Revenue from gold production and other activities, such as contract mining, is intended as a source of funding for current uranium resource development and future uranium production at JSE-listed investment holding company Oakbay Resources & Energy’s Shiva Uranium mine, in Hartbeesfontein, in the North West.

During a site visit to the mine last week, Oakbay CEO Varun Gupta noted that the mine had been placed on care and maintenance in 2008, owing to the slump in commodity prices.

When Oakbay bought the mine in 2010, it was in a challenging position, with an average maintenance spend of $1-million a month. Gupta explained that the company had focused on starting openpit gold mining at the mine to provide cash flow.

The mine has a total gold resource of 5.2-million ounces and an estimated 16-year mine life, with potential to extend this to 100 years.

Shiva’s exploration and mining operations are focused on the Dominion group and the West Rand group of the Witwatersrand basin. The West Rand group’s gold section is processing about 65 000 t/m run-of-mine (RoM) but is in the process of increasing this. The overall processing capacity for the Dominion reef is 250 000 t/m RoM.

Gupta also highlighted that Shiva has one of the largest uranium orebodies in South Africa, with a total uranium resource of 196-million pounds.

“Shiva is well positioned to achieve low-net-cost uranium production given its ability to profitably mine low-grade gold resources,” he stated.

The company’s uranium plant is the only reverse-pressure-leaching uranium plant in Africa, enabling Shiva to achieve uranium yields of up to 92%.

“This is 30% higher than other plants using traditional leaching methods,” Gupta asserted.

A new bankable feasibility study (BFS) for the mine’s uranium operation is to be commissioned in the near future. Oakbay is also preparing for a local and international capital raising programme to finance Shiva expansion in line with the feasibility study, which the company anticipates will show demand for at least R800-million in capital investment.

Gupta said that, according to the company’s current BFS, Shiva could produce uranium at a cost of $41/lb, while also extracting gold from the same seam at no additional cost.

“This means that our net cost could decrease by as much as $20/lb, owing to the cash generated by gold production,” he highlighted.

Shiva currently employs about 1 000 people, with significant potential for further jobs to be created when uranium production starts at the mine.

“Analysts expect that, by 2017, there will be a 50-million pound shortfall in uranium resources; this will lead to a significant rise in uranium prices of between 65% and 85%. This will place Shiva in an ideal position to supply the market then,” Gupta stated.

Community Development

He pointed out that Oakbay places a significant emphasis on upskilling workers and assisting communities surrounding the mine.

The mine’s in-house training centre provides engineering skills training, learnerships, apprenticeships, artisan short courses, foremen development, planned maintenance and other specialised short courses in line with the Mining Qualifications Authority.

“We have invested R3.1-million in training during the 2015 financial year, averaging 120 hours of training per employee,” Gupta said.

Twenty-two people received trackless machines training, of which 20 graduated successfully. Four people received scaffolding training, all of who passed as specialist scaffolding erectors and inspectors. This course focused on building scaffolding and declaring it safe to use.

Oakbay provided learnerships for 12 employees in the electrical trade and boilermaking, as well as an apprenticeship programme. The company also provided training and qualification for 25 electricians. “They were provided with practical experience to ensure their future employability.”

Shiva’s medical clinic provides health care treatment free of charge to employees and their families as well as to the local communities and farm workers. The facility is staffed with a doctor and registered medical professionals.

Oakbay has several other community empowerment projects, including the Tigane brick- making project, which supplies local markets in the Matlosana municipality with stock paving, maxi and block bricks, and the Tigane agricultural project, which grows crops for the benefit of the community.