re: Ann: Black Range Selects Development Appr... Hi Swissboy,No...

re: Ann: Black Range Selects Development Appr... Hi Swissboy,

No probs. Will do my best to explain my thought process.

In a lot of presentations by BLR I've seen/ read, one of the main selling points of BLR was their large 90mlb resource at Hansen and Taylor combined which is one of the largest in the US.

The ability of the company to extract this 90mlb resource was however dependent on the suitability of the deposit to open cut mining as opposed to underground mining and obviously on the price of uranium. Open cut mining being cheaper to carry out would allow the company to use a cut-off of 250ppm which would result in a JORC compliant resource of 90mlbs.

However, because the latest announcement stated that underground mining would have to be used instead and underground mining is always more expensive, a higher cut-off of 750ppm had to be adopted instead resulting in a reduction of JORC from 90mlbs to 43mlbs (19mlbs for Hansen + 24mlbs for Taylor and others).

This means that if underground mining is to be used, only 43mlbs (not 90mlbs) can be extracted economically. Of this 43mlbs, a scoping study has only been done to date on Hansen which only has a total (inferred and indicated) resource of 19mlbs. As no details were provided on Taylor(the remaining 24mlbs), there is still some uncertainty as to it's feasibility until more info is provided.

Surely you have to agree that 19mlbs for an underground mining operation in the current environment is not exactly a company maker. IMO, to make it work, BLR need to demonstrate that Taylor is feasible as well in order to obtain the benefits of economies of scale with a combined resource of at least 43mlbs. As an example, Deep Yellow, are currently working on an open cut mining operation in Namibia and they are of the opinion that in the current environment, they need at least 50mlbs in order for their project to be economically feasible. Yes, Hansen will have the benefit of a lower Capex of only $80mlbs but 19mlbs is till quite a small resource for an underground mining operation IMO.

All this is of course based on the current long term uranium price of $60/lb which is why I stated that a rise in the uranium price is crucial to a higher share price for BLR. This is because a higher uranium price would effectively lower the cut-off grade required for an economical underground mining operation which would in turn increase the amount of resource that can be economically mined.

Don't get me wrong, BLR are definitely going in the right direction but IMO the announcement was not enough to excite the market and this was clearly shown by the lack of movement in the share price. More clarity is required on Taylor and even on Hansen and I believe this will be provided in the Prefeasibility study in the Sept Qtr.

So to answer your question of "who were the people expecting more", my answer would be 'the market'.

Just my thoughts.