30/01/2008 - 22:00

Uranium drives rush to Namibia

30/01/2008 - 22:00

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A review of listed uranium companies found that the top three performers – West Australian Metals, Extract Resources and Bannerman Resources – all have operations in Namibia.

Uranium drives rush to Namibia

A  review of listed uranium companies found that the top three performers – West Australian Metals, Extract Resources and Bannerman Resources – all have operations in Namibia.

Situated on the south-west coast of Africa, Namibia is the world’s fifth-largest producer of uranium and produces large quantities of diamonds, lead, zinc, tin, silver, and tungsten.

Colonised by Germany and South Africa before gaining independence in 1990, Namibia boasts a democratically elected government, a mining act that works, a constitution with a bill of rights, and an independent judiciary. 

A spokesman for West Australian Metals said he was surprised by the excellent infrastructure, high number of tourists, and overall level of safety during his first visit to Namibia.

“You could be flying into Kalgoorlie; it’s not dissimilar to operating mineral fields in WA,” he said.

Home to Rio Tinto’s Rossing mine, which supplies 8 per cent of the world’s uranium, and Paladin Energy’s Langer Heinrich mine, the country has attracted many exploration companies, including Bannerman, Extract, Nova Energy, Erongo Energy and Deep Yellow, which listed on the Namibian stock exchange this month.

DJ Carmichael head of research Paul Adams said the broker remained bullish on uranium stocks, despite a big sell-off last year, but it was necessary to identify companies with “good quality projects in uranium-friendly jurisdictions”.

“Australian investors tend to shy away from Africa but that is certainly not true for Namibia and Botswana, which are extremely stable, pro-mining countries,” Mr Adams said.

Far East Capital also has a favourable view of Namibia, describing it in a recent research report as “an excellent country in which to be operating, both with respect to cost structures and geopolitical risk”.

Far East said water and power supplies were the biggest issues, but that both were being addressed.

Much of the exploration activity by Australian companies centres on the resort-style town of Swakopmund.

Swakopmund is situated about 300 kilometres west of the capital city, Windhoek, and 50km north of Walvis Bay, the country’s only deepwater port.

Located within a 50km radius of significant uranium deposits, Extract Resources’ main asset is the Husab uranium project.

Extract’s business development manager, Richard Henning, said there were challenges working in a different country with a slightly different pace.

“Human and physical resources don’t always work the way you want them to, and life works at a different pace because they don’t have the same level of industry resources that we have here,” Mr Henning said.

Namibia has moved to rein in the rush for the country’s uranium by introducing a moratorium on prospective uranium mining applications, although Mr Henning said the embargo only applied to new applications.

“If all production commenced immediately it would put a bit of a burden on the existing infrastructure, so halting growth gives an opportunity to plan the infrastructure,” he said.

“If uranium keeps expanding like it looks like it might, it’s going to be of huge benefit to the local economy, and that’s to everyone’s benefit.”

To address the issue of water and power supply, the government has moved to expand the national power utility’s capacity through a coal plant and gas power from the Kudu gas fields, and plans to build a desalination plant by the end of 2009.

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