The Dewey-Burdock Project is a Development stage uranium project located in Black Hills Uplift in South Dakota, USA. The Dewey-Burdock Royalty was created pursuant to a quitclaim deed and assignment between Neutron Energy, Inc. (acquired by Westwater Resources Inc. in 2012) and Powertech (USA) Inc., dated January 12, 2009. This agreement also includes certain rights of the royalty holder to require any of the underlying property rights to be re-conveyed to it to the extent that, among other things, the payor determines to abandon, not maintain in good standing or not renew any such rights or fails to hold, maintain and operate any such property as a diligent and prudent operator.
The Dewey-Burdock Royalty does not apply to the entire Dewey-Burdock Project area. The royalty currently applies to approximately 1,700 acres, or approximately 16%, of the currently proposed Dewey Burdock Project NRC permit area total of 10,580 acres, with an additional 1,227 acres of coverage outside such permitted area. The net minerals rights disclosed in the Dewey-Burdock Technical Report(1) is 16,962 acres. The area subject to the Dewey-Burdock Royalty represents 17% of such aggregate acreage.
The Dewey-Burdock Project is an Advanced stage ISR uranium project located in the Edgemont uranium district of South Dakota, USA and is comprised of 12,613 surface acres and 16,962 net mineral acres. According to publicly available information, the property is owned and operated by Azarga Uranium Corp. ("Azarga"), which has announced that the Dewey-Burdock Project is its initial development priority.
The information below regarding project milestones and recent developments for the Dewey-Burdock Project has been summarized from technical reports available under Azarga's profile on SEDAR (www.sedar.com), and from Azarga's public disclosure.
In its management's discussion and analysis for the three months ended September 30, 2018, Azarga disclosed that the Dewey-Burdock Project has received several key licenses and permits and is in the process of obtaining final regulatory approvals required for project construction. Azarga further disclosed that it is continuing to evaluate project financing options, with a view to having a funding solution in place prior to or concurrent with the finalization of permits.
In December 2018, Azarga filed a technical report which included the following mineral resource estimates: 7.53 million short tons or 6.83 million tonnes of combined measured and indicated resources at an average grade of 0.113% U3O8 returning 16.94 Mlbs U3O8 for the ISR resources only.
Azarga announced that on July 20, 2018, the United States Court of Appeals for the District of Columbia Circuit (the "DC Circuit Court") ruled on the Oglala Sioux Tribe's motion for summary disposition and its request to stay or revoke the United States Nuclear Regulatory Commission (the "NRC") license issued in relation to the Dewey-Burdock Project. Azarga's disclosure stated that the DC Circuit Court supported the NRC's decision to maintain the license, though indicated that the NRC must ensure it complies with the requirements under the National Environmental Policy Act to complete the license application and that the primary point of contention was the lack of sufficient archeological surveying on the project to identify potential impacts to the Oglala Sioux Tribe's cultural and historical resources.
Azarga announced that the NRC issued a decision on January 31, 2019, upholding the effectiveness of the Dewey-Burdock Project NRC license in consideration of the remand from the DC Circuit Court. Azarga's disclosure stated that the NRC reasoned that the radioactive materials and waste license may remain in place, while proper historical preservation measures are being explored, because other permits from the state of South Dakota and the United States Environmental Protection Agency (the "EPA") have not been granted.
In May 2019, Azarga announced that the Atomic Safety and Licensing Board issued an order granting the NRC staff's motion to set a schedule for an evidentiary hearing pertaining to the final contention for the Dewey Burdock Project NRC license and that such decision provided the NRC staff and Azarga with an opportunity to resolve such final contention. Azarga further announced that the timeline established by the Atomic Safety and Licensing Board set November 29, 2019 as the decision date on the matter. In its management’s discussion and analysis for the six months ended June 30, 2019, Azarga disclosed that its NRC license remained in good standing.
On August 28, 2019, Azarga disclosed that that the EPA had issued revised draft permits. The revised draft EPA permits pertain to the Azarga's planned Class III and Class V Underground Injection Control ("UIC") activities. The Class III and Class V UIC EPA permits represent one of the three major regulatory agency approvals required for the Dewey-Burdock Project. Azarga disclosed that it already holds a Source and Byproduct Materials License from the NRC, being one of the three major regulatory agency approvals required for the Dewey-Burdock Project. According to the EPA's public notice, the draft permits will be made available for public review and comment until October 10, 2019.
On January 17, 2020, Azarga disclosed a Preliminary Economic Assessment for the project(1). The report disclosed an updated mineral resource statement, stating 7.4 million short tons or 6.7 million tonnes of combined measured and indicated resources at an average grade of 0.116% U3O8 returning 17.1 Mlbs U3O8. Resource pounds and grades of U3O8 were calculated by individual grade-thickness contours. Tonnages were estimated using average thickness of resource zones multiplied by the total area of those zones.
The preliminary economic assessment of the project states all values in U.S. dollars and uses a constant uranium price of $55 per pound. Azarga states that the estimated initial capital costs for the first two years of the project life are approximately $31.7 million with sustaining capital costs of approximately $157.7 million spread over 17 years of operation. Direct cash operating costs are approximately $10.46 per pound of U3O8 produced excluding royalties and severance and conservation taxes. U.S. federal income tax is estimated to be $3.39 per pound. The total capital and operating costs average approximately $28.88 per pound (pre-U.S. federal income tax) and $32.27 per pound (post-U.S. federal income tax) U3O8 produced. The project is estimated to generate net earnings over the life of the project of $372.7 million (pre-U.S. federal income tax) and $324.4 million (post U.S. federal income tax). It is estimated that the project has an internal rate of return (IRR) of 55% and a NPV of $171.3 million (pre-U.S. federal income tax) and an IRR of 50% and a NPV of $147.5 million (post-U.S. federal income tax) applying an 8% discount rate.
In a news release dated September 7, 2021, Azarga announced that it had entered into a definitive agreement with enCore Energy Corp. ("enCore") whereby enCore will acquire all the issued and outstanding common shares of Azarga pursuant to a court-approved plan of arrangement. In a news release dated November 16, 2021, Azarga stated that the shareholders of Azarga have approved the plan of arrangement. In addition, they stated that closing of the plan of arrangement is subject to the receipt of applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature, including, without limitation, the final stock exchange approval.
NI 43-101 Technical Report, Preliminary Economic Assessment, Dewey-Burdock Uranium ISR Project, South Dakota, U.S.A., with an effective date of December 3, 2019, prepared for Azarga and authored by Steve Cutler, P.G. and Douglass H. Graves, P.E.