By James West
Monday, May 25, 2009
As far as uranium companies go, there aren't many who can say they are developing one of the largest undeveloped deposits in the world. But Santoy Resources (TSX.V:SAN), through its acquisition of a minority stake in Virginia Uranium, is doing just that. Santoy is in the process of acquiring a 20% interest in the holding company ("Holdco") that controls the leasehold development and operating rights of the Coles Hill uranium property in southside Virginia.
The transaction is structured as a plan of arrangement that also provides Santoy with a right of first refusal on future financings. Santoy's ambition is to earn a 30% interest over the next few years through various financing transactions.
Ron Netolitzky, Chief Executive Officer of Santoy, is also a director and a shareholder of Holdco. To increase the number of Holdco shares available to Santoy, Mr. Netolitzky and Santoy have agreed under the Business Combination Agreement that Santoy will acquire his 2,000,0000 Holdco shares in exchange for Santoy shares at the same ratio of six shares of Santoy for each one share of Holdco. The transaction has been negotiated by an independent committee of the board of Santoy and has received full board approval with Mr. Netolitzky abstaining.
It is contemplated that Santoy will, subject to regulatory approval, change its name to "Virginia Energy Resources Inc." or such other name as approved by the Santoy Board to reflect the significance of the transaction to Santoy.
According to Virginia Uranium CEO Norman Reynolds, who will become CEO of Santoy upon the transaction's closing, "What this gives Santoy is a very substantial interest in one of the largest undeveloped uranium projects in the world. Its in an area that is very nuclear friendly, Virginia has four reactors generating more than a third of the state's electricity needs. Forty miles from the project there are two nuclear facilities, one owned by Areva that manufactures fuel rods for the commercial reactors and the other one manufactures the fuel rods for the navy. When the Atlantic fleet is in its home port of Norfolk Virgina, there are in the neighborhood of 50 reactors in the various aircraft carriers and submarines, so it's a state that is very comfortable and supportive of nuclear energy."
Reynolds was the president of Marline Corp. when the deposit was discovered in the '80s.
Dominion Virginia Power has four nuclear plants in Virginia that provide about a third of the state's energy, but the uranium used at the facilities is imported. The situation in neighboring states is similar, including in Maryland, which gets 31 percent of its electricity from nuclear power, according to the federal government.
Marline Corp. began searching for uranium deposits in the Eastern US in the late 1970s and in 1982 said it discovered 30 million pounds of uranium oxide in Pittsylvania County, potentially worth $1 billion or more.
Since then, the estimate of available ore has climbed to 119 million pounds, worth perhaps $10 billion. However, Virginia placed a moratorium on uranium mining in 1982, until such time as uranium mining regulations are enacted into law. Marline was working with the state legislature in the 1980's to develop the appropriate laws and regulatory framework for uranium mining in Virginia when the price of uranium declined to the point that the project was abandoned. Santoy's will support Virginia Uranium's efforts to pick up today where Marline left off 25 years ago. In the meanwhile, the state continues to import all of its nuclear fuel requirements.
In 1982, Virginia did pass laws covering uranium exploration. Per those regulations Virginia Uranium Inc. applied for and received a permit from the Virginia Department of Mines, Minerals and Energy in November 2007 to conduct uranium exploration drilling on 194 acres in and around the Coles Hill deposit in Pittsylvania County.
Baseline water quality has been established for water wells, surface water ponds, and streams in the area. An archeological, cultural, and historic resources review of the area has been completed. There are no threatened or endangered species within or near the permit area.
The Virginia governor's energy plan issued in the Fall 2007 mentioned this project about 50 times, saying that studies needed to be done to assess the potential for developing it, and generally supporting the idea of a developed uranium mining industry in the state," said Reynolds "That was largely the catalyst that motivated the Coles and Bowen Families to begin developing Coles Hill more aggressively."
Family patriarch Walter Coles said in January 2008, "There's too much uranium here. Somebody's going to mine it. I felt like while I was alive, it was my duty to make sure it was done right."
Virginia Uranium is focused on and committed to best practices in terms of environmental protection and community relations. To that end, the company is:
* Supporting an independent study authorized by the Commonwealth of Virginia to analyze the effect of mining on the community with emphasis on agriculture;
* Actively working with the Virginia Farm Bureau to assist the county's efforts to preserve the agricultural traditions of the region, and;
* Supporting local and regional colleges and universities with research, scholarships, grants and job opportunities related to agriculture, mining and geology.
Gov. Timothy M. Kaine (D) supports a study, and a state energy report released this fall recommends one. Virginia currently gets more of its energy from nuclear power than almost any other state -- about 35 percent, almost twice the national average.
In addition to the Virginia acquisition, Santoy has actively been exploring its strategically located uranium properties within three main geographic locations in Canada; the Athabasca Basin of Saskatchewan, the Central Mineral Belt of Labrador and in the Otish Mountains of Quebec. These projects are located on favourable geological trends and are in close proximity to known deposits.
The company currently holds interests in 12 uranium properties within or on the margins of the prolific Athabasca Basin of northern Saskatchewan.
Santoy and its 50-50 joint venture partner Denison Mines Corp. (TSX:DML, AMEX:DNN) have approved a $300,000 budget for fieldwork on the Hatchet Lake and Murphy Lake properties for 2009. Ground electromagnetic surveys are currently underway on the Tuning Fork and Tuning Fork West grid on the Hatchet Lake property.
Santoy will also spend $1 million on nine claim blocks within and on the margins of the Proterozoic Otish basin it controls in the province of Quebec.
The company has an experienced management team which is supported by a veteran board of directors who have been directly involved with the discovery and development of three major gold discoveries in Canada that have subsequently been put into production (Eskay Creek, Snip and Brewery Creek mines); of coal and coalbed methane projects in Western Canada; of producing "green power" projects throughout Canada; of conventional oil & gas discoveries throughout North and South America; and of taking uranium discoveries through to feasibility study.
Visit the company's web site at www.Santoy.ca and also at www.VirginiaUranium.com to learn more.