| Tue 5 Apr 2011, 11:03 | | EXT - Extract Resources Limited - Definitive Feasibility Study demonstrates |
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EXT - Extract Resources Limited - Definitive Feasibility Study demonstrates
viability of the Husab Uranium Project
Extract Resources Limited (`Extract`)
Registration No. ABN 61 057 337 952
Registered as an external company in Namibia
ISIN Code: AU000000EXT7
NSX Share Code: EXT
Definitive Feasibility Study demonstrates viability of the Husab Uranium
Project
Highlights:
- Definitive Feasibility Study on Zones 1 and 2 ("DFS") demonstrates the
viability of developing the Husab Uranium Project to become one of the
three largest uranium mines in the world;
- DFS envisages open pit mining of 15 million tonnes of ore per annum and a
conventional acid leach plant producing approximately 15 million lbs pa
U3O8 equivalent;
- DFS supports maiden reserve estimate for Zones 1 and 2 of 205 million
tonnes at 497ppm for 225 million lbs contained uranium;
- Cost estimates based on current resource model, mine plan and process
design:
- Capital costs estimated at US$1,480 million, including initial mine
fleet, process plant and supporting infrastructure; and
- Production costs estimated at US$28.5/lb, excluding royalties,
marketing and transport.
- "Hot" commissioning scheduled to occur 33 months after project approval;
- Mine Optimisation and Resource Extension programme ("M.O.R.E.")
commenced, aimed at substantially increasing the current mine life, and
at optimisation of process plant and mining operations;
- Updated resource estimate scheduled for release during Q2, 2011 is
expected to increase mine life and result in significant additional value
to the project.
Extract Resources CEO and Managing Director Mr. Jonathan Leslie said: "This is
an important milestone for the Company. The DFS results demonstrate that Husab
is capable of being developed into one of the largest uranium mines in the
world with a low-risk conventional open pit mine supported by a proven flow
sheet.
"While the DFS has demonstrated the economic viability of the project,
additional exploration and resource definition drilling is expected to
continue to increase the already large resource inventory to enable
significant extensions to the mine life. We have initiated a programme to
investigate this potential, as well as the potential for mine plan
optimisation and process modifications to enhance the Project`s expected
operating and financial performance.
"Extract is committed to developing this strategically important project,
working with key stakeholders to determine the optimum funding and development
framework to bring the project into production. We continue to work closely
with the Namibian Government to obtain the necessary permits to enable the
mine to be developed in a timely manner for the benefit of all stakeholders."
Extract Resources Limited (ASX/TSX/NSX: EXT) ("Extract" or the "Company")
announces that it has completed its Definitive Feasibility Study ("DFS") on
the Husab Uranium Project in Namibia.
Definitive Feasibility Study
Extract has defined a base case mine plan and process plant design, including
plans for delivery of the infrastructure necessary to support the project. The
DFS has demonstrated the technical and economic viability of developing Husab,
the world`s fifth-largest uranium-only deposit.
The DFS is based on:
- Indicated resources defined at Zones 1 and 2;
- Open pit mining by truck and shovel from two separate pits to maintain a
sustained rate of 15Mt pa over the life of mine with an average strip
ratio of 7:1 (waste:ore);
- A waste and plant tailings storage facility (the mine residue facility);
- Ore crushing and overland conveying to a new processing facility
employing milling, leaching,ion exchange, solvent extraction and
precipitation plant and equipment to produce approximately 15 million lbs
pa of U3O8 equivalent; and
- Provision of temporary and permanent power and water supplies, access
roads, temporary and permanent buildings and structures necessary to
support the Project.
Capital costs for the Project are estimated at US$1,480 million, including
initial mine fleet, process plant and supporting infrastructure. Inclusive of
pre-strip and other pre-production operating costs of US$179 million, the
Project Cost is estimated at US$1,659 million. This estimate excludes
allowance for finished goods inventory in transit and held at conversion
facilities, debtor payment terms, creditor payment terms, escalation, and
financing costs (including fees and interest during construction).
Production costs are estimated at US$28.5/lb, excluding royalties, marketing
and transport and cost escalation. Operating costs including royalties,
marketing and transport are estimated at US$32.0/lb.
The accuracy provision for the DFS is +/- 10%. Figures are expressed in US$ in
real terms assuming a base date of 1 January 2011 unless otherwise stated.
Extract has engaged with potential customers to assess demand for production
from the Husab Uranium Project, and has identified several possible strategic
contracting opportunities. Extract is confident that it will become an
attractive supplier to end-users, as a result of the Husab Uranium Project`s
ability to offer geographic diversification and long term security of supply.
Further details of the Definitive Feasibility Study are provided on the
Company website (www.extractresources.com).
M.O.R.E. Programme
The Company has commenced a programme to investigate opportunities to add
significant additional value through Mine Optimisation and Resource Extension
("M.O.R.E.").
- Results of recent drilling will be included in an updated resource
estimate scheduled for release in Q2, 2011. Definition of additional
resources is expected to increase mine life, while conversion of Zones 1
and 2 Inferred Resources to Indicated Resources will result in additional
Probable Reserves which is expected both to increase the mine life and to
reduce the mine`s strip ratio;
- A detailed geotechnical review has indicated potential for steeper slope
angles, and a consequent increase in reserves and a reduced strip ratio;
- The Company`s exploration programme will continue in Zones 3, 4 and 5,
Middle Dome, Salem, Ida Dome, and Pizzaro areas, not included in the DFS;
- The programme will investigate possible process enhancements including
finer grind process, elevated temperature leach, direct IX or SX, with
potential to increase process recovery and simplify the process plant;
The programme will also consider other potentially value accretive
opportunities, including the potential for on-site production of sulphuric
acid.
Corporate
On 8 March 2011, Extract noted the announcement by Kalahari Minerals plc
("Kalahari") and CGNPC Uranium Co Ltd ("CGNPC") of a possible recommended cash
offer by CGNPC for Kalahari, Extract`s 42.79% shareholder. Extract has made
submissions to the Australian Securities and Investments Commission ("ASIC")
to request that all Extract Shareholders are afforded the opportunity to have
the effective benefit of any offer from CGNPC on no less than equivalent terms
to those offered to Kalahari shareholders. The Company is also continuing with
the partnership process and will keep shareholders informed of any material
developments in this regard.
The Company`s cash balances of AUD86.5M as at 31 March 2011 are expected to be
sufficient to fund the envisaged drilling, optimisation and initial
development activities. The Company is also reviewing its options for
financing a standalone development of the Husab Uranium Project. Any such
financing is likely to involve a combination of new equity and debt.
On behalf of the Board of Directors,
Siobahn Lancaster
Company Secretary
Windhoek, 5 April 2011
Registered Office
Swakop Uranium (Pty) Ltd
3 Schutzen Street
Windhoek
Namibia
Sponsor
IJG Securities (Pty) Ltd
Member of the NSX
100 Robert Mugabe Avenue
P O Box 186, Windhoek, Namibia
Registration No. 95/505
Date: 05/04/2011 11:03:03 Produced by the JSE SENS Department.
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