From uranium to lithium: a divergent exploration path for Metals Australia and Marenica Energy

Earlier today, Metals Australia (ASX: MLS) has said it entered into a binding agreement to divest its entire interest in the Mile 72 uranium project to uranium explorer Marenica Energy (ASX: MEY).

The two ASX-listed explorers have done a deal on uranium project located in Namibia, with one of the two heading off into lithium exploration as opposed to uranium development.

The deal will see Marenica Energy making a cash payment of A$30,000 to Metals Australia and granting a 1% gross preferential dividend on an exclusive prospecting licence that effectively sees the company benefiting from any future commercial upside achieved by Marenica.

The primary reason why Metals Australia has turned away from uranium is down to a fundamental change of direction towards lithium exploration.

“The Board of Metals Australia consider that the sale of the Mile 72 uranium project is in line with the change in the company’s strategy to position itself to become a developer of key commodities for the growing lithium-ion battery and energy storage markets,” said Mr Gino D’Anna, director of Metals Australia.

Mr D’Anna added that “Marenica Energy already holds other uranium projects in Namibia and is well positioned to continue the exploration of Mile 72. Marenica are also more favourably positioned to undertake the development of any uranium deposits that may be discovered”.

According to both parties, their agreement remains subject to regulatory approvals that are required in both Australia and Namibia. However, with the deal now formally agreed, there are unlikely to be any stumbling blocks.

Different commercial directions

The Mile 72 project is located in the world-class Erongo uranium province in Namibia, which includes the Rossing uranium mine now in its 41st year of operation and the Langer Heinrich and Husab mines.

Marenica thinks it can assimilate the Mile 72 project into its current operations and apply its proprietary (and trademarked) U-pgrade process to the ore material excavated at the site.

According to Marenica, U-pgrade is a novel process that can deliver drastic reductions to capital expenditure costs and therefore able to transform previously uneconomic uranium prospects into economically viable projects that deliver high-grade uranium into world markets.

Marenica says that the mineralisation at the Mile 72 uranium project is “calcrete-hosted”, which makes it very similar to the Marenica’s own uranium project dubbed the Langer Heinrich project which contains the Paladin and Tumas Deep Yellow deposits, also located in Namibia.

Past test work on these projects has confirmed the amenability of U-pgrade and indicates that the U-pgrade process potentially “reduces the project development and operating costs by around 50%”.

Marenica says it expects Mile 72 calcrete mineralisation will respond to U-pgrade the same as all other Namibian calcrete deposits tested and produce a “low mass concentrate for leaching”.

“We are excited about the acquisition of Mile 72 as we build a portfolio of uranium assets at the bottom of the uranium price cycle, assets in which our proprietary U-pgrade process is expected to add significant value”, said Mr Murray Hill, managing director of Marenica Energy.

“Mile 72 has been underexplored for calcrete uranium mineralisation and presents a great opportunity for the company to potentially delineate a high-grade resource, in a world-class uranium province,” said Mr Hill.