Uranium has become an integral resource in powering a cleaner world, and companies like Forsys Metals (TSX:FSY, OTC:FOSYF) are gearing up to lead the revolution. Nuclear power accounts for around 25 per cent of the world’s low-carbon electricity production as a low-carbon reliable, and as a secure source of generation it is expected to play a key role in future energy supply.
The key advantage of nuclear is its proven ability to provide reliable and economic baseload power on a near-zero carbon basis. In the United States, nuclear energy currently provides around 48 per cent of the country’s carbon-free electricity, and in the European Union it accounts for 40 per cent of the region’s carbon-free electricity.
Between the forecast period 2021 to 2040, it is expected that global demand for electricity will grow by a staggering 50 per cent. So what does this mean for the uranium market? Because uranium powers commercial nuclear reactors that produce electricity, this means demand for uranium supply will no doubt increase in the coming years.
Case in point, according to market research, the uranium market is expected to grow by US$1.6 billion during the forecast period 2022 to 2027, representing a compound annual growth rate of 7.06 per cent.
The focus in Namibia
Richard Parkhouse, director of investor relations for Forsys Metals, explained that its assets that make up the Norasa Project (Norasa) were acquired by the company between 2007 and 2010.
He said one of the biggest reasons the company locked in with Namibia in the first place is because it is a stable environment politically, and the country has some of the most famous uranium mines in the world, including Rio Tinto’s Rossing uranium mine, the Husab mine owned by China General Nuclear Power Group and Paladin Energy’s Langer Heinrich mine, among others.
“Namibia is a stable jurisdiction with a sensible tax system and is very mining friendly,” Parkhouse said.
Past mineral producers in the country include uranium, diamonds, copper and gold. Additionally, Namibia is the second largest producer of uranium – with 350 million pounds produced over the past 45 years and an annual average of 23 million pounds – and is the fifth largest country by uranium resources at more than 1,500 million pounds, which means Forsys Metals couldn’t be in a better position to advance the Norasa project.
The Norasa project
Forsys Metals will, undoubtedly, be a key primary source and driving force in meeting future demand thanks to its Norasa flagship project in Namibia.
Located approximately 75 kilometres south-west of the town of Usakos in central-west Namibia, Norasa includes the wholly owned Valencia site, which has a 25-year mining licence and a 100 per cent interest in the Namibplaas site, which is 4.5 km northeast of Valencia. Both projects have NI 43-101 compliant uranium resources and reserves.
Image credit: Forsys Metals Perhaps most impressively, however, is that Norasa is potentially one of the largest, fully permitted uranium projects in the world.
In an interview with The Market Herald Canada, Parkhouse explained that a Definitive Feasibility Study (DFS) had previously been completed by the company back in 2015 generating “proven and probable” reserves of 91 million pounds of uranium, which he said is “significant.”
“That gives 5.2 million pounds per year over a 15-year life-of-mine,” he added, and would currently position it ninth largest uranium mine in the world once it’s in production – which is impressive all on its own. Notably, highlights from the 2015 DFS include:
- The operating costs per pound are estimated to average $32.96/lb uranium over the first five years of production and $34.72/lb uranium over the life of the mine
- The economic analysis results in an estimated pre-tax net present value (NPV) at a discount rate of 8 per cent to Forsys of $622.6 million. Using the initial investment and operating cash flows from inception, the pre-tax internal rate of return (IRR) is estimated to be 32 per cent
Re-evaluating the Norasa project
Parkhouse explained that exploration companies like Forsys went into a care and maintenance period “for quite some time after the disaster of Fukushima in 2011, However, now that uranium prices are improving, we have been very busy reorganizing ourselves and putting all the building blocks in place to shift from explorer to producer. He said that “one of the things that is really exciting here is that there are new technologies, new mining and processing techniques all of which can potentially have a substantial positive impact on the financials of a mining project,”
Parkhouse said that since 2021, the company initiated a comprehensive plan to re-evaluate all aspects of the previously published 2015 Definitive Feasibility Study (DFS). As a key part of this, it has been evaluating the trade-off opportunity between tank and heap leaching given how advances in HPGR heap leach technology lower sulphuric acid costs and suggest that heap leaching could provide a superior economic flowsheet than the existing tank leach process.
To accomplish this, the company recruited an experienced team of highly respected process engineers, mining experts, geologists, environment consultants, and specialists based in Namibia. This team operates under the leadership of the Namibian country director, Pine Van Wyk.
Image credit: Forsys MEtals Multiple workstreams have been established to re-analyze geology data and geotechnical information, conduct pit optimization and perform various process trade-off studies. The company aims to explore new methods and technologies to enhance recovery rates and optimize tailings handling and improve on the pit design and mine planning. In addition, on March 31, 2023, the company initiated a new drilling program to retrieve fresh geology samples from the Valencia and Namibplaas orebodies and pit environments. The samples of ore and the ore envelope rocks are required to confirm resource size and improve on process and pit designs.
The project team has furthermore been reviewing the project licences, including all required mining permits, environmental clearance certification and compliance, as well as land surface agreements. In June 2023 the company reported that an updated Environmental Clearance certificate had been issued by the Ministry of Environment & Tourism (MEFT). Simultaneously, all land surface agreements are undergoing review and updates, same as the accessory works plans, radiation management and infrastructure plans.
Currently, the company holds a 25-year Mining Licence (ML-149) for its Valencia deposit, which is valid until 2033. Furthermore, the company has been working closely with the Ministry of Mines and Energy (MME) of Namibia and looks forward to the renewal of its Exclusive Prospecting Licence (EPL 3638) for further pit optimization work at the Namibplaas site. This will provide the requisite data to complete the approval for a full Mining Licence (ML-251) at Namibplaas.
Future outlook
Moving forward, Parkhouse said the company will be completing their re-evaluation of all these mining and process engineering aspects, and that “we will be in a very strong position to publish as the results are forthcoming.”
Parkhouse said that initial results from the heap leaching testing had exceeded all expectations and showed significantly high recovery rates. He said the company was optimistic that these studies could potentially improve the processing capex and opex costs on a current-year basis.
With so much coming to fruition, Parkhouse also stated how exciting it was being on the cusp of potentially shifting from explorer to producer.
The investment opportunity
“Forsys is an explorer with potentially the largest permitted uranium project,” Parkhouse said. “That means we’ve already got a licence for mining in our largest deposit, which is Valencia.”
And, because the deposit has the potential for annual production of 5.2 million pounds per year, he said that sets it apart from other mines that are currently only permitted and have not entered production. In other words, not only is the mine the largest permitted by production but is also the largest permitted by reserves.
With a market capitalization of around C$152 million and share price of $0.78, having potentially the ninth largest uranium mine is nothing short of a huge feat – and gives it a competitive advantage compared with its peers in the space.
The management team
Mark Frewin, CEO and director
Mark Frewin has been a director of Forsys Metals since 2005 and acted as vice president of legal affairs between June 2010 and March 2017. He has also held the position as head of legal affairs between June 2007 and June 2010. Frewin also serves as director of Caledonian Consultancy, a position he has held since June 2013, is a previous partner of McCarthy Tetrault, director of Giyana Gold and chairman of Westbridge Energy.
Jorge Estepa, director and corporate secretary
Jorge Estepa has served as director since 2016 and as corporate secretary since 2004. Estepa graduated from the University of Toronto and has more than 25 years of experience with publicly traded companies, serving in investor relations and corporate administrative and development roles. Over the past 23 years, Estepa has also served as an officer and/or director of a wide range of public mineral resource companies listed on Canadian stock exchanges.
Miles Nagamatsu, CFO
Miles Nagamatsu has more than 30 years of experience in accounting, management, lending, restructuring and turnarounds. Nagamatsu has, since 1993, acted as chief financial officer of public and private companies in the minerals exploration and investment management industries. He holds a Bachelor of Commerce degree from McMaster University and is a chartered professional accountant.
Richard Parkhouse, director of investor relations
Richard Parkhouse has been a director of the company since May 2021 and is an experienced board director and chief operating officer with more than 30 years of experience. He has held a wide range of senior management positions in global investment banks and asset management companies.
He has also served on multiple private and public company boards in different jurisdictions with a focus on governance, risk management and social responsibility matters. Parkhouse holds an Honours Degree in economics from Brunel University.
Pine Van Wyk, country director, Namibia
Pienaar-Schalk (Pine) van Wyk is a qualified Metallurgical Engineer by trade, with a degree in business management. He has more than 25 years’ experience in the mining industry, encompassing roles on a senior operational, exco management and directorship level. His experience includes roles with AngloGold, Rio Tinto, Paladin Energy, Gecko Group, Celsius Resources (ASX-listed) and Namibia Critical Metals (TSX-listed).
Van Wyk brings a wealth of project development experience and expertise to the African mining industry. He has played an instrumental role in achieving several strategic milestones that took exploration projects into production, some of which include Langer Heinrich Mine (uranium) in 2005; Cape Cross (salt) in 2011 and Okanjande (graphite) in 2016.
Van Wyk has further helped junior mining companies progress their projects by managing feasibility studies and raising capital to advance projects. He has been involved in the following commodities over the past decade: uranium, cobalt, graphite, copper, tantalum, niobium, fluorspar, salt and rare earths.
In addition to this, he did a management buyout and birthed the Stewardship Group of Companies in 2018. Stewardship operates in the mining industry and provides drilling, engineering, construction and project consulting services.
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