Nova uranium gets N$57.5m boost

Deep Yellow has brought in Core Energy Minerals to spend about N$57.5 million (A$5 million) exploring its Nova uranium joint venture in Namibia, following the exit of former Japanese partner JOGMEC.

The agreement gives Core Energy a path to a controlling 51% interest in the joint venture, which covers about 600 square kilometres of exploration ground west and south-west of the Langer Heinrich uranium mine.

JOGMEC previously spent A$4.5 million, equivalent to about N$51.7 million at the current exchange rate, to earn a 39.5% interest in Nova before withdrawing from the project.

Its exit restored Deep Yellow’s interest to 65%, after which the company began looking for another party to fund exploration of the licences it regards as non-core.

Under the new two-phase agreement, Core Energy will take over management of the Nova Joint Venture during the earn-in and fund all exploration expenditure and operations.

The existing shareholders will be free-carried until Core Energy has met its expenditure commitments.

The transaction expands Core Energy’s existing uranium footprint in Namibia, where the ASX-listed explorer already has the Gemsbok and Oryx projects in the Erongo Region.

Nova Energy (Namibia) holds exploration prospecting licences (EPLs) 3669 and 3670, which together cover about 600 square kilometres.

Deep Yellow is concentrating its Namibian development efforts on its more advanced Tumas uranium project, which the company is progressing towards a final investment decision.

N$57.5m for majority stake

Deep Yellow currently controls Nova through its wholly owned subsidiary Reptile Mineral Resources and Exploration (RMR), which holds a 65% interest and manages the joint venture.

Nova Energy (Africa), a subsidiary of former ASX-listed Toro Energy, holds 25%, while Namibian company Sixzone Investments owns the remaining 10%.

Core Energy can earn an initial 25% interest by spending A$2 million, or about N$23 million, within 18 months of the start of the earn-in.

Completion of the first phase would leave Core Energy with 25%, RMR with 48.75%, Nova Africa with 18.75% and Sixzone with 7.5%.

Core Energy can then earn a further 26% by spending another A$3 million, or about N$34.5 million, within 24 months of the end of Phase 1.

If both phases are completed, Core Energy will hold 51%, while Deep Yellow’s RMR interest will fall to 31.85%, Nova Africa will hold 12.25% and Sixzone 4.9%.

The A$5 million, equivalent to about N$57.5 million at the current exchange rate, represents exploration expenditure that Core Energy must fund to earn its interest. It is not a cash payment to Deep Yellow.

Core Energy takes over exploration

Core Energy will replace RMR as manager of Nova during the earn-in and fund all exploration expenditure and operations during the period.

The existing shareholders will be free-carried while Core Energy completes its expenditure commitments. Once those commitments are met, the other parties will generally be required to contribute to future expenditure according to their respective interests.

Sixzone will remain carried, with its share of expenditure to be recovered from future dividends.

The arrangement allows Deep Yellow to retain exposure to any future exploration success at Nova without funding the next A$5 million of exploration expenditure itself.

Core Energy's entry into the joint venture also adds another sizeable exploration position to its existing Namibian uranium portfolio.