of U3O8
Corp's current projects. Forward-looking statements consist of
statements that are not purely historical, including statements
regarding beliefs, plans, expectations or intensions for the
future, and include, but not limited to, statements with respect
to: (a) a joint venture with the Chubut Government, (b) the
low-cost, near-term production goal of Laguna Salada, (c)
compliance with current Chubut mining law, (d) the Laguna Salada
and Berlin PEAs, (e) beneficiation test work on Laguna Salada, (f)
the Carina property, including potential for near-term production
and cash flow, (g) the market opportunities for uranium and silica
sands from Argentina, and (h) the potential of the Kurupung
district in Guyana. Basis for such assumptions include that: (i)
discussions with the Chubut Government will be favourable, (ii)
actual results of our exploration, resource goals, metallurgical
testing, economic studies and development activities will continue
to be positive and proceed as planned, (iii) requisite regulatory
and governmental approvals will be received on a timely basis on
terms acceptable to U3O8 Corp., and (iv) economic, political and
industry market conditions will be favourable. However, such
statements are subject to risks and uncertainties that may cause
actual results, performance or developments to differ materially
from those contained in the statements, including, but not limited
to: (1) that a joint venture will not be formed with the Chubut
Government, (2) timing and outcome of the PEA or that a mine will
be achieved on the Laguna Salada Project in compliance with current
Chubut mining law, (3) the Carina property will not be developed as
anticipated and silica potential not realized; (4) risks that a
mine will not be achieved on the Berlin Deposit and other
exploration projects, (5) that beneficiation test work will
continue to be favourable and results from small scale
metallurgical testing can be duplicated on a larger scale, (6) the
inherent uncertainties and speculative nature associated with
exploration results, resource estimates, potential resource growth,
future metallurgical test results, changes in project parameters as
plans evolve, (7) volatility of commodity prices, (8) dependence on
regulatory approvals and changes in legislation, environmental
compliance, community support and the political and economic
climate, (9) availability of future financing, and (10) exploration
risk and other factors beyond the control of U3O8 Corp. including
those factors set out in the "Risk Factors" in our Annual
Information Form available on SEDAR at www.sedar.com. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. U3O8 Corp.
assumes no obligation to update such information, except as may be
required by law.
U3O8 Corp.Richard SpencerPresident & CEO(416)
868-1491richard@u3o8corp.comU3O8 Corp.Nancy Chan-PalmateerVice
President, Investor Relations(416)
868-1491nancy@u3o8corp.comwww.u3o8corp.com
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