High uranium grades, will bull market
Deep Yellow jumps 81% in a day on news of high grade deeper drilling results from its INCA uranium oxide project in Namibia.
Author: Barry Sergeant
Posted: Thursday , 23 Apr 2009
JOHANNESBURG -
mineweb.com
Australia- and Namibia-listed Deep Yellow experienced a daily 81% stock price increase to AUD 0.28/share on Thursday, following release of very high grade results from six deeper drill samples from its INCA uranium project in Namibia.
Namibia is increasingly establishing a name as big elephant country in the uranium field, gaining a raised profile from around August 2007, when French transnational Areva paid USD 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.
The style of mineralisation at INCA is unusual, being classified by Deep Yellow as a metasomatic - magnetite skarn type. This is distinct and different from the known lower grade alaskite hosted uranium mineralisation well known in Namibia, and the recently announced higher grade Rössing South discovery, recently described by owner Extract Resources as "the highest grade granite hosted uranium deposit in Namibia and potentially one of the largest uranium deposits in the world".
It remains relatively early days at INCA, but sample grades out today include 10m of 7,293 parts per million (0.73%) U3O8 from 228m. Seen a little more broadly, Deep Yellow has chosen to say that INCA, near Swakopmund, "has returned wide intersections of uranium mineralisation of around one pound (450 ppm) U3O8 or better at ±200 meter depth including exceptionally high grades of up to 3.2% U3O8 over 2 meters in hole INCR15".
While the host at INCA - iron ore - is highly unusual in Namibia, Deep Yellow also differs from its peer group seeking uranium in Namibia. Deep Yellow already holds multiple projects, with aggregated resources easily topping 100m pounds of uranium. The Reptile Project holds 100% of four contiguous exclusive prospecting licences (EPLs), covering 2,681 km2 that contains historical discoveries of gypcrete, calcrete and sand hosted secondary uranium mineralization. Projects within projects within Deep Yellow include INCA, Tumas, Oryx, Aussinanis and Ripnes. At INCA, the uranium oxide is a primary, and not secondary, type deposit.
INCA is in good company. Extract's stock price has exploded over the past few months, not least on recent news that major miner Rio Tinto had raised its stake in Extract to 15.6%. Kalahari Minerals, which holds 38.85% of Extract Resources, has also seen its stock price soar. Rio Tinto has also acquired a 15% stake in Kalahari Minerals. Further beneficiaries of this action include NWT Uranium, which holds 34.06% of Niger Uranium, which in turn owns 15.06% of Kalahari Minerals. If that were not enough, Polo Resources last month announced a holding of 5.7% in Extract.
Recent 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.
Paladin, which holds close to 20% of Deep Yellow, delivered first production from its key asset, Namibia's Langer Heinrich, which lies north of the Deep Yellow projects area, 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 USD 25/lb by the second half of 2010. Uranium spot prices are currently around USD 42.00/lb; term prices sit around USD 60/lb.
Paladin's recently opened Kayelekera, a second low risk open pit operation, located in Malawi, is expected to begin commercial production 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 USD 5.5bn in 2007.
Further names to watch in Namibia include Bannerman, Xemplar, and Forsys, which may be acquired by George Forrest International Afrique S.P.R.L. for CAD 579m.
See link above for table |
