The net present value (NPV) of gold and uranium mining company First Uranium exceeds $1-billion, says First Uranium investor relations vice-president Bob Tait.

Tait calculates that the TSX- and JSE-listed company’s 16-year-life uranium, gold and acid projects on South Africa’s prolific West Rand deliver an NPV of $1,108-billion.

This value will be obtained overwhelmingly from the production of gold at an average rate of 421 000 oz/y and from the production of uranium at two-million pounds a year from 2009 to 2025.

Ezulwini will contribute $667-million, Mine Waste Solutions $413-million and the acid plant $28-million, Tait reports.

The gold will be produced at a cost of $400/oz and the uranium at $30/lb.

Both Ezulwini and Mine Waste Solutions are producing gold, and both will soon also be producing uranium.

Mine Waste Solutions is recovering gold and uranium from the surface at low cost from 350-million tons of tailings – 50 years’ worth, and Ezulwini will commission its uranium plant next month.

Capital costs have been moderate as a result of a legacy of existing infrastructure, including Ezulwini’s underground shaft system, generators and ventilation shafts.

Two uranium modules are under construction at Mine Waste Solutions, where the size of the gold plant is being doubled.

The proposed acid plant will provide the sulphuric acid needed in the extraction process from sulphur present in the tailings.

Helping the company to be low cost is its dual-commodity mix, which means that for the same single mining effort, both uranium and gold are obtained.

Several members of the management team, including current CEO Gordon Miller, were managing the operations prior to First Uranium acquiring them.

“Because we have the records from that time, we are basically duplicating the operation, and we know what the orebody is like,” says Tait.

The upper Elsburg reef is the gold-only reef and the middle Elsburg reef the uranium and gold reef.

The plant has been designed with a milling capacity of 200 000 t/m from four mills of 50 000 t/m each.

Tait ascribes the decline of First Uranium’s market capitalisation from C$1-billion to C$481-million partly to the market waiting for the company to begin producing.

BLUE SKY

While Tait says that the 16-year life of both current operations is sufficient to satisfy most investors, First Uranium vice-president exploration John Gould reports that exploration drilling has intersected “significant value” in an area that is earmarked for mining in 20 years.

The area of the intersection is three times larger than the current mining footprint, with additional reefs available for mining.

The intersection supports neighbouring South Deep’s discovery that the orebody thickens and lengthens as it deepens.

While drilling continues, infrastructure is being designed to access the area.

Extensions of Cooke Three’s orebody are also being studied to Zuurbekom in the north, where the former Gencor drilled 20 holes directly east of Cooke One.

The upper Elsburg A1 reef has been the money-spinner for Randfontein’s Cooke section for the past 40 years.

The 1 600-m depth is 500 m below Ezulwini’s lowest 50 level.

From the suboutcrop on the road between Western Areas and the Potchefstroom road is where the upper Elsburg started thinly at high grade and then slowly dissipated from reefs A1 to A5.

Within 2 km of the suboutcrop it fell away, as did further deeper pursuit of the reefs.

Randfontein has mined from 1 000 m to 1 500 m, but the intersection 1 km further than First Uranium’s deepest mining is showing promise.

To view videos of First Uranium’s Gordon Miller and Bob Tait, go to www.miningweekly.com, click on ‘Multimedia’ and then ‘Video Clips’.

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