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From Mining News April 11 '06

The good and the bizarre for Alkane

Michael Vaughan
Tuesday, April 11, 2006

THE good news for Alkane Exploration is the Federal Government has given the company $A3.29 million to partially fund a feasibility study and a demonstration pilot plant for its Dubbo zirconia project (DZP) in New South Wales. The bizarre news for Alkane is the company will be producing uranium but will be forced to dispose of it because of state government regulation.

The Federal Department of Industry, Tourism and Resources will give Alkane the grant over a 27-month period, which the company must contribute to on a dollar-for-dollar basis, in order to get the DZP to a decision to mine stage by mid-2008.

Alkane technical director Ian Chalmers told MiningNews.net the funding is hugely important because it will allow the construction and operation of the DZP pilot plant for six to 12 months, meaning the company can settle on a processing technique and complete its feasibility study.

The company believes it could start process work for the pilot plant by mid-year, allowing construction of the plant to start before the end of the year.

Alkane is looking at a base case processing rate for the development of about 200,000 tonnes per annum, giving the DZP a life of more than 350 years, though the rate could be scaled up depending on market conditions.

The project has a resource base of 73.2 million tonnes grading 1.96% zirconium, 0.46% niobium, 0.04% hafnium, 0.03% tantalum, 0.14% yttrium, and 0.014% uranium.

Strangely, the resource contains about 10,000t of uranium, probably the hottest commodity at the moment with the price at more than $US40 per pound and climbing.

However, with NSW being a staunch anti-uranium state, Alkane is unable to sell the product.

The company will have to separate it in the processing route because it acts as a contaminant for the zirconia, zirconium chemicals, niobium-tantalum concentrate and yttrium-rare earth concentrate being produced.

"If we're just going to have to dispose with (the uranium) then obviously we won't have to muck around with it but it won't take a lot to clean it up and present something we can sell," Chalmers said.

"It might not be standard grade uranium oxide but it's certainly something other people can take and turn into uranium oxide.

"We've taken a very softly, softly approach on it and it's something we need to sit down with the NSW Government when we're a little further advanced and say this is the nature of the project, this is what we can do and yes, we would like to use the uranium."

Chalmers estimated uranium could generate $A5-7 million in revenue annually for the DZP.