Okapi Resources is set to become the single largest shareholder of a private Australian company developing and commercialising a bleeding-edge uranium enrichment technology after entering into a binding agreement with Ubaryon. Okapi currently has its foot on a suite of uranium assets in North America and says the investment will help it manufacture a processed form of uranium that is typically imported from Russia.
With trade with Russia remaining complex due to the ongoing war in Ukraine, the deal could represent a material pathway to cutting the dependency on enriched uranium known as “SWU” or “separative work units” from the former superpower. According to Okapi the US currently imports about 95 per cent of its uranium concentrate powder or “yellowcake” requirements and 70 per cent of its SWU from Russia.
The company says the opportunity to pick up a cornerstone shareholder position in Ubaryon also provides it with exposure to a manifold of components in the nuclear fuel cycle including exploration, mining and now uranium enrichment.
Okapi will fork out $3.1 million for an initial 19.9 per cent stake of Ubaryon. The proceeds will be used to drive Ubaryon’s enrichment process and $1.3 million will be applied to a share buyback . Okapi management says its ownership purse could rise to 21.1 per cent subject to the buyback by Ubaryon from its current shareholders. The transaction is tipped by the company to close by the end of March this year and is subject to Okapi’s continued due diligence efforts. Laced into the agreement is an option for Okapi to nominate a director to Ubaryon’s Board – a position which will fall to current Okpai Managing Director, Andrew Ferrier who will be tasked with assisting in Ubaryon’s development and commercialisation efforts.
Ubaryon boasts research and development amenities in Sydney at ANSTO, the country’s premier science investigation facility and enriches uranium through an innovative process that is not reliant on significant temperature or pressures. The system thereby significantly drives down technical and economical processing risks. The company says its process could change the nature of the current uranium enrichment industry owing to its economics, safety and environmental characteristics which are all improvements on the sector’s existing methods.
The deal follows in the footsteps of Cameco Corporation, the world’s largest uranium producer who picked up a 49 per cent interest in Silex Systems – an ASX-listed technology company that uses lasers to produce enriched uranium. Silex boasts a current market capitalisation of about $950 million despite its technology still not being commercialised and Okpapi and privately held Ubaryon will be hoping the potential union can deliver similar value for the partnership.
Speaking of the potential Okapi investment Ubaryon’s Managing Director, Adam Blunn said: “We have been approached by numerous companies over the past 12 to 18 months but we believe that this partnership with Okapi represents an outstanding path to add value to our development due to their likeminded approach and philosophy about the best way to progress the opportunity and achieve an excellent return for both Ubaryon and Okapi shareholders.”
Ubaryon is now eyeing the construction of an enrichment plant, conducting regulatory approvals work to permit negotiations with large-scale corporations, further validation of its enrichment process and additional bench-scale activity. The program could push the company closer to the delivery of commercial-scale enriched uranium, a feat achieved by only a handful of government-owned or controlled companies.
According to Okapi, the uranium enrichment sector has only four key producers; Russian state corporation Rosatom, Urenco, Orano and CNNC, a Chinese state-owned operation. Rosatom is the current production leader for enriched uranium with an output of 27,000 SWU a year.
According to a 2022 report from Credit Suisse, the war in Ukraine has sent the price of enriched uranium to US$125 per SWU, up from a pre-skirmish price point of about US$60 per SWU.
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