An update to Laramide Resources’ (TSX, ASX: LAM; US-OTC: LMRXF) Westmoreland uranium project in northern Australia increases indicated tonnage by 34% and inferred tonnage by 11% over the previous resource from 2009.
Indicated resources now amount to 27.8 million tonnes grading 770 parts per million (ppm) for 48.1 million contained lb. uranium oxide (U3O8), the company reported Friday. Inferred tonnage totals 11.8 million tonnes at 680 ppm for 17.7 million contained lb. U3O8. The update also brings to 70% the indicated portion of the total resource, and to 30% for the inferred at the project, located in northwestern Queensland.
“This updated (resource) reiterates our long-held view that Westmoreland is a genuinely world class deposit,” Laramide president and CEO Marc Henderson said in a release. “At 65-plus million pounds it ranks as one of the largest undeveloped uranium deposits in the world and has the potential to be a top 10 global uranium mine.”
The company says the Liberal National Party government of Queensland, elected last October, will help quickly move Westmoreland towards the development stage while exploration continues, Henderson added.
‘Sweet spot for size, life’
Describing Westmoreland as “one of the larger open pittable projects in Australia”, SCP Resource Finance analyst Justin Chan said in a note on Friday it hits a sweet spot for size and mine life. Laramide said in a 2016 preliminary economic assessment (PEA) the project could produce about 3.5 million lb. U3O8 over 13 years. The PEA gives Westmoreland a post-tax net present value of $400 million and an internal rate of return of 36% at capital costs of $316 million.
Permitting is the main obstacle for the project but with the new pro-business Queensland government and a federal election approaching in May, Chan said Westmoreland has compelling potential.
“If there is movement on the permitting front, we would expect Westmoreland to be in high demand from ASX-listed producers,” he said. “It offers good operational diversification for in-situ recovery assets and/or geographical diversification.”
Chan said he maintains his buy rating and C$1.35 per share price target.
Laramide shares gained 0.9% Friday afternoon in Toronto to 56¢ apiece, giving the company a market capitalization of $140.9 million. Its shares traded in a 52-week range of 40¢ to 89¢.
Uranium tailwinds
The company’s update comes as the uranium spot price, at $65.50 per lb. U3O8, continues to sit at a level higher than it was in the decade after the Fukushima disaster, which tanked uranium prices. While the price has declined from the $106 per lb. high it had early last year, demand for the metal is rising among countries seeking zero-emissions energy alternatives and sources for power-hungry artificial intelligence servers.
Laramide’s updated resource involved re-estimations of the Redtree, Huarabagoo and Junnagunna deposits as well as an initial resource for the Long Pocket deposit.
Reconsidering uranium?
Uranium mining is banned or restricted in four out of Australia’s seven states and territories, including in Queensland. Nuclear energy is illegal nationwide.
Despite Queensland’s uranium mining ban, re-introduced in 2015, key members of Premier David Crisafulli’s government have shown interest in considering small modular reactors (SMRs), according to the Australian Energy Council. Federal Opposition leader Peter Dutton has also promoted the use of SMRs as a green energy option.
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