Forsys Metals (FSY-T) has updated the resource estimate for its Namibplaas uranium deposit and says it is now certain that it makes sense to combine its Namibplaas and nearby Valencia deposit 7 km to the southwest as a single feed to an optimized process plant. The mines would be linked by conveyor.
The company’s two deposits in Namibia are about 50 km north of Paladin Energy’s (PDN-T, PDN-A) Langer Heinrich mine and 35 km along strike from Rio Tinto’s (RTP-N, RIO-L) Rossing uranium mine. The Rossing mine supplies about half of Namibia’s total output of uranium oxide.
“We now have two ore bodies where the geology is very similar and we are able to blend the ore,” Forsys chief executive Marcel Hilmer said in a telephone interview.
Together Namibplaas and Valencia contain 243.3 million tonnes grading 175 parts per million for 93.9 million pounds of contained U308 in the measured and indicated category at a cut-off grade of 100 parts per million.
“We have a very large deposit in global terms ... it’s in the top quartile in terms of size ... so we have the capability to develop a large plant and become one of the largest producers in the world,” Hilmer said.
A technical report confirming the merits of combining the deposits will be completed in the second quarter of next year, with a feasibility study to follow before the end of 2013. Hilmer believes consolidating the two projects will mean faster execution of a feasibility study, better economics and a shortened timeframe to construction.
Production could start as early as 2015, he says, just in time to meet demand from new nuclear power plants that are expected to come on stream in China, Russia, India and the United Arab Emirates.
“We are a short-term proposition in terms of getting into production,” he says, noting that Valencia is one of the only deposits in Namibia that has a mining licence and all permits required to start construction.
Valencia has a 25-year mining licence and the deposit supports a 17-year mine life that offers a post-tax net present value of US$273 million.
Of the combined resource, Valencia contains about 60.5 million pounds U308 in the measured and indicated category and Namibplaas 44.4 million pounds. At Namibplaas, the discovery of two significant high-grade zones will be the focus of pit design optimization and the company points out that there is extensive mineralization along a strike length of about 1.7 kilometres.
Hilmer, who has spent many years working in Africa, most recently in charge of business development at First Quantum Minerals, describes Namibia as a country that looks very favorably on the uranium mining industry with no restrictions on uranium exports or on the development of uranium mines that meet its stringent safety requirements.
Namibia is the fifth-largest producer of uranium in the world and the industry drives its economy, Hilmer continues. He also notes that the government is “very proactive and competent” and continues to invest in infrastructure, including a commitment to build a second desalination plant and another coal-fired power plant. The two projects are expected to be completed in 2014/2015.
Namibplaas and Valencia already have access to water, power and roads.
Looking ahead, Hilmer says the company eventually will need a strategic partner who would be interested in off-take. “We have 100% of that available and we would be entering into discussions with interested parties to participate at the project or company level, providing project finance and or an equity issue and a right to off-take."
Hilmer forecasts the contract price of uranium should bounce back to the US$70 per lb. range in the not-too-distant future. “We think there will be improvement next year and very strong improvement in 2014.”
At presstime in Toronto Forsys was trading at 64¢ a share within a 52-week range of 51¢ -$1.14. The company has about 110 million shares outstanding.
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