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03 iaea conference becker

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  • 1. IAEA Sandstone Uranium Conference 2012Grade – The Crucial Factor for an EconomicSandstone Uranium Mine (An Opinion Based onConsiderable Experience and Common Sense)Ed BeckerExecutive General Manager – Geology and Exploration
  • 2. Mine - EconomicsThe main factors whichdefine the economics Picture of Block Model:of an orebody: Kayelekera — Grade of the mineralisation — Tonnage of the mineralisation — Value of the commodity — Cost of extraction (capex + opex) — Efficiency of operation 1
  • 3. Commodity Value Currently uranium is traded for US$51.00 to US$61.00 Prices are expected to rise (when?) Price rise expectations vary from US$60.00 to US$90.00/lb U3O8 2
  • 4. Production Costs(mining and processing) Minimum US$30/t for mining and processing for large tonnage operations of >10Mt/year or more (includes C1 and 2 costs) Smaller operations will be in the range of US$40 to US$60/t or more Production efficiency will vary between 70% to 90% extraction (This talk will use 90% extraction) 3
  • 5. Capital Cost Rule of Thumb: $100 to $150 per lb U3O8 annual production — e.g. 3Mlb U3O8 annual production needs US$300M to $450M investment (This talk will use $100 per lb U3O8 annual production) Minimum size for an economic operation: 3Mlb U3O8 annual production for at least 8 years 4
  • 6. Marginal Cut of Grades (using 90% recovery)Revenue Production Marginal Cut Marginal Cut of Grade + Marginal Cut of Grade$/lb Costs of Grade Basic Capital Repayment $/t ppm U3O8 US$20/lb U3O8 Revenue $60/lb Marginal Cut of Grade + 80060 30 252 402 Basic Capital Repayment 600 ppm U3O8 400 40 336 482 200 50 420 570 0 30 40 50 60 60 504 654 Production Costs $/t Revenue $70/lb70 30 216 345 600 ppm U3O8 400 40 288 417 200 50 360 489 0 30 40 50 60 60 432 561 Production Costs $/t Revenue $80/lb80 30 189 302 600 ppm U3O8 40 252 365 400 200 50 315 428 0 60 378 491 30 40 50 60 Production Costs $/t Revenue $90/lb90 30 168 268 600 ppm U3O8 40 224 324 400 200 50 280 380 0 60 336 436 30 40 50 60 Production Costs $/t Note: these are break even grades 5
  • 7. Economic Reserves and Grades Basic tonnage and grade (reserves) requirements for an economic sandstone uranium orebodyOre Reserves Average Grade Contained Metal 700Mt Ppm U3O8 Mlb U3O8 60010 1,000 24 50020 900 40 400 Mt40 800 70 30080 700 120 200160 600 210 100320 500 350 0 100 200 300 400 500 600 700 800 900 1000640 (?) 400... 560 (?) ppm U3O8 6
  • 8. Conclusion In the current economic environment, minimum grade and tonnage combination are required to have a chance to develop a sandstone uranium mining operation A minimum average grade of 500ppm U3O8 needs large tonnages of +300Mt of ore Better average grades of mineralisation of 1,000ppm or better still need a minimum of 25Mlb recoverable metal Note: good grades and tonnages are just the starting point but not the only requirements for the development of a sandstone uranium mining venture. 7
  • 9. Recommendation Before you spend money on metallurgical test programmes, scoping, prefeasibility, let alone definitive feasibility studies, concentrate your efforts on improving the grade or tonnage of your mineralisation to the point that gives you a realistic development chance. 8
  • 10. Feasibility and Reality BFS RealLanger Heinrich Mine (2005) $/lb 15 30$100 million CAPEX $/t 26 45 Recovery 90% 85%Kayelekera Mine (2007) $/lb 28 45$230 million CAPEX Langer Heinrich Mine under construction $/t 60 90 Recovery 90% 85%Dominion Mine (2006) $/lb (15) 20 ? (40 + 60)$180 million CAPEXNPV $180 million $/t (22) 30 ? (40 + 60) Kayelekera Mine under constructionIRR 32% Recovery 87% 84% 9
  • 11. Contact Details Mr Ed Becker Executive General Manager – Geology & Exploration Email: ed.becker@paladinenergy.com.au Level 4, 502 Hay Street, Subiaco Western Australia 6008Thank you. PO Box 201 Subiaco Western Australia 6904 Tel: +61 (0) 8 9381 4366 Fax: +61 (0) 8 9381 4978 Email: paladin@paladinenergy.com.au www.paladinenergy.com.au 10

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