VANCOUVER — The Rossing South uranium project is already home to 267 million lbs. U3O8 in two adjacent deposits. Now owner Extract Resources (EXT-T, EXRLF-O) has found a third zone at the Namibian property.
Rossing South is the primary target area within Extract’s Husab property, a 637-sq.-km land package that sits on the southern border of Rio Tinto’s (RTP-N, RIO-L) Rossing mine property. The Rossing mine has been producing uranium for 30 years from a deposit that averages 0.03% U3O8.
The area to the south was thought to be barren because it did not emit a radiometric signal. Extract hypothesized the signal was masked by some 30 metres of Namib Desert sand and was proven right when its first holes into Rossing South, in early 2008, included a 70-metre hit grading 0.03% U3O8.
Less than a year later, the company released an initial resource for the project, showing more than 100 million lbs. contained U3O8. By mid-2009, Extract had defined a second zone at Rossing South. The resource currently stands at 20.7 million indicated tonnes grading 0.0527% U3O8 and 126.3 million inferred tonnes averaging 0.0436% U3O8 in Zone 1, as well as 102 million inferred tonnes grading 0.0543% U3O8 in Zone 2.
Zones 1 and 2 are both elongated areas striking north-northeast and each already boasts a strike length of 2.4 km. They lie on the eastern limb of the Rossing South antiform. In stepping another 1.2 km south of Zone 2, Extract has hit mineralization in a third zone that appears to sit on the western limb of the antiform, and the mineralization carries some of the best grades found on the property.
To date, two holes have pierced the new zone. Hole 1 intersected 55 metres grading 0.147% U3O8 from 157 metres depth. Hole 2 cut 53 metres averaging 0.162% U3O8 starting 104 metres down-hole. From the banding patterns in the core, Extract geologists think the zone dips shallowly to the west, meaning intercepts likely represent 65% to 75% of true widths.
Extract hit the new zone when it followed up on an area of strongly anomalous mineralization defined by reconnaissance drilling another 400 metres south.
Extract currently has 10 drill rigs turning at Rossing South, including five diamond-drill rigs and five reverse- circulation rigs. Some drills are working on infill drilling to increase confidence in the Zone 1 and 2 resources, while others, like those that found Zone 3, are probing for additional mineralization farther to the south.
Infill results are looking good. In a recent set of results from Zone 1, hole 37 returned 87 metres of 0.0978% U3O8 from 435 metres depth and hole 62 hit 93 metres grading 0.0619% U3O8 starting 49 metres down-hole. In Zone 2, hole 48 cut 13 metres grading 0.171% U3O8 from 348 metres depth.
The company is advancing a feasibility study based on its July resource and expects the study to examine a mine producing some 15 million lbs. U3O8 each year. Extract believes drilling on the targets it has already identified can boost the Rossing South resource to 500 million lbs. uranium oxide.
To help pay for all that drilling, Extract is in the midst of closing a two-part financing that should raise A$91 million. The equity raise includes a A$40.3-million private placement, which recently closed, and a A$50.7-million pro rata offer.
In the private placement, the company sold 5.2 million special warrants for A$7.75 apiece; each warrant will automatically convert into an Extract share within four months, with the exact date dependent on the receipt of regulatory approval. In the entitlement offer, existing Extract shareholders have the option to purchase one new share for every 35 shares held at a price of A$7.75 each. If the
maximum 6.54 million shares available through the offering are purchased, the arrangement will raise A$50.7 million. Extract’s three largest shareholders — AIM-listed
Kalahari Minerals (KMPLF-O, KAH-L), which holds 40% of Extract; Rio Tinto, which owns 15%; and AIM-listed Polo Resources (POLJF-O, PRL-L), which carries 10% — have each committed to purchasing their full entitlements.
The equity raises are not the only money-related issues Extract is considering of late. The company says “a number of global uranium industry players. . . have expressed interest in participating in the future development of the project.” Extract says it is reviewing various corporate and business options for bringing Rossing South into production.
The Zone 3 drill results pushed Extract shares up 50¢ or 6% in a day to close at $9. All through 2008 and early 2009, the company’s stock hovered near $1.20. Since the initial Rossing South resource estimate in January, Extract’s share price has risen consistently, gaining 800%. The company has 213 million shares outstanding.
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