Special Edition - Q&A with ATHA Energy CEO

As promised, we have a special sponsored edition of Funding Secured this week presenting an exclusive Q&A with the CEO of the largest uranium exploration company in the world: Atha Energy (TSX-V:SASK).

Atha Energy has raised over $65 million through two strategic offerings and is embarking on the largest Uranium drill program in the world, not to mention the company is run by a CEO who has spent decades in the Uranium sector, with experience across a variety of strategic roles.

See what we learned below…

This interview has been edited for length and clarity.

What intrigues me about Troy is his career path, he started at Cameco, one of the largest uranium companies in the world (currently worth $30B) as an Exploration Geologist then worked his way up to Supervisor of Geology over the next nine years.

Tell us a little more about your time at Cameco?

It was foundational for me. It was right at the feverish point of the last cycle. I joined in 2007, had the opportunity to learn from a very large established department, a very seasoned geologist, and industry leaders in the field at that point in time giving me the opportunity to see multiple projects across the Athabascan Basin and Australia.

By extension, I received exposure to Cameco’s broader portfolio from the exploration side, and I had the good fortune of having exposure to the operational side as well.

I worked on Cameco’s Eagle Point underground mine that fed the Rabbit Lake Mill and worked as an underground Mine Geologist for a number of years where I became the Supervising or Chief Geologist at Eagle Point.

Seeing it from multiple scales from the the regional generative exploration scale right down to mining, so, yeah, it was a great foundational set of experiences.

You then went to the junior resource side and started working with NexGen Energy, one of the darlings of the uranium world, acting as the VP of Project Development. Tell us a bit more about that experience.

Yes, I’ve been very busy! And the culmination of experience through Cameco then NextGen, helping lead the development of the RookOne project, really gave me the ability to develop the project from a 360 perspective. There was exploration and community and everything in-between.

It sets us up for where we come into Atha Energy. And the idea, the foundation behind Atha, came through the idea to bring a company public at this exact stage in the commodity cycle.

Let’s start with how the Company was formed. Can you tell us a bit more about the three company amalgamation?

Atha was formed by two experienced executives in the generative uranium space that have had tremendous success within the uranium industry.

They were foundational behind Hathor in the last cycle. That was acquired by Rio Tinto for US$640 million. Then they had the good fortune of bending the foundational assets into NextGen Energy. Well, those guys set to work over the course of about a decade from, say, 2014 to 2023, compiling 3.4 million acres across the Athabasca Basin.

They got together with the capital markets team, raised $43 million into the deal and brought the deal live with 3.5 million acres of exploration property across the basin. That then set the stage for the transaction, a three-way transaction, which gets us to where we're at today.

So we evaluated a whole bunch of companies across the space, settled on 92 Energy and Latitude Uranium, the two companies that we entered into a three-way transaction to acquire.

Over the course of Q1 of this year and just in the early part of Q2, we closed both of those transactions. Now what we're sitting on is a company with a profile that has over 8 million acres of exploration property across three dominant jurisdictions in Canada, the Athabasca, the Thelon Basin, and the Central Mineral Belt in Labrador.

We have a discovery stage project on the eastern edge of the Athabasca that's GMZ. And we've got one of the highest grade resources outside of the Athabasca Basin in the Angulak project where we have 43 million pounds of uranium at 0.69% U308.

What drew you to to take on the increased responsibility and the role of CEO for Atha Energy?

I've lived and breathed the uranium business for the better part of two decades now. I see a tremendous opportunity going into this cycle. I think we're at the very early stages of this uranium bull cycle. I think the macro story is really foundational. It's a demand driven story, plain and simple. There's a scarcity of supply and there's supply uncertainty.

The complication is that we just don't know where the pounds are going to come from.

Under that backdrop, the concept of an exploration at scale strategy and approach leading into a decades-long supply deficit in the uranium space is a place that, we thought, collectively, myself and the ATHA team, believes that we can add significant value.

The other thing that it does is, you think about a conventional exploration story where you have a microcap company that's focused on a single project. And more often than not, what ends up happening is you get into a binary event. You stand up, you raise just enough capital to get into a single drill program on a single project. And then your fortunes are binary. It's either on or it's off. And the valuation of your company is dependent on your last drill result.

And so we were looking at Atha and our strategy with a scaled approach to exploration as a counterbalance to some of the problematic issues that happen within micro cap companies.

Let's hit on some of the causes of this supply, demand imbalance. What are you seeing in the industry from your side?

From our side, it's the strength of demand moving forward.

You look at the capacity build-out that's been happening in Asia, predominantly in China. Other nations around the world, you look at indicators coming out of COP28 where you've got 30 nations that are committing to tripling nuclear power and nuclear energy by 2050.

Domestically within the United States, reactors that were planned for decommissioning and closure have gotten approval to run decades longer. It's not a single driver on the demand side, but it's across multiple drivers. It's build out in new developing nations and established nations.

The crux of it is that there's a broad realization now that in order to hit net zero targets and initiatives, that needs to be backstopped by nuclear power.

It is a zero carbon power source and it is reliable and it's a baseload power source.

We were seeing the fundamentals of sprout starting to grow as much as five or six years ago. And then, you know, within the last 18 to 24 months, it really turned.

And that comes at a time when, as you mentioned, we hit $20 uranium.

And so the amount of investment in exploration and development stage stories across the industry was really muted, you know.

And so it's a combination of those two factors that the demand side is turning on at a point in time when there's been a systemic lack of investment in the exploration and development side of the industry on the supply side for the better part of a decade.

And as you know, it's difficult to just turn on a new uranium project, right? From discovery through to production, it takes a while. So there is no near-term solution to solve for this supply-demand problem.

Where do you see this demand going from here?

Everything that we've been talking about on the demand side has been conventional demand. You know, the upside here, you talk about the build out of data centers and data farms domestically in the US. Projections are by 2030 could consume as much as 10% of the electrical demand within the country.

That's phenomenal, phenomenal growth.

But the big upside here that isn't baked into any of the projections is the commercial adoption of small modular reactors or micro reactors.

I think it's too early to tell actually how big that upside could be because the use case for SMRs is so broad - Small modular reactors - it goes from electricity, standing up beside a data farm to refurbing coal plants, coal-fired plants that have the infrastructure there already in terms of the electrical infrastructure retrofitting those facilities, standing up an SMR on those.

You think about the broad scale distribution you can have across the United States, just the US alone with the adoption of SMRs. And it's starting to really gain traction across Canada and the United States. There's multiple designs that are in the final stages of regulatory approval.

And that's a key step because once those SMR designs get regulatory acceptance and approval, then for adoption, all you need to do is a site-specific assessment, and it becomes a very straightforward process.

So the ability for that to materially impact the demand side of the story is not fully baked in yet, and that's all upside.

Let's hit on that $33 million and the $23.5 million that you raised in 2022 and 2023, respectively. How did you raise those dollars, and who if any were your strategics?

The first $33 million was done at $1.00. It was completed as a subscription receipt financing with the condition that Atha became listed. So if Atha didn’t become listed, those funds would be returned to investors. There were no warrants in this round.

It was done across two family offices and eight institutions.

So it was a very tightly held raise with the normal strategics as part of any long-only energy funds.

Fast forward to 2023 where we completed a $23.5 million placement.

This raise was a senior offering, which again was a sub-receipt deal that was done at $1.00.

This one was taken 50/50 by ISO Energy and Mega Uranium. Both of them came into the deal through acquisition and then supported the deal through the raise that we did.

So $4 million of that was split between ISO and Mega. The remaining $19.5 million was done through a mechanism that we have in Canada that some of your audience would be familiar with, and that's a charity flow-through structure.

We were able to raise $19.5 million, with a blend of a 1.57x and 1.75x premium off that $1.00 back end. So it was a very effective, minimally dilutive way to raise capital and deploy it into the ground in Canada.

Was that brokered through any particular firms?

The initial financing was done primarily through the capital markets team that we have within Atha, supported by Eight Capital.

The $23.5 million raise was a a non-brokered deal but it was supported by Eight Capital and Canaccord while PI and Red Cloud also had a small portion as well.

What does the share structure look like now, and hit on what ISO Energy and Mega Uranium own now?

ISO and Mega combined own about 4% of Atha so by extension, our institutional ownership is around 24%. Insider’s own around 27% and the retail float, which came in through 92 Energy and Latitude Uranium, make up the balance.

We really like how the structure of the stock is condensed into very few hands.

You currently have $65 million in cash. What’s the use of proceeds, how long does that money last, and what do these drill programs look like for you?

The use of proceeds is in dollars into the ground. That's what we're focused on. Putting dollars to work, investing in our exploration properties across the scale.

If you look at our portfolio of projects, from resource projects, right through to generative stage projects, we're going to be investing along the entirety of that exploration risk curve with a heavier weighting at our more mature assets.

We're going to be deploying $30 million into the ground this year, which is leading across a peer group, and for reference, Cameco referenced in their Q1 report, that they're going to be investing $20 million in exploration.

So significantly larger than Cameco.

40% of that is going to be focused on Angilak. That's our 43 million pound deposit. We bought that project because we believe that there is significant expansion potential.

And so that's what the drill programs will be focused on, expanding the Angilak deposit. 30% of our budget will go into Gemini to expand the GMZ zone and explore along the corridor there.

The remainder is going into advancing our unprecedented buildup of exploration properties across the Athabasca and Thelon Basins, with the idea of continuing to backfill and build a pipeline of high probability, high value exploration targets based off of an at scale exploration approach.

What are the plans for the next 3 to 5 years?

Atha, as envisioned initially, was envisioned as a growth platform in the uranium space. That growth comes in three ways.

It comes through investing in the asset base that we've built up, it comes through Atha’s 10% carried interest in a large percentage of NexGen Energy's exploration portfolio and ISO Energy's portfolio, and the third leg comes through consolidation and M&A.

And, you know, in the very near term right now, we're solely focused on building out the value and the assets that we just acquired.

But that doesn't mean that we're complacent.

We also are looking at, and we'll continue to look at value accretive opportunities in the uranium space across the board because our goal through either the assets that we have in hand, or through acquisition, is to continue to move to the right in terms of our maturity and relevance within this uranium cycle.

To sum up, the next 3 to 5 years is about growth.

This year at Angulak, our most advanced project, (43 million pounds), that's exactly what it's about. It's about finding the extent of that zone, finding the extent of that deposit.

If we're successful at doing what I feel and believe we can there ,with a drill program this summer, there's no need for us to throttle back work.

Given our balance sheet, given our technical team and our ability, we anticipate that 10,000 meters as being a base case and just continuing to execute and continuing to operate and drive it forward.

I don't think there's ever been a better time to be aggressive in the uranium space than right now.

Any final thoughts, Troy?

We've worked incredibly hard and we've set the stage. We've been developing, we've been acquiring, and we've been building to get ourselves exactly into this position, right now, to be able to start executing and drilling on de-risked assets - That starts the 1st of June. We are all chomping at the bit to get going here.

Thank you for joining us today Troy. You can learn more about Atha Energy by searching their stock ticker SASK on the TSX-V or by visiting their website at AthaEnergy.com

This special edition of Funding Secured has been paid for by Atha Energy Corp. Please refer to the disclaimer and disclosure at the bottom of this email.