George Forest International Afrique takeover off Forsys Valencia Project should be finalised Febuary valued at $579mill WME being next door hopefully farmin agreement, Joint Venture or takeover on the cards Send this article to a friend Print this page
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Namibia's uranium sector booms Brendan Ryan Posted: Fri, 02 Jan 2009
[miningmx.com] -- NAMIBIA'S uranium production hit record levels in 2008 and should do so again this year while the country’s third uranium producer could come on stream in 2010 if all goes to plan.
That will be Valencia Uranium owned by TSX-listed Forsys Metals. Valencia is located some 45 kms from the long-established Rossing Uranium mine near Swakopmund which has been in operation since 1976.
As of mid-December, Rossing Uranium was on track to produced 4,004t of uranium oxide (U3O8) for 2008 making this the first year it has reached this level of output since 1990.
In November, ASX and TSX-listed Paladin Energy (Paladin) announced that its Langer Heinrich mine – also situated close to Rossing – had produced 650,555 pounds (lbs) of U3O8 during the September quarter.
That meant Langer Heinrich had hit its designed “nameplate” annual production capacity of 2.6 million lbs (m lbs) of U308 for the first stage of the mine’s development.
Paladin is about to commission the second stage at Langer Heinrich which will boost production to 3.7m lbs annually.
Paladin MD John Borshoff estimated at end-November that Langer Heinrich should produce about 3m lbs of U308 for Paladin’s current financial year to end-June.
Still being evaluated is the stage three expansion of Langer Heinrich which is “dependent on design and costing and on some water agreements with the Namibian government.”
According to Borshoff, “if this issue is settled within our expected timeframe we expect to increase production to 6m lbs/year in late 2010.”
The proposed Valencia mine is still at the feasibility stage. A technical report produced by Snowden Mining in June 2007 looked at construction of an open pit mine which would produce around 3m lbs of U3O8 annually starting production from 2010.
A mining licence for Valencia was granted by the Namibian government in August.
Click Here to subscribe to our daily newsletter The financial parameters used in the Snowden report are much higher than current uranium prices following the collapse in the uranium market last year.
Snowden did the financial assessment assuming a uranium price of $100/lb for the period 2010/2012 and $75/lb for the period 2013 to 2121. The current uranium price is around $55/lb after peaking at around $135/lb in 2007.
Despite this, George Forrest International Afrique (GFI) bid for Forsys in mid-November offering C$7 a share in cash which was 55% premium on the level of the Forsys share price at that time. The bid valued Forsys at C$579m.
The Forsys board of directors has approved the bid and the plan is to have it wrapped up during February.
GFI is part of the privately owned Forrest group which is one of the largest, if not the largest, groups operating in the Democratic Republic of Congo (DRC).
Forrest said on November 14, “I believe Forsys and the Valencia Uranium deposit represent an excellent investment opportunity. I am also very impressed with the Namibian infrastructure and the regulatory environmental standards.”
Rossing is in the middle of an expansion programme to extend the life of the mine to 2021 and increase the nameplate production capacity to 4,500t/year from 2012.
That involves major expenditure on overburden stripping during the next two years to extend the current open pit mining operations.
According to a Rossing statement released on December 12 the company remained “geared for growth” but warned about the likely financial strain.
The Rossing statement commented, “even though we have revised our capital and production plans, the company’s cash flows independent of the financial crisis will continue to be strained.
“The company’s outlook for 2009 is positive and the company is sound but it will continue to engage in initiatives and projects that will preserve cash flow particularly in 2009 – 2010. “
WME Price at posting:
8.0¢ Sentiment: Hold Disclosure: Held
