UKL (ASX) re: rio puerco and grants uranium belt

Originally posted by markco2 ↑

re: rio puerco and grants uranium belt

Hi markco2,

Yes I have read the reports. UKL is receiving very good coverage and gaining a higher profile in the market place(s) (Aus, USA, Can, UK...). I found the comment on the Apex-Lowboy in the Report very interesting. See below. If the price of Uranium continues to increase the payback period will decrease accordingly and make the Cash Operating Margin even more attractive to the Market Place.

On the Rio Puerco project it seems that they need to tick one more box on the application and the drilling will commence per my conversation with Mike Duncan in New Mexico. He stated that the driller has been contracted and they are ready to go once the last tick on the application is completed. Time frame??? Soon?? Time will tell...

In the report it commented on the past operations at the Rio Puerco project (see below). To validate what was stated in the report I had a look at the satellite photos to see what was actually in-place at the site. See photos below.

Rio Puerco Project

Rio Puerco Project – High Grade, More Tonnes

The Rio Puerco project in New Mexico is a larger project with about 2,000 t of U3O8 and a better grade of 1,200 ppm, with the potential to double.

Back in the 1970s, Kerr-McGee sank a 270m shaft to develop the resource as a room-and-pillar underground mine, spending US$17.5m in the process. A 10,000 ton bulk sample was mined and treated off-site, but uranium market economics did not warrant a move to full commercialisation at that point. At present, the Rio Puerto property includes the mine shaft and ancillary surface facilities. The head frame has been removed.

Apex-Lowboy Project

Payback Could be as Low as Four months

Even if we assume a high operating cost of US$30/lb (about twice what Paladin is aiming for on a similar grade), the cash operating margin on 660,000 lbs p.a. at the spot price of US$85/lb could be US$36m p.a. (A$45m or 53¢ a share).

Given the low capital cost nature of heap leaching, and the ability to use contract mining, UKL might be able to get away with a low capex of US$10m. At the estimated cash flow, the payback for the mine could be as short as four months (once the usual slower ramp-up period for heap leach operations is over).