High uranium price to fuel Rössing South’s Husab mine

A REBOUND in the uranium spot price next year and the emergence of the Rössing South uranium project as a producer from 2014 would help Perth-based Extract Resources Limited emerge as owner of the second largest uranium mine globally.

Addressing the second day of the Paydirt 2010 Africa Downunder Conference in Perth, Extract’s new Chief Executive Officer, Jonathan Leslie, yesterday said new uranium supply required to fill shortfalls from 2015 would precipitate higher uranium oxide prices.

“The U3O8 spot price has remained relatively flat in the past 12 months at between US$40,50 to US$54 per pound,” he said.

“However, current sentiment towards the spot price is for a strong rebound in uranium concentrate prices over a two year horizon to satisfy the new growth in demand.

“Spot prices of around US$70 a pound can be expected to provide uranium producers with the right incentive to develop new supplies – bearing in mind that most off-take contracts are based around long-term price trends, not the spot price.

“The spot price is indicative however and the weighted average already for 15 new projects due to come on line suggests a minimum spot price of between US$67 and US$90 a pound – a price range equivalent to between 7,5 per cent and 15 per cent of these projects’ projected internal rate of return,” Leslie said.

He said Rössing South now officially has the fifth largest uranium deposit in the world. 

“It is well positioned to become globally, the second largest producing uranium mine – titled Husab - with the potential to produce 15 million pounds of concentrate per annum,” Leslie said.

“The scoping studies to date suggest low cash costs and attractive economics for Husab with the definitive feasibility study due to commence in the forthcoming December quarter.

“We anticipate at this stage that project development will continue through to the end of 2013 with commissioning and first production underway over 2014-2015,” he said.

Rössing South’s path to maiden output would benefit from the deposit’s high grades and conventional, low risk open pit mine development, with test work to date generating good recoveries from conventional agitated acid leach operations, Leslie said.

Internal studies by Extract in March this year suggested a production throughput of 40 000 tonnes per day at a head grade of 487 parts per million and production costs of around US$23,60 per pound.

Husab has an estimated capital cost of US$704 million and an estimated mine life of 20 plus years.

---