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WORLD WIDE MAKES "GO" DECISION ON KAZAKSTAN URANIUM PROJECT 1996-10-15 TORONTO, ONTARIO World Wide Minerals Ltd. (TSE: WWS) announced today that it had entered into a definitive Management Agreement and had made a "go" decision to take over management of the Tselinny uranium mining project in Kazakstan. Tselinny is a State-owned mining company with major uranium mining and processing facilities at Stepnogorsk in north-central Kazakstan. World Wide has secured the exclusive right to manage Tselinny with an option to purchase a 90% interest. World Wide completed a five month due diligence review in September, employing some of the finest technical and financial consultants in the international mining industry. The result has been a comprehensive preliminary report from the consultants which will form the basis for reactivation and financial and operational restructuring of the uranium mines and mill and related facilities. The conclusion of the due diligence review is that Tselinny can be a viable uranium producer that could be competitive in the global market. The uranium market has seen renewed strength in the past two years, with considerable increases in both the spot and long term uranium prices. World Wide is dedicated to ensuring that the operation will be competitive and will considerably enhance its shareholder value. The Tselinny project is the only totally integrated uranium mining, processing and marketing company operating in Kazakstan. The Tselinny uranium assets include several underground mines with estimated reserves of 75 million tonnes of ore with an average grade of 0.12% uranium. The reserves have been reviewed by Roscoe Postle Associates Inc. who are engaged with World Wide in developing a geological and mining plan to increase the grade to at least 10 million tonnes at a mining grade of 0.35% to 0.40% uranium, using a higher cut-off grade and a more selective mining plan. The objective is to achieve a mill head grade of at least 0.30% uranium. The uranium processing mill has a design capacity of 2 million tonnes per year of ore. Historically, the mill has produced up to 1.8 million kg or uranium (4.7 million lb of U308) per year. World Wide's plan is to reduce the ore input to 1.0 million tonnes per year and to increase the mill head grade, with the result of recovering a substantially higher throughput of up to 2.6 million kg of uranium (6.8 million lb of U308) per year. In addition, existing mine-site heap leach facilities would be expanded with the objective of producing additional uranium from lower grade ore. It is anticipated that initial production could commence in the first quarter of 1997 after mill tune-up, with maximum production being achieved after the full re-start of the facilities, and some mine and mill modifications, are completed over the next 18 months. World Wide sees considerable scope for increasing production as these modifications are made and worldwide markets are developed. The assets being taken over includes a 180 megawatt coal-fired power station and industrial power distribution grid. Excess power is sold into the national grid and would be available to wheel to other mines to be developed by World Wide in the future. Under the Management Agreement World Wide will manage all of the TGK facilities for two years on a full cost recovery basis, plus a management fee capped at US$300,000 per year. Starting December 31, 1998, World Wide will have the option of continuing as manager for a fee of 6% of the gross revenue of TGK. Alternatively, World Wide may acquire a 90% interest for a purchase price based on US$47.25 million, which is 90% of the June 30, 1996 book value, to be adjusted to net out assets not being acquired and bad debts to be written off. All working capital provided and debt assumptions made by World Wide would be offset against the purchase price. World Wide already has compromised or rescheduled some of the existing debt and will negotiate with trade creditors during the re-start period. World Wide estimates that in addition to the working capital requirements, the ultimate net purchase price to be paid would be US$3 million, with payment deferred until 1999-2000. Kazakstan also hosts substantial additional undeveloped reserves of uranium, including low costs in situ leachable deposits. World Wide has a unique opportunity to move into the exploration and development of uranium, as well as gold and other minerals in Kazakstan. Also, the Tselinny facilities would be capable of custom processing minerals for third parties. World Wide is in the process of finalizing an equity issue to raise $25 million through the issue of 20 million special warrants at $1.25 per special warrant. The special warrants would be exchangeable for 20 million common shares and warrants to purchase an additional 10 million common shares over two years at prices of $1.75 - $2.00 per share. Net proceeds would be applied to the Tselinny project as well as to exploration of the company's other properties and working capital. For further information contact: James G. Wade, P. Eng. President and Chief Executive Officer Direct Telephone: (416) 369-6676 General Telephone: (416) 369-6080 Facsimile: (416) 369-6088 | ||||||||||||||
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