Marenica Uranium

The Marenica uranium deposit is located about 90 kilometres northeast of Swakopmund in Namibia, and hosts a JORC Resource of 276 million tonnes at 94 parts per million uranium for a total of 57 million pounds of contained uranium.

Marenica is located in a world-class uranium province, close to Rio Tinto’s (ASX: RIO) Rossing Uranium Mine and Paladin Energy’s (ASX: PDN, TSX: PDN) Langer Heinrich Mine.

Following his retirement in accordance with the company’s constitution, Nelson Chen has been re-appointed by the board as a director - with immediate effect.

John Young, chief executive officer, as previously foreshadowed has resigned which will take effect from this Friday (2 December 2011).

Young’s duties will be undertaken by the chairman Robert Pearce and non-executive director Doug Buerger, while a replacement for the position is sought.

Importantly, Young’s services will still be available to Marenica on a consultancy basis as required.

In other Marenica news, Simon Robertson has resigned as company secretary which will take effect from today, with Michael van Uffelen the new appointment.


Marenica eyes foray into U.S. coal sector

In a very interesting development for Marenica, in September the company announced a diversification of activities through a subscription for a cornerstone investment in a new IPO to be called Texas & Oklahoma Coal Company Limited (TOCC), which would provide the company with exposure to the rapidly emerging U.S. coal market.

The new coal investment is an initial step towards diversifying and expanding Marenica's asset base and provides an early-stage opportunity to participate in the development of coal export opportunities from the U.S.

Marenica subscribed for 3.4 million shares in TOCC, which has issued initial seed capital of 28.75 million shares at $US0.06 per share. This will equate to a substantial 6.4% interest in the company’s pre-IPO issued capital.

TOCC is in the process of acquiring options over or equity interests in selected coal projects in the U.S. Plans are well advanced to secure a coal resource base of between 100 million and 500 million tonnes. Listing on the ASX is expected in early 2012.

The purchase is around a $9,000 investment, with the trades including 68,356 shares at $0.09 and 31,644 at $0.091.

Earlier in the month Marenica made significant steps toward underwriting the future development of its flagship Uranium project in Namibia, by securing $5 million of debt and equity funding from China’s Hanlong Energy Limited.

The funding deed signed with Hanlong will provide immediate funding of $3 million through a $2 million convertible note and $1 million share placement at A$0.07 per share.

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Marenica has ensured momentum at the Marenica Uranium Project is maintained with $5m financing from one of China's largest private resource investors - with potentially more finance in the offing as well as potential off-take agreement.

Mining cost estimates are based on using a combination of Caterpillar 785 trucks (136 t) loaded by a Komatsu PC4000 excavator in order to achieve the ore processing rate of 10.3 million tonnes per annum (Mtpa) after scrubbing, and around 64 Mtpa total material movement.

Eight excavators and around 44 trucks are required, and mining services have been costed as contract only. The estimated capital cost is expected to be US $260M for the crushing, screening and process facility including a 10Mtpa On/Off leach pad, ancillary infrastructure and closure costs.

The metallurgical work currently underway at AMMTEC involves a series of upgrade, agglomeration and column leach tests. The aim is to produce an upgraded dry (screened) product that is combined with an upgraded (scrubbed) slurry that will be agglomerated as preparation for column leaching.

This work is being supervised by Kappes, Cassiday & Associates, who specialise in the development, engineering and implementation of extractive metallurgical processes for the mining industry and have particular expertise in heap leaching.

The results of this column leach test work will provide critical information on leaching kinetics, water and reagent use that will allow further optimisation of the costs used in the current economic model.

Operating and capital costs used to develop this scoping study were based on industry standard capital and operating cost data for similar sized mining, production processes.

Using a long term uranium price of US $65 a pound, the study indicates that the Marenica project can produce a positive NPV and IRR and pay back the initial project capital in 5 years.

Investors should note that this economic model is based on inferred and indicated resources. Marenica said the results of the study have provided it with the confidence to undertake additional drilling and metallurgical work in order to upgrade inferred resources, which should continue to improve the economic parameters of the project.

Upon a sufficient indicated resource being delineated a definitive feasibility study will commence. The project described in the scoping study will require mining and environmental permits and a site‐wide Environmental and Social Impact Statement (ESIS). Preliminary work required for the ESIS, such as baseline water sampling, meteorological and dust monitoring, will begin in November 2010.

The scoping study assumes receipt of all required permits to construct and operate the mine and plant within three years and the company believes that construction and commissioning of the plant would take place in 2013 and 2014.

Buerger is a mining veteran, specialising in mineral exploration and mining, having worked in the sector for 40 years, and most recently as managing director and chief executive officer for Bendigo Mining (ASX: BDG).  He has a track record in capital raisings and gaining valuable environmental and government support in the set up of new mines.

Marenica made a second senior appointment with existing director Robert Pearce appointed chairman.

SRK Consulting (UK) completed the independent estimate and was based on all the results of the 2009 drilling and probing program at Marenica to the end of January 2010.

The updated resource now totals 227Mt grading 170ppm U3O8 comprising an Indicated Mineral Resource of 31Mt grading 175ppm U3O8 and an Inferred Mineral Resource of 196Mt grading 169ppm U3O8 for a combined total of 85 million pounds of contained U3O8.

This represents an 86% increase in tonnage and a 120% increase of approximately 46Mlbs (million pounds) of contained U3O8 to a total of 85Mlbs compared with the previously announced Indicated and Inferred Resource completed in late 2009.

WME’s CEO, John Young, said the 2010 Mineral Resource upgrade, represented a major step forward provided a very solid foundation for the Scoping Study on the Marenica Project which is scheduled to be completed by June 2010.

“With the completion of this landmark resource upgrade it’s now all systems go for Marenica as we forge ahead with an aggressive evaluation and development program in 2010, he said.”

The MEY share price has ticked up to $0.18.

The Marenica project licence in South-west Africa’s Namibia was also extended for two years by the country’s Ministry of Mines and Energy.

Areva NC holds a majority stake in Namibia’s Trekkopje uranium mine, located just 30 km away from Marenica’s major resource.

The French giant’s acquisition came on the back of circa A$74.24 million-capped Marenica upping its 80 per cent-owned uranium resource to 122 million tonnes at 140 ppm uranium, including an indicated resource of 16 million tonnes at 170 ppm uranium.

An inferred resource came in at 106 million tonnes at 140 ppm uranium.

Indicated resources are more accurate and reliable than inferred resources, often through increased drilling.

Combined, Marenica said the project’s total resource had been boosted by 9 per cent, and the uranium content by 12 per cent.

“Metallurgical test work on bulk samples from the Marenica project is continuing at ANSTO in Australia,” the company said.

“Initial results from screening, scrubbing and ore sorting tests carried out on two 500 kg samples have confirmed that the ore is amenable to upgrading.”

Marenica said that over the December quarter, 90 reverse circulation drill holes were completed over 2654 metres, bringing the year’s total to 617 holes over 14,889 metres.

Significant results ranged between 1257 ppm uranium at 7.9 metres, to 406 ppm uranium at 13.6 metres.

Sixteen new targets were also identified via airborne radiometrics.

“Anomalies have been categorised as primary granite hosted targets and secondary uranium palaeochannel hosted targets, similar to the Marenica deposit,” management said.

“More than 728 holes over 15,552 metres of drilling will be included in the next resource upgrade, due for completion in February 2010.”

Marenica’s Phillipus target indicated between 294 ppm uranium at 150 metres, to 101 ppm uranium at 100 metres. 

The company added that its Springbok target had 12 holes drilled over 1368 metres, although results were “typically disappointing”.

In Australia, Marenica has also undertaken aerial surveillance and limited drilling at is Western Australia-based Northhampton uranium and Scadden lignite prospects.

Various blocks had to be relinquished at Northhampton under fourth-year compulsory reduction, with the five most prospective blocks retained.

At Scadden, Marenica said “the drilling identified a lignitic seam of potential economic interest ranging typically from five metres to 10 metres in thickness, and occurring at depths of between 15 metres and 50 metres.”

Lignite is the lowest-ranked coal, with properties lying between coal and peat. It can be converted into gas and petroleum products. 

For the December quarter 2009, Marenica outlaid A$2.06 million - mostly on exploration - and exhibited a A$2.02 million decrease in cash to A$5.23 million.

Marenica Energy was formerly known as West Australian Metals (ASX: WME).

At the time of writing, Marenica shares were trading at 16.5 cents.

The 47.56m Marenica shares are the remainder of 49.56m shares that Polo purchased in June 2009 at A$0.12 as part of Marenica raising A$9.9m. Polo retained the 24.78m options in Marenica it received as part of the fundraising. These are exercisable at A$0.25 each by 30 June 2011.  Westhouse said this is good news for Marenica as Areva is the only real partner for the Marenica uranium project in Namibia which is adjacent to Areva’s Trejkoppe project.

Polo previously held 10.3m Berkeley Resources shares (ASX: BKY; AIM: BKY) and 5.67m options at A$0.75 but sold these over the summer in order to participate in the raising by Extract Resources. However, in discussions the company has always remained positive about the outlook for Berkeley.

As part of the deal, Areva will exercise its 10.6m options in Berkeley Resources  and sell these shares plus its existing 3.5m shares to Polo. The difference in value, equivalent to ~6.4m Berkeley shares, will be met by Polo paying Areva A$7.42m - the average trading price over the ninety days prior to the 30 November 2009.

Over the summer, in order to participate in a fundraising in its largest investment Extract Resources (ASX: EXT), Polo closed several positions. These included selling its entire holding in Berkeley Resources and significantly reducing its holdings in A-Cap Resources (ASX: ACB), Impact Minerals (ASX: IPT), Marenica Energy (ASX: MEY) and Uranex (ASX: UNX).

As a consequence of the deal Berkeley announced on 12 January 2010 that Areva’s rights for off-take or marketing of the uranium production from Berkeley's projects had been terminated.

On 2 December Berkeley released the results of its scoping study for the Salamanca uranium project in Spain and hopes to have the feasibility study completed by November 2010.

As well as selling its entire holding in Berkeley over the summer, Polo also significantly reduced its holdings in A-Cap Resources, Impact Minerals, Marenica Energy and Uranex.

Polo sold down its stakes in A-Cap Resources and Impact Resources to China Growth Minerals Limited (CGM), a Hong Kong based investment company. CGM purchased 13 million A-Cap Resources shares and 5.92m shares in Impact Resources from Polo. CGM also has an option to purchase the remaining shares in A-Cap and Impact Polo hold at the 15-day Volume-Weighted Average Price (VWAP). The option expires on 23 March 2010.

During the afternoon trade, shares in Marenica increased 6.9%, or 1c, to 15.5c.

In late December 2009, the French-based multinational industrial and nuclear energy giant, Areva agreed to acquire a 10.57% interest in Marenica from Polo Resources PLC, on terms and conditions set out together with the Substantial Interest Notice (Form 603) lodged on 23 December 2009.

Areva, which is the world leader in the nuclear fuel cycle, from uranium mining, conversion and enrichment through to spent fuel re-processing and re-cycling, has a majority interest in the Trekkopje Uranium Mine, which is located less than 30km from the Marenica Project.

The Trekkopje deposit is a shallow, high-tonnage, low-grade uranium deposit hosted by calcretised palaeo-channels. Full production at Trekkopje is anticipated to commence in 2011 with a forecast initial mine life of 12 years.

Areva’s Southern African subsidiary, AREVA Resources Namibia, has key infrastructure, including a desalination plant at Wlotzkasbaken, located approximately 30 km north of Swakopmund – a first for Southern Africa – that will supply sufficient water to support the mining operations at Trekkopje Mine, which lies approximately 40km inland into the desert.

Marenica has also advised that its resource consultants, SRK Consulting (SRK) Pty Ltd, are continuing to work on the Marenica Resource Estimate update due at the end of January. All probe data and QA/QC assay data have now been compiled, and the resource update is on track to be finalised and announced in late January/early February 2010.

The Company released a series of positive results from the Marenica Project prior to Christmas, including an interim Resource Estimate upgrade announced on 18 November of 122 million tonnes grading 140ppm U3O8, comprising an Indicated Resource of 16 million tonnes grading 170ppm U3O8 and an Inferred Resource of 106 million tonnes grading 140ppm U3O8.

Marenica is also pleased to report that 16 new priority exploration targets have been identified following the receipt of new airborne radiometric and magnetic data for the Marenica Project.

Preliminary interpretation of the data has been completed within an area of 340 square kilometres. Marenica’s exploration team in Namibia will begin ground checking and sampling of the anomalies in early 2010.

Work is continuing on final Marenica resource upgrade due in January 2010 following interim upgrade to 122Mt grading 140ppm U3O8 in November 2009

The company’s principal asset is the Marenica Uranium Project JV (joint venture) in Namibia in the Damara uranium province, which Resource Capital said was “world class,” hosting 8-10% of the world’s uranium production, including the Rossing, Langer Heinrich and Trekkopje projects.

MEY holds an 80% working interest Marenica, a palaeochannel uranium deposit formerly explored by Goldfields with alaskite primary uranium mineralisation. The deposit’s palaeochannel resource is estimated at 38.6 mlbs (million pounds) of U3O8 (uranium oxide concentrate) grading 0.014% at an 80ppm (parts per million) cut-off with potential for open cut mining covers the historic resource area plus extensions over 10-15km (kilometres).

Drilling in the second half of the current year focused on infill, with extension drilling to the north and west. MEY plans to drill test two other sections of the channel 3km and 3.5 km long 4Q09 (5,000 metres) which have not previously been drill tested. A resource upgrade is expected 1Q10 targeting an Indicated Resource of about 15-20mlbs U3O8.

Preliminary bottle roll alkaline leach tests indicated uranium recoveries or greater than 90% from calcrete and oxidised bedrock. MEY said last month that ore was amenable to 375% upgrade to 0.087% U3O8 from 0.023% by screening, scrubbing and sorting, which could potentially reduce variable processing costs.

There are currently three primary targets in the Marencia area. MEY has drilled 18 holes for 2,831 metres at the Phillipus and Springbok zones in Q3 2009. Phillipus Zone has a radiometric anomaly over 900 metres and 2Q08 was confirmed to contain uraninite, which is easy to process. Drilling intercepts included 16.2 metres at 169 ppm U3O8, while low grade, mineralisation occurred near surface from about 15 metres and was consistent with resource and reserve grades of 0.011% to 0.012% U3O8 at the Valencia alaskite project.

An airborne radiometric survey was completed in October to assist with target identification for 2010. A scoping study for the project is expected in Q2 2010, while the next resource statement is due Q1 2010.

Resource Capital said Marenica had the potential to be economic based on the economics of low grade heap leach deposit, but that would likely come to pass at a uranium price of US$50-60/lb, compared to the current price of US$45/lb. Marenica could optimise the project through further paleochannel exploration success in Q4, which could help resolve the scale and grade issues, with alternatives for project optimisation provided by the proximity of Trekkopje.

Resource Capital said the 2010 exploration drilling offered a blue sky upside and estimated the EV/resource ratio at approximately US$1.70/lb.

A placement conducted in July raised A$9.9million through an issue of 82.6m shares at 0.12 cents per share plus options.

The results, which saw shares in West Australian Metals increase 7.7%, or 1c, to 14c, have led the company to schedule a full resource upgrade for the early part of 2010 as the foundation to advance the project towards production.

Preliminary testwork has shown that by screening and scrubbing ore grades could be increased by up to 375% prior to processing.

In the latest results, the down‐hole geophysical probe survey was completed during November, and included probing of previously un‐assessed historical drill‐holes from the main Marenica resource area as well as exploration holes drilled by WME at the regional Springbok prospect.

Significant final down-hole probe results received from historical drill holes at Marenica with better intersections including 14.6m @ 363ppm eU3O8, 19.8m @ 313ppm eU3O8, 12.5m @ 621ppm eU3O8, 7.9m @ 1,256ppm eU3O8 and 13.6m @ 406ppm eU3O8.

The calculated weighted mean of significant intersections for the final 355 re-probed historic holes is 196ppm eU3O8.

This is in excess of the recently announced interim resource grade of 140ppm U3O8.

This interim upgrade was based on results received up to the end of September 2009 (approximately 39% of the total). The January 2010 resource will include all results received since then, including the final probe results announced today.

This announcement follows on from encouraging metallurgical results announced for the Marenica Project last week.