AZARGA URANIUM CORP. (TSX:AZZ) (OTCQB:AZZUF) (FRA:P8AA) has filed its National Instrument 43-101 Technical Report and Preliminary Economic Assessment for its flagship Dewey Burdock In-situ Recovery Uranium Project in South Dakota, USA following the Company’s press release dated 4 December 2019.

Highlights:

• Pre-income tax IRR of 55% and NPV of US$171.3 million (at US$55 per pound uranium sales price and 8% discount rate)

• Post-income tax IRR of 50% and NPV of US$147.5 million (at US$55 per pound uranium sales price and 8% discount rate)

• 14.3 million pounds of U₃O₈ production over 16 years; steady state production of approximately 1 million pounds per year achieved in year 3

• Low initial capital expenditures estimated at US$31.7 million

• Direct cash operating costs estimated at US$10.46 per pound of production

Summary of Economics

The base case economic assessment results in a pre-income tax internal rate of return of 55% and a pre-income tax net present value of US$171.3 million when applying an eight percent discount rate. Using the same discount rate, the post-income tax IRR is 50% and the post-income tax NPV is US$147.5 million.

The projected cash flows for the Dewey Burdock Project PEA are positive in the second year of production, two years after the commencement of construction. Initial capital expenditures are estimated at US$31.7 million.

Direct cash operating costs are estimated to be US$10.46 per pound of production, royalties and local taxes (excluding property tax) are estimated to be US$5.15 per pound of production and the total pre-income tax cost of uranium production is estimated to be US$28.88 per pound of production. Income taxes are estimated to be US$3.39 per pound of production and have been calculated on a project basis in accordance with NI 43-101 requirements; therefore, certain tax shelter balances, such as tax loss carry forwards available at the corporate level, have not been considered.

Pre-income tax NPV and IRR Sensitivity to Alternative Uranium Price Scenarios

Cautionary statement: The results of the Dewey Burdock Project PEA are preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimated mineral recovery used in the Dewey Burdock Project PEA is based on site-specific laboratory recovery data as well as Azarga Uranium personnel and industry experience at similar facilities. There can be no assurance that recovery at this level will be achieved. There is no certainty that the Dewey Burdock Project PEA will be realized.

Updated Mineral Resource Estimate – 3 December 2019¹

1. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

In addition to the ISR mineral resource estimate, the NI 43-101 resource estimate includes a non-ISR (located above the water table) resource estimate containing Measured resources of 857,186 pounds at 0.060% U₃O_8, Indicated resources of 407,851 pounds at 0.053% U₃O₈ and inferred resources of 114,858 pounds at 0.051% U₃O₈. These resources are not included in the ISR resources presented in the table above and are not included in the economic analysis for the Dewey Burdock Project PEA.

Both the ISR and non-ISR resources were determined using the GT contour method and met the following criteria:

1. 0.02 percent grade cutoff;
2. Occur within the same mineral horizon (roll front);
3. Fall within the 0.20 GT contour; and
4. Extend no farther from the drill hole than the radius of influence specified for each category, i.e., measured, indicated or inferred.

For the purpose of the PEA, the uranium recovery is estimated at 80% for all categories of ISR resources. Therefore, life of mine U₃O₈ production is estimated to be 14.3 million pounds.

Technical Report and PEA

The Dewey Burdock Project Technical Report and PEA has been prepared in accordance with the requirements of NI 43-101 and was independently prepared by Woodard & Curran, Douglass Graves, P.E., a qualified person as defined under NI 43-101 and Roughstock Mining Services, Steve Cutler, P.G., a QP as defined under NI 43-101. The Technical Report and PEA titled “NI 43-101 Technical Report, Preliminary Economic Assessment, Dewey-Burdock Uranium ISR Project, South Dakota, USA” has been filed on SEDAR at www.sedar.com and Azarga Uranium’s website www.azargauranium.com.

Qualified Person

The disclosure of a scientific and technical nature contained in this press release was approved by Douglass Graves, P.E. and Steve Cutler, P.G., qualified persons as that term is defined under NI 43-101.

About Azarga Uranium Corp.

Azarga Uranium is an integrated uranium exploration and development company that controls ten uranium projects and prospects in the United States of America (“USA”) (South Dakota, Wyoming, Utah and Colorado), with a primary focus of developing in-situ recovery uranium projects. The Dewey Burdock in-situ recovery uranium project in South Dakota, USA (the “Dewey Burdock Project”), which is the Company’s initial development priority, has received its Nuclear Regulatory Commission License and draft Class III and Class V Underground Injection Control (“UIC”) permits from the Environmental Protection Agency and the Company is in the process of completing other major regulatory permit approvals necessary for the construction of the Dewey Burdock Project, including the final Class III and Class V UIC permits from the EPA.