Azarga Uranium (TSX: AZZ) CEO Blake Steele: The Dewey Burdock Project Is One of the Leading Undeveloped ISR Uranium Deposits in the US with a Sector-Leading Combination of Grade and Scale

May 21, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of Azarga Uranium (TSX: AZZ)(OTC: AZZUF), Mr. Blake Steele. Blake, how are you?

Blake Steele: Thanks, Gerardo. I'm doing well. Thanks for having me again.

Gerardo Del Real: Thanks for coming back on. It's been a few months since we chatted. Quite a bit of important news has materialized since then. I think we should absolutely start with the fact that Azarga increased its measured ISR uranium resource by 234% at the high-grade, flagship Dewey Burdock project. Do you mind if we start there, Blake? And can you share some details and provide some color there?

Blake Steele: Absolutely, Gerardo. We are extremely pleased with the results of the resource update. Not only did we significantly increase the resources at our initial development priority, the Dewey Burdock project, but we also increased the confidence of our overall resource. As you mentioned, measured resources increased by 234%. But in addition to that, our measured and indicated resources nearly doubled to 16.9 million pounds. Measured resources represent 13.8 of the 16.9 million pounds.

The resource update highlights the Dewey Burdock project as one of the leading undeveloped in-situ recovery uranium deposits in the United States, offering a sector-leading combination of grade and scale. Another important factor here is that the entire resource estimate falls within the existing Nuclear Regulatory Commission license boundary, and that several miles of mineralized trends remain to be further delineated.

So really looking to the future off the back of this resource update, we are going to prepare an updated preliminary economic assessment which we expect to have completed by the middle of this year. We expect the larger and more contiguous resource is likely to achieve improved project economics compared to our previous PEA, which already had very compelling economics.

Gerardo Del Real: When can we expect that, Blake? Any time I hear a CEO talk about that sector-leading combination of grade and scale, as you put it, that to me automatically translates into attractive margins. That's typically how that plays out. When are you anticipating completing that updated PEA?

Blake Steele: We're looking at the middle of 2019 for that updated PEA, Gerardo. So we're currently in the process of going through that update process. We want to make sure that we do this right and take the sufficient amount of time to put the proper result in front of investors.

Gerardo Del Real: Excellent. Now I understand that's fully funded. In March, you closed a $3 million private placement. In May, I know you've been extremely busy behind the scenes, Blake, but you got some positive news regarding the final Dewey Burdock NRC license contention, which you're hoping to have resolved by, the way I understand it, hopefully Q4 of 2019. Can we talk about what the rest of this year looks like and kind of take it in order here?

Blake Steele: Yeah, absolutely. We recently received some very positive news on the NRC permitting front. The Atomic Safety and Licensing Board decision to grant an evidentiary hearing provides us with the opportunity to resolve the final contention on the Nuclear Regulatory Commission license within legally established timelines.

Now, this is important because it provides clarity around timing, something not previously available to us. And you're correct, the timeline sets November 29th as the decision date. And we're very excited for the opportunity to resolve this final contention by the fourth quarter of 2019. Lastly, I want to reiterate on this point that our Nuclear Regulatory Commission license continues to remain in good standing while we go throughout this process.

With respect to the financing that you touched on, in March of 2019 we completed that $3 million financing at $0.23 per share, all Canadian dollar terms. What's important to highlight there is we received significant support from institutional investors which subscribed for the vast majority of the financing. The institutional support, not only is it important for our business and validation of our business strategy, but is also important for the broader uranium market. The capital raise strengthened our financial position and as you touched on, Gerardo, it provides us with the necessary means to continue to execute our corporate initiatives while at the same time we improved our shareholder register.

Gerardo Del Real: I got to say Azarga presents one of the more compelling speculations in the uranium space. Anybody that's seen a uranium bull market knows that they can be violent to the downside in bad times and violent to the upside in good times. We are, of course, anticipating more clarity here soon moving forward. I got to believe that if we get positive news on that front, mainly the utilities coming back to the market, that's going to satisfy the appetite of the early-moving institutional investors that have taken a position in Azarga. And if that then coincides with a resolution of that last license contention by Q4 of 2019, it could be a fun, fun Christmas time this year. Anything left to add there, Blake?

Blake Steele: Well, touching on your point with respect to the institutional investment community, I think the institutional investors are starting to recognize the opportunity that exists in the uranium sector and they have been and are building equity positions in high-quality assets. The supply and demand fundamentals of the uranium market continue to improve. We've touched on this in the past. Uranium prices have started to recover due to the supply disruption and increasing demand.

But I believe this is just the beginning of the next uranium bull market. As a result of unsustainably low prices, mine supply has been cut back, capital investment into the sector has been reduced, and new projects coming on line have diminished resulting in reduced inventories all at a time where uranium demand is now growing.

I like to dub this the perfect storm. And this perfect storm has turned the uranium market into a deficit position, which requires new production to come on line. So, in short, I think institutional investors are building these positions to get in on the ground floor of the trade.

Gerardo Del Real: Wow. And one of the beauties of a brutal bear market like the one that we've had in the resource space, and even more pronounced in the uranium space, is that it does a very effective job of getting rid of the companies and management teams and assets that frankly were never going to make it anyway. I don't believe it's a coincidence that Azarga is still around executing, able to capitalize itself and advancing the permitting the way that you're supposed to.

So kudos for working through a very tough market. And, again, I think when we talk next time it's going to be a different sentiment in this space, Blake. Thank you so much for coming on. And again, hopefully I can have you back on soon.

Blake Steele: Sounds good, Gerardo. Appreciate it and look forward to speaking again in the future, sooner rather than later.

Gerardo Del Real: Thank you, Blake.

Blake Steele: Thanks a lot.

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