Uranium explorer Vimy Resources has released a positive definitive feasibility study for its Mulga Rock project, located east of Kalgoorlie, but the report is based on the assumption of a near tripling in the current uranium spot price by 2021.
The company has forecast a capital cost of $493 million for the project, which is expected to produce 3.5 million pounds of uranium annually.
Vimy is predicting a pre-tax net present value of $530 million, with free cash flows of $134 million per annum after royalties over a 15-year mine life.
Vimy’s metrics assume a uranium price of $US60 per pound at the time of first production, which is planned for 2021.
The current uranium spot price is around $US21.
The company believes that recent announcements from some of the world’s biggest uranium producers, including Cameco, Kazatomprom and Areva, to cut production will drive spot prices higher over the short to medium term.
“The supply side response to unsustainably low prices establishes a foundation for stronger uranium prices going forward,” Vimy said in its release.
Vimy chief executive officer Mike Young increasingly favourable market conditions would lay the foundations for the project.
“The DFS is the result of two years of incredibly diligent work by the Vimy team and demonstrates the robustness of the Mulga Rock Project and its potential to become a strategically important supplier of uranium for nuclear power stations all over the world,” he said.
“The report’s release comes at a pivotal time for Vimy as we accelerate negotiations with future offtake partners and aim to secure project finance ahead of a final investment decision in the second half of 2018.”
Shares in Vimy were down 8.57 per cent at 16 cents at 3pm AEDT.
Meanwhile, Toro Energy has announced interim results from phase two of a design study for its Wiluna uranium project, flagging significant cost reductions and the potential for gold production at the site.
The results show that the redesign of the process flow sheet will significantly reduce the capital and operational cost of the proposed hydrometallurgical plant at Wiluna.
“Toro is also considering other avenues to extract value from the Wiluna uranium project during this subdued uranium price market, including an assessment of the prospectivity for other metals, the most obvious being Yandal style gold (Jundee, Darlot and Bronzewing) on the tenements related to the Lake Maitland deposit,” the company said.
Toro shares were up 2.5 per cent at 4.1 cents each.
By Tayler Neale
