Uranium junior Alligator Energy (ASX: AGE) has moved a step closer to 3000 metre drilling program at its advanced TCC4 prospect in the Northern Territory, after shareholders approved a $1.75 million capital raising to fund the planned activities.
Targeted at strategic and institutional clients, as well as high net worth clients of advisory firm BW Equities, the capital raising is based on the placement of up to 250 million fully paid ordinary Alligator shares at $0.007, with a 1:2 attaching Alligator listed option.
Up to $1.5m of the funds will be used to restart exploration work and undertake the drilling program at TCC4, with the remainder allocated to advance other uranium targets within the company’s 650 square kilometre Arnhem Land tenement package.
Alligator acting chief executive officer Greg Hall said the placement was well-timed in light of recent increased interest in the uranium market and uranium equities, and excess demand from the company’s recent rights Issue.
“[We believe] this placement opportunity represents immediate value in on-ground drilling work this year at our primary target and we are pleased our shareholders agree with that view,” he said.
Advanced uranium potential
TCC4 is believed to have the most advanced undercover uranium potential of Alligator’s Arnhem Land tenements, with identification of underlying Cahill Formation geology similar to the nearby Ranger uranium mine operated by Energy Resources of Australia (ASX: ERA).
The prospect has been advanced to drill-ready stage, with past years of undercover pathfinder work determining the most likely location for mineralisation beneath the sandstone cover.
While uranium prospects occurring at surface may have been eroded over time, Alligator said those which may exist under the sandstone cover would have the best chance of being complete and of economic size.
A uranium-rich province
Located approximately 250km east of Darwin, the ARUP is an underexplored region believed to contain nearly 1 billion pounds of high-grade uranium resources.
It is host to several world-class discoveries including the Ranger No 1 and No 3 mines which have to date produced over 300 million pounds of yellowcake for export.
It is also home to the Jabiluka deposit – one of the world’s largest uranium deposits – with a reported resource in excess of 300Mlb at grades of up to 5000 parts per million uranium.
Alligator’s planned drill program at TCC4 consists of up to 10 holes, varying in depth from 250m to 400m metres, within four preferred lines, and drilled via a combination of reverse circulation pre-collars through the main part of the sandstone cover, and diamond-cored tails through the target horizons.
The company has said its exploration team will undertake “rapid and ongoing evaluation” of geology, lithology and any mineralisation encountered during drilling to enable real-time modification of the program based on results.
Under the conditions of a traditional landowners agreement, Alligator has re-opened its Myra drill camp and main access tracks in preparation for the commencement of the program.
Necessary equipment, fuel and exploration personnel have also been engaged and mobilised to site.
While the global uranium spot price remains low, recent announcements of production cutbacks worldwide have had an impact.
Alligator reported some increased price and buying interest mid-year which moved the commodity’s price upwards around 10%, and by post-June quarter, the price moved again to sit at around US$25.65 per pound.
Global uranium production is now significantly below global demand, with this ratio declining rapidly as uranium producers around the world refuse to deplete resources at such low prices, and global nuclear power generation increases as new reactors come on line.
In 2016, the World Nuclear Association reported global uranium production was 98% of demand; by 2017, that figure had reduced to 92%.
According to Alligator’s estimates, global uranium production for 2018 will be approximately 80% of demand, taking into account recent suspensions.
At mid-afternoon trade, Alligator Energy shares were steady at $0.009.