RE: 9 billion lbs metal in the groundjust released last night,
more supporting for inflation in mining sector
cost overrun 76% after ONLY 7 months
they are in Africa, should be worse in Canada
https://www.miningmx.com/energy/740680.htm
Allan Seccombe
Posted: Wed, 19 Dec 2007
[miningmx.com] -- THE cost of First Uranium’s tailings treatment operation in South Africa is $112m or 76% more expensive than estimated just seven months ago because of higher construction costs an increased distance to a new tailings site.
However, TSX and JSE-listed First Uranium has sufficient cash and anticipated cash flows from the Buffelsfontein uranium and gold project, which is expected to be commissioned in November 2008 and ramp up to full production in the following year. It released the findings of a pre-feasibility report into the 330 million tonne tailings project on Wednesday, comparing the results to a preliminary assessment put out in May 2007.
First Uranium has raised capital in its IPO and an issue of convertible debentures. “Between that and internal cash flow we’ll have sufficient to finance this project. We don’t have to come back to the market for this purpose,” said Bob Tate, spokesman for First Uranium. “Having the feasibility done means we lock those costs in and prevents any further escalation of those costs,” he said. The plan is to have three modules in each of the gold and uranium processing plants. Two modules in each plant will be built and commissioned by November 2008. It will take another year to build and commission the third modules and bring the project up to full production, Tate said. The project has a life of 16 years. The pre-feasibility study, which First Uranium made public on Wednesday, shows annual average uranium production of 1.34 million pounds and 126,000 oz of gold. The estimated cash cost to produce uranium is $24/lb and $264/oz for the gold.
First Uranium has not yet entered offtake contracts and will wait until it is more certain of production, Tate said.
The Buffelsfontein project has reserves of 330 million tonnes at an average uranium grade of 0.076 kg a tonne, giving it just shy of 55 million pounds of uranium. The gold grade is 0.28 grams/tonne for nearly three million oz of gold.
First Uranium already has gold production from tailings retreatment at Buffelsfontein after the acquisition of Mine Waste Solutions in June this year.
The gold plant will be expanded by 133,000 tonnes to 633,000 tonnes/month by January 2008. A second expansion to double capacity will run parallel with building the first two modules of the uranium plant to all be commissioned in November 2008.
The third modules of the gold and uranium plants will be commissioned in November 2009. The new tailing site is going to be much further away than initially thought, Tate said and the costs of transporting waste material are included in the revised capital estimate.
Simmer & Jack, the JSE-listed gold producer and holder of 62.4% of First Uranium, has increased its attributable gold reserves by 38% and 519% for uranium because of the updated figures in the Buffelsfontein tailing project. Simmers has 6.69 million oz of proven and probable gold reserves and 40.8 million pounds of uranium. Its gold resources are 40 million oz and 194 million pounds of uranium.