OBERON $OBRN LEAPS INTO THE LEAD IN THE URANIUM RACE: PROJECT AND EXTRACTION TECHNOLOGY ACQUISITION IN CANADA
Figure 1. Uranium Outperforms Other Asset Classes in the Short-Term (2019-2023)
Vancouver, BC - TheNewswire - March 6, 2023 - OBERON URANIUM (“Oberon” or the “Company”) (CSE:OBRN) is pleased to announce that it has signed a letter of intent dated March 6, 2023 (the “LOI”) with 2037881 AB Ltd. (“2037881 AB”) in respect of a proposed transaction (the “Proposed Transaction”) under which Oberon will acquire all of the issued and outstanding shares of 2037881 AB. The material assets of 2037881 AB are 23 mineral claims totaling 20,064 hectares near Uranium City, Saskatchewan, Canada, known as the “Fusion Uranium Zone Project”, which is prospective for uranium. In addition, 2037881 AB owns uranium extraction technology using a method of in-situ leaching of uranium deposits located in non-porous, impermeable underground formations.
The Fusion Uranium Zone Project has seen extensive drilling and expenditures since 2005, and within meters of the project, crown reserve land of the Government of Saskatchewan has been reported to have significant amounts of uranium. Furthermore, operating costs in Uranium City have been historically low due to existing surrounding infrastructure and road accessibility.
Lawrence Hay, President of Oberon, commented “We are beyond excited to be adding this asset to our portfolio. This project will go a long way in strengthening our position in the uranium space.”
The Proposed Transaction
Pursuant to the Proposed Transaction, the Company will issue to an aggregate of 20,000,000 Class A common shares of Oberon (the “Consideration Shares”) to the 2037881 AB shareholders at a deemed price per Consideration Share of $0.2025, representing an aggregate purchase price of $4,050,000. The Proposed Transaction will be completed pursuant to available prospectus exemptions in accordance with applicable securities legislation. The mineral claims comprising the Fusion Uranium Zone Project will be subject to a 3% production royalty retained by a shareholder of 2037881 AB. The Company will have the right to buy back the royalty at any time for $1,000,000. Oberon and 2037881 AB have agreed to negotiate in good faith the terms of a definitive agreement with respect to the Proposed Transaction within 90 days.
MORE DETAILS ON THE MARKET
Uranium's Strong January Performance
January was a strong month for uranium markets, along with the broad equity and bond markets, but a mixed month for the commodity complex overall. The U3O8 uranium spot price rose from $48.31 to $50.75 per pound in January, a 5.05% increase, while uranium mining equities gained 14.65%. For the U3O8 uranium spot price, this marked a continuation of notable performance, having appreciated 14.74% in 2022 and 104.23% since December 31, 2019.1 January’s strong performance for uranium mining equities reflects a reversal of their 11.42% decline in 2022. The recent strength of uranium miners represents a return to their pre-2022 notable performance; from December 31, 2019, to January 31, 2023, uranium equities have gained 213.63%.
Lifting Headwinds and Stronger Government Support
In 2022, the fundamentals for uranium and nuclear energy significantly strengthened and were bolstered by a continuous flow of endorsements from global governments. Despite this, uranium mining equities were dragged down in 2022 by their systemic risk to the overall markets, not surprising given last year’s bear market in which the S&P 500 Index fell 18.11%.
January marked a pivotal month in shifting investor sentiment and diminishing headwinds for equity markets, which supported the surge in uranium mining equities. A combination of the “January Effect”,6 lessening fears that the U.S. economy is heading toward recession and declining inflation, buoyed markets. Markets began their move higher on January 6 when the December U.S. Jobs Report showed wage growth was below expectations, and indication that inflation pressures may be weakening.7 This eased concerns that Federal Reserve would continue its aggressive interest rate hikes. Market anxiety over Inflation and rate hikes further quelled on news that the year-over-year U.S. consumer price index fell from 7.1% in November to 6.5% in December.
In January, other market headwinds that dominated 2022 reversed course and helped to boost asset prices. Most notably, Europe’s anticipated energy crisis was mitigated by warmer weather, and China reversed its long-standing zero COVID policy and reopened its economy. The reduction in these headwinds helped uranium mining equities flourish in January. We continue to believe the strong underlying fundamentals of the uranium sector will provide long-term structural support for uranium and uranium miners in the remainder of 2023.
