TSX-listed Azarga Uranium is aiming to produce about one-million pounds a year of uranium oxide (U3O8) at a direct cash operating cost of $10.46/lb, in South Dakota, US.
The company on Friday filed a National Instrument 43-101 technical report and preliminary economic assessment (PEA) for its Dewey Burdock in-situ recovery uranium project, which is based on a 16-year mine life.
Over that period, Dewey Burdock will produce 14.3-million pounds of U3O8.
The base case economic assessment results in a pretax internal rate of return (IRR) of 55% and a pretax net present value (NPV) of $171.3-million when applying an 8% discount rate. Using the same discount rate, the post-income-tax IRR is 50% and the post-income-tax NPV is $147.5-million.
The base case uses a uranium price scenario of $55/lb.
The total pre-income-tax cost of uranium production is estimated to be $28.88/lb of production. Income taxes are estimated to add $3.39/lb.