www.toroenergy.com.au
Toro Energy (ASX: TOE) is well placed to operate one of the first new Western Australian uranium mines. The company is also an explorer in Western Australia, the Northern Territory, South Australia and in the African country of Namibia.
The Wiluna Project is at an advanced stage in government assessment and approval, with Toro planning to commit to construction late next year for first production in 2013. The project hosts two shallow (generally less than 10m deep) calcrete deposits with a Measured, Indicated and Inferred resource of 24.4Mlbs of contained Uranium (U3O8) in the current project approved.
Toro Energy steps up consolidation of WA regional uranium resources
Toro Energy (ASX: TOE) has boosted its Wiluna uranium resources by 25% with the acquisition of the Nowthanna deposit in Western Australia.
Toro has paid A$1.3 million in cash and 10 million Toro shares at A$0.15 per share for two exploration tenements covering about 70% of the Nowthanna uranium deposit near Meekatharra.
The acquisition cost on a per pound basis for the Nowthanna deposit equates to $0.28 per pound at the current Toro share price, which is considerably lower than the industry average.
The deposit while early stage, is believed to offer significant potential for Toro as the grade is relatively high.
The Nowthanna deposit has Inferred Resources of 10.37 million tonnes (Mt) at 446 parts per million (ppm) uranium U3O8 for 4,600 tonnes (10.1Mlb) of contained U3O8 at a 200ppm cut-off grade.
The company has signed a non-binding term sheet for the acquisition from a group of vendors including Impact Minerals (ASX: IPT), CITIC Nickel Pty Ltd, Talbot Group Investments Pty Ltd, Spar Resources Pty Ltd, John Rowntree and Teddy Tech Pty ltd.
The term sheet provides for a binding exclusivity period in favour of Toro which runs until 15 September 2011 or execution of definitive legal documentation. The transaction is expected to be completed before that date, subject to due diligence and approvals.
Half of the newly issued shares will be subject to a 6 month escrow provision with the remainder having a 12 month escrow period.
The Nowthanna deposit is located 50 kilometres south of Meekatharra and 150 kilometres west of Toro’s Wiluna Uranium Project.
Two of the three tenements that cover this deposit (E51/1072 and E51/1075) will be acquired by Toro and equate to a resource of 7.39 Mt at 450 ppm U3O8 for 3,350t (7.4Mlb) of contained U3O8 at a 200ppm cut-off grade.
This represents a 25% increase to 37.10 Mt at 464 ppm U3O8 for 17,220t (38.0Mlb) of contained U3O8 at a 200 ppm cut-off grade in Toro’s regional uranium prospective Wiluna footprint.
The deposit has a low strip ratio (given overlying waste of between 1 metre and 4 metres) and the poorly consolidated sediments will be amenable to simple mining methods, making it similar to other surficial style deposits in the north Yilgarn craton such as Toro’s Lake Way and Centipede deposits.
Toro is currently undertaking a full update to its Wiluna Project and regional resources, expected to be completed in August.
In the past 12 months Toro secured other uranium tenements in Western Australia in similar transactions with 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.
These tenements are within a 200 kilometre radius of the Wiluna Uranium Project and are part of the company's strategy to consolidate smaller deposits that may or may not be economic in their own right. All the tenements host either uranium resources or defined uranium mineralisation.
Nowthanna is a relatively early stage project with significant potential given its higher grade tenor that allows the deposit to withstand increases in cut-off grade in the event of higher cost development scenarios.
The deposit will require significant resource, environmental, community and technical evaluation work to be done in order to advance the project.
The project would be subject to appropriate WA and Federal Government approvals if deemed an economic proposition in the future. Nowthanna is not part of the current government assessment of the Wiluna Uranium Project.
The proposed transaction is the sixth uranium deposit acquisition by Toro in WA in addition to its Lake Way and Centipede deposits within its wholly-owned Wiluna uranium project, 30 kilometres southeast of Wiluna in Central Western Australia. The others include Lake Mackay, Birrindudu, Dawson-Hinkler, Millipede and Firestrike.
At Lake Way and Centipede, within Wiluna, Pre-Feasibility and optimisation studies have been completed and a Definitive Feasibility Study is underway.
The company has commenced the approvals process targeting its first uranium production by late 2013.
Toro envisages a 10-year mine life at the rate of around 700 tonnes of uranium oxide per annum for Wiluna although nearby regional exploration and asset acquisition could extend this.
The company has three other exploration and development projects in Western Australia, and owns uranium assets in Northern Territory, South Australia and in Namibia, Africa.
Toro is well funded and had A$32.2 million cash at the end of the March quarter, and has a supportive major shareholder in OZ Minerals (ASX: OZL).
Given Toro's expertise in the calcrete style of mineralisation, its strong regional position in the Wiluna District, Toro is adding to its uranium resource base at a lower cost than exploring and continuing to accumulate future potential.
Toro is currently undertaking a full update to its Wiluna Project and regional resources, expected to be completed in August which should provide further newsflow.
