Canadian companies Xcite Resources and Eagle Plains Resources have signed an option agreement, as per which the former can earn up to an 80% interest in six uranium properties near Uranium City in Saskatchewan, Canada.

The projects cover an area totalling 5,905ha. Xcite can earn the stake in each property by spending C$3.2m ($4.28m) on exploration, issuing 750,000 of its shares and paying C$55,000 in cash to Eagle Plains, over a four-year period. This totals C$19.2m in exploration expenditures, 4.5 million shares and C$330,000 in cash payments.

After Xcite completes these conditions, an 80:20 joint venture will be established, “with Eagle Plains retaining a carried interest in all expenditures until delivery by Xcite or its assigns of a bankable feasibility study”.

During the option earn-in period, Xcite will operate the properties and Eagle Plains will manage the exploration programmes under the direction of a joint technical committee.

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By GlobalData

Eagle Plains will also continue to retain an underlying 2% net smelter royalty on each of the properties.

The six properties are the Beaver River, Black Bay, Don Lake, Gulch, Larado and Smitty. These are located in Beaverlodge District near Uranium City in the Lake Athabasca region of Saskatchewan province.

Uranium mineralisation is said to be abundant in the region and it has been explored since the 1940s. The first uranium in the country was produced at the Beaverlodge camp.

Historically, around 70.25 million pounds of triuranium octoxide (U3O8) was produced between 1950 and 1982, from ore averaging 0.23% U3O8.

Beaver River property covers 1,455ha of land. Samples from the property returned trace values of up to 27.62%, 36.30% and 29.70% of U3O8.

Covering 1,114ha of land, the Black Bay property has returned samples of 16.74% and 9.64% of U3O8 at 12.8m of depth.

The Don Lake property covers 524ha of land. Samples from here returned values of 10.7% and 2.14% of U3O8.

The Gulch property is located 20km from Uranium City and covers 1,685ha. Historic measurements returned values of up to 2.23% of U3O8.

The Larado property is also located close to Uranium City and covers 245ha. Between 1953 and 1960, extensive underground development and production took place.

Structurally controlled uranium mineralisation at the property is associated with graphite and pyrite.

The sixth property is Smitty, which covers 849ha. In 1954, it became the first privately owned property to produce uranium, with mineralised material being shipped to nearby Eldorado mill.

Xcite Resources board chairman Chris Cooper said: “We are pleased to enter the world’s best uranium district with a premier portfolio of properties that have demonstrated high-grade surface showings with a strong potential for a world-class discovery. This transaction will lead us to the forefront of the energy metal arena and allow our shareholders to capitalise on the emerging uranium market.”

Eagle Plains president and CEO Tim Termuende said: “We are excited to partner with Xcite to accelerate the exploration of the Uranium City projects. Considering the rich production history of many of the individual projects, we welcome the opportunity to conduct modern exploration methods combined with continually advancing geological understanding of the genesis and controls of uranium mineralisation known to exist there.”

Earlier this year, Bullion Gold Resources agreed to sell its Turgeon Lake Property in Quebec to Xcite. Covering 2,067ha of area, the property had 39 mining cells.