The PEA points to a recovery rate of 88 percent, and initial CAPEX is estimated at $123 million. OPEX is pegged at $31.10 per pound of U3O8, excluding royalties, and total life-of-mine costs are expected to be $37.90 per pound of U3O8.
“We are pleased by the encouraging results of this PEA,” said Govind Friedland, executive chairman of GoviEx. “GoviEx now has two mine-permitted projects, Madaouela in Niger and Mutanga in Zambia, and we can clearly see the economic potential for both of these projects to be developed when uranium prices rise, as expected, as a result of the looming supply deficit forecast later this decade.”
GoviEx notes that the base-case economics for Mutanga are positive at a long-term uranium price of $58 per pound. As of November 13, the uranium price was $23, up $2.75 from the previous week.
Some market watchers expect uranium prices to rise soon. Earlier this month, major producer Cameco (TSX:CCO,NYSE:CCJ) announced plans to suspend production at its McArthur River mine and Key Lake milling operations by the end of January 2018 due to “continued uranium price weakness.” The production cut was widely viewed as a positive sign that could spur a price recovery.
Mutanga will have an after-tax net present value of $112 million at an 8-percent discount, and an IRR of 25 percent. The firm said almost all of the mineralization at the project occurs within 125 meters of the surface and should be extractable via open-pit mining. GoviEx noted that it has investigated an alkaline leach and acid leach process, but selected acid heap leaching because it provides “slightly better overall recovery for all six deposits.” It is also faster and has lower operating and capital costs.
The project has a measured and indicated resource of 21.6 million tonnes at an average grade of 318 ppm U3O8, containing 15 million pounds of U3O8. Its inferred resource stands at of 74.6 million tonnes at an average grade of 273 ppm U3O8, containing 45 million pounds of U3O8.
GoviEx’s share price closed Tuesday at $0.28, up 5.66 percent; year-to-date the company’s share price is up 86.68 percent. For more information on GoviEx, click here to watch our recent interview with CEO Daniel Major.
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.