AIM/ASX RELEASE | 30 November 2015 | AIM/ ASX: BKY
Salamanca aims to be the world’s lowest cost producer
Optimisation studies have commenced on the Salamanca project which are expected to reduce the operating costs making it the amongst world’s lowest cost uranium producers once developed.
As previously reported the high grade Zona 7 deposit has transformed the economics of the project lifting the Net Present Value to over US$871.5 million (£580.9 million, £3.22 per share) and reducing operating costs from US$24.60 to US$15.60 per pound of uranium produced during steady state operations.
Managing Director Paul Atherley commented:
“The near surface high grade Zona 7 deposit has transformed the economics of the project largely due to an increase in grade. We are now focussed on further reducing the operating costs with the aim to make the Salamanca project the world’s lowest cost producer”
Early indications from the optimisation studies have demonstrated that whilst the project has benefited from on average a 42% increase in grade from the Zona 7 ore during the first ten years of operation there is room for further improvement particularly in the material handling scheduling, strip ratio, the mining unit rates and the fixed costs associated with grade control drilling and assaying.
The project continues to benefit from external factors such as continued deflationary trends arising from ongoing strong competition amongst major contractors and suppliers as well as the continued depreciation of the Euro against the US dollar making local costs cheaper against the US dollar denominated uranium price.
The optimisation forms part of the definitive feasibility study required by financiers and offtake parties to enable funding and sales contracts to be put in place ahead of the commencement of construction in mid-2016.
The study is being undertaken by metallurgical consultancy MDM Engineering, part of the Amec Foster Wheeler group working in conjunction with major Spanish engineering groups Iberdrola and OHL and a number of specialist local contractors.
These groups are bringing to the project the latest industry developments in automation, data analytics and process control and reflect management’s commitment to continuous improvement in all aspects of its operations.
Interim results are expected to be reported early in the New Year giving guidance on the progress of the optimisation studies.