World Wide gains interest in Mongolian uranium mine

An agreement between Denver-based WM Mining and World Wide Minerals (WWS-T) will give the latter a majority interest in the Dornod uranium mine in Mongolia.

World Wide can earn WM’s 58% interest in Central Asian Uranium, which owns the open-pit project, by paying US$10 million in cash and issuing 1.4 million treasury shares at 82 cents each. World Wide would also be responsible for funding the project’s capital expenditures and working capital.

The remaining interest in the project is held by an enterprise owned by the Mongolian government.

The mine is in the process of being reactivated following an 8-Month shutdown. Annual production of 800,000 tonnes of uranium oxide (U3O8) is expected by April of next year.

Minable reserves are estimated at 10 million lb. of U3O8, while the recoverable grade is pegged at 0.12%. Long-Term contracts have been secured for the annual sale of 550,000 lb. U3O8 over the first five years of reactivated production. Sales are expected to exceed US$40 million over that period.

Solutions from heap leaching will be treated on site at a plant which has yet to be constructed, while the resulting concentrate will be processed on a tolling basis by major Russian uranium miner, Priargunskiy.

Capital expenditures and working capital for project development are expected to total US$10 million over the next six months. About US$7.5 million will be financed through a loan which is repayable out of cash flow. The company is also in discussions with an unnamed international commercial bank.

Eventually, World Wide hopes to increase annual production to 2.8 million lb.

U3O8 by 2001. Key to this plan is a partially developed underground deposit of 20 million lb. U3O8, the recoverable grade of which is 0.35%.