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Vimy banks on uranium surge for $378m Rock

Andrew Forrest. Picture: Nic Ellis/The West Australian.

The Andrew Forrest-backed Vimy Resources has placed a $378 million tag on getting Mulga Rock, one of the State’s biggest uranium deposits, into production.

Releasing details yesterday of the long-awaited scoping study, Vimy said it had used a base case uranium price of $US75 per pound of U3O8 (and an exchange rate of US76¢) and expected life-of-mine cash costs for Mulga Rock to be about $US29/lb.

The payback would be 2.6 years for a project slated to run 16 years.

Construction of Mulga Rock, 240km north-east of Kalgoorlie-Boulder, is slated to cost $332 million, including $41 million of contingencies, while Vimy says it will also have to spend $46 million on mining pre-stripping.

NYMEX yesterday quoted the uranium spot price as $US37.75/lb. There is a widespread view among analysts and mining industry players that uranium, along with zinc, are the commodities with the most price upside.

PAC Partners analyst Andrew Shearer said he shared Vim’s assumption the price would appreciate though “the risk the price does not strengthen does need to be acknowledged”.

Vimy expects to complete the pre-feasibility study in August before moving straight into a feasibility study. It wants to sanction Mulga Rock’s development late next year.

Vimy shares closed un-changed yesterday at 30¢.