Alligator Energy signs with Traxys in first step towards becoming a uranium producer
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Uranium and cobalt-nickel explorer, Alligator Energy (ASX:AGE), has made the first step towards becoming a uranium producer, after announcing a strategic agreement with global commodities trader, Traxys.
The agreement saw Alligator forming an exclusive partnership with Traxys North America LLC, the US arm of the commodities trading group Traxys.
Under the deal, Traxys will provide a full scope of work for Alligator’s uranium project, which includes marketing services on future uranium production, long term off-take contracting, and project development financing.
Traxys will also assist Alligator in project acquisition opportunities.
Traxys is a well-known global player in the trading of metals, minerals and alloys, with a turnover exceeding US$6 billion annually.
The company’s uranium trading division covers the regions of Americas, Europe, Australia and Asia, and transacts up to 15 million pounds of U308 annually. It also manages contract supply books in conversion, UF6, futures and options.
Alligator believes that it can leverage on Traxys’ market intelligence and customer relationship – in order to develop its Samphire Uranium Project’s contract sales book, and maximise future product pricing with uranium buyers.
The company says that Traxys will also provide it with U3O8 inventory finance and logistics support, and potentially project financing of up to US$15 million for new project startups.
Working with Traxys will also allow Alligator to evaluate potential acquisition opportunities and develop a future supply pipeline, as the company aims to transition from a junior explorer into a bona fide producer with a global supply profile.
“With planning for the upcoming Samphire Project drilling program well underway, and agreements in place with ANSTO for updated metallurgical testing, the Traxys agreement adds exceptional experience towards our goal of becoming a future uranium producer,” remarked Greg Hall, CEO of Alligator.
An initial compensation of US$250k, and annual fee of US$125k will be paid to Traxys in the form of AGE shares.
However, Traxys will be remunerated largely through a success-based compensation model, with payments made for establishing long-term off-take contracts, and for short-term purchase and sale of uranium.
This, Alligator says, will ensure that both parties are fully aligned on goals and achievement of mutual success.
Over the coming weeks, Alligator intends to schedule a general meeting of shareholders to secure approval for the issue of AGE shares related to the initial upfront compensation.
Alligator Energy may play a crucial role in a world where there is a severe shortage of uranium production to meet global demand.
Its share price has risen by around 140 per cent over the past 12 months.