Energy & Minerals Australia (ASX: EMA) said today that the sandstone-hosted Ambassador deposit could be producing at an estimated operating cost of $US23 per pound of U3O8, net of by-products.

The scoping study viewed two possible production routes - resin in pulp (RIP) of the lignite deposits at Mulga Rocks concurrent with in-situ recovery (ISR) of adjacent sandstone-hosted deposits.

The nameplate production was given as 1,200 tonnes (2.6 million lbs) U308 per annum, being 600 tpa each from RIP and ISR production. Project capital was given as $A260 M ($US259 M) with a maximum negative cash flow of $A165 M ($US164 M).

The internal rate of return was given as 30%.

EMA's managing director Chris Davis said the project was expected to be a long term, high volume, low cost producer of uranium with the flexibility of two production routes.

The Mulga Rocks deposits were discovered about three decades ago by the Japanese utility PNC but the low uranium price and then negative Federal Government policies on uranium mining saw this and many other Australian uranium discoveries dropped or put on ice.

Mulga Rock has the Ambassador, Emperor and Shogun deposits which Davis said collectively comprise one of Australia's largest undeveloped uranium resources.

The project is about 240 kilometres north east of the regional city of Kalgoorlie-Boulder and, despite its remoteness, has access to all required infrastructure and inputs for development, and is in an area with no conflicting land uses.

The modelling used was based on a U3O8 price of $US65/lb in Year 1 (2014), increasing to $US75/lb by 2016, and then constant thereafter. The exchange rate was a constant $US/$0.80 which today is out of kilter with the Australian dollar going past parity today against the weakening Greenback.

Principal by-products are nickel, cobalt and rare earth elements that could contribute sales of $US465 M over the life of the Ambassador open pit.

EME said the mining extraction from the Ambassador deposit will involve two distinct operations -- conventional open pit mining of the lignite resources by truck and shovel methods, after in situ recovery of uranium from sandstone mineralisation areas under the open pits.

There would be two separate primary treatment plants and one combined product preparation facility.

The first section of the treatment facilities will be a solvent extraction (SX) plant attached to the acid ISR well fields, and used to extract uranium from sandstone hosted mineralisation.

The second front end treatment facility, utilising agitated-tank, atmospheric acid leach and RIP, has been designed to extract uranium, base metals and rare earth elements from lignite hosted mineralisation mined from the open pit operations.


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