Deep Yellow confirms improved project economics from Tumas definitive feasibility study

Uranium explorer Deep Yellow (ASX: DYL) has confirmed the definitive feasibility study (DFS) for its flagship Tumas project in Namibia is on track and improving on pre-feasibility assumptions.

Key workstreams completed to date have delivered stronger results than some of the key inputs to the positive pre-feasibility study completed in January last year.

The project’s expected production life has increased from 11.5 years to 25.75 years, while operating margins are up 114% to $3.1 billion.

Net present value post-tax also improved from $290 million to $578 million, while the internal rate of return sits at 23%.

All-in-sustaining costs for the first 20 years of production have reduced from $43.12 per pound of uranium oxide to $42.67/lb.

Ore reserves increase

Ore reserves for Tumas have increased by 120% to 68.4 million pounds uranium oxide at an average grade of 345 parts per million and a cut-off grade of 150ppm.

The company said potential remains to further expand reserves in the project area by utilising 48.6Mlb of inferred resources available for upgrade.

Additional upside exists with approximately 40% of the highly-prospective Tumas palaeochannel system still underexplored.

The ore reserve upgrade fulfils a critical DFS target, after pre-feasibility work indicated a potential doubling of net present value by increasing the Tumas mine life beyond 20 years at pre-feasibility production rates.

Infrastructure

A detailed trade-off study has concluded the most cost-effective power supply option for the Tumas project would be via the local NamPower grid, augmented by a solar array with process heat provided by conventional heavy fuel oil fired boilers.

This arrangement is expected to result in lower overall costs than those assumed for the pre-feasibility study and could also improve sustainability and greenhouse gas emissions over the mine’s life.

Proposed water supply for the project remains as a combination of existing groundwater and supplies from local utility NamWater.

An independent review of transport and logistics infrastructure concluded that current road, air and sea services are sufficient for Tumas and would not impact existing local demand.

Process design

Deep Yellow has confirmed the process for uranium and vanadium extraction from Tumas ore remains fit-for-purpose as outlined in the pre-feasibility study and no material changes would be required to achieve optimum recovery, cost and long-term site rehabilitation exposure.

A study by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) into the impact of seepage from waste rock dumps and tailings storage facilities concluded down-channel interaction between ionic elements (principally uranium, vanadium and lead) and groundwater would result in the precipitation of these metals in close proximity to the zone of interaction in much the same way that currently occurs.

The finding was considered “very significant” as it validates the tailings management process developed for Tumas with the aim of minimising environmental impacts.

Second phase

Deep Yellow said work completed to date paves the way for the commencement of the second and final DFS phase.

This will include further detailed process design, operating and capital cost estimates, detailed mine planning, ore reserve optimisation and negotiation of material contracts in preparation for project implementation.

Ausenco Services and Cube Consulting are key contributors to the DFS, carrying on from work completed during the pre-feasibility stage.

Deep Yellow will engage with debt-funding providers and potential customers in parallel with the second phase.