Project Summary

The Cigar Lake/Waterbury project is a fully developed property with an underground mining operation located near Waterbury Lake in northern Saskatchewan, Canada approximately 660 km north of Saskatoon. The Cigar Lake Joint Venture partners are Cameco Corporation (50.025%), Orano Canada Inc. (37.1%), Idemitsu Canada Resources Ltd. (7.875%), and TEPCO Resources Inc. (5%).

As at December 31, 2020, Cameco disclosed estimated: (i) mineral reserves of 165.6 Mlbs of U308 at an average grade of 15.92% U3O8; and (ii) measured and indicated resources, exclusive of reserves, of 104.8 Mlbs at an average grade of 13.88% U3O8 and inferred resources of 22.8 Mlbs at an average grade of 5.55% U3O8, for the project.

The project is permitted for a maximum of 18 Mlbs U3O8 of annual production. Ore is mined at Cigar Lake utilizing unique ground freezing from surface to mitigate risks of high-pressure ground water and increase geotechnical stability and vertical jet boring technology from underground. The ore is ground, thickened and blended into a slurry which is then shipped 69 km north to the McClean Lake mill for processing and production of calcined uranium ore concentrate.

The Cigar Lake deposit is a high-grade, unconformity-related uranium deposit with an average stated grade of 15.92% U3O8 for the above-estimated reserves. The Cigar Lake deposit was discovered in 1981 and placed into production in 2014. The mineralization occurs between 410 to 450 metres below surface with a strike length of approximately 1950 m. Operating costs are estimated to be between $15 and $16 per pound U3O8 over the life of mine, placing this operation amongst the lowest cost uranium projects in the world. Under the Cigar Lake Joint Venture Agreement and related agreements, made effective January 1, 2002, the Mineral Lease and Mineral Claims were divided into the Cigar Lake lands, consisting of ML-5521 and claim S-106558, and the Waterbury Lake lands, consisting of the remaining 36 claims. Cameco has been the operator for the Cigar Lake lands with respect to ML-5521 since 2002. Orano is the operator of the Waterbury Lake lands and is also contract exploration operator of the Cigar Lake lands, other than the area on ML-5521 where mining is being conducted.

Totaling historical production and all current reserves and resources, it has an attributable endowment of 258.5 Mlbs of U3O8. This makes the Cigar Lake uranium mine the second largest, high-grade uranium mine in the world, extracting approximately 92.9 million pounds U3O8 since the start of production in 2014.

In December 2020, Cameco announced that it had suspended operations at Cigar Lake due to impacts from COVID-19 on the operations workforce and stakeholder communities. Cameco has stated that a restart decision is dependant on the risks posed by the COVID-19 pandemic.

Royalty Details

The royalty is a sliding scale 20% Net Profits Interest (“NPI”) on a 3.75% share of overall uranium production, derived from Orano’s current 37.1% production interest in the project. The pounds exposed to the royalty equate to 10.11% of the pounds attributed to Orano to equal the original 3.75% equity portion. The sliding scale percentage is based upon the determined mineral reserves on the combined Dawn Lake and Waterbury Lake/Cigar Lake project lands, having already reached the maximum of 20% for combined historical production and recoverable reserves in excess of 200 Mlbs of U308. The NPI percentage will adjust to 10% upon reaching a production hurdle of 200 Mlbs of U308 from the combined Dawn Lake and Cigar Lake/Waterbury project lands (93 Mlbs production to date). As a profit-based interest, this royalty will begin to generate revenue after cumulative expense accounts, including development costs, are exhausted. Acquisition of the royalty is subject to customary closing conditions, including receipt of requisite approval of the TSX Venture Exchange and requisite consents.

The royalty covers all current claims and mining leases that comprises the Cigar Lake Joint Venture, including both the Cigar Lake Lands and Waterbury Lake lands, as well as any future modification or replacement of those claims and leases.

Royalty History

The original joint venture established over the Cigar Lake area in 1976 was the Keefe-Henday joint venture between Canadian Kelvin Resources Ltd. and Asamera Oil Corporation Ltd. The Keefe Lake Joint Venture was later divided into three separate project areas, the Dawn Lake, McArthur River, and Waterbury Lake (which includes a portion of the lands now known as Cigar Lake) project areas. In 1980, a joint venture agreement was entered into to govern exploration in the Waterbury Lake area. After the establishment of the joint venture, Reserve Oil and Minerals Corporation acquired a 3.75% equity stake in the Waterbury Lake project. Preceding the sale of this interest to Cogema Canada Ltd., Reserve Oil and Minerals assigned a sliding scale Net Profit Interest royalty to its wholly owned subsidiary L-Bar Minerals. The royalty has since been assumed by Orano Canada Ltd. through historical company re-organizations from Cogema through to Orano today. In 1993, L-Bar Minerals Corporation was renamed to Reserve Minerals Corporation, which held the royalty until purchase by Uranium Royalty Corp.

Historical Deposit Information

In addition to the resources outlined above, the historical Tibia Lake showing has been outlined approximately 800 meters north of the Cigar Lake mine, though the deposit does not have any resources attributed to it as disclosed by Orano.

Note on Technical Disclosure

Unless otherwise indicated, the scientific and technical information disclosed herein regarding the Cigar Lake Mine has been derived from a technical report titles "Cigar Lake Operation, Northern Saskatchewan, Canada" prepared for Cameco Corporation and dated effective December 31, 2015, Cameco’s Management’s Discussion and Analysis for the Year Ended December 31, 2020, and historical uranium deposit information outlined in the Saskatchewan Mineral Deposit Index (SMDI).