- Australian explorer says resources may be 600 million pounds
- Peninsula Energy aims to start mining uranium by 2020
Peninsula Energy Ltd., an Australian listed uranium explorer and producer, said deposits of the nuclear fuel buried in South Africa’s semi arid Karoo region may be 10 times greater than the 57 million-pound resource it has already found.
Peninsula is building upon exploration work done by Esso Minerals in the 1970s, which indicated resources of 450 million pounds to 600 million pounds, Chief Executive Officer John Simpson said in an interview in Cape Town on Feb. 10. About 200 million pounds of uranium are consumed globally each year, he said.
“Potentially, it’s a very significant mineral deposit,” he said. “We’ve gone through scoping and prefeasibility studies. That has been very positive. We think we can produce uranium from here even under the current environment.”
Spot uranium prices have fallen about 49 percent to $34.15 a pound since the Fukushima nuclear disaster in March 2011 as some governments shied away from building new reactors. Contract prices, which account for 95 percent of trading in the fuel, are about $45 a pound, according to Peninsula, which already produces uranium in Wyoming.
Peninsula rose 3.9 percent to A$0.81 by the close of trading in Sydney Monday, the biggest advance since Jan. 22 and valuing the company at about A$143 million ($102 million).
The company’s prefeasibility study indicated that 3 million pounds of uranium could be mined each year in the Karoo at costs in the low $30s a pound, Simpson said. Perth-based Peninsula’s aim is to begin mining in 2019 or 2020. The resource has a uranium content of about 1,100 parts per million, considered “low-grade ore” by the World Nuclear Association.
“We still need to continue drilling here and take those resources through to reserves,” Simpson said. “We need to complete a bankable feasibility to go out and seek funding.”
Extracting resources from the Karoo has raised the ire of campaign groups, who want to preserve the natural beauty of an area that covers some 400,000 square kilometers (150,000 square miles), about a third of the country. In addition to uranium, the region may have extensive resources of shale gas, according to Petroleum Agency SA, which regulates the oil and gas exploration in the country.
Simpson dismissed any notion that mining uranium may harm the environment. “The reality is South Africa is a very mature market,” he said. “It’s got strong regulatory and frameworks for the authorization and approvals of mining. We’ve got to comply with all of those before we would get the approvals.”