Azarga Uranium Corp. [AZZ-TSX; AZZUF-OTCQB] shares moved lower Friday May 3 on news that Kyrgyzstan’s parliament has voted to ban uranium exploration and mining in the Central Asian nation despite issuing licenses to foreign companies such as Azarga.
A report by Reuters news service said the move, which may expose the Biskek government to compensation claims from foreign investors, followed a series of public protests against plans to develop the Kyzyl Ompul Project, in which Azarga has a stake.
Azarga shares were down 6.38% or $0.015 to 22 cents Friday, and now trade in a 52-week range of 19.5 cents and 34 cents.
Azarga has been positioning itself to be America’s next uranium developer. In keeping with that plan, the company has been working to gain the approvals it needs to commence construction at its flagship Dewey Burdock project in South Dakota, using low-cost in-situ recovery methods.
Dewey Burdock is one of five U.S. uranium projects in the company’s asset portfolio. It also owns a 70% stake in the Kyzyl Ompul Project, which ranks as the largest known uranium deposit in the Kyrgyz Republic.
The Kyzyl Ompul Project is 100%-owned and operated by UrAsia in Kyrgyzstan LLC (UrAsia), in which Azarga owns a 70% interest and consists of one exploration license with an area of 42,379 hectares. The license is valid until December 31, 2020 and permits exploration for uranium.
However, UrAsia is being taken over by the Central Asian Uranium Co. Ltd.
A replacement earn-in agreement announced in April 2018 provides Central with an option to earn a 100% interest in the Kyzyl Ompul Project in exchange for $5.85 million in cash payments and a commitment to fund $1.5 million of exploration and development expenditures through December 1, 2020.
According to a NI 43-101-compliant technical report, the main zone at Kyzyl Ompul contains an inferred resource of 15.13 tons, averaging 225.2 ppm U3O8.
“Parliament has taken a historic decisionâ€¦.uranium mining will be prohibited,” speaker Dastan Jumabekov told the legislature after the May 2, 2019 vote, by which it ordered the government to draft the necessary bills to enforce the ban, Reuters said in a report.
The only exception will be made for the reprocessing of waste in Soviet-era tailings.
However, Azarga has said its immediate priority is to obtain the necessary permits and licenses it needs to advance the Dewey Burdock Project to the construction phase.
In keeping with that plan, the company recently raised $3 million from a private placement financing that will be used to advance Dewey Burdock and the Gas Hills Project in Wyoming.
The non-brokered private placement consisted of 13 million units at 23 cent per share.