Titan Uranium Inc. (TSX VENTURE: TUE)(FRANKFURT: T4X) is pleased to
announce that it has completed a Preliminary Feasibility Study
(PFS) for its 100% owned Sheep Mountain uranium project in Fremont
County, Wyoming. The study was prepared by a group of consultants
led by BRS Inc., an independent engineering consulting firm based
in Denver, Colorado. A number of other independent consulting firms
including Western States Mining Consultants, Lyntek Inc. and
McNulty and Associates provided their study results for use in
developing the PFS. The project generates a pre-tax Internal Rate
of Return of 25%, with a Net Present Value of $101 million. All
currency amounts are quoted in US dollars.
Brian Reilly, President and CEO of Titan Uranium stated: "The
results of the PFS confirm our view that Sheep Mountain is a high
quality project which exhibits robust economics. This is a
significant milestone in the development of the project which will
utilize conventional mining methodologies and state-of-the-art
equipment. We will continue to work with all stakeholders to
advance the project toward production."
Highlights include:
-- PFS estimates are based on estimated capital and operating costs for a
uranium mine using conventional open pit and underground mining methods
and heap leach recovery, with a maximum annual capacity of 1.5 million
lb;
-- The financial model is based on the long term uranium price of
$60.00/lb. as projected by The Ux Consulting Company March 2010;
-- Probable Mineral Reserve of 6,393,000 tons at an average grade of 0.111%
eU3O8, containing 14,186,000 lbs eU3O8;
-- Initial mine life: 11 years
-- Estimated capital cost: $118 million including allowances for
contingency and risk;
-- Estimated operating cost: $28.67 per pound recovered;
-- Estimated pre-tax Net Present Value (NPV) at a 7% discount rate: $101
million;
-- Estimated pre-tax Internal Rate of Return (IRR): 25%
-- Estimated pre-tax payback period: 5 years
Pre-tax NPV and IRR Sensitivities
--------------------------------------------
Selling price
(USD/pound)
--------------------------------------------
Discount rate $ 50 $ 60 $ 70
--------------------------------------------
5.0% $ 50M $ 129M $ 209M
--------------------------------------------
7.0% $ 34M $ 101M $ 169M
--------------------------------------------
10.0% $ 17M $ 70M $ 122M
--------------------------------------------
IRR 14.0% 25.0% 35.0%
--------------------------------------------
Sheep Mountain Project:
The uranium deposits which form the Sheep Mountain project are
hosted by sandstones and conglomerates of the Eocene Battle Springs
formation. The style of mineralization can be generally classed as
"roll front".
Mining on the Sheep Mountain property started in 1956 and
continued in several open pit and underground operations until
1982. The Sheep I shaft was sunk in 1974, followed by the Sheep II
shaft in 1976. Production from the Sheep I shaft to 1982 is
reported to be 312,701 tons at an average grade of 0.107% U3O8. In
1987 an additional 12,959 tons at 0.154% U3O8 were produced,
followed by 23,000 tons at 0.216% U3O8 in 1988. There has been no
production from the Sheep II shaft. The Congo Pit was being readied
for development in the early 1980's but plans were never followed
through because of a major collapse of the uranium market.
Current plans include the development of both the Sheep I and
Sheep II underground mines, with access from twin declines. Haulage
to the surface will be via a 36-inch conveyor belt system. At its
peak production, the underground mine will produce approximately
1.0M pounds U3O8 per year. Also the Congo Pit will be developed,
producing an average of 500,000 pounds U3O8 per year. Recovery of
the uranium will include heap leach pads, using H2SO4, and a
conventional recovery plant, through to yellowcake production on
site.
Probable Mineral Reserve:
The Mineral Reserve estimate is compliant with CIM Definition
Standards on Mineral Resources and Reserves. Probable Mineral
Reserves are fully included in the total Indicated Mineral
Resources previously reported (Titan release dated March 4, 2010)
for the Congo Pit and Sheep Underground. This estimate includes
deletion of the portions of the mineral resource model which fall
within the historic mine limits and is fully diluted based on
minimum mining thicknesses appropriate for the selected mining
methods. The Probable Mineral Reserve is that portion of the
Indicated Mineral Resource that is within the current open pit
design or within the current underground mine design, as
follows.
Sheep Mountain Project Probable Mineral Reserve
----------------------------------------------------------------------------
Minimum GT Pounds eU3O8 Tons Average % eU3O8
----------------------------------------------------------------------------
Congo Pit 0.10 4,938,000 2,895,000 0.085
----------------------------------------------------------------------------
Sheep I and II 0.45 9,248,000 3,498,000 0.132
----------------------------------------------------------------------------
Total 14,186,000 6,393,000 0.111
----------------------------------------------------------------------------
As the operating costs per ton vary substantially between the
open pit and underground, it is appropriate to have separate grade
cutoff criteria for the two operations. A calculation of breakeven
cutoff grades for both the open pit and underground mines based on
current cost forecasts and a sales price of $60 per pound follows.
The costs per ton reflect operating costs only and do not include
capital write off. The calculation of breakeven cutoff grade allows
for a constant tail or loss in the mineral processing of 0.01%
U3O8.
Minimum Mine Cutoff
Breakeven Grade
Operating Cost U3O8 @ $60/lb
$/Ton Price
Mineral Processing $ 13.51
Open Pit Mine $ 19.28 0.037
Underground Mine $ 52.24 0.065
From this evaluation and other factors such as minimum mining
thickness, the mine design cutoffs were set as follows.
-- Open Pit
-- Minimum 2 foot thickness
-- Minimum grade 0.05% U3O8
-- Minimum GT 0.10 ft%
-- Underground
-- Minimum 6 foot thickness
-- Minimum grade 0.075% U3O8
-- Minimum GT 0.45 ft%
Congo Open Pit:
The current mine design for the Congo Pit includes typical
highwall heights in the range of 100 to 400 feet, and reaches a
maximum depth of 600 feet in localized areas in the southeast pit
corner. The open pit design employs similar design parameters and
mining equipment configurations to those used successfully in past
operations. Highwall design is based upon the performance of past
projects in the Sheep Mountain and Gas Hills districts, and
includes an average highwall slope of 0.7:1, which reflects the
average of a 10 foot bench width and a 50 foot wall at a 0.5:1
slope.
The Congo Pit is essentially a single open pit that will be
developed sequentially to accommodate the desired mine production
and allow for internal backfilling. This sequential schedule and
internal backfilling reduces the amount of double-handling of mine
waste material required to backfill and reclaim the mined pit
during the life of the mine.
The planned open pit has a total volume of 32,200,000 cubic
yards of overburden, from which an estimated 2,895,000 tons
containing 4,938,000 pounds of uranium oxide will be produced. The
stripping ratio of the pit expressed as cubic yards overburden to
cubic yards mined material is approximately 20:1, or expressed as
cubic yards overburden to pounds of uranium contained is
approximately 6.5:1.
Sheep I and II Underground:
Sheep Mountain has operated as a conventional underground mine
on three separate occasions under Permit to Mine No. 381C. The
planned mining method is a conventional method using a modified
room and pillar method, utilizing state of the art mining equipment
such as jumbo drills and seven cubic yard scooptrams for haulage. A
new double entry decline will be constructed starting at the
reclaimed Paydirt Pit and ending below the deposit. Haulage from
the mine will be accomplished via a 36 inch conveyor within one of
the double declines. The existing shafts will be used for
ventilation purposes only with exhaust fans mounted at both
locations.
Mineral Processing:
Western Nuclear Corp. (WNC) processed feed from Sheep Mountain
over a 30 year period from the early 1950's through the mid 1980's
at their Split Rock Mill which was located north of Jeffrey City
along the haulage road to the Gas Hills. WNC also processed Gas
Hills ores at their mill and operated a commercial heap leach in
the Gas Hills, as did Union Carbide Corp. (UCC). Historical and
published data indicates an acid consumption of 50 pounds per ton
H2SO4 and a loss for heap leaching of 0.008% U3O8. The current test
results are consistent with or better than historic experience with
respect to recovery, and acid consumption.
Acid is readily available locally from an acid plant located in
Riverton, Wyoming (some 60 miles from Sheep Mountain).
For the purposes of this study, a constant residue, including
soluble uranium losses, of 0.010% U3O8 and a sulfuric acid
consumption of 50 pounds per ton of mineralized material was used.
This assumption is conservative with respect to the recent test
work but representative of historic heap leaching experience with
similar mineralized material. With a lifetime average feed assay of
a 0.098% U3O8, this assumed total loss equates to a uranium
recovery of 89.8 percent. The soluble uranium loss in the rinsed
heap residue and the impurity bleed to the evaporation pond will
likely be on the order of 2 percent, suggesting a heap extraction
of about 91.8 percent.
Assuming no re-use of heap pads, there will be 100 heap leaching
cells, each with a capacity of 66,000 tons of material stacked to a
height of 25 feet over an area 40 feet by 100 feet. The mineral
processing rate will be 500,000 tons per year or greater. Although
the resource is primarily un-cemented sand, there will be a jaw
crusher with an open-circuit product of 6 inches. This product will
be conveyed to a cone crusher producing a nominal minus 1-inch heap
feed without screening. An inclined belt conveyor with automatic
sampler and scale will deliver crushed material to a stockpile with
a reclaim bin and belt feeder. Metered mineralized material from
the belt feeder will be conveyed to a small portable stacker for
distribution into heap cells.
The heap leach pads will be lined with a synthetic double liner
system with leak detection. A network of drain pipes and gravel
bedding convey the solutions which pass through the heap to lined
ponds by gravity flow. Solutions are distributed on the heap
through a piping network utilizing sprays for uniform application
of solutions. The heap pads are initially leached with concentrated
lixiviant. Leach solutions returned from the heap to the collection
ponds are regenerated with lixiviant as necessary and recycled
through the heap until the solution grades are enriched to suitable
levels for processing. Enriched solutions, referred to as pregnant
leach solution (PLS), are then delivered to the processing plant
for uranium recovery.
Further processing will use a standard flow sheet using solvent
extraction, through the production of ammonium diuranate,
precipitation, thickening, filtration and finally to drying and
yellowcake packing. All this will take place at the project
site.
Personnel:
At full production the Sheep Mountain Project will require
approximately 200 employees. Roughly 80 employees will be required
for operation of the open pit, heap leach and mineral processing
plant with the remainder required for the underground mine.
Capital Cost:
Initial capital costs are summarized in the following table.
Additional capital will be necessary for the construction of
additional heap pads and replacement of underground mine equipment
during the life of the project. The surface mine equipment has
sufficient life to complete the planned mining and reclamation
without replacement.
Capital Cost Summary:
----------------------------------------------------------------------------
Capital Contin Start
Expenditures: -gency Yr -3 Yr -2 Yr -1 Production Yr +1 Total
----------------------------------------------------------------------------
$1000's
----------------------------------------------------------------------------
NRC Licensing $ 1,260 $ 925 $ 1,050 $ 710 $ 3,945
----------------------------------------------------------------------------
Pre-Development
+ dewatering $ 1,640 $ 1,915 $ 800 $ 400 $ 4,755
----------------------------------------------------------------------------
Open Pit Mine
Equipment 15% $ 12,687 $ 12,687
----------------------------------------------------------------------------
Underground
Mine
Equipment
+ Decline 10-30% $ 11,534 $ 23,068 $ 11,534 $ 46,136
----------------------------------------------------------------------------
Office, Shop,
and Dry 15% $ 2,274 $ 2,274
----------------------------------------------------------------------------
Mineral
Processing
Plant 25% $ 10,924 $ 10,924 $ 21,849
----------------------------------------------------------------------------
Heap Loading
Crusher/
Conveyor 25% $ 5,044 $ 5,044
----------------------------------------------------------------------------
Heap Pads(ii) 25% $ 4,872 $ 4,872
----------------------------------------------------------------------------
Working capital $ 715 $ 715 $ 1,430
----------------------------------------------------------------------------
Warehouse
Inventory $ 500 $ 500
----------------------------------------------------------------------------
TOTAL $ 2,900 $ 2,840 $ 25,023 $ 61,194 $ 11,534 $ 103,492
----------------------------------------------------------------------------
After Year 1, additional capital investment, totaling
$14,177,000, will be required to add more heap leach pads and to
replace underground min equipment, giving a total capital required
of $117,670,000.
The total capital cost equals $9.00 per pound U3O8
recovered.
Operating Costs:
Open pit mining operating costs account for:
-- All earth moving costs related to excavation and placement including:
-- Primary stripping
-- Mining
-- Interburden
-- Preparation of heap base
-- Surface support equipment
-- Overall mine supervision including health and safety
-- Surface mine and heap leach reclamation costs
Underground mine operating costs account for:
-- All costs related to underground mine excavation
-- Conveyance of mined material to the surface for loading on the heap
-- Mine supervision, support and miner training
-- Underground development between mining levels and areas
-- Ventilation
-- Dewatering
-- Mine safety and ground control
Mineral processing operating costs account for:
-- All costs related to the operation of the heap leach
-- Heap loading
-- Heap leaching and liquid handling
-- Power and water use and handling
-- All costs related to processing of uranium bearing liquids from the heap
leach
-- Solvent extraction
-- Ammonia stripping and precipitation
-- Yellow cake drying and packaging
-- Power use
-- Mineral processing supervision and support
-- Radiation Safety and compliance
-- On site laboratory facilities
-- General supervision
Reclamation operating costs include:
Reclamation and closure costs have been incorporated primarily
into the open pit mine operating costs as the open pit and heap
leach reclamation represent the largest cost components for
reclamation. A specific allowance for decommissioning of buildings,
facilities, and equipment was not included as these costs will be
substantially offset by the salvage value for the same and/or the
facilities and equipment can continue in use for the mining and
processing of additional mineral resource either within reasonable
proximity to the Sheep Mountain Project.
The project operating costs are summarized in the following
table:
-------------------------------------------------------
$ per ton $ per pound
mined/processed U3O8 recovered
-------------------------------------------------------
Open Pit $ 19.28 $ 12.42
-------------------------------------------------------
Underground $ 52.24 $ 21.71
-------------------------------------------------------
Processing $ 13.51 $ 6.69
-------------------------------------------------------
Additional costs
(taxes/royalties) $ 5.00 $ 2.48
-------------------------------------------------------
From this, the average operating cost per pound U3O8 recovered
is $28.67.
Sensitivity:
Sensitivity of the projected IRR and NPV with respect to key
parameters is summarized in the table below. It is considered
unlikely that the heap recovery will vary by more than a 0.002 U3O8
loss based on current metallurgical test work and historical
production experience. If a variation in recovery occurs it is
expected to be favorable. The sensitivity analysis shows that the
project is not highly sensitive to minor changes in OPEX and/or
CAPEX. As contingencies were added to both of these items and as
costs were based primarily upon recent contractor and vendor quotes
it is considered unlikely that a variance in CAPEX and/or OPEX in
excess of 10% will occur. With respect to Mine Recovery, Mine
Dilution, and Disequilibrium Factor (DEF), production history
indicates that a positive variance may be expected. Management
and/or improvement in Mine Recovery and Mine Dilution are dependent
upon grade control and mining selectivity. The mine planning,
equipment selection, and personnel allocations for both the open
pit and underground provide for selective mining and tight grade
control. The grade control program will also be critical in the
recognition of chemically enriched mineralized zones. Finally,
selection of a $60/lb basis for this PFS is well supported by
current published pricing and published price forecasts predict
higher prices in the time frame that the Sheep Mountain project is
scheduled to be brought into production.
--------------------------------------------------------------------------
Parameter Change from Base Case Change in IRR Change in NPV
--------------------------------------------------------------------------
U Price 5 $/lb 5% $ 40 million
--------------------------------------------------------------------------
Mine Recovery 10% 5% $ 35 million
--------------------------------------------------------------------------
Mine Dilution 10% Reduction 5% $ 35 million
--------------------------------------------------------------------------
Heap recovery 0.002 U3O8 loss 1% $ 9 million
--------------------------------------------------------------------------
DEF 10% 6% $ 45 million
--------------------------------------------------------------------------
CAPEX 10% 3% $ 11 million
--------------------------------------------------------------------------
OPEX 10% 2% $ 15 million
--------------------------------------------------------------------------
The uranium quantities and grades are reported as equivalent
U3O8 (eU3O8), as measured by downhole gamma logging. This industry
standard protocol for reporting uranium in sandstone hosted
deposits in the USA has been validated for the Sheep Mountain
project by test drilling at the deposit, as well as by correlation
with previous mining activities. In the fall of 2009, five rotary
percussion holes were drilled on the property to study
disequilibrium. Downhole logging of the drill holes was completed
using standard gamma technology as well as a uranium spectral
analysis tool (USAT), both supplied by Century Wireline of Tulsa
OK. The USAT tool gives a direct measurement of uranium content and
therefore allows determination of the equilibrium state of the
uranium mineralization intersected in the hole. A total of 34
intervals were measured, showing an overall moderate positive
disequilibrium (thus the true chemical grade of the mineralization
is slightly higher than the equivalent grade determined by the
gamma tool). The results of the resource estimates were not
adjusted to account for this positive disequilibrium, and can
therefore be considered conservative.
Chris M. Healey, a Professional Geologist licensed in the State
of Wyoming and Chief Operating Officer for Titan, is the Qualified
Person responsible for the technical content of this release. Doug
Beahm P.E, P.G., President BRS Inc., is the independent Qualified
Person responsible for the preparation of the Preliminary
Feasibility Study.
About Titan Uranium Inc.
Titan Uranium's vision is to be a leading mid-tier
North-American uranium exploration, development and mining company.
Our mission is to create shareholder value by advancing quality
projects to production.
Our growth strategy is driven by three elements:
- Development: A pre-feasibility study has been completed at the
Sheep Mountain Uranium Project, Wyoming. The deposit contains a NI
43-101 compliant probable reserve of 14.1M lbs. of U3O8 (6,393,000
tons at 0.111% eU3O8).
- Exploration: The goal is to discover world class uranium
deposits by exploring over 1.5M acres of land in the proven
Athabasca and prospective Thelon Basins. Exploration programs are
also active in Utah and Wyoming.
- Consolidation: The Company is actively pursuing M & A
opportunities and focused on uranium-friendly jurisdictions such as
Saskatchewan and Wyoming.
Titan has gained market recognition for its ability to attract
strategic partners to participate in the exploration of its
properties. Japan Oil, Gas and Metals National Corporation and Mega
Uranium Ltd. are partners in current exploration programs managed
by Titan.
Titan is well-financed and ideally positioned to emerge as a
pre-eminent player in the uranium industry.
ON BEHALF OF TITAN URANIUM INC.
Brian A. Reilly, President
No stock exchange, securities commission or other regulatory
authority has approved or disapproved the information contained
herein. This News Release includes certain "forward-looking
statements". All statements other than statements of historical
fact, included in this release, including, without limitation,
statements regarding potential mineralization and reserves,
exploration results, and future plans and objectives of Titan
Uranium, are forward-looking statements that involve various risks
and uncertainties. There can be no assurance that such statements
will prove to be accurate and actual results and future events
could differ materially from those anticipated in such statements.
Important factors that could cause actual results to differ
materially from Titan Uranium's expectations are exploration risks
detailed herein and from time to time in the filings made by Titan
Uranium with securities regulators.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Contacts: Titan Uranium Inc. Investor Relations 306-651-2405 or
604-925-1810 306-651-5105 (FAX) ir@titanuranium.com
www.titanuranium.com
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