Southern Cross has agreed to spend at least A$100,000 on exploration and pay Equinox a 1.5% royalty on any uranium it produces from the tenement. Equinox retains the rights to any basement-hosted mineralization discovered.
The tenement adjoins Southern Cross’s Goulds Dam and Katchiwilleroo licences and is believed to contain the headwaters of the Billeroo and Curnamona paleochannels (the former hosts the Goulds Dam resource).
Southern Cross says about a third of Ethiudna has potential for hosting Tertiary uranium mineralization; the property is also home to several outcroppings.
The company is now readying its drills at the Brooks Dam prospect, a belt of uranium mineralization northwest (and downstream) of its Honeymoon deposit. (Earlier this year, a 49-hole drilling campaign failed to boost resources at Honeymoon. Indicated resources there stand at 7.3 million lbs. U3O8. The company says it will consider building a plant that is smaller and longer-lasting than the originally planned 2-million-lb.-per-year operation.)
The Brooks Dam prospect has a strike length of at least 1 km and grade thickness values ranging from 0.23 metre per cent to 0.83 metre per cent. It has been delineated by grades greater than 0.03% U3O8, based on an internal dilution of less than 20 cm, and across a mining width of at least 20 cm. Two-thirds of this resource lies within the mining lease; the remainder is north, on exploration licence 3017 (T.N.M., June 7-13/04).
The company will then focus its drills on Goulds Dam, home to a low-grade resource totalling 13.4 million lbs. U3O8. Southern Cross figures previous gamma-logging may have underestimated the uranium content of the deposit.
Southern Cross chief executive Mark Wheatley recently replaced Oliver Lennox-King, who left his post as chairman to pursue other business activities.
Meanwhile, Equinox Minerals has received a listing on the Toronto Stock Exchange and raised $15.6 million via an initial public offering of 22 million shares at 71 apiece.
Equinox will use the proceeds to acquire the 49% interest it does not already hold in the Lumwana copper-cobalt project in Zambia. This will require paying US$5 million to
A bankable feasibility study by Aker Kvaerner Australia indicates Lumwana is capable of producing 112,000 tonnes copper per year from the Malundwe and Chimiwungo deposits over a minelife of 20 years.
During the first five years of operation, two open pits will target Malundwe to produce a concentrate grading 44% copper. Offsite smelting and refining will produce an average of 140,000 tonnes copper per year.
In subsequent years, an on-site roast-leach-electrowinning plant would process concentrates produced from Chimiwungo containing 25% copper. Average annual production is pegged at 100,000 tonnes of London Metal Exchange Grade A copper cathode (plus byproduct cobalt and sulphuric acid). Chimiwungo will be mined via three pits.
The 2-stage approach takes into account Chimiwungo’s higher cobalt content. Mineralization at Lumwana is predominantly sulphide, with about 5% classified as oxide or transition. There are also significant cobalt and gold credits. Mineralization is hosted by high-grade, metamorphosed, intensely mylonitized and recrystallized muscovite-phlogopite-quartz-kyanite schists, with disseminated sulphides (around 5%) dominated by chalcopyrite and bornite.
Malundwe is home to in-pit proven and probable reserves totalling 87.3 million tonnes grading 0.94% copper, 0.03 gram gold per tonne, and 128 parts per million (ppm) cobalt. Another 8.3 million tonnes of 0.64% copper, 0.02 gram gold, and 80 ppm cobalt are classified as inferred.
At Chimiwungo, in-pit reserves amount to 118 million tonnes averaging 0.69% copper, 0.02 gram gold, and 265 ppm cobalt; inferred resources total 134.6 million tonnes of 0.6% copper, plus minor gold and cobalt.
The estimates are based on an average copper cutoff grade of 0.3%. Both deposits remain open laterally and at depth, and several exploration targets have been identified nearby.
The study projects an average cash cost of US42 per lb. (including byproduct credits), an after-tax internal rate of return of 21%, and an after-tax net present value (at an 8% discount) of US$399 million. The estimates are based on a copper price of US95 per lb.
Preproduction capital costs for the initial stage are estimated to be US$296 million, excluding the mining fleet, contingency and prestripping. The second stage carries a price tag of US$288 million.
Equinox is looking to arrange project financing, which may include taking on a new partner. Commercial production is planned for the second half of 2006, pending financing and a 24-month development period, including 18 months of construction.
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