Norasa Uranium Project

 

Development has commenced at the Company’s wholly owned and permitted Norasa uranium project located in the mining friendly and politically stable country of Namibia, Africa. The Valencia deposit is situated approximately 80km from the coastal town of Swakopmund.  It is located 35 km along strike to the world class Rössing Uranium Mine which has been in production for over 30 years and 50 km north of the Langer Heinrich Uranium Mine. What sets Norasa’s Valencia mine apart from many other uranium exploration and development projects, is that it is fully permitted including all environmental approvals. In August 2008, the Namibian government issued a 25 year Mining Licence for the mine.

In March 2014 the company updated its initial scoping studies, pit optimization, metallurgical environmental and economic studies for the development of Norasa and released an updated National Instrument 43-101 Technical Report to pre-feasibility level. The Mineral Resources are reported above cut-off grades of 100ppm and 160ppm U3Ofor Valencia and Namibplaas respectively, and areas have been classified as Measured, Indicated and Inferred Resources in accordance with the guidelines of the NI 43-101 as listed in Table 1. Estimated Measured and Indicated Mineral Resource for Norasa is 237Mt at a grade of 197ppm U3O8, which equates to 103Mlbs of U3O8.  The estimated Inferred Mineral Resource is 50Mt at a grade of 198ppm U3Ofor 22Mlbs of U3O8. The Mineral Reserve estimate is summarised in Table 2. The total Proven and Probable Norasa Mineral Reserve is 177Mt at a grade of 202ppm, which equates to 79Mlbs of U3O8. Resources are reported inclusive of Reserves. Mineral Resources that are not Reserves either haven’t demonstrated economic viability or don’t meet the cut-off grade criteria. The project supports a 13 year mine life at the proposed production rate.

In the second quarter of 2010 an important access road was completed, joining the Valencia mine site to the main highway. Construction of power infrastructure has commenced in conjunction with NamPower and the Company has entered into a Memorandum of Understanding with NamWater to obtain water required for the mine construction phase and production. Given the advanced stage of the project, its world class location, infrastructure agreements, politically stable environment with a track record of supporting the successful development of its uranium resources, the Norasa development presents a rare opportunity for the investor to participate in what could potentially be one of the next uranium producing mines.

Valencia Uranium Mine Location Map  click to enlarge

Valencia Uranium Mine Location Map
click to enlarge

Permits Received for the Valencia Deposit

In August 2008, the Company’s wholly owned subsidiary was awarded Mining Licence ML149 for its Valencia permit which covers an area of 735.6 hectares. The granting to the Company of this 25 year renewable mining licence for the Valencia deposit is the most significant milestone in the development of Valencia, and this is only the third licence to be granted within the last few decades in Namibia. Awarding of this Mining Licence followed receipt of approval and clearance by the Namibian Ministry of Environment and Tourism on both the Environmental Impact Assessment and the Environmental Management Plan. A summary of permits received is as follows:

Permit Issued By Date Received
Environmental Clearance —Valencia Village Ministry of Environment and Tourism 11 April 2013
Accessory Works Ministry of Mines and Energy 29 May 2009
Petroleum Consumer Installation Ministry of Mines and Energy 12 October 2012
Mining Licence Ministry of Mines and Energy 23 June 2008
Environmental Clearance Mining Ministry of Environment and Tourism 11 April 2013

Norasa Resource and Reserve Highlights and Technical Reports

In preparation for the development of the Norasa uranium project, the Company has completed an extensive exploration program culminating in an updated prefeasibility technical report in 2014 on the development of the project.

Norasa consists of three deposits; Valencia, a Satellite pit and Namibplaas. Historical information including geological setting, drilling, mineralization and sampling and analysis are detailed in the following files and are available for download on this website or on SEDAR (www.sedar.com):

Resource and Reserve Information from the NI 43-101 Technical Report – March 2014

The Mineral Resources are reported above cut-off grades of 100ppm and 160ppm U3Ofor Valencia and Namibplaas respectively, and areas have been classified as Measured, Indicated and Inferred Resources in accordance with the guidelines of the NI 43-101 as listed in Table 1. Estimated Measured and Indicated Mineral Resource for Norasa is 237Mt at a grade of 197ppm, which equates to 103Mlbs of U3O8.  The estimated Inferred Mineral Resource is 50Mt at a grade of 198ppm for 22Mlbs of U3O8.

The Mineral Reserve estimate is summarised in Table 2. The total Proven and Probable Norasa Mineral Reserve is 177Mt at a grade of 202ppm, which equates to 79Mlbs of U3O8. Resources are reported inclusive of Reserves. Mineral Resources that are not Reserves either haven’t demonstrated economic viability or don’t meet the cut-off grade criteria.

Table 1 – Norasa Mineral Resource as at March 2014

Category Cut-Off Grades

Tonnes [M]

U3O8 [ppm]

U3O8 [Mlbs]

Measured
  Val 60ppm: Nam 100ppm

27

153

9

  Val 100ppm: Nam 160ppm

17

202

7

  Val 140ppm: Nam 200ppm

10

253

6

Indicated
  Val 60ppm: Nam 100ppm

419

153

141

  Val 100ppm: Nam 160ppm

221

197

96

  Val 140ppm: Nam 200ppm

114

248

62

Measured + Indicated
  Val 60ppm: Nam 100ppm

447

153

150

  Val 100ppm: Nam 160ppm

237

197

103

  Val 140ppm: Nam 200ppm

125

248

68

Inferred
  Val 60ppm: Nam 100ppm

105

156

36

  Val 100ppm: Nam 160ppm

50

198

22

  Val 140ppm: Nam 200ppm

18

269

10

Resources are reported inclusive of Reserves.

Table 2 – Norasa Mineral Reserve as at March 2014

Classification

Tonnes [M]

U3O8 [ppm]

U3O8 [Mlbs]

Proven

  16

203

  7.3

Probable

161

202

71.7

Total Reserve

177

202

79.0

Cut-off grades of 100ppm for Valencia and 160ppm Namibplaas

The Reserves come from three deposits, resulting in 3 distinct pits; the Valencia pit, a small satellite pit just 500m away from Valencia, and the Namibplaas pit.

Economic analysis and parameters

A financial model was prepared to assess the economics for Norasa based on the Mineral Reserve and mining schedule to report NPV, payback and IRR. The financial model quantifies the revenues, costs and capital expenditure over a 13-year life of mine.  It is believed that these results are accurate to within ±25%, within the constraints of the associated assumptions.

NPVs were calculated on post-tax, uninflated cash flows at discount rates of 0%, 6% and 8% and outcomes are shown in Table 3. The IRR for the project is 36%. A long-term uranium price of US$68/lb is assumed. The project has a payback period of 3 years after commencement of production.

Table 3. Norasa Project NPV

Discount Rate NPV (US$ M)
0% 851
6% 491
8% 410

The financial modelling was based on the following production assumptions:

  • construction to commence in early 2015,
  • plant commissioning by mid 2016,
  • mining to commence in early 2016 to prepare pit benches and open mining faces,
  • the mining rate steadily increases to 68Mtpa in 2021,
  • radiometric sorting is introduced in mid 2018, after 2 years of plant operation,
  • nameplate Norasa plant capacity achieved in 2019.

Economic parameters include:

  • metal price of US$68/lb throughout the life of mine,
  • as of the end of 2013, deferred exploration expenditures of US$32.9M for Valencia and US$7.3M for Namibplaas are capital deductible and included in the model.
Figure 1. Geology of Norasa’s Valencia and Namibplaas deposits with proposed pit outlines.

Figure 1. Geology of Norasa’s Valencia and Namibplaas deposits with proposed pit outlines.

Potential for Uranium Reserve Expansion

At the Valencia deposit (ML149) based on current knowledge and exploration success to date, the Company believes that very good potential exists for future increases in the Valencia uranium reserve base and more fully described in the Technical Report of March 2014.

Specifically, potential exists for conversion of the estimated Inferred Mineral Resource is 50Mt at a grade of 198ppm U3O8 for 22Mlbs of U3O8.

Further, below the bottom of the currently defined Valencia pit (350m * 300m wide) would allow us to go down further by a few benches. Several holes in the 2009 drill program were drilled roughly 20m beyond the current pit bottom, which is at 380m from surface (elevation 350m). These holes are mineralized beyond the current pit bottom but not included in inferred material as the data based used to model the Valencia pit, forming the basis of Proven and Probable Reserves in table 2 above. The Company’s expectation of further resource expansion below an elevation of 350 m is further reinforced by one deep drillhole (VA-152) drilled in 2008, which encountered ore grade mineralization down to 470 m depth. The results of this hole are summarized in the Company’s press release dated July 22, 2008.

Infrastructure

SADWater Supply
Short and medium term supply of water from Areva’s desalination plant
NamWater’s own desalination plant to provide long term requirements of up to 20 million cubic metres per annum

Power Supply
Namibia signed electricity import agreement with Mozambique in 2013 for 122MW
NamPower to construct its own 800MW gas power station in co-operation with Zambian power company

Roads
26 km of new access road linking Valencia mine to highway completed in mid 2010. Some internal service roads have also been constructed

Buildings
Central office and admin complex will be constructed. Semi-permanent village will be established 8 km from plant

. . .