Toro Energy (ASX:TOE) is steadily demonstrating that its massive Wiluna uranium project in Western Australia will be financed and brought into production as markets for the nuclear fuel improve.
Toro’s Wiluna regional resource contains approximately 76.5 million pounds of uranium oxide, sufficient to run a mine for at least 25 years. The project has already received final environmental approvals, setting it up to be WA’s first producing uranium operation.
Recent progress in realising the Wiluna plan has unfolded on several fronts, with technical R&D work regularly improving operational viability as Toro embraces new investors and international customers in the uranium space.
Working capital of A$4.9 million was raised in the December quarter through a $3.9 million share purchase plan and private placement with RealFin Capital Partners for $1 million.
The company raised a further $20 million through a subscription and securities sale agreement and unitisation deed with independent global private equity firm The Sentient Group.
Cash held at the end of the June quarter totalled an enviable $22.9 million.
This support has helped the company reduce financing costs and bolster the cash holdings needed as Wiluna marks milestones toward operational start-up.
Recent optimisation work at Wiluna has included an ambitious drilling program, completed at the end of June, which comprised a total of 130 sonic holes for 983 metres across the project’s Centipede, Millipede, Lake Maitland and Nowthanna areas. Some 1,800 half-metre full core samples were collected for geochemical analysis and about 600 sub-samples for mineralogical analysis.
All geological data from the campaign is being reviewed and is expected to be delivered in the third quarter 2015.
Toro has also made progress an environmental approval extension for Wiluna. The extension relates to mining of the Millipede and Lake Maitland deposits and treatment of ore from these deposits at the already approved Centipede processing facility. The company is aiming to have received full state and federal environmental approval, for the extended Wiluna project, by the third quarter of 2016.
One of only a handful
Wiluna represents one of the few projects worldwide capable of bringing new production to the market in the medium term when a shortfall is predicted during the second half of the decade.
The uranium is found close to the surface and is often associated with a naturally forming calcium-carbonate cement known as calcrete. This type of deposit is not unlike the nearby larger Yeelirrie deposit owned by Cameco Corporation (TSE:CCO) and the Langer Heinrich deposit in Namibia being mined by Paladin Energy (ASX:PDN).
The mine will be a shallow strip excavation using surface miners. Blasting and drilling will not be required. The maximum mining depth will be 15 metres, and the estimated area of ground disturbance is 1530 hectares.
Infrastructure needed includes the mine, processing plant, packaging and handling facility, an accommodation village, a water supply bore field and pipeline, access and haul roads and facilities for on-site power generation, including a gas pipeline, communications and domestic and septic waste treatment.
Finding new markets
Traction in building customer relationships as uranium markets expand has been a priority for Toro during the development of Wiluna.
Earlier this year, Toro managing director, Dr Vanessa Guthrie was invited by the Prime Minister Tony Abbott to join the Australia-India CEO Forum following signing of the Nuclear Civil Cooperation Agreement between Australia and India in September 2014.
Guthrie participated in the forum held in Delhi in June 2015, continuing Toro’s focus on developing relationships with potential project financiers, equity partners and off-takers within the expanding Indian energy market.
While the restart of Japanese reactors often makes headlines as a bellwether of improving uranium sentiment, more commercial possibilities are likely to be exploited in the construction of 27 new nuclear reactors in China.
Meanwhile, South Korea’s Wolsong reactor has recently restarted after more than two years of being offline as Seoul moves to reduce greenhouse gas emissions 37% before 2030 largely through added nuclear capacity.
Analysis
Toro’s proven ability to raise large amounts of cash for Wiluna has reflected a growing awareness about a pending upswing in the uranium space as massive Asian markets explore options for cleaner energy sources.
Wiluna’s location in WA provides the politically stable mining jurisdiction that is necessary for uranium customers needing of undisrupted 5-10 year contracts. Well established business ties between WA’s mining industry and its Asian customers are likely to facilitate future foreign investment in the state’s burgeoning uranium sector.
Wiluna’s design features, management controls and mitigation measures are expected to allow environmental, socioeconomic, health and cultural heritage impacts to be managed sustainably – a critical political advantage in the sometimes divisive uranium sector.
Toro has successfully completed a trial mine and a comprehensive metallurgical testwork program including a pilot plant trial. These studies substantially reduced the technical risk of the project by generating critical information that was used to support the engineering design of the project.
Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China.