Strathmore Minerals announced in late January 2012 it entered into a definitive agreement with Korea Electric Power Corp. (Kepco) whereby Kepco will make phased investments of up to $40 million in Strathmore, with the proceeds to be used to develop Strathmore’s Gas Hills uranium properties in Wyoming. The agreement also contains an off-take provision, whereby Kepco has the right to purchase a portion of any future annual uranium production from Strathmore’s properties, subject to pre-existing agreements.
Under Phase 1 of the agreement, in February 2012, Kepco acquired an approximate 14% interest in Strathmore for $8 million, which will be used for a Phase I exploration and development program in the Beaver Rim area of the Gas Hills and for ongoing permitting activities on Strathmore’s nearby lower Gas Hills properties. Kepco is now Strathmore’s largest shareholder.
Following completion of the Phase I program, Kepco may elect to establish a limited liability company with Strathmore for the further development of the properties. Strathmore will contribute all of the properties and assets of its Gas Hills project to the company, and Kepco will contribute, as its initial contribution, $12 million to fund the first year of the Phase II development program, thereby acquiring a 15% equity interest in the project company.
In the second year of the Phase II program, KEPCO may acquire an additional 12.5% equity interest in the project company by funding an additional $10 million in development expenditures; and in the third year of Phase II, Kepco also may acquire an additional 12.5% interest, for a total of 40%, by funding an additional $10 million in expenditures.
Strathmore controls more than 34,000 acres of mineral claims in the Gas Hills, including approximately 16,000 acres in the relatively unexplored Beaver Rim area, located to the south of the lower Gas Hills area. The company has been actively advancing its mine permit application in the lower Gas Hills area for submittal to the state of Wyoming, in addition to a source materials license application to the U.S. Nuclear Regulatory Commission.