| Tue 29 Aug 2006, 15:33 | | sxr Uranium One Inc - News Release |
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SXR
SXR
sxr Uranium One Inc - News Release
SXR Uranium One Inc
Share code: SXR
Isin: CA87112P1062
390 Bay Street, Suite 1610
Toronto, Ontario M5H 2Y2
Trading Symbols: SXR - The Toronto Stock Exchange, the Johannesburg Stock
Exchange
NEWS RELEASE
August 29, 2006 Toronto, Ontario
sxr Uranium One Announces Honeymoon Feasibility Study and Approves Honeymoon
Project
Toronto, Ontario and Johannesburg, South Africa -- 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).
Highlights from the feasibility study include:
Indicated mineral resource estimate of 1.2 million tonnes ore, grading 0.24%
U3O8 (2,900 tonnes U3O8)
Project capital costs of US$35.9 million
Life of mine average cash operating costs of US$14.13/lb U3O8
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
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
U3O8 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 U3O8.
Financial Evaluation
Based on a 70% recovery rate from an indicated mineral resource containing 2,900
tonnes of U3O8, 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 U3O8 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 U3O8 to 2,900 tonnes
(6.5 million pounds) from the previous indicated mineral resource estimation
(2.8 million tonnes ore, grading 0.12% U3O8 (3,300 tonnes U3O8 )) contained in
the December 2001 independent technical report prepared by Hackester Pty Ltd.
(available on SEDAR). The reduction in contained U3O8 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.
In addition, the revised resource has been:
- directly measured using PFN, whereas the previous estimation was based on
indirect gamma methods (estimated equivalent eU3O8 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% U3O8 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% U3O8 minimum grade with up
to 1m of internal dilution, are shown in the table below. An economic grade
thickness cut-off of 0.1m% U3O8 has been applied.
Sand Ore Grade Tonnes Pounds Thickness GT
(tonnes) (% U3O8 U3O8 (Metres) (m%U3O8
U3O8) )
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
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
(1) Minor apparent multiplication mismatch of contained U3O8 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.
For further information please contact:
Jean Nortier Chris Sattler Greg Cochran
Chief Financial Officer Vice President, Investor Executive Vice President
Relations
Tel: + 27 11 482 3605 Tel: +1 416 350-3657 Tel: +61 8 8363 7006
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.
Date: 29/08/2006 03:33:36 PM Produced by the JSE SENS Department
