Toro Energy has moved quickly to take advantage of the recent price spike in global uranium prices announcing plans to freshen up a previously released scoping study over its Lake Maitland project eyeing off the possibilities of what the current 16-year high price above US$100 a pound could mean for the prospects of its uranium project near Wiluna in WA.
The previous scoping study over Lake Maitland, released in October 2022 used a uranium oxide price estimate of US$70 (AU$106) per pound, which even at those levels resulted in some world leading financial metrics. Today, with the commodity price having soared by more than 40 per cent since, Toro will no doubt be eager to recalculate the investment potential housed at Lake Maitland.
The giddy price hike has inspired Toro to go looking at adding even more uranium from two satellite deposits nearby.
The original scoping study suggested the Lake Maitland project could produce a total of 22.8 million pounds of uranium oxide, or yellow cake, at an all-in sustaining cost of US$28.02 (AU$44.35) per pound of uranium oxide during the 17.5-year mine life. In addition to the yellow cake, the project is modelled to produce 11.9 million pounds of vanadium pentoxide ‘red cake’.
The project was modelled to produce a pre-tax net present value (NPV) of $610 million, with a capex of $270 million and a payback period of just 2.5 years. Earnings before interest, taxes, depreciation, and amortization (EBITDA) was estimated at $100m a year over the life of the mine totaling $1.76 billion.
Given the recent price of the commodity, there will no doubt be many interested observers waiting to see the results of a newly updated scoping study.
Toro Energy executive chairman Richard Homsany said: “A standalone Lake Maitland uranium vanadium processing operation is potentially quite robust and viable. Preserving the optionality available to Toro moving forward, whether to develop a standalone Lake Maitland deposit or a broader Wiluna Project amongst various production and processing scenarios, is a very valuable aspect of our uranium asset. The refresh of the Scoping Study, completed in 2022 by SRK, will also be undertaken by SRK. Assessing the Project with the latest more favourable commodity pricing and exchange rate guidance will be informative. This refresh will run in parallel to our Extension Study to evaluate the broadening of our Lake Maitland operation to include materials from our nearby 100% owned uranium deposits, Centipede-Millipede and Lake Way.”
Fast forward to today, those numbers look like a blip in the rear-view mirror for Toro, which is looking to the charts for its new uranium price yardstick and two satellite uranium deposits which will give the project a shot in the arm.
Significantly, the previous scoping study assessed the Lake Maitland project using ore from the Lake Maitland deposit alone which is no slouch, boasting 22 million tonnes of ore grading at 545 parts per million (ppm) uranium oxide giving 26.4 million pounds of uranium oxide at a 200ppm cut-off. Also, notably that entire resource sits within the higher-confidence indicated category.
Toro says it will now look at adding ore from the Lake Way and Centipede-Millipede deposits, which sit about 70km west of the main Lake Maitland deposit, as part of an extension study being run in parallel with the scoping study review.
Management says the extension study will assess the Lake Way and Centipede-Millipede mineral resources along with the economics of various operating scenarios including the most optimal processing plant locations.
The extension study will also look at optimising pit design for both satellite deposits. Previous pit optimisation 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 – a feat that Toro would like to repeat.
Lake Maitland makes up part of Toro’s larger Wiluna uranium project located about 105km south-east of the township and 730km north-east of Perth. While the company did not reach the substantial commencement condition of state environmental approvals for the Wiluna uranium project, Toro is hopeful that the favourable study results may allow an extension or the opportunity for an amendment to allow its Lake Maitland project to be commercialised.
With uranium prices having broken above US$100 for the first time in 16 years, up more than $US20 in just the past few weeks ASX uranium stocks have been little market darlings as investors have been climbing over themselves for exposure.
And Toro certainly hasn’t missed out having spiked from the low 40c range just a month ago to touch 65c yesterday. There is also now a freshly minted scoping study to look forward to as well.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Andrew Duffy
