Northern Uranium (ASX: NTU) is an established Australian exploration company primarily focussed on Uranium and Rare Earth exploration and development in Western Australia and the Northern Territory.
Northern Uranium to purchase John Galt Rare Earths Project
Northern Uranium (ASX: NTU) has completed due diligence and signed a formal sale and purchase agreement with Arnhem Resources Pty Ltd for the Option to purchase the John Galt project under the terms announced on 9 April 2010.
The John Galt Project is a high value heavy rare earths (HREE) prospect located in the Kimberley region of Western Australia about 28km south of Warmun and 35km from the Great Northern Highway. It covers an area of 65km² within tenement application E80/4298 held by Arnhem.
The Project is complementary to the company’s existing Browns Range Project with a similar style of mineralisation and composition of HREE. This discovery is particularly significant due to the strong global demand for the HREE elements present in the mineralisation.
Under the terms of the agreement with Arnhem, Northern Uranium has the right for a four year period to acquire 100% interest in the project. Northern Uranium has completed the Option to Purchase agreement with a cash payment of $25,000.
Upon granting of the tenement to Arnhem, Northern Uranium will also issue Arnhem 500,000 unlisted options with a three year exercise period at either 25c or at a 43% premium to the 5 Day VWAP prior to the date of issue, whichever is greater.
Should Northern Uranium proceed to purchase, the final consideration comprises a cash payment of $250,000, the issue of NTU ordinary shares to the value of $500,000 and a 1% Net Smelter Return Royalty on all minerals on the tenement.
A work program for the John Galt project will be added to Northern Uranium’s proposed exploration program at the Browns Range HREE project where rock chip sampling in the 2009 program indicated a new HREE discovery.
On-ground exploration at John Galt will commence as soon as the tenement is granted, which is expected to be in the second half of 2010.
The Rare Earth Industry has strategic importance in the current age of technology as rare earths are critical in many applications including hybrid vehicles, computers, mobile phones and wind turbines amongst others.
Currently 97% of the world production of rare earths comes from China.
In response to this the United States has recently introduced the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2010 to reestablish within the US a competitive domestic rare earths minerals production industry.
Northern Uranium has recently completed a successful rights issue raising $3.2m. These funds were raised for a drilling program at the Gardner-Tanami Project and Gardner JV Project, and exploration activities on the HREE projects at the Browns Range and John Galt Projects.
