Elevate Uranium buys Marenica stake to build Erongo scale

Elevate Uranium (ASX: EL8; US-OTC: ELVUF) will buy another 15% of the Marenica uranium project in Namibia, tightening control to 90% of a growing asset as it tests whether its processing technology can cut future mine costs.

Marenica hosts 134.5 million tonnes grading 180 parts per million (ppm) uranium oxide (U₃O₈) for 52.8 million lb., giving Elevate 47.5 million attributable lb. after closing. The project sits in central Erongo, an established uranium mining region about 200 km west of Windhoek. The deal is to lift Elevate’s Namibian resource base to 124 million lb. and its global total to 181 million pounds.

“Marenica has seen multiple successes this calendar year, with its JORC resource essentially doubling in grade and increasing in size by 31% to 52.8 million lb. U₃O₈,” managing director Murray Hill said in a Monday release, citing a resource update from last month.

“Increasing our ownership means more of that upside and that of the pilot plant results to come, will sit directly with our shareholders.”

The move follows a busy stretch for uranium consolidation, after Paladin Energy (ASX: PDN; US-OTC: PALAF) closed its takeover of Fission Uranium in December and Uranium Energy (NYSE-A: UEC) bought Rio Tinto’s (ASX, NYSE, LSE: RIO) Sweetwater plant and Wyoming uranium assets the same month.

Elevate is working to scale the project into a development case in a proven uranium belt. Marenica and the nearby Koppies project have given the company a district package large enough to test its so-called U-pgrade process across several ore types, while the larger stake gives shareholders more exposure to any pilot-plant success.

The Sydney-listed stock traded 6% lower on Tuesday morning at A23¢ (C22¢) apiece, giving it a market capitalization of A$107 million. It has traded in a 12-month range of A22¢ to A50¢.

Deal terms

Elevate expects to close the acquisition by the end of July. It is to buy 5% of Marenica Minerals, the private company that owns the project, from Millenium Minerals and 10% from Xanthos Mining. Xanthos will retain a 10% free-carried stake.

The company will pay A$1.1 million in cash to Xanthos, issue A$2.2 million in Elevate shares split equally between the two sellers and cancel A$3.4 million in debt owed by Millenium. The share payment will be priced on Elevate’s five-day volume-weighted average price before closing and issued from its existing placement capacity.

Processing test

Marenica ore underpins Elevate’s U-pgrade pilot plant work this year. The company developed the beneficiation process on Marenica mineralization and says bulk samples from across the updated resource are now being tested to set processing parameters for later studies.

Bench-scale tests have supported the process, but the pilot plant remains the key test. Elevate says U-pgrade aims to reject most non-uranium waste before leaching, lift ore grades and reduce plant size and reagent use compared with conventional processing.

Erongo scale

Koppies, Elevate’s other flagship Erongo asset, hosts 186.2 million tonnes grading 186 ppm U₃O₈ for 76.2 million pounds. Together, Koppies and Marenica anchor one of the larger undeveloped uranium positions in a region that already hosts mines, power, roads and export routes through Walvis Bay.

Namibia has produced uranium for nearly half a century and hosts China National Uranium Corp.-controlled Rössing, Swakop Uranium’s Husab and Paladin Energy’s Langer Heinrich mines, giving developers a deeper pool of skills, contractors, and infrastructure than most uranium jurisdictions.