Extract Resources Plans 2014 Production Start at Namibia Uranium Mine

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Researched by Industrial Info Resources (Sugar Land, Texas)--Australia-based uranium explorer and developer Extract Resources Limited (ASX:EXT) (Perth, Australia) has announced that it plans to start production at the Rössing South uranium mine in Namibia, part of the company's Husab uranium project, in 2014.

Extract CEO Jonathan Leslie made the announcement at the recently completed Africa Downunder Conference in Perth, Western Australia. The conference was attended by mining company representatives and government officials from Australia and Africa.

According to Jonathan Leslie, the Husab project, which along with the Rössing South mine includes the Ida Dome uranium deposit, has the potential to become the world's second-largest uranium mine, with an estimated production capacity of up to 15 million pounds of uranium oxide each year.

The Rössing South deposit was discovered in February 2008 and initial drilling revealed inferred estimates for Zone 1 of about 108 million tons of uranium. These estimates were upgraded in July 2009 to include Zone 2 and placed inferred estimates for zones 1 and 2 at 243 million tons. Further drilling has now placed the total inferred estimates of zones 1, 2, 3 and 4 at Rössing South at 257 million tons.

A definitive feasibility study is currently under way and is expected to be delivered in the last quarter of this year, enabling construction of the mine to start at the end of 2013. Meanwhile, further drilling is expected to increase the estimates of zones 1 and 2 from the current 122.2 million tons and 118.8 million tons, respectively.

Extract intends to use the outcome of the environment impact assessment statement and the management plans, which are currently under way, with the results of the definitive feasibility study, to support its mining licence application, which is likely to be submitted by the end of 2010.

The project will have an estimated life of about 20 years and will require an investment of almost $650 million. However, Jonathan Leslie is confident that world prices for uranium oxide will rise from the current range of between $40.50 and $54 per pound. His optimism is based on the expected rise in demand for uranium as nuclear power plants are constructed and planned, creating a supply shortage of the mineral.

Currently there are 436 existing nuclear power plants worldwide. Fifty-three plants are under construction; 142 are planned, and a further 327 have been proposed.

According to Leslie, "The spot price is indicative, and the weighted average already for 15 new projects due to come online suggests a minimum spot price of $67 to $90 a pound--a price range equivalent to between 7.5% and 15% of these projects' protected internal rate of return."

Major uranium mines are located in Canada, Australia and Kazakhstan, but mining for the mineral is under way in more than 25 countries, with more than 100 mines reported to be active or under development worldwide. The largest mine currently is the McArthur River Mine, in Saskatchewan, Canada, operated by Cameco Corporation (NYSE:CCJ) (Saskatoon, Canada), which produces about 18 million pounds of uranium per year.

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