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Tuesday, January 30, 2007

Strathmore (STM.V STHJF) starts to monetize properties

Strathmore Minerals (combined links) announced a binding letter of intent to monetize a lesser known property. I'd never heard of it, it wasn't even on my radar screen. But a recent presentation, shows that it's one of the Wyoming properties (Red Creek). I'll want to get back to that presentation, since it has a lot of good detail that I haven't seen before: check out pages 9, 10, 15, and especially 16 which has estimated production cost per pound from the Kerr-McGee database! Church Rock and Roca Honda are $20 and below!
Mr. Dev Randhawa, Chairman and CEO of Strathmore commented, "We are very pleased to enter this JV as it marks the beginning of an aggressive strategy by our company to monetize our non-core assets. We can advance a number of uranium assets outside our targeted production areas." Mr. David Miller added, "The Baggs/Juniper Ridge properties offer an excellent opportunity for our new partner to develop as there is potential for a significant uranium resource and secure production much faster than starting a grass roots exploration project."
The Baggs, Juniper Ridge project, located in the Poison Basin uranium district of south central Wyoming, near the Colorado border (aka Red Creek Claims and associated Wyoming lease). 3,200 acres. Discovered by Urangesellschaft USA back in the 1970s. 2,000 holes were drilled in the 1970s and by AGIP in the 1980s. And of course Strathmore just happens to own a whole bunch of uranium mining database details.

The other partner is Yellowcake Mining, Inc. (YCKM, sec), who only 7 days ago completed a reverse merger into Hoopsoft Development Corporation. Yellowcake now has 91.8 million shares of stock.

Strathmore gives Yellowcake (option) 80% interest in the property along with the database info.

Yellowcake gives Strathmore...
Yellowcake agrees to spend $1.6 million per year for 5 years. After spending $4 million, they get to have 50% of the optioned interest (i.e. 40% ownership of the property). After spending another $4 million, they get the rest of it.

Strathmore will get a royalty payment of 3% of the optioned portion of all production. [I'm guessing that Strathmore also gets 20% of the overall operating profits of the venture.]

Yellowcake also will finance the evaluation of the "Strathmore Texas Database" regarding uranium prospects in Texas (apparently $25K up front and $440K for a year). They will be obligated to fund any additional land leases to be acquired. Subsequently, Strathmore and Yellowcake will be 50/50 partners in development of any identified targets resulting from that database work.

This whole deal closes after 90 days, pending everyone agreeing to the deal and Yellowcake raising $4 million and being happy with the property.

Yellowcake will cancel 56 million shares held by William Tafuri (who signed the contract for Yellowcake). Does this mean Yellowcake will actually have only 35.8 shares total?

This press release from Strathmore has a bit more text.
Yellowcake will arrange for a financing of 4 million units at no less than $1 each, each unit consisting of 1 share and 1/2 warrant at $1.50 for two years.


If I understand these terms correctly, it seems to me that Strathmore has a lot of power in calling the shots and monetizing these properties should be very profitable. The presentation material would explain the recent rise in the Strathmore stock price.

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