TNT Mines (ASX: TIN) has entered a binding agreement to acquire the East Canyon uranium and vanadium project in Utah.

The US-based project is within Utah’s Dry Valley/East Canyon mining district and encompasses 200 unpatented lode claims, which are believed to host high-grade uranium and vanadium mineralisation.

Additionally, the project hosts multiple historical workings and drill data, with the company claiming field work undertaken in 2019 had generated “highly encouraging results”.

The Dry Valley/East Canyon district has historically produced uranium at 0.13-0.15% and vanadium at 1.3%.

“We are very pleased to have identified an asset with the quality of East Canyon from our strategy of securing a strategic mineral project in North America, and we look forward to working towards completing the acquisition,” TNT executive director Brett Mitchell said.

He added the outlook for the US uranium sector was “extremely positive” driven by increasing power generation and strong government support.

Acquisition terms

TNT has paid the vendor $25,000 and issued 500,000 shares in order to secure a 14 day due diligence period.

If due diligence is successful, TNT will then issue 2.5 million shares and a further 2.75 million performance rights.

The vendor Peter Woods will joint TNT’s board as a non-executive director and receive a 2% net smelter return royalty.

TNT will also commit to spending US$100,000 on field work at the project, which will begin immediately upon settlement and include rock chip sampling, trenching, mapping, soil and channel sampling.

It is expected this will be followed up with a drilling program and the evaluation of other potential acquisitions in the surrounding areas.

TNT noted that Mr Woods has been pegging up claims in the area and is responsible for advancing East Canyon to date.

Mr Woods is also a director of advisory and investment firm Bluebird Capital and has extensive experience in capital markets and financial services as well as holding non-executive director roles on many ASX-listed company boards.

East Canyon project

Part of the appeal of East Canyon is its location on the Uravan Mineral Belt which has produced more than 85 million pounds of uranium and 660Mlb of vanadium.

East Canyon covers 16 square kilometres and hosts the historic None Such Mine as well as other workings.

TNT noted the historic workings remain open and “appear in good condition”.

Limited field work in 2018 and 2019 involved collected 26 samples from eight sites with results revealing peak grades of 0.47% uranium and 9.21% vanadium.

During field work, a 20-40 foot thick fine-to-medium grade permeable sandstone host was observed with visible uranium-vanadium mineralised seams and zones.

Other major mines in the area include TSX-listed Energy Fuels’ Rim/Columbus and La Sal Complex mines.

The major is also advancing the Sage Plains project which is 13 miles south-east of East Canyon and contains a measured and indicated resource of 1.6Mlb uranium at 0.17% and 13.3Mlb vanadium at 1.42%.

Another TSX-listed company Anfield Resources owns the Velvet-Wood deposit about eight miles north-east of East Canyon.

Velvet-Wood hosts a historic measured and indicated resource of 4.6Mlb uranium at 0.285%.

Nearby infrastructure

TNT noted Energy Fuels’ White Mesa uranium-vanadium mill is 50km along a major highway from East Canyon.

The plant is the only fully licenced and operating conventional uranium-vanadium mill in the US and has historically been the country’s largest uranium producer in addition to generating high purity vanadium.

TNT also pointed out that Energy Fuels has previously accepted toll mining agreements and purchase programs for treating ore from third party mines.

Uranium outlook

With the US Government’s push to reinvigorate the country’s domestic uranium industry, the outlook for US-based producers is positive.

Nuclear reactors generate 10% of the world’s power, with 20% of the US’ domestic power sourced from local reactors in 2019.

Worldwide a further 53 nuclear reactors are under construction, with more than 100 ordered and in excess of 300 others proposed.

Due to the depressed uranium market over the last decade, there are minimal uranium projects, with analysts predicting a supply shortage in the coming years.