ALX Uranium (TSXV: AL) announced this week that it has signed a binding option agreement with Orano Canada to earn up to a 51% participating interest in the Close Lake uranium project located in the eastern Athabasca Basin area of northern Saskatchewan, Canada.
In a media statement, ALX said the execution of the agreement confirms a five-year deal according to which the company has to fund exploration expenditures for a total amount of $12 million. ALX also has to issue 10,000,000 common shares to Orano.Historical drilling at Close Lake totals approximately 110,049 metres in 170 drill holes
Close Lake is currently the subject of a joint venture in which Orano, as the operator, holds a 74.4% interest, with Cameco Corporation (TSX: CCO) holding a 14.9% interest, and JCU holding the remaining 10.6% interest.
Based on the new agreement, ALX can earn up to a 51% interest from Orano, subject to a back-in right to be retained by the latter.
Later on and upon having exercised any portion of its options, ALX will be required to become a party to the joint venture agreement between Orano, Cameco, and JCU. Meanwhile, Orano will remain the operator of the project during ALX's option period.
"ALX and Orano are on the verge of initiating a multi-year exploration program with the goal of locating a new, high-grade uranium deposit in the Athabasca Basin," Warren Stanyer, ALX CEO said.
Close Lake consists of 21 mineral claims totaling 38,679 hectares. The eastern boundary of the property adjoins the Cigar Lake uranium mine, while its southern boundary adjoins the McArthur River uranium mine.
According to ALX, numerous uranium and base metals showings have been discovered from historical drilling at the project by a joint venture first established in 1978.