NAMIBIA URANIUMResource Capital Research
Extract Resources Limited
A$ 1.08
EXT
has extensive uranium targets in the Namibian "alaskite corridor",
including a potential extension to the Rössing deposit (RIO). Its most
advanced project is Ida Dome (EXT 100%) - initial resource target
30mlbs U3O8 (grading 0.02% to 0.03%) anticipated 1Q08.
Investment Points
100% uranium focus in Namibia. Accelerated exploration program - budget A$12m pa.
Main
asset - Husab - strategically located within 50km of 6 other
significant uranium deposits. Ida Dome (Husab) scoping study (4Q07, GRD
Minproc) confirms potential for high tonnage, low grade project -
2.9mlbspa U3O8, opex US$29/lb.
Intial Ida Dome JORC resource expected 1Q08. 6 drill rigs on site (Husab, 60,000m program). BFS expected to commence 3Q08.
Considerable
additional exploration upside at grassroots projects along strike from
Goanikontes (Hildenhof) and Rössing (Rössing South).
Overview:
Extract Resources Limited (ASX:EXT TSX:EXT ) is exploring for uranium in
Namibia. Its main project, Husab, has an interim scoping study and an
initial resource is expected early 2008.
Husab (Uranium, Namibia):
(630km2) covers uranium-bearing alaskites similar to those mined at the
world-class Rössing uranium mine (Rio Tinto), which lies 6km north of
the prospecting licence boundary. Bannerman’s Goanikontes “A” project
(ASX:BMN, Alaskite) lies 5km west. Mineralisation is primary
(uraninite, pitchblende). The most advanced area is Ida Dome, which
includes Garnet Valley and Ida Central prospects – an Anglo American
project in the ‘70’s (60 holes drilled). EXT currently has a major
drill program underway (60,000m) with 5 rigs on site - 20,000m complete
to date. Drilling has indicated mineralisation to 250m depth (remains
open) and ore zones 40m to 50m wide (Rössing 250m wide). Initial JORC
resource expected 1Q08, targeting 30mlbs U3O8 (to 100m depth). Recent
drill assays include 105m @ 0.019% U3O8 with 31m @ 0.026% U3O8; earlier
gamma logged intercepts include 35m @ 0.052% eU3O8. Drilling to date
has tested approx. 2km of potential 10km Ida Dome alaskite
stratigraphy. Other project areas include Hildenhof, strike extension
of Goanikontes; and Rössing South, possible extension of Rössing
orebody beneath Namib desert cover. Drilling (1 rig) 4Q07. The Uis
Project has airborne radiometric anomaly and carnotite mineralisation
at surface, possible calcrete-type uranium deposit, spectrometer
readings 0.04% eU3O8 – resource drilling 2008.
Ida Dome scoping
study: released Oct. ’07, indicates potential for a 6mtpa acid leach
mill operation supported by a series of satellite pits. Target
production is 2.9mlbs U3O8, recovery ~85%, mine life 9+ years, capex
US$211m, and opex US$29.15/lb (± 30%) using radiometric sorting. GRD
Minproc South Africa assumed an extrapolated conceptual resource of
46-53mt grading 0.026% U3O8 (25 to 41mlb U3O8), to a depth of 100m. The
processing flowsheet is based on Rössing with the addition of
radiometric sorting. There is potential to reduce opex by on-site
sulphuric acid production or increasing project size. Pre-feasibility
study expected 2H08.
Sale of Australian gold projects: EXT is
divesting its two gold projects, viz. Burnakura (EXT 50-70%, 391koz Au)
is subject to a sale agreement with ATW Venture Corp (A$4m, plus scrip)
and Tuckabianna (EXT 50%, 236koz Au) to Silver Lake Resources (A$1.2m
in cash + scrip).
Investment Comment: EXT has high
quality exploration targets and is approaching important milestones for
a likely development stage uranium project at Husab, in the Namibian
“alaskite corridor”. Project advancement is supported by an aggressive
drilling program, which includes potential extensions to Rossing and an
initial JORC resource expected at Husab 1Q08. The region has high
potential for very large, low grade deposits which are likely economic
at a uranium price of ~US$40/lb. Upgrades of Namibian power and water
infrastructure are scheduled for completion in 2009. Extract (diluted
mkt cap A$217m) is undergoing a similar process of expansion, but at
earlier stage, to Forsys (TSX:FSY, low grade 0.0126% U3O8, BFS, mkt cap
~C$300m/A$350m) and Bannerman (ASX:BMN, mkt cap. A$576m). The recent
TSX listing (Oct ’07) is expected to further raise EXT’s profile and
liquidity following a capital raising anticipated 1H08. Initial target price A$1.35/share with expected further re-ratings on continuing news flow.