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Mar 2007 - Oz’s Uranium Mine

Australia’s Next Uranium Mine

Australia’s “three (uranium) mine policy” that was enacted in 1983, stopped Australia’s then burgeoning uranium industry in its tracks, with all other approvals seemingly withdrawn except it seems for the ones that were producing, namely Nabarlek (NT) (stopped production in 1988 and was environmentally cleaned up, though apparently held by Cogema), Ranger (NT) (still owned by ERA which became a subsidiary of RIO) and Olympic Dam (SA) (WMC’s now BHPB’s), as shown in Figure 1.

Theoretically it appears that there was not supposed to be any more, but in 2000, Beverley (SA) became the third uranium mine (or fourth as Nabarlek can apparently still produce). It was always planned to use ISL (in-situ leaching) even in 1982, when the SA government apparently stated in 1983 that a mining lease would not be issued, so it was sold to Heathgate Resources (affiliated with a US company). Following a field trial in 1998, environmental approval was given in 1999, and it became the third uranium mine.

Similarly, Honeymoon (SA) had ISL approval, and even had a trial but was reputedly uneconomic and stopped in 1983. In 1997, a Canadian company Southern Cross Resources (now Uranium 1) funded the merger of adjacent properties and achieved 100% control in 2004. Following a feasibility study in 2006, Honeymoon is now in construction becoming the fourth uranium mine since 1983.

Jabiluka was bought by Ranger/ERA from Pancontinental and could have been (and it seems still can be) mined, although after a number of studies, it hasn’t as yet. You do have to wonder, if Jabiluka had been bought by a non-Australian company, whether it would now be in production. But if that had happened, then the current squeeze may not have eventuated, so it appears that it was fortunate for the uranium market that it was mothballed.

This column is based on our first attendance to Paydirt’s Uranium Conference held in Adelaide in March 2007, otherwise our uranium knowledge is “old” mainly dating back to the late 1970s/ early 1980s with Gencor. For the Australian states, uranium exploration is banned in NSW and Victoria and has apparently not been looked for in Tasmania.

The Northern Territory and South Australia are pro-urainum mining, with South Australia at the conference stating that the instant they are able to, they intend to remove any legislation restricting uranium mining in their state, providing it still complies with Australian requirement that exports are for peaceful purposes.

The WA Premier Alan Carpenter stated that “there will be no new uranium mines in WA while he remains premier” as recently as 23 March 2007, and the WA Greens reputedly plan to table legislation banning uranium mining and nuclear power stations in WA.

As for Queensland, it appears to be hazy. Although the QLD Premier Peter Beattie stated on 22 March 2007 that he was no longer opposed to uranium mining in QLD as it can be shown as not threatening the coal industry, and the market has jumped on the comment, that does not necessarily mean approval.

At about the same time (reported in Adelaide on 23 March, and repeated at the conference), the Resources Minister, Ian Macfarlane predicted that states like QLD (where he comes from) and WA would still be unlikely to allow uranium mining even if the ALP overturned their “No New Mines” policy. Ian Macfarlane commented that it would require all the previous legislation prohibiting uranium mining to be removed with new legislation controlling how it is mined, transported and shipped etc (not all [as at present] through Darwin). Before that occurred there would have to be further debating in which all views were heard....and hence perhaps his comment that uranium mining appeared to be unlikely to be allowed in QLD or WA.

There are a number of companies who claim to have Australia’s next (5th) uranium mine, and we have consequently excluded QLD and WA, leaving just the central strip of (Australia) being SA and the NT. Not all the companies that have potential mines presented at the conference, and this column has been limited by what presentations we attended amongst those that presented.

There is a cluster of projects around Beverley, although Alliance (AGS)’s 25% holding in Beverley 4-mile at its Arkaroola Project in SA sounded costly to develop. Apparently if the salinity of the groundwater is too high, ISL doesn’t work properly (we are not metallurgists), and hence that is reputedly why Alliance is looking at an open-cut, even though it is only about 8km NW of the Beverley Mine.

Alliance stated that they would expect to have a 170m to 200m deep pre-strip to expose the ~9m thick orebody, which would mean a strip ratio of between 17 to 1 up to 30 to 1 because of the sandy walls. It would also apparently have to pass through a water inflow zone, because the uranium values were quoted as equivalent uranium (based on a neutron gamma technique that determines the equilibrium uranium values, as the water causes any values to be smeared using conventional logging). Recoveries were expected to be about 65%, although the scoping study has yet to be completed, with drilling of the rest of the mineralisation expected to last about the next 2 years. (Uranium recoveries reputedly mainly range between 60% and 80%).

Marathon’s Mt Gee in the Mt Painter inlier of SA (west of Beverley), also expected to be drilling for the next two years as part of establishing its resources/reserves with production possibly commencing in 2011. Some laboratory studies following petrogenesis have occurred, although recoveries were not known depending on whether heap-leaching or tank-leaching was chosen (60% to 65% ?).

Deep Yellow (DYL) have sold an option on their Napperby orebody (north-east of Alice Springs, NT) to Toro Energy (TOE), being a resource of 6,000t to 8,000t U3O8 over a 14km east-west palaeochannel that is limited to about 10m at depth due to the red granite regolith, in which it leaches very minorly into, with the bulk of the ore over a 7m thick interval. The DYL work verified that grades were higher than expected over the 1km length studied. Toro has stated that they expect to undertake further infill over the next 3 years, and verify amongst other things if the palaeochannel can be extended (which appeared possible). Whether they wait or start a BFS earlier remains to be seen.

Energy Metals did not present, so we cannot comment on their progress.

Consequently, as PepinNini (PNN) have stated they probably do have Australia’s next (fifth) uranium mine at Crocker Well in SA (about 150km south of Beverley). PepinNini have estimated their capex at $160m and expect to commence production in about 3 years’ time (assuming that all the approvals are received on time). Recoveries were at one stage thought to be 65%, but recent testwork has apparently shown that they should be higher.

However, as commented at the conference, while PNN appears to have Australia’s next (fifth) uranium mine, most of the short-term focus was on what was going to be the next Australian developed uranium mine (apart from Paladin’s Kayelekera in Malawi). That was expected to be a race between the 3 companies exploring adjacent to PDN’s Langer Heinrich, namely Bannerman (BMN, to the north), Deep Yellow (DYL, to the south) and Nova Energy (NEL on the adjacent western extension).

With no delays (like Australia) to mine uranium in Namibia, apart from possibly water (although a desalination plant is reputedly being planned), construction was thought to possibly be capable of starting as early as 18 months’ time.

Disclosure and Disclaimer : This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, (ERA, an independent research company) who is an Authorised Representative with Taylor Collison Ltd, and with his associates, may hold interests in some of the stocks mentioned in this article. The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

Figure 1. Location of Australia’s Uranium Mines and Some of the Prospects (Source : www.uic.com.au)GDNmar07

  • Written by: Keith Goode
  • Thursday, 01 March 2007