PERTH (miningweekly.com) – ASX-listed uranium developer Extract Resources is aiming to start production at Rössing South, which would be the world’s second-largest uranium mine, in 2014, CEO Jonathan Leslie reported on Thursday.

The definitive feasibility study (DFS) for the Namibian project was likely to be delivered before the end of this year, with construction at the Rössing South project starting on the back end of 2013.

The mine had the potential to deliver up to 15-million pounds of uranium a year, Leslie told delegates at the African Downunder conference in Perth.

The project currently had an estimated indicated resource of 122,2-million tons at the zone-one deposit, with a further 118,8-million tons at the zone-two deposit.

The project would cost an estimated $704-million to develop, and would have a life-of-mine of 20 years.

Meanwhile, work on the environmental-impact assessment (EIA) and management plan was proceeding on schedule and in parallel with the preparation of the mining licence application.

Along with the outcomes from the DFS, the EIA would be used to support the mining licence application, which would be made before the end of the year.

Meanwhile, Leslie added that new uranium supply required to fill shortfalls from 2015 would precipitate higher uranium oxide (U3O8) prices.

“The U3O8 spot price has remained relatively flat in the past 12 months at between $40,50/lb and $54/lb,” Leslie said.

“However, current sentiment towards the spot price is for a strong rebound in uranium concentrate prices over a two-year horizon to satisfy the new growth in demand.”

He noted that spot prices of around $70/lb could be expected to provide uranium producers with the right incentive to develop new supplies – bearing in mind that most offtake contracts are based around long-term price trends, not the spot price.

“The spot price is indicative, however, and the weighted average already for 15 new projects due to come on line suggests a minimum spot price of $67 to $90 a pound – a price range equivalent to between 7,5% and 15% of these projects’ projected internal rate of return.”