9th May 2008 07:00
Albidon Limited09 May 2008 ALBIDON LIMITED LEVEL 1 62 COLIN ST WEST PERTH 6005 WESTERN AUSTRALIA ARBN 107 288 755 TEL:+6189211 4600 FAX: +6189211 4699 EMAIL:[email protected] ASX CODE: ALB AIM CODE: ALD http://www.rns-pdf.londonstockexchange.com/rns/0533u_-2008-5-9.pdf Via electronic lodgement PRE-FEASIBILITY STUDY COMPLETED FOR CHIRUNDU URANIUM PROJECT, ZAMBIA HIGHLIGHTS: • Albidon's joint venture partner African Energy Resources (AFR) has completed the Pre-Feasibility Study (PFS) on the Chirundu Uranium JV Project. • The Pre-Feasibility Study demonstrates that commercially viable mining of uranium from the Chirundu Project is possible under the projected uranium price, capital cost and operating cost scenarios used by AFR. • Uranium resources at Chirundu have been upgraded, as follows: • Njame North • Indicated Resource of 3.9 Mt @ 388 ppm U3O8 (containing 3.4 Mlb U3O8) • Inferred Resource of 5.2 Mt @ 275 ppm U3O8 (containing 3.1 Mlb U3O8) • Gwabe • Indicated Resource of 0.9 Mt @ 196 ppm U3O8 (containing 0.4 Mlb U3O8) • Inferred Resource of 4.0 Mt @ 303 ppm U3O8 (containing 2.6 Mlb U3O8) • Key points from the PFS: o Production of 1.3 Mlb U3O8 per annum over a 5-6 year project life; o Open pit mining; o Acid heap-leach processing and ion-exchange precipitation; o Estimated capital costs US $68 million for pre-production costs with anadditional US $21 million deferred costs; and o Uranium recovery estimated at 85-90% for Njame ores, and over 70% forGwabe ores. • Marketing discussions for uranium sales contracts are underway with interested parties. • Work is well advanced in environmental and community programmes for the Project areas. • AFR's Board has approved a Bankable Feasibility Study (BFS) which commenced in early May. • Albidon has 60 days from the date of completion of the PFS to determine whether it wishes to contribute to the BFS. INTRODUCTION Albidon's joint venture partner African Energy Resources (AFR) has completed thePre-Feasibility Study to assess the viability of commercial uranium mining fromthe Njame and Gwabe deposits in the Chirundu JV Project. The joint venture hasalso completed an upgrade to Indicated and Inferred Resources for the project.By completing these milestones AFR has now earned an interest of 70% in theChirundu JV, with Albidon holding 30%. AFR has concluded that the Pre-Feasibility Study demonstrates commerciallyviable mining of uranium from the Chirundu Project is possible under theprojected uranium price, capital cost and operating cost scenarios. AFR'sDirectors have approved the commencement of a Bankable Feasibility Study for theChirundu JV Project. Albidon now has 60 days to decide whether it wishes tocontribute to the BFS costs in proportion to its interest in the JV. URANIUM RESOURCES AFR completed infill and extensional drilling at the Njame and Gwabe uraniumdeposits in late 2007. Data from these drilling programmes have been used toestimate the following Indicated and Inferred resources, using a 100 ppm U3O8cut-off grade: Resource Class Million Grade ppm Contained U3O8 Mlbs Tonnes U3O8NJAME- Indicated Resource 3.9 388 3.4- Inferred Resource 5.2 275 3.1 GWABE- Indicated Resource 0.9 196 0.4- Inferred Resource 4.0 303 2.6 CHIRUNDU JV PROJECT- Total Uranium 14.0 309 9.5 Additional infill drilling to convert the resources to Measured and IndicatedResource category will commence for both deposits in the third quarter of 2009as part of the Bankable Feasibility Study. Both joint venture partners believethat there is good potential for locating additional uranium resources thatcould be processed at the Njame facility through extensions to knowmineralisation and from exploration in the Chirundu JV Project and the nearbyKariba Valley JV Project which is currently owned 100% by Albidon, with AFRsole-funding expenditure to earn an initial 30% interest. CHIRUNDU URANIUM PROJECT OVERVIEW The Chirundu Pre-Feasibility Study (PFS) commenced in October 2007 to evaluatemining and processing options for the commercial extraction of uranium form theNjame and Gwabe deposits. The following programmes were completed during thePFS: • Mineralogical assessment of ore and gangue mineralogy conducted byMintek Laboratories • Bottle-roll acid leach tests undertaken by Mintek Laboratories • Ore comminution testwork by Mintek Laboratories • Bottle-roll alkaline leach tests by SGS Lakefield • Column acid leach test by SGS Lakefield • Hydrogeological assessment by Knight-Pieshold • Engineering and Process design by GRD Minproc • Leach pad design by GRD Minproc • Electrical power requirements and power supply options by Utilink • Engineering Cost Study by GRD Minproc • Preliminary mining optimisation by GRD Minproc • Capital Cost Estimate by GRD Minproc • Operating Cost Sensitivity Analysis by GRD Minproc • Risk Analysis by African Energy and GRD Minproc • Fauna and Flora assessment by Miriam Nachilembi • Archaeological and Heritage Survey by Collins Chipote • Environmental Project Brief and draft Environmental Impact Assessmentby African Energy The PFS is based on uranium ores being mined initially from the Njame depositonly, with mining and heap leaching to commence at the Gwabe site once Njame hasbeen exhausted. All mining will be from open pits, with ore stacked as a seriesof cells on a single-lined leach pad, and waste will be stored on a waste dump(see Diagram 1 in the hyperlink above). Comminution tests indicate that the oreis very soft and is not abrasive and is amenable to mining by continuous surfacemining equipment at costs equal to or less than drill and blast. Use of the surface miner will remove the need for additional crushing equipmentif further testwork confirms initial tests indicating the run-of-mine productmay be directly leached with good recoveries. Column leach tests to date withfeed top size of 20mm or 38mm have demonstrated no material differences in leachdynamics related to feed size. Dust suppression and highly selective mining forgrade control purposes will be also possible using the surface miners.Overburden removal may be by surface miner or a combination of ripping and drilland blast. On completion of operations, leach heaps will be neutralised andrehabilitated with top-soil cover. A summary of the project flowsheet is provided in (see Diagram 2 in thehyperlink above). Processing of the ores by heap leaching will use sulphuricacid irrigation supplemented with an oxidant (hydrogen peroxide, manganesedioxide or ferric sulphate), with solutions supplied from double-lined ponds.Pregnant leach solutions will be passed through an ion-exchange column where theuranium is adsorbed onto resin beads prior to elution, precipitation andultimately packaging. All elution, precipitation and packaging will be carriedout at the Njame Central Processing Facility, including the processing of loadedresin delivered from the Gwabe Remote Ion-Exchange operation. Hydrogeological studies have indicated that suitable water is locally availableand that a small production bore-field near the mine should provide sufficientprocess make-up water for the operation. Uranium ore will be delivered to the leach pads at a rate of approximately2.25Mt per year to produce, on average, approximately 1.3 Mlb per year of U3O8over an initial mine life of just over 5 years. Bottle-roll tests and columnleach tests have demonstrated that leach dynamics are rapid and that excellentrecoveries are possible when an oxidant is added to the sulphuric acid leachate.Recoveries of 83 to 93% have been achieved for Njame composite samples, andrecoveries of 71% for Gwabe composite samples. The lower recoveries at Gwabe reflect the presence of approximately 2% calcitein the composite sample. Inspection of drill cores from Gwabe and acid droptests on Gwabe RC chip samples indicate that this calcite is concentrated in theimmediate footwall of the mineralisation, so that selective mining and gradecontrol may lead to recoveries at Gwabe similar to those for Njame. Anassessment of variability in metallurgical domains within each orebody will thusbe a critical component of the forthcoming BFS. Project power requirements are low, with the Njame facility requiring no morethan 1.2 Mw per year during leaching and downstream processing operations (lessonce leaching has finished), and Gwabe requiring approximately 0.4 to 0.5 Mw peryear. Negotiations for a Power Supply and Power Connection Agreement havecommenced with local utility ZESCO. Power could be provided from an existing 88KVA supply point at Chirundu, requiring approximately 45km of new line to beinstalled and step-down transformers at Chirundu, Njame and Gwabe. Dieselelectricity generation will be evaluated as an alternative power option duringthe Bankable Feasibility Study. CAPITAL AND OPERATING COSTS Capital costs estimates have been prepared by AFR and GRD Minproc. The projectedcapital costs are as follows: Area Description Bare Cost USD Accuracy Provisions Total Cost USD ($m) (%) ($) ($m) NJAME SITE- Direct Costs 53.8 11.9% 6.4 60.2- Indirect Costs 6.9 10.0% 0.7 7.6Njame Totals 60.7 11.7% 7.1 67.8GWABE SITE- Direct Costs 16.0 14.3% 2.3 18.3- Indirect Costs 2.1 10.0% 0.2 2.3Gwabe Totals 18.1 13.8% 2.5 20.6CHIRUNDU JV PROJECT- Direct Costs 69.8 12.5% 8.7 78.5- Indirect Costs 9.0 10.0% 0.9 9.9TOTALS 78.8 12.2% 9.6 88.4 Direct costs include construction of the leach pads, leach ponds, processingplant, packaging plant, first fills, power supply, mining equipment and owner'scosts. Indirect costs are largely EPCM costs. These capital estimates do notinclude closure costs or contingency provisions. The Njame site includes theCentral Processing Facility, and will be built and operated for three yearsprior to the commencement on mining and Remote Ion-Exchange operations at Gwabe.The Gwabe capital costs are thus deferred. AFR has estimated that operating costs will be in the range of $30 to $40 perpound recovered U3O8. Based on these operating cost estimates, the project hasgood returns at the study price of USD $65 lb. Updated operating costs will beestimated after further column leach testwork to determine absolute acid andoxidant consumption has been completed. Sensitivity analysis indicates that theproject is sensitive to realised uranium price, uranium recovery, mining costs,reagent consumption and reagent costs (largely sulphuric acid). Optimisationprogrammes to address these sensitivities will be conducted as part of theBankable Feasibility Study. Marketing discussions with interested parties have commenced for uranium salescontracts, and discussions with potential sulphuric acid suppliers in Zambiahave been initiated. BACKGROUND Albidon now holds a 30% interest in the Chirundu JV, with AFR having earned a70% interest in the project by delivering the Board-approved Pre-FeasibilityStudy Report and the Indicated Resource Report. Albidon now has 60 days todetermine whether it wishes to contribute to the BFS costs in proportion to itsinterest in the Chirundu JV. Albidon owns 100% interest in the Kariba Valley andLuano Valley joint ventures, with AFR earning an initial 30% interest bysole-funding exploration programs on a number of uranium prospects. The Australasian Code for Reporting of Exploration Results, Mineral Resourcesand Ore Reserves (the 'JORC Code') sets out minimum standards, recommendationsand guidelines for Public Reporting in Australasia of Exploration Results,Mineral Resources and Ore Reserves. The information contained in thisannouncement has been presented in accordance with the JORC Code and referencesto "Inferred and Indicated Resources" are to those terms as defined in the JORCCode. Information in this report relating to Mineral Resources has been compiled by DrFrazer Tabeart (a full-time employee and Managing Director of African Energy)and Mr Lauritz Barnes (who is a consultant to African Energy). Dr Tabeart andMr Barnes are both members of The Australian Institute of Geoscientists. DrTabeart has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity whichhe is undertaking to qualify as a Competent Person under the 2004 Edition of theAustralasian Code for reporting of Exploration Results, Mineral Resources andOre Reserves. Mr Barnes has sufficient experience which is relevant to themodelling and resource estimation and to the activity which he is undertaking toqualify as Competent Persons under the 2004 Edition of the Australasian Code forreporting of Exploration Results, Mineral Resources and Ore Reserves. DrTabeart and Mr Barnes consent to the inclusion of the data in the form andcontext in which it appears. If you have any queries please contact the Chief Financial Officer, Nicholas Dayor Managing Director, Dale Rogers on +61 8 9211 4600 or email [email protected]. Albidon's nominated adviser is RFC Corporate Finance Ltd, contact Stephen Allen+61 8 9480 2500. Additional information may also be viewed on Albidon's website atwww.albidon.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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