Dominion hangs on high U price (August 14, 2006)

A uranium mine at SXR Uranium One’s (SXR-T, SXRFF-O, SXR-J) Dominion project near Klerksdorp, South Africa, would be very sensitive to uranium prices, a feasibility study says.

A high-price scenario with U3O8 prices at US$46.50 per lb., gold at US$629 per oz., and the South African rand at US15.2, showed an internal rate of return of 32% and a net present value of US$184 million, after tax and at an 8% discount rate.

If the uranium price falls to US$30 per lb., however, the net present value falls to US$32 million. A price of US$60 per lb. U3O8, on the other hand, almost doubles the project’s value to US$349 million.

The mine design supposes two declines on the Dominion section, to exploit a reserve of 11.5 million tonnes grading 0.08% U3O8 and 1.2 grams gold per tonne. Another decline would provide access to the Rietkuil deposits, which host a probable reserve of 6.9 million tonnes grading 0.07% U3O8 and 0.7 gram gold per tonne.

The plant would have a design capacity of 200,000 tonnes per month and would operate in parallel with a carbon-in-leach gold plant already built on the property. The project would produce 1,700 tonnes U3O8 annually at US$32,000 per tonne (US$14.50 per lb.).

Plant recoveries range from 83% to 89%, and about 60,000 oz. gold would be produced annually as a byproduct. The deposits are in Witswatersrand sediments, where gold and uranium are commonly found together.

Estimates put the cost of the mine at US$57.1 million with US$60.5 million in sustaining capital between 2008 and 2016. The plant would take up another US$111 million in a total US$244-million capital budget.

A second phase, currently under study, would see a US$98-million expansion to add another 19 years to mine life. Operating costs were pegged at US$90,000 per tonne (US$41 per lb.).