Why Is Elevate Uranium Selling Oobagooma to Focus on U-pgrade Tech?
Elevate Uranium Ltd has agreed to sell its Oobagooma Uranium Project to Orpheus Uranium Ltd in a deal combining cash and milestone-based equity payments, aligning with Elevate’s pivot towards its innovative U-pgrade beneficiation technology and other core assets.
- Sale of Oobagooma Project to Orpheus Uranium Ltd for cash and equity
- Milestone-based share payments tied to exploration and drilling activities
- Orpheus assumes royalties and third-party rights linked to the project
- Elevate refocuses on commissioning U-pgrade demonstration plant and advancing Namibian and Northern Territory projects
- Transaction subject to regulatory and shareholder approvals
Elevate Uranium Divests Non-Core Asset
Elevate Uranium Ltd (ASX, EL8) has announced the sale of its Oobagooma Uranium Project, located in Western Australia's Kimberley region, to Orpheus Uranium Ltd (ASX, ORP). This move marks a strategic divestment of a non-core asset as Elevate sharpens its focus on advancing its proprietary U-pgrade beneficiation process and progressing key projects in Namibia and the Northern Territory.
Deal Structure and Consideration
The transaction involves an upfront cash payment of A$175,000 and the issuance of 20 million fully paid Orpheus shares to Elevate upon completion. Additionally, milestone-based equity payments of 15 million and 25 million shares are contingent on Orpheus securing exploration approvals and completing specified drilling programs within three and five years, respectively. A non-refundable exclusivity payment of A$50,000 has already been made.
Orpheus will also assume existing royalties tied to the project, including a 1% total sales return royalty payable to Orano Mining and a 1% gross revenue royalty payable to Paladin Energy Limited. Paladin retains rights including a buy-back option and right of first refusal on future sales, underscoring the layered interests surrounding the tenement.
Strategic Implications for Elevate
Elevate’s divestment aligns with its strategic priority to concentrate resources on the commissioning of its U-pgrade demonstration plant. The U-pgrade process, developed on ore from Elevate’s Marenica Uranium Project in Namibia, promises to significantly reduce processing costs by concentrating uranium ore and rejecting waste material. This technology could be transformational for the uranium sector, potentially halving operating and capital expenses.
By shedding the Oobagooma asset, Elevate aims to streamline its portfolio and capital allocation, focusing on projects where the U-pgrade process can be applied effectively. The company’s Managing Director, Murray Hill, highlighted the importance of this strategic realignment in positioning Elevate for future growth.
Conditions and Next Steps
The sale is subject to several conditions precedent, including ministerial consent for the tenement transfer, Orpheus shareholder approvals for share issuances, and agreements with third parties such as Paladin to formalize royalty and rights arrangements. Completion is expected within 120 days of the agreement’s execution, barring extensions.
For Orpheus, acquiring the Oobagooma Project represents a significant opportunity to expand its uranium portfolio with a sedimentary-style roll-front mineralisation asset. The milestone structure incentivizes active exploration and drilling, which could unlock further value for shareholders.
Bottom Line?
Elevate’s divestment signals a sharper focus on its innovative U-pgrade technology, while Orpheus takes on a promising uranium project with exploration milestones that could reshape its growth trajectory.
Questions in the middle?
- Will Orpheus secure the necessary approvals and successfully complete the exploration milestones?
- How will Elevate’s focus on U-pgrade impact its financial performance and project timelines?
- What are the implications of the royalty and buy-back rights retained by Paladin for future project economics?
