After reviewing a definitive feasibility study (DFS) on the Tumas uranium project, in Namibia, ASX-listed Deep Yellow has made positive reassessments of capital expenditure and the value of the project.
The Tumas DFS, published in February, was undertaken during a period of significant inflationary and supply logistics volatility, which necessitated a review of cost estimates later on in the year.
“Given these factors and ahead of key development activities, Deep Yellow, along with Ausenco, considered it prudent to re-cost the project as global market conditions settled,” explains Deep Yellow MD and CEO John Borshoff.
He adds that most major economies are demanding more nuclear power, as it is a clean energy source that can provide baseload power supply and numerous other vital applications, while achieving zero emissions.
For example, 24 countries committed to the goal of tripling nuclear energy capacity to achieve zero emissions by 2050, during the COP28 conference held in Dubai recently.
The DFS review finds the base case uranium price increased from $65/lb to $75/lb owing to market strengthening conditions, which results in a post-tax net present value (NPV) increase of the project by 68% to $570-million, or A$838-million, with an internal rate of return (IRR) of 27%.
In a more optimal scenario of the uranium price reaching $90/lb, the project’s NPV increases to $878-million and its IRR to 36.1%.
The re-costing study has validated a lower initial capital cost for Timas of $360-million, or A$529-million, down 64% from the initial estimates in the DFS.
The revised life-of-mine C1 operating cost increased, however, to $34.36/lb from $33.99/lb previously, owing to a 13% increase in power charges from the Namibian energy utility in November this year, a 9.5% increase in diesel cost and a 15% increase in heavy fuel oil cost.
The re-costing work also identified further potential gains to be made during the detailed engineering phase of the project, with more gains to be made across beneficiation, washing and concentration as demonstrated by metallurgical test work not having been incorporated into the re-costing effort.
The outcome of the review validates the commercial viability of the project as a long-term, high-margin and globally significant uranium operation.
The company aims to progress to a final investment decision in the third quarter of next year. Before then, by January next year, Deep Yellow will call for tenders for detailed engineering and project execution from selected third-party engineering services providers.
Additionally, Deep Yellow will advance project finance negotiations.