Resource World Magazine

www.resourceworld.com 31 F E B R U A R Y / M A R C H 2 0 1 4 from joint owners Cameco Corp. [CCO- TSX; CCJ-NYSE] and Vena Resources Inc. [VEM-TSX]. Azincourt will issue a total of $2 million in cash and stock to Cameco and Vena for the purchase. The acquisition brings with it two properties: the early-stage Muñani Project and the advanced-stage Macusani Project on which $12.5 million has been spent on exploration between 2007 and 2011, including 232 diamond drill holes for just below 38,000 metres drilled. Effective October 2011, and at a cut-off of 0.18 lbs per ton, the project has a NI 43-101-com - pliant resource of 5.7 million lbs uranium measured, 12.5 million lbs indicated and 17.4 million lbs inferred. Five individual target areas were drilled, with focus on the Tantamaco prospect. In addition, the Macusani Project is accessible by gravel roads connecting to a main highway 11 km away. Before becoming Azincourt's President and CEO, Ted O'Connor worked at Cameco where he was key player in the mining major's corporate development group. This unit was instrumental in taking Cameco into Peru. "I would go around evaluating projects and companies for partnerships and acquisitions during my last ten years with Cameco, [which] had a focus on South America from 2006 to 2012," O'Connor said. "[As part of this], I went down to Peru and recommended Cameco get involved with Vena Resources on the Peruvian uranium projects." [Cameco and Vena] spent $12.5 million on exploration between 2007 and 2011, the last time the projects were actively worked," he added. "I managed the rela - tionship until April 2013, so I'm quite familiar with the area and the projects." O'Connor then moved to Azincourt and was instrumental in helping line the company up to acquire the Peruvian plays. "Azincourt was able to get Cameco and Vena together and negotiate a deal whereby we basically spent $2 million in a combination of cash and shares and acquired 100% of Minergia," he said. While the Macusani Project is of a lower grade, its strength lies in its potential vol - ume and the ease with which it could be mined as a potential open-pit operation. "[Open pits afford] large volumes, easy mining and low operating costs," Stalker said. "[And] open-pit opportunities are the ones that capture the market's atten - tion when the market environment and uranium prices are positive." O'Connor believes that an operation at Macusani could deliver uranium at a cost of under $30 per lb once extraction and processing costs are tallied. "Macusani Yellowcake, our friend and neighbour on the Macasani Plateau, just came out with a preliminary economic analysis recording a cost of production in the order of less than $21 per pound," O'Connor said. "The mineralization [in the area] is quite clean and leaches extremely well," he added. "The geology also suggests to us that there's a lot more [uranium] to be found … So, in spite of the grade, you have the relatively unusual instance where geology and economics come together." GRASSROOTS GROWTH But before Azincourt can tackle further exploratory work, it must engage with the two local communities affected and begin the permitting process anew. "We can't just go in there and start drilling because there has been a two-year hiatus, although this wouldn't have been our first plan anyway," O'Conner said. "We'll be starting back at the community agreement level and go through the environmental permitting process for exploration work [approval]." This will require dedicating time and effort to connect with local people at the grassroots level, Stalker said. "You have to work your way upwards and not approach this from the top down. I know that we've got the [management] background to take the correct steps and get ourselves aligned properly to move forward," he said. "We've got a great opportunity to move community relationships forward posi - tively, with the best results in mind for all parties involved." A key advantage for Azincourt is the skeleton crew from Minergia that remains in position and comprises team members with whom O'Connor worked during his time at Cameco. "One [of the team] is a community relations specialist who lives close to the communities and another is the chief geologist who has worked in Peru on uranium since 2005 … They've always worked with the community, hiring locals for the mine camp work and other assis - tance jobs. Some great relationships have been built up." As the community relations work pro- gresses, Azincourt will also begin analysis of the drill core and samples it has inher- ited. "We'll be trying some preliminary leach testing to get our own version of what the economic parameters might be for the style of deposit. We'll also seek to confirm what others have done and to get numbers that we can report," O'Connor said. Although Peru currently produces no uranium, the government has already taken preparatory measures by embedding rec - ognized standards. "Minergia was the first "Brazil is the only country in South America currently producing uranium, with an output of 231 tonnes reported by the WNA for 2012."

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