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March 28th, 2009

Namibia’s uranium bull market

Extract Resources, a global top stock performer, among all stocks, is finding that grades improve as it drills deeper at the (already) world class Rössing South project.
Author: Barry Sergeant
Posted: Friday , 27 Mar 2009

Extract Resources put it this way on Friday when announcing its latest assay results: “Rössing South is the highest grade granite hosted uranium deposit in Namibia and potentially one of the largest uranium deposits in the world”.

In Australia, certainly, the long lamented bull market in listed uranium stocks seems to be back – certainly, again, for those names on the right pieces of ground in Namibia. Extract’s stock price has exploded over the past few months, not least on news that major miner Rio Tinto (and world No 2 uranium miner) has raised its stake in Extract to 15.6%.

The Extract stock price is currently nearly 500% higher than its recent lows, seen in November 2008. Kalahari Minerals, which holds 38.85% of Extract Resources, has seen its stock price rise by 269%; the two names rank as among the best-performing in the world, across all equity subsectors. Rio Tinto has also acquired a 15% stake in Kalahari Minerals.

The latest news from Extract on Rössing South, which lies immediately south of Rio Tinto’s Rössing mine, can only be classified as confirming a world class deposit. In January Extract announced an initial resource of 108m pounds of uranium oxide at a grade of 430 parts per million at zone I of its Rössing South project. The very latest numbers include 53 meters at 794ppm U3O8, 65m at 1,056ppm and 20m at 3,351ppm, from 90 meters to 247 meters depth.

Rio Tinto owns 69% of the Rössing mine, known to uranium specialists as the “grand old lady” of the Namibian uranium industry, with a claim of 140mlb historical production over 30 years. Rio Tinto also holds a majority stake in ERA, and ranks overall as No 2 uranium miner in the world, after, of course, Cameco.

More broadly, the latest upbeat news from Extract once again highlights uranium names busy in Namibia. Paladin delivered first production from its key asset – Namibia’s Langer Heinrich – in 2007 on time and on budget, and continues with the process of ramping production to what could amount to 6m pounds of uranium a year, at a cash cost of $25/lb by the second half of 2010. Uranium spot prices are currently around $42.50/lb; term prices sit around $60/lb.

Paladin’s Kayelekera, a second low risk open pit operation, located in Malawi, is expected to begin producing during the first half of 2010, ramping to a run rate of 3.3m pounds a year by 2011. Paladin is seen by a number of specialist investors as offering among the most viable growth profiles in the industry, one of the best cost structures (with all-in costs second only to the ISL (in situ leaching) projects of Kazakhstan), and is an easily traded stock in both Canada and Australia.

Mantra Resources, which ranks among the top performing uranium developers, holds a 36m pound uranium resource at 360ppm in southern Tanzania, across the border from Kayelekera; the Mkuju River project is headed for mining. Attention has increasingly been drawn to Mantra by the endorsement and 20% shareholding of Highland Park – an investment vehicle representing the ex LionOre team which picked the top of the nickel market to sell LionOre to Norilsk for $5.5bn in 2007.

Back in Namibia, possible consolidation in the uranium fields looms ever larger.

Uranium-related activity and development in Namibia gained a relatively high profile in August 2007, when Areva paid $2.5bn for Uramin, formed just two years previously to acquire and develop mineral properties, predominantly uranium, in Namibia, the Central African Republic and South Africa. Further names now present in Namibia include Bannerman, Deep Yellow (in which Paladin owns 19.3%), Xemplar, and Forsys, which may be acquired by George Forrest International Afrique S.P.R.L. for C$579m.

Click to view the table…

March 20th, 2009

Kalahari Minerals’ Mark Hohnen Speaks to Proactiveinvestors

Mark, thank you very much for joining us for this interview.

Thank you Harry.
Earlier this week,* Extract announced the Maiden Resource at Rossing South. What are your thoughts on this resource and how big do you think Rossing south is going to be?

The Zone 1 resource that was announced this week was announced at 108 million pounds and at a grade of 430 parts per million. In the last year Extract announced its target here was 60 – 90 million pounds with a grade of 260 – 300 which is the same as Rossing. So they have exceeded that handsomely, but more interestingly it’s open to the north and the south and at depth, so Zone 1 itself is going to be much larger. Zone 2, which is 2 kilometres in length and has been drilled 2 kilometres in length, their target there is 90 – 105 million pounds. We believe that the upper side is certainly very achievable. Brock Salier, who is the Resource Analyst at Ambrian, our Brokers, has been on site there and his initial target for Rossing South is 300 million pounds; we think that’s very easily achievable given time and given drilling. The most important thing to remember is that the Rossing South structure is some 15 kilometres long and between Zone 1 and Zone 2 there have only so far drilled 4.4 kilometres. So there is another 11 kilometres of potential there and there is no reason to say that it isn’t all going to be bearing. So this thing could be a real elephant. It is certainly now the most important discovery in Namibia and one of the most important in the world. read more

Australia's largest producer says long term demand strong

March 20th, 2009

Long-term uranium demand strong: ERA
20/03/2009 4:27:01 PM

Energy Resources Australia Ltd (ERA) says long-term demand for uranium is likely to remain strong with China to drive demand growth in the next decade.

The yellow cake miner also says it is well positioned to take advantage of the robust market for uranium with projects in 2009 to increase production capability.

Uranium has not been subject to as severe a downturn in demand and prices that has beset the market for many other mineral commodities, ERA says in its annual report released on Friday.

“As market prices have risen, the long term fundamentals for the uranium market remains strong,” ERA said.

“Overall, the supply and demand balance in uranium markets point to sustained higher prices in the medium term,” the company said.

ERA concluded its first sale of uranium to China last year and says that country will drive demand growth for its product.

“The most significant growth in demand for uranium in the next decade will come from China.”

Russia Wants Howard's Deal

March 18th, 2009

Russia urges Australia to honour uranium deal


Russia is urging Australia to honour a deal to sell uranium to the former Soviet state, saying nuclear cooperation will be “fruitful” for both nations.

Sergey Mironov, chairman of the upper house of the Russian parliament, believes there is “no alternative” but for Australia and Russia to cooperate on the issue of nuclear energy.

“In the field of peaceful uses of nuclear energy, I believe there is no alternative to this cooperation because it is fruitful for both Russia and Australia,” he said.

The former Howard government struck a deal – estimated to be worth about $1 billion – with Moscow in 2006 to sell uranium to Russia on the proviso it be used for civilian purposes under strict safeguards.

But the parliament’s treaties committee recommended in September last year the government delay the deal until Australia can be certain Russia will meet its obligations under the nuclear non-proliferation treaty.

The Rudd government is yet to respond to the recommendation.

Mr Mironov has had meetings with Prime Minister Kevin Rudd and Foreign Minister Stephen Smith during his two-day visit to Canberra but neither office was immediately available to comment on the discussions.

In a lecture at Parliament House, the chairman of Russia’s Federation Council lent his support to Mr Rudd’s proposal for an Asia Pacific Community by 2020.

While the regional response to the idea has been lukewarm so far, Mr Mironov was far more enthusiastic.

“Russia is interested in this initiative undertaken by Kevin Rudd about setting up the Asia Pacific Community,” he said.

The issue was canvassed during his meeting with the prime minister, whom Mr Mironov indicated was in “no rush” to proceed with the initiative.

“Mr Rudd said that there is no rush in the schedule of the setting up of this organisation,” Mr Mironov said.

He described the proposal as a good idea but believes it should concentrate on security and other matters and leave the regional forum for economics to the Asia Pacific Economic Cooperation (APEC) gathering.

“This new entity would rather detail political problems and problems of security. Russia is considering thoroughly this initiative and our president will respond to this initiative in proper time.”

“But I as a parliamentarian believe it is a good and positive initiative.”

Call for debate to dispel ignorance based fear

March 17th, 2009

Uranium Association calls for nuclear debate

17 March 2009
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Australia should have a debate on the implications of introducing nuclear energy given that it has 40% of the world’s low cost uranium resources, Uranium Association executive director Michael Angwin told MINING DAILY.

“As suppliers of raw fuel to the nuclear power industry, we don’t believe there should be any principal objections to a nuclear power industry in Australia. After all, 31 other countries around the world are currently employing nuclear power,” he said.

Angwin said it makes sense to have the nuclear power debate in Australia.

“If we have such a debate and we come out the other end without nuclear power it will be because we know we have better alternatives to it and if we come out the other end with nuclear power, then we will know that we’ve got it for good reasons,” he said.

“People fear uranium because they don’t understand it. A debate would help clear up any issues of this nature.”

While Angwin is a strong proponent for Nuclear energy, he said having an extensive uranium resource was not a reason for wanting nuclear energy.

Another Reduction Uranium Supply Story

March 17th, 2009

Uranium mining expansion facing delay, warns analyst
Tuesday March 17, 2009, 8:17 am

A resource analyst is warning the global financial crisis could force BHP Billiton to delay a planned expansion of the Olympic Dam mine in outback South Australia by at least two years.

He has told a conference in Adelaide that the uranium industry is enduring a major shake-out thanks to the downturn, but will survive.

Among an array of resources, Olympic Dam near Roxby Downs has the world’s largest known uranium deposit.

The SA Government has long heralded a massive expansion of the mine, saying it will underpin an economic boom.

But the financial crisis has already claimed 85 jobs at Olympic Dam and an expansion date of 2013 is not set in stone.

Resource analyst Warwick Grigor forecasts a delay.

“Olympic Dam is probably going to slip by at least two years in its timetable, if not longer,” he said.
EIS due soon

The SA Government insists the project will go ahead and is negotiating a new indenture agreement with BHP Billiton, ahead of the release of an environmental impact statement (EIS) in May.

Paul Heithersay, of Primary Industries and Resources SA, thinks the mine has a future despite the current downturn.

“Clearly nothing is going to touch Olympic Dam in terms of contained uranium and therefore exploring for more of the same seems a pretty good bet to me,” he said.

But a tough credit market and a 68 per cent plunge in ore prices is making life much tougher for the once red-hot uranium exploration industry.

Greg Hall, of Toro Energy, says there are still opportunities.

“While we’ve probably reduced the amount of exploration, we are still undertaking some very targeted exploration on significant potential projects,” he said.

Michael Angwin, of the Australian Uranium Association, thinks the industry will ride out the tough time.

“The increase in demand for nuclear power over the next 20 years or so will be between 50 and 100 per cent and Australia, with 40 per cent of the world’s low-cost uranium resources, is well-placed to meet that demand,” he said.

He says demand will be fuelled by a move towards low-carbon energy.