Emerging uranium producer, Toro Energy (ASX:TOE) has been provided significant encouragement from first 2012 drill results from its principal exploration asset, Theseus in Western Australia.

Theseus had a Exploration Target Range of 20 - 40 million tonnes (22 million - 44 million pounds uranium) at 400 - 500 ppm uranium.

Drilling commenced on 1 May 2012 in the southern part of the Theseus Project area.

Today's results, using a Prompt Fission Neutron Tool (PFN) downhole logging tool showed that 14 of the 20 holes drilled so far reported mineralised intervals greater than 200ppm pU3O8, would place Toro on the way to achieving this target.

Peak results were over 0.6% pU3O8, with consistent widths and grades using a 200 parts per million (ppm) pU3O8 cut off.

The results included:

- 3.77m at 717ppm uranium from 111.73m including 0.91m at 2105ppm uranium
- 2.54m at 646ppm uranium from 110.53m including 0.55m at 2336ppm uranium
- 2.05m at 566ppm uranium from 118.15m including 0.55m at 1541ppm uranium
- 10.7m at 275ppm uranium from 124.24m including 0.74m at 748ppm uranium

The results have also confirmed Toro’s geological model for the southern area of the Theseus Project. 

These results would justifiably provide Toro with confidence in the grade and tonnes of the Exploration Target Range (ETR) for the remaining area of Theseus Project still to be drilled. 

Three mineralised zones have been intersected to date, the first around 70 metres below surface, with the main zone starting at around ~110-112 metres and now a third zone at 120 metres. In drillhole LM0090, the two lower zones coalesce and report 10.74 metres at 275ppm pU3O8 from 112.9 metres.

Toro managing director Greg Hall said: “It is exciting to see the first drill results of 2012 confirming the uranium potential in the southern part of the Theseus Project. 

It is also pleasing to see consistent widths and grades with the possibility of exploitable ISR uranium mineralisation.”


Analysis

Today's drill results included high grade as well as significant widths at Theseus and puts the company on the road to achieving its exploration target range of 22 million - 44 million pounds uranium at the project.

This is in addition to Toro's flagship 54 million pound Wiluna uranium project (total regional resource) in Central Western Australia, where Toro has advanced the approvals process with an anticipated date of mid-2012, construction through 2013 and first uranium sales in 2014.

Timing wise, Wiluna's development timeline could suit European and US utilities which are known to be eyeing long-term uranium supply contracts - post Fukushima. Toro could be the first post-ban uranium miner in Western Australia to market and next uranium mine in Australia to production. Toro could also be one of the few uranium producers in the world capable of production in the critical 2014-15 period.

Taken together, and on an EV/uranium resource peer basis this provides a solid long term case for Toro Energy.


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Toro Energy (ASX: TOE) has begun the eagerly awaited 2012 drilling program at its Theseus Uranium Project targeting a conversion of a sizeable amount of its exploration target to an Inferred Resource. 

Indicating the size potential of the project, Toro has defined an exploration target of 20 to 40 million tonnes at 400 to 500 parts per million for 22 to 44 million pounds of uranium.

A mud rotary rig will begin the initial program of about 20,000 metres. 

The main zone of mineralisation covers an area about 6 kilometres long by up to 1.5 kilometres wide. 

This zone is open to the northwest and southeast and a second zone, about 2 kilometres long by 0.5 kilometres wide, is open to the east.

Greg Hall, managing director said: “It is very good news for Toro to be able to start this drilling program early in the season. 

“Toro believes there is an excellent chance to convert the exploration target range estimate to an Inferred Resource over the next few months. 

“We are looking forward to further positive news from Theseus, especially after the highly successful extraction tests improve the probability of an ISR project.” 

Toro has achieved high rates of extraction of greater than 96% in the first uranium extraction tests for the Theseus Project. 

The extraction process was quick, with the majority of leaching occurring within the first 12 hours.

The results demonstrate good metallurgical characteristics for the Theseus Project at this early stage of the project.


Theseus potential 

Theseus was discovered by Toro during a grassroots regional aircore drilling program in 2009. 

Initial results highlighted the potential for sandstone hosted uranium mineralisation at the project. 

A total of 130 vertical mud rotary and aircore holes have been drilled and downhole gamma logged, with almost 50% of the holes reporting a gamma, assay or PFN result greater than 0.5 metres at 100 parts per million uranium. 

Given the high quality and speed of uranium extraction, it is likely that the mineralisation at Theseus consists primarily of uraninite and coffinite, which is easily extractable.

Importantly, this is comparable to the preliminary recoveries from other Australian in-situ recovery type deposits.


Post-Fukushima turnaround

Toro is one of a handful of miners, including BHP Billiton (ASX: BHP), that wasted no time in exploiting Western Australia’s uranium potential following the lifting of the State Government’s ban on uranium mining in 2008. 

The company is buoyed by a potential turnaround in the post-Fukushima uranium market with European and US utilities eyeing long-term uranium supply contracts as well as continued Japanese demand.

Toro is well placed to become the first post-ban uranium miner in Western Australia if its Wiluna project progresses quickly through the final phase of government approvals.

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Toro Energy (ASX: TOE) plans to farm-out up to 80% of all the mineral rights, except uranium, within its Browns Range tenements in the Northern Territory under a joint venture agreement with Northern Minerals (ASX: NTU).

The two companies have completed due diligence and as a result have now formalised the joint venture partnership.  

The agreement allows for Northern to explore for non-uranium minerals on seven of Toro’s wholly owned tenements in the Tanami region of the Northern Territory.

Northern intends to focus on heavy rare earth elements as part of its Browns Range project while Toro retains 100% of all uranium rights throughout the joint venture.

JV Terms 

- The agreement allows Northern to earn up to an 80% interest in non-uranium minerals in the tenements over a five year period in various stages;
- In the first stage, Northern has agreed to spend $4 million on exploration over the first three years to earn a 51% interest;
- In the second stage, Northern has the option to increase its interest to 70% by spending an additional $2 million over the following two years; and
- Finally, Northern has the option to complete a Bankable or Definitive Feasibility Study and lift its equity position in non-uranium minerals to 80% if Toro chooses not to contribute.

Browns Range

Toro’s tenements lie around the southern margin of the Browns Range Dome and, in particular, have substantial potential for unconformity style uranium.

Highlighting the prospectivity of the area, the single previous explorer, Japanese company PNC, identified a 20 kilometre long belt of geology that is directly analogous with that of the Alligator River Uranium Field, which hosts the Ranger and Jabiluka uranium deposits.

PNC created a sizable dataset that will enable Toro to fast-track its own uranium exploration in the area, which will also assist in the exploration for other commodities by the joint venture partners.

 
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Toro said that shareholders have voted to accept the terms of a termination agreement for the company’s involvement in the Mount Woods uranium project in South Australia.

At yesterdays general meeting, shareholders supported the proposal that Toro be paid $3.75 million by OZ Minerals (ASX: OZL) as consideration for the termination of an agreement between the two companies as previously applied to the project.

Both companies signed a Letter of Intent in November last year for the termination of the Tenements Access Agreement between them over Mount Woods – a project comprising tenements EL4025, EL4132, EL4283 and EL4390.

Toro required shareholder approval for the transaction as it was disposing of a substantial asset to a substantial shareholder, OZ Minerals, which holds 42.06% of Toro’s issued share capital.

The Tenement Access Agreement granted Toro the right to explore for and, under certain conditions, mine economic uranium discoveries. It also entitled Toro access to all Mt Woods exploration data and information collected by OZ Minerals on the tenements.

OZ Minerals has conducted major exploration programs at Mt Woods and, despite extensive drilling campaigns, no potentially economic uranium results have been reported from the project.

Toro announced at the time that a review by it of the project’s exploration data, provided no indication or encouragement.

For the last phase of the program, Toro focused on testing the extent of higher-grade zones within the eight kilometres of palaeochannel previously defined.

Drilling at 100 metre spacing has intersected higher grade zones of mineralisation in three locations.

The mineralised zone at the Theseus Project palaeochannel system is now confirmed over a minimum strike length of 8km and averages 500 metres wide, varying in thickness from 1 metre to 9 metres.

This palaeochannel system is considered open to the northwest and to the southeast with a secondary, mineralised, 2 kilometres long tributary that is also open to the east.

The latest results are pointing to a large uranium mineralised system.

Highlights from the final phase of the in-hole gamma results from the mud rotary program include:

- 1.52 metres at 0.15% uranium [0.22%GT] from 116.61 metres, including 0.46 metres at 0.44% uranium;

- 3.44 metres at 0.13% uranium [0.45%GT] from 111.4 metres, including 1.34 metre at 0.31% uranium; and

- 3.74 metres at 0.17% uranium [0.65%GT] from 100.2 metres, including 2.62 metres at 0.23% uranium.

Importantly, the tenor and grade of intersection results above at >0.1%GT would be considered ore-grade for a typical in-situ recovery operation.

Greg Hall, managing director, commented on the positive results, “The most recent drilling results from the Theseus Project point to a large uranium mineralised system with the right ingredients for in-situ recovery.

"The potential size of the system is very encouraging for Toro.

"Further work already underway will provide more information on the uranium mineral species and the potential to extract uranium in a leach solution, but we have been especially encouraged by the tenor of intersections late in the program where ore-grades seen elsewhere are now being regularly intersected at Theseus.”


Extensive 2011 drilling program

The 2011 drilling program comprised in total 51 aircore holes for 6700 metres and 64 mud rotary holes for 8500 metres, which have now all been completed.

Providing another boost to the project, the addition of the extra geophysical information gained from the mud rotary drilling is enabling Toro to build a geological model to constrain higher-grade mineralisation and provide targets for drilling in 2012.

Once a full analysis of the geophysical data is completed early in November, an exploration target range for 2012 will be announced for the Theseus Project.

Meanwhile, Toro is aiming to deliver a revised JORC resource update for the Wiluna Region this month. Nowthanna will constitute a portion of the revised consolidated resource.

On a 100% basis, the Nowthanna deposit has an Inferred JORC Resource of 10.37 million tonnes at 446ppm uranium for 4,600 tonnes (10.1Mlb) of contained U3O8 at a 200ppm cut-off grade.

Full legal documentation, formalising the terms of the transaction outlined in the non binding term sheet, has now been executed with a group of vendors led by Impact Minerals (ASX:IPT).

The vendors included CITIC Nickel Pty Ltd, Talbot Group Investments Pty Ltd, Spar Resources Pty Ltd, John Rowntree and Teddy Tech Pty Ltd, for the purchase of two exploration tenements, E51/1072 and E51/1075.

The acquisition fits neatly with similar regional transactions by Toro in the past 12 months that secured uranium tenements in WA from U308 Limited (ASX: UTO), MPI Nickel Pty Ltd (a subsidiary of Norilsk Nickel Australia Pty Ltd, transaction in process) and the Minerals and Metals Group. 

All host either uranium resources or defined uranium mineralisation, as part of the company's regional consolidation strategy.

The "Millipede" uranium tenements could add 4 million pounds uranium to the company's resource base.

Toro is currently working on a JORC Resource update for the Wiluna Project and the company expects the three new tenements will constitute a portion of the revised consolidated resource when it is released at the end of this month.

On 17 February 2011 Toro announced it was acquiring a project called Millipede from MPI. Consideration for the tenements includes a A$4.5 million cash payment to MPI and 2% Net Smelter Return (NSR) style royalty in favour of MPI on production in excess of 4.5 million pounds (Mlb) uranium (U3O8) from the tenements.

MPI is a subsidiary of Norilsk Nickel Australia Pty Ltd and holds a 100% interest in tenements M53/590 and M53/693 and a 90% interest in tenement M53/336.

Millipede contains the tenements which have an exploration target in the range of 4–5 million pounds of uranium (U3O8) (1,800 tonnes-2,300 tonnes) at a grade similar to the Centipede and Lake Way deposits (0.04%-0.06% or 400-600 parts per million (ppm)).

While the uranium exploration target at Millipede is small by international standards, the acquisition is an important one for Toro and adds to the robustness of the Wiluna Uranium Project, which is currently focusing on the development of the Lake Way and Centipede deposits.

Wiluna has prefeasibility and optimisation studies completed and a definitive feasibility study underway. Toro has commenced the approvals process targeting the company’s first uranium production by late 2013.

Toro has purchased the mining tenements and associated database from MPI, while MPI has retained the rights to all non-uranium minerals (other than as a by-product of uranium mining of co-mingled ores).

One of the tenements (M53/336) is held in Joint Venture between MPI and Barrack Mines Pty Ltd, which is a wholly owned subsidiary of Grange Resources (ASX: GRR), with Barrack holding 10% equity.

Toro has concluded the acquisition of this 10% interest in M53/336 on the same terms on a pro-rata basis.

Other highlights from mud rotary holes include:

- 1.62 metres at 370 ppm eU3O8 [600GT] from 100.26 metres in LM00018 including 0.36 metres at 1071 ppm eU3O8 from 101. 4 metres and; and
- 2.02 metres at 456 ppm eU3O8 [921GT] from 108.24 metres, including 0.52 metres at 1141 ppm eU3O8 from 108.48 metres (using a 100ppm eU3O8 cut off)

Two aircore holes and 11 mud rotary holes have been completed since the last update on August 29.

Greg Hall, Toro managing director, said “it is hoped that drilling proposed for the southern half of the project will confirm the potential size of this prospect."

The company said a mud rotary drill rig has been sourced and is now operational on site. Borehole Geophysical Services has also been contracted to provide down-hole geophysical probing to supplement geological logging and assist with correlations between mineralised zones.

The Wallis aircore rig is predicted to return to site around 24 September to complete the drilling program for the southern half of the prospect, after requiring mechanical repair earlier this month.

In addition, chemical assays for the first six aircore holes, LP00173 to LP00178, have been received with results including:

- 6 metres at 625ppm cU3O8 (3751GT) compared to 4.84m @ 829ppm eU3O8 (4012GT)
- 2 metres at 1406ppm cU3O8 (2812GT) compared to 1.56m @ 2010ppm eU3O8 (3135GT)

The company said the similarity between the chemical (c) and equivalent (e) results in LP00177 suggests that uranium disequilibrium will not be a major factor.

Toro expects aircore drillhole samples to be despatched shortly for XRD mineral identification along with bulk samples to determine basic leach mechanics later this year.

This preliminary test-work will attempt to identify the uranium mineral species and the basic leach tests will give some indication of the potential extractability of uranium.

Over the next three weeks, aircore drilling will continue to test the southern section of the prospect at 500 metres  to 1 kilometres spacing designed to cover the original grid drill plan area of 5 kilometres x 8 kilometres by mid October.

The mud rotary rig will shortly commence a detailed 200 metre spaced grid covering the 1 square kilometre area between high grade drillholes LP00191 and LP00194.

Importantly. the geological environment and the consistency of the mineralised zones at Theseus, albeit at an early stage, supports the possibility of ISR extraction methods as a potential development scenario - although the development scenarios and economics remain undefined at this time.

To continue to unlock the significance of this discovery, Toro will now ramp up drilling targeting the definition of higher grade uranium zones.

Drilling highlights include:

- 4.46 metres at 837 ppm eU3O8 from 98.11 metres, including 1.54 metres at 1909ppm eU3O8;

- 9.02 metres at 619 ppm eU3O8 from 100.38 metres, including 1.46 metres at 2204ppm eU3O8; and

- 3.54 metres at 378 ppm eU3O8 from 105.63 metres, including 0.44 metres at 1469ppm eU3O8.

An air-core drilling campaign kicked off at the prospect earlier in the month, with 19 of the planned 60 holes having been drilled and gamma logged so far to total depths ranging from 103 metres to 210 metres, passing through a basement interface at roughly 125 metres.

What is so important for the discovery, is that twelve of the nineteen holes drilled so far report uranium intersections with grades above 100ppm eU3O8, and widths greater than 0.5 metres - pointing to an extensive system.

Greg Hall, managing director, added “We are excited and encouraged by the size, extent and grade of uranium mineralisation so far intersected.

"Toro’s systematic approach to defining the location of the higher grade uranium mineralisation in Theseus is key to ensuring the system is well defined before more closely spaced drilling is used to define a resource prepared in accordance with the JORC code.”

Importantly - the minimum extent of the system is now 5 kilometres by 1.5 kilometres, and open in all directions.

Geologically, Theseus is situated within an interpreted northerly trending palaeovalley broadly defined by previous drilling.

The prospect is part of Toro's wholly owned flagship Lake Mackay Project, located 650 kilometres west of Alice Springs but inside the Western Australia border.

Toro is also developing the advanced Wiluna uranium project which is further west in the state and scheduled for first production from late in 2013, pending government approvals.

Potential in-situ recovery

Toro has outlined the lithological and mineralogical association at Theseus saying that it is very similar to the 4 Mile and Beverley uranium deposits in South Australia which are currently being developed or are in production.

Both uranium deposits are amenable to In Situ Recovery (ISR) where slightly acidified water is pumped to depths of 150 metres through confined sand layers, extracting and transporting uranium to a surface processing plant.

The company added that similarities can also be drawn to operating ISR mines in the US and Kazakhstan where uranium mineralisation is mined by ISR techniques.

The geological environment and the consistency of the mineralised zones at Theseus, albeit at an early stage, supports the possibility of ISR extraction methods as a potential development scenario - although the development scenarios and economics remain undefined at this time.