JOHANNESBURG (miningweekly.com) – Perth-based Paladin Energy on Monday announced that it would buy the Carley Bore uranium project in Western Australia’s Carnarvon basin from Energia Minerals in a A$15.8-million transaction.
The acquisition would consolidate Paladin Energy’s control of an emerging uranium province around its Mayingee project, where the company is considering an in-situ recovery (ISR) operation producing two-million pounds a year of uranium oxide (U3O8).
“The current low uranium price and sustained sector weakness have created an opportunity to consolidate our portfolio in strategically important regions for the company. This acquisition is certainly a game changer for us in terms of our Australian projects. With this land package, we have cornered a significant portion of the emerging Carnarvon basin uranium province,” commented Paladin MD and CEO John Borshoff.
Paladin, which also owns mines in Namibia and Malawi, said the potential to develop a significant mining operation with a mine life extending beyond 20 years in a new mining district was compelling. However, it would only develop new projects when the uranium price reached at least $70/lb.
Paladin said it envisaged Carley Bore as a satellite operation with Manyingee as the main processing hub.
“The ability of ISR projects to operate with a central plant supported by numerous satellite deposits typically results in a lower capital cost and highly cost effective development approach. For decades, a similar satellite and central processing hub and spoke strategy has been successful at a number of operations in the US and is currently used at Heathgate Resources’ Beverley ISR uranium project, in South Australia, with the Four Mile, Panniken and Pepegoona deposits,” the company said in a statement.
The acquisition would increase Paladin’s Joint Ore Reserve Committee-compliant indicated mineral resources in the area by more than 30% to 20.7-million pounds of U3O8 at a grade of 680 parts per million (ppm), and doubled the inferred mineral resources to 20.9-million pounds at a grade of 415 ppm. Paladin stated that it could potentially increase the resource base by a further 15-million pounds to 25-million pounds. Exploration work in the 2016 financial year would focus on resource extensions to Carley Bore and regional exploration to test potential for additional uranium deposits.
Meanwhile, Energia said the sale of Carley Bore would allow it to expand its current underground refurbishment programme in the upper levels of Colonna Zorzone, at its Gorno zinc project, in Italy, providing access to the high-priority exploration targets.
Energia also planned to expedite metallurgical testwork, conceptual mine design, treatment plant design and baseline environmental studies in preparation for its goal of becoming a significant producer of high-grade zinc concentrates in 2017.
The heads of agreement (HOA) with Paladin comprised 45-million Paladin shares, of which 16-million would be held in voluntary escrow for 12 months, and A$1.6-million in cash. Forty-million Paladin shares and the A$1.6-million in cash would be payable upon completion. The remaining five-million Paladin shares would be issued when Energia’s application for expenditure exemption on E08/1644 had been approved.
The number of shares to be issued in Tranche 2 would be adjusted downwards for any increase in the Paladin share price above 45c a share so that the maximum value of Tranche 2 shares at the time of transfer did not have a market value of more than A$2.25-million.
Energia MD Kim Robinson said the sale represented a major boost to the company’s strategy to become a low-cost zinc producer in northern Italy during 2017.
The transaction was conditional upon Energia obtaining Ministerial consent for the transfer of all tenements and if required, obtaining shareholder approval for the transaction, as well as Paladin receiving Foreign Investment Review Board approval.
Paladin would also be granted a right of first refusal over the sale of any future tenements granted to Energia that share any boundary with the existing Carley Bore tenements, as well as other tenements in the vicinity of the Carley Bore tenements.
Paladin would prepare and submit a fully termed agreement, which incorporates the provisions of the HOA, to Energia in 15 business days.