Trading Symbols: SXR - The Toronto Stock Exchange, the Johannesburg Stock
Exchange
TORONTO and JOHANNESBURG, Aug. 29 /CNW/ - sxr Uranium One Inc. announced
today that its Board of Directors has approved the development of the
Honeymoon In-Situ Leach (ISL) Uranium Project in north-eastern South
Australia.
The Board's decision follows a detailed review of a feasibility study on
the Honeymoon Project prepared by Mayfield Engineering Pty Ltd. and Aker
Kvaerner Australia and others and a revised mineral resource estimate for the
Honeymoon Project completed by K.F. Bampton MSc, MAusIMM, MAIG of Ore Reserve
Evaluation Services (Adelaide).
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Highlights from the feasibility study include:
- Indicated mineral resource estimate of 1.2 million tonnes ore,
grading 0.24% U(3)O(8) (2,900 tonnes U(3)O(8))
- Project capital costs of US$35.9 million
- Life of mine average cash operating costs of US$14.13/lb U(3)O(8)
- NPV of US$37.7 million at an 8% discount rate and after-tax IRR of
40%
- Payback period of 2.9 years from commencement of construction
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In light of the results of the feasibility study, Uranium One's Board of
Directors has approved the development of the Honeymoon Project. The Company
intends to fund the Project with an appropriate mix of finance from debt and
internal sources.
In commenting on the feasibility study, Neal Froneman, CEO of Uranium
One, said: "We are pleased that the feasibility study confirms that the
Honeymoon ISL Project is both technically viable and financially robust.
Today's announcement follows closely on feasibility studies completed for our
Dominion Uranium Project in late July and for the Modder East Gold Project in
early August. It is particularly gratifying to be in a position to announce a
production decision on a second uranium project within the span of 4 weeks.
With the feasibility studies behind us, we are now moving towards uranium
production, first in South Africa at Dominion in the first quarter of 2007 and
then at Honeymoon, where we look forward to commissioning Australia's fourth
uranium mine in 2008."
The Honeymoon Project
The Mayfield feasibility study examined the development of a commercial
uranium ISL project with an annual production capacity of 400 tonnes (880,000
lbs) of U(3)O(8) and a total project life of between 6 - 7 years. The basic
wellfield design will be based on '7-spot' patterns consisting of six
injection wells arranged in a 20 - 60 metre hexagon, with a centrally located
production well. The production plan is designed to bring the wellfield
on-line in two stages during the first year; first year production is assumed
to be 75% of design.
The process plant will utilize solvent extraction technology to recover
uranium from the pregnant leach solution. While Honeymoon ore shows greater
than 90% recovery rate in laboratory leaching tests, the Project model assumes
a 70% recovery rate in commercial operation, based on published information on
acid in-situ leach operations in central Asia. The 70% recovery rate, however,
is subject to qualifications relating to the efficiency of leach operations,
including the control of gypsum precipitation and the possible need to reduce
well spacing to improve solution passage through mineralized areas.
Implementation of the Project has already been initiated. Discussions are
underway with potential suppliers for long-lead items and infrastructure
development. Project commissioning is expected within 17 months.
Capital and Operating Costs
Capital costs for the Honeymoon Project are estimated by Mayfield and
Aker Kvaerner to be US$35.9 million, with an additional US$5.6 million
allocated for working capital-related costs (all at an assumed exchange rate
of US$0.75/A$1.00). The life of mine average operating costs are estimated at
US$14.13 per pound of U(3)O(8).
Financial Evaluation
Based on a 70% recovery rate from an indicated mineral resource
containing 2,900 tonnes of U(3)O(8), the Project has a net present value of
US$37.7 million at an 8% discount rate and an after-tax internal rate of
return of 40%, applying a flat uranium price of US$46.50 per pound over the
life of the project. The payback period is 2.9 years.
Revised Mineral Resource Estimate
The revised mineral resource estimate reflects the results of a recent
two-stage drilling program that comprised a total of 236 holes (29,200 m) on a
nominal 40 metre square pattern directed at the Honeymoon deposit only and
excluding the East Kalkaroo resource. Grade estimation is based solely on the
new holes using PFN technology to directly measure U(3)O(8) grades and refined
geological modelling using sophisticated geophysical techniques applied to
model the resource. Economic mineralisation extends over an area of 900 x 450
metres at an average depth of 110 metres within Tertiary-aged Eyre Formation
Basal Sand. While the grade of the Honeymoon deposit has increased from 0.11%
to 0.24%, the revised resource estimation reflects a 12% reduction in
contained U(3)O(8) to 2,900 tonnes (6.5 million pounds) from the previous
indicated mineral resource estimation (2.8 million tonnes ore, grading 0.12%
U(3)O(8) (3,300 tonnes U(3)O(8))) contained in the December 2001 independent
technical report prepared by Hackester Pty Ltd. (available on SEDAR). The
reduction in contained U(3)O(8) can be ascribed to the fact that many thin
low-grade intercepts, believed not addressable by ISL mining, have been
excluded.
The revised resource estimation has, however, significantly improved the
geological understanding of the deposit, which will enhance wellfield design,
thereby resulting in the potential for improved recoveries during future
mining operations. The main difference in the resource estimation is that the
revised resource has been individually calculated for 5 laterally extensive
sand packages, whereas the previous resource was estimated from only upper and
lower sand units whose intercepts were cumulated.
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In addition, the revised resource has been:
- directly measured using PFN, whereas the previous estimation was
based on indirect gamma methods (estimated equivalent eU(3)O(8)
grades from gamma-emitting daughter products);
- estimated from new drilling undertaken on a regular 40 metre square
grid, whereas the previous resource was based on irregular historic
drilling undertaken during the 1970's and early 1980's; and
- estimated from drill intercepts with more stringent parameters
applied (0.03% vs. 0.01% U(3)O(8) primary cut-off and 40cm minimum
width versus no minimum width intercepts).
The revised indicated mineral resource estimations per sand unit,
estimated from drill intercepts of 0.4m minimum thickness and 0.03% U(3)O(8)
minimum grade with up to 1m of internal dilution, are shown in the table
below. An economic grade thickness cut-off of 0.1m% U(3)O(8) has been applied.
-------------------------------------------------------------------------
Sand Ore Grade Tonnes Pounds Thickness GT
(tonnes) (%U(3)O(8)) U(3)O(8) U(3)O(8) (Metres) (m%U(3)O(8))
-------------------------------------------------------------------------
EBS-5 89,000 0.13 120 260,000 1.4 0.18
-------------------------------------------------------------------------
EBS-4 45,000 0.17 77 170,000 1.2 0.20
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EBS-3 140,000 0.37 530 1,170,000 1.4 0.51
-------------------------------------------------------------------------
EBS-2 410,000 0.28 1,100 2,500,000 1.7 0.47
-------------------------------------------------------------------------
EBS-1 530,000 0.20 1,100 2,400,000 2.1 0.43
-------------------------------------------------------------------------
Total 1,200,000 0.24 2,900 6,500,000 1.7 0.42
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(1) Minor apparent multiplication mismatch of contained U(3)O(8) in the
resource figures is due to post-computational rounding of all
components to 2 significant figures.
(2) Mineral resources have been estimated by K.F. Bampton, MSc, MAusIMM,
MAIG, of Ore Reserve Evaluation Services (Adelaide) and reported in
accordance with JORC.
(3) Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability.
>>
The majority of drilling was open hole rotary-mud, which is the most
applicable drilling method suitable for wireline logging in unstable
unconsolidated sediment; however, a total of 7 core holes were also drilled
for quality control/assurance purposes, mineralogical analysis and to confirm
the geological model.
Sophisticated geophysical logging backed up by logging drill cuttings and
the core drilling has significantly improved the geological model of the host
stratigraphy. The Basal Sand unit has now been modelled as five separate
laterally continuous sand packages, each with its own hydro-geological
characteristics arising from different genetic episodes of sedimentation. This
model has been generated in conjunction with a detailed sedimentalogical
analysis undertaken by Dr. Ian Dyson. Professor Paul Ashley of the University
of New England has completed a mineralogical study of selected core samples
and concludes that mineralisation comprises an extremely fine grained, acid
soluble mineralogy of uraninite, coffinite and uranium phosphates, which are
amenable to ISL mining.
Quality Assurance and Quality Control
All drilling was carried out under the direction of Mr. Colin Skidmore
MAusIMM, Vice President Exploration Australia, sxr Uranium One Inc. who is a
qualified person for the purposes of NI 43-101. A comprehensive quality
control and quality assurance programme was overseen by Dr. David Lawie of
ioGlobal (Perth), who compared PFN measured grades with the results of XRF
assays from quarter core, compared duplicate PFN data collection runs and
verified the quality of the PFN calibration process. The resource estimation
was undertaken by Mr. Ken Bampton MSc, MAusIMM, MAIG of Ore Reserve Evaluation
Services (Adelaide), who is a qualified person for the purposes of NI 43-101
and a competent person under the JORC code and Mr. Bampton audited the
available drill hole data for completeness, consistency of hole identifiers,
negative PFN values, overlapping sample intervals or sample data beyond
maximum hole depth. The resource estimation, geological model and independent
technical report, which is being prepared by Mr Bampton for filing in
accordance with the requirements of NI 43-101, has been independently audited
by SRK Consulting (Perth).
Ken Bampton is the qualified person as defined in NI 43-101 responsible
for the preparation of the information relating to the revised mineral
resource estimate contained in this news release.
Victor J. Absolon MSc.(Eng), FAusIMM, C.P. Met., M.M.I.C.A is the
qualified person as defined in NI 43-101 who supervised for Mayfield
Engineering Pty Ltd the preparation of the information relating to the
feasibility study contained in this news release.
About sxr Uranium One
sxr Uranium One Inc. is a Canadian uranium and gold resource company with
a primary listing on the Toronto Stock Exchange and a secondary listing on the
Johannesburg Stock Exchange. The Corporation owns the Dominion Uranium Project
in South Africa and the Honeymoon Uranium Project in South Australia, and is
actively pursuing growth opportunities in the western United States. The
Corporation holds a 75% interest in Aflease Gold Limited, which owns the
Modder East gold project in South Africa. Through a joint venture with
Pitchstone Exploration Ltd., the Corporation is also engaged in uranium
exploration activities in the Athabasca Basin of Saskatchewan.
Cautionary note concerning forward-looking statements and disclosure of
mineral resources: No stock exchange, securities commission or other
regulatory authority has approved or disapproved the information contained
herein. This news release includes certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 and
"forward-looking information" within the meaning of applicable Canadian
legislation. All statements other than statements of historical fact included
within this release, including without limitation, statements regarding
potential mineralization and reserves and future plans and objectives of
Uranium One are forward-looking statements (or forward-looking information)
that involve various risks and uncertainties. There can be no assurance that
such statements will prove to be accurate and actual results and future events
could differ materially from Uranium One's expectations. Such factors include,
among others, the actual results of exploration activities, actual results of
reclamation activities, the estimation or realization of mineral reserves and
resources, the timing and amount of estimated future production, costs of
production, capital expenditures, costs and timing of the development of new
deposits, availability of capital required to place the Company's properties
into production, conclusions of economic evaluations, acceptance of the
Mayfield feasibility study by financial or lending institutions, changes in
project parameters as plans continue to be refined, future prices of
commodities, possible variations in ore grade or recovery rates, failure of
plant, equipment or processes to operate as anticipated, accidents, labour
disputes and other risks of the mining industry, delays in obtaining
governmental approvals, permits or financing or in the completion of
development or construction activities, Uranium One's hedging practices,
currency fluctuations, title disputes or claims limitation on insurance
coverage, as well as those factors discussed under "Risk Factors" in Uranium
One's Annual Information Form and Management's Discussion and Analysis as
filed with securities regulatory authorities in Canada. Although Uranium One
has attempted to identify important factors that could cause actual results to
differ materially from anticipated results, there may be other factors that
cause results not to be as anticipated, estimated or intended.
There can be no assurance that such statements will prove to be accurate
as actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not place undue
reliance on forward-looking statements. Uranium One does not undertake to
update any forward-looking statements which are included herein, except in
accordance with applicable securities laws.
To receive the Corporation's news releases by email, please register on
the Corporation's website at www.uranium1.com.
%SEDAR: 00005203E
