opportunity land ********

Opportunity land
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While Africa in general and Southern Africa in particular is being hailed as a ‘land of opportunity’ for uranium miners, the door is being closed on uranium mining in Western Australia.

Southern Africa is on the point of getting three new uranium-mines at a time of colossal projected uranium shortfall, while prospects in Western Australia are on hold.

All three mines are under construction, one in Namibia, a second in Malawi and a third in South Africa.

Two are being built by Australian company Paladin Resources, which is also listed on the Toronto Stock Exchange, and the third by South African company Aflease, also heading for a new Toronto listing in partnership with a Canadian company.

The new operations will come on stream at a time of soaring demand for uranium, prompted by a world anxious about future sources of energy.

Uranium is seen as the only option that will provide the required volumes while not putting additional carbon dioxide into the atmosphere.

The uranium price has trebled and the shares of uranium companies are soaring.

The share price of Paladin, a mid-capitalis-ation company, has rocketed by 2 000% in two years, for instance, as investors clamour for uranium equity.

Paladin will be building both the Namibian prospect, which it acquired for a song from a once-illustrious but now somnambulant South African has-been, Gencor (Mining Weekly September 16–22, 2005).

Paladin MD John Borshoff describes Southern Africa as the ‘land of opportunity’ for producing uranium into an increasingly-hungry market that has cottoned on to uranium’s glowing future as a fuel source for resurgent nuclear power.

Boshoff enthuses that the first sod will be turned this month at Paladin’s Langer Heinrich uranium project in Namibia, which it had acquired for a reputed $15 000 from South Africa’s moribund Gencor.

Paladin also owns 100% of the Kayelekera uranium prospect in Malawi – which cost it a moderate $5,5-million – as well as two prospects in Western Australia. Slowdown in Australia is juxtaposed by speed-up in Southern Africa, to such an extent that it is drawing vociferous opposition Down Under.

Addressing the Africa Downunder mining conference in Perth this month, resources consulting group, RSG Global, slammed the actions of the Western Australian government towards uranium as economically and environmentally irresponsible.

“The government has chosen to mortgage the wealth of Western Australia’s uranium reserves by not allowing uranium mining, for the sake of political expediency,” RSG Global Principal, Rick Yeates, told delegates.

“Yet this is against the dramatic escalation in the uranium price which is now providing huge opportunities in many regions of Africa that have seen little serious exploration and mining activity since the 1970s and early 1980s,” Yeates said.

“These countries include Niger, Gabon, Malawi and Tanzania, along with more- established uranium producers such as Namibia and South Africa.

“Unlike the Western Australian government, few such political expediency issues exist among the more liberal and responsible African governments, providing for significant future investment in these states’ uranium sectors.” Yeates told conference delegates that, while much of the world demand for raw materials in the current resources boom was attributed to China’s domestic infrastructure requirements, it was China’s modernising industrial sector seeking value-adding opportunities for re-export, that was now adding to energy pressures.

“One impact is China’s escalating demand for oil, which is occurring at a dramatic rate. This demand is a major contributor to the increasingly critical crude oil supply and associated price increases.” Yeates said.

With 440 nuclear power reactors in operation around the world, and an additional 60 expec-ted to be commissioned over the next 15 years, further uranium price appreciation is widely expected.

Aflease’s primary focus continues to be the development of its Dominion Reefs uranium property near Klerksdorp. The fact that it is a brownfields project eliminating the need for elaborate environ- mental approvals.

This property hosts one of the world’s largest undeveloped uranium deposits – a total inferred resource of over 113-million pounds of contained U3O8, at an average grade of 0,64 kg/t, and a total measured and indicated resource of more than 10-million pounds at an average grade of 0,45 kg/t.

In June 2005, the board approved the development and construction of the Dominion Reefs uranium-mine and plant and the company remains committed to delivering uranium to the market in the first quarter of 2007, when it anticipates uranium market conditions to be more favourable than they are currently.

Paladin’s Namibian project will be in production next year, at which point the Malawian project will also be 90% developed.

Paladin’s Langer Heinrich resource adjoins Rio Tinto’s long- standing Rössing uranium oper-ation near Swakopmund, which is of great benefit to Langer Heinrich, as national uranium-mining acceptance and logistics patterns are well-entrenched.

Borshoff describes Langer Hein-rich as a large low-to-moderate- grade 25-year-life resource, whence the first yellow cake will emerge in September 2006. He has been accumulating spurn-ed uranium assets during a quarter-century of uranium downturn, in anticipation of what now looks like being a multidecade uranium upturn, already under way.

Paladin began exploring for uranium in Africa in 1998 and envisages playing a role – along with a myriad of other, particularly Australian, mid-level mining companies – in helping to redefine the economy of the African continent.

For as long as “we are good corporate citizens”, Borshoff believed there would be “great opportunities” for foreign mining investors in Africa. With uranium inventories depleting, demand was increasing to such an extent that there was the dawning of a new uranium age, mining production projected at 165-million pounds compared to an expected demand of 215-million pounds.

Paladin itself had ‘extremely high’ earnings-a-share potential, having acquired its assets for less than any other uranium-mining company. It was the best-performing share on the Australian Stock Exchange (ASX) for the year to June 2005.