Toro Energy’s Wiluna uranium project may get a shot in the arm with the addition of ore from two of the company’s 100 per cent owned satellite deposits now being assessed as part of an extension study.
Ore from the Lake Way and Centipede-Millipede deposits, which are about 70km west of the project’s main Lake Maitland deposit, may add to the proposed processing operation at Lake Maitland which already has impressive financial metrics including a forecast total earnings before interest, taxes, depreciation, and amortization (EBITDA) of $1.76 billion, or just over $100 million a year over the projected 17.5-year mine life.
Management says the extension study will include pit optimization for both satellite deposits which it hopes will allow the company to squeeze every ounce of ore from the ground. Pit optimization for the Lake Maitland deposit resulted in an additional 8 million pounds of uranium oxide and 11.9 million pounds of vanadium pentoxide being added to the production potential.
The company says the study is also assessing the Lake Way and Centipede-Millipede mineral resources along with testing the economics of various operating scenarios including the most optimal processing plant locations.
On the financial front, the study will aim to lock-down the latest long-term metal prices, exchange rates, operating costs and processing recoveries to estimate the economic cut-off grades for each deposit.
Toro says the addition of material from Lake Way and Centipede-Millipede has the potential to extend the processing of high-grade uranium ore beyond the forecast seven years for the standalone production operation using ore form the Lake Maitland deposit alone.
Toro Energy executive chairman Richard Homsany said: “The uranium resources at Lake Way and Centipede-Millipede are strategically located and considerable, and need to be thoroughly evaluated for viability. The inclusion of additional material into the Lake Maitland uranium vanadium processing operation has the strong potential to add significant value to the Wiluna Uranium Project. Global uranium markets continue to strengthen and fundamentals remain strong. Toro’s current and planned development activities at Wiluna will significantly build upon the excellent Lake Maitland Scoping Study outcomes. Toro remains committed to developing the Wiluna Uranium Project to maximise its value when both government policy and uranium markets align.”
In October last year Toro announced a set of impressive scoping study results for the Lake Maitland uranium deposit as a stand-alone operation producing a uranium peroxide product, known as yellow cake, along with a vanadium by-product, known as red cake.
Total production was modelled at 22.8 million pounds of uranium oxide and 11.9 million pounds of vanadium pentoxide, with an all-in sustaining cost of US$28.02 (AU$44.35) per pound of uranium oxide during the 17.5-year mine life that the company now hopes to extend.
The Lake Maitland deposit is 100 per cent owned by Toro through its subsidiary Redport Exploration and has an indicated mineral resource of 22 million tonnes grading at 545 parts per million (ppm) uranium oxide giving 26.4 million pounds of uranium oxide at a 200ppm cut-off.
Along with the impressive EBITDA, the scoping study also revealed Lake Maitland could produce a pre-tax net present value (NPV) of $610 million, with a capex of $270 million and a payback period of 2.5 years. Those numbers are based on a 15m deep open cut mine with a strip-ratio of 1.17:1 and a commodity price of US$70 (AU$110.80) per pound of uranium oxide.
Uranium oxide has recently traded through US$100 (AU$151) per pound for the first time in 16 years and it seems the market now has a bent for the oft maligned energy metal. Global ambitious decarbonization goals drove the US and 20 other countries to announce their nuclear power generation will be tripled by 2050 which augers well for uranium.
China is also committed to nuclear power and is building 22 of the world’s 58 new reactors while construction of a nuclear plant in Finland marked Europe’s first new facility in 16 years. Those developments are coupled with supply constraints as utilities in Western countries refuse Russian uranium.
Toro is committed to Wiluna’s Uranium story which, with Lake Maitland alone, has the potential to re-shape Australia’s power landscape. With the addition of ore from the Lake Way and Centipede-Millipede deposits, the production potential could go exponential.
Investors jumped on board the Toro train too this morning, giving the company’s share price an 18 per cent boost up from yesterday’s close of 55 cents to hit an morning high of 65 cents.
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By Andrew Duffy
