JOHANNESBURG (miningweekly.com) - A definitive feasibility study (DFS) at ASX-listed Vimy Resources' Mulga Rock project (MRP), in Western Australia, has confirmed robust financials and a simple, low-cost mining process.
"The DFS reinforces the status of the MRP as Australia's largest and most advanced uranium project based on a low risk, openpit mining operation that will underpin production of 3.5-million pounds of uranium oxide (U3O8) a year for 15 years," the company noted in a statement.
The results further confirmed the project's competitive cash operating costs, which for the initial five years of operations - the all-important pay-back period - were estimated at $25.11/lb U3O8.
Over life-of-mine (LoM), the cash operating costs were forecast to be $27.95/lb with a pre-tax net present value at a robust A$530-million, generating free cash flow of A$134-million a year after royalties.
These metrics assume a uranium contract price of $60/lb U3O8 at the time of first production, which is targeted for 2021. The assumed uranium price is significantly higher than the current spot price of about $20/lb.
Vimy stated that the DFS results, which significantly improved upon the Mulga Rock prefeasibility study (PFS) released in November 2015, along with increasingly favourable market conditions, laid the foundation for the company to become Australia' s next supplier of U3O8 and operator of Western Australia's first uranium mine.
"The DFS is the result of two years of incredibly diligent work by the Vimy team and demonstrates the robustness of the Mulga Rock project and its potential to become a strategically important supplier of uranium for nuclear power stations all over the world," said CEO Mike Young.
"The report's release comes at a pivotal time for Vimy as we accelerate negotiations with future offtake partners and aim to secure project finance ahead of a final investment decision in the second half of 2018," he added.
The DFS included a substantial increase in ore reserves at the Mulga Rock project, with around 85% of the contained uranium inventory within the optimised pit designs for the Ambassador, Princess and Shogun deposits classified as ore reserves.
More importantly, more than 90% of the first ten years of production was supported by ore reserves. The DFS also included a revised mining plan to increase metal output during the initial phase of production, and new supply side assumptions following recent decisions by the world's largest uranium producers to cut production.
Vimy completed the DFS with a number of important elements of the project already achieved. These included securing all Ministerial approvals required for the mine. The state government granted final Ministerial approval in December 2016, which was followed by Federal approval in March 2017.