1. IAEA Sandstone Uranium
Conference 2012
Grade – The Crucial Factor for an Economic
Sandstone Uranium Mine (An Opinion Based on
Considerable Experience and Common Sense)
Ed Becker
Executive General Manager – Geology and Exploration

2. Mine - Economics
The main factors which
define 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
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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
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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)
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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
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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 +
800
60 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/lb
70 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/lb
80 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/lb
90 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 orebody
Ore Reserves Average Grade Contained Metal 700
Mt Ppm U3O8 Mlb U3O8
600
10 1,000 24
500
20 900 40
400
Mt
40 800 70
300
80 700 120
200
160 600 210
100
320 500 350 0
100
200
300
400
500
600
700
800
900
1000
640 (?) 400... 560 (?)
ppm U3O8
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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.
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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.
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10. Feasibility and Reality
BFS Real
Langer 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 CAPEX
NPV $180 million $/t (22) 30 ? (40 + 60)
Kayelekera Mine under construction
IRR 32% Recovery 87% 84%
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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 6008
Thank 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
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