14th December 2007
The capital cost to complete phase one of Uranium One’s Dominion Reefs uranium mine (Drum) project is estimated to be about 25% more than the 2006 feasibility study estimate of $180-million. Company president and CEO Neal Froneman tells Mining Weekly that changes in design, scope, material specifications and material prices, predominantly in the uranium plant, account for as much as 70% of the forecast overrun.
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Meanwhile, the operation’s under- ground mine development is running slightly behind schedule. In the nine months to the end of September this year, underground development achieved 9 047 m compared with the expected feasibility [figure of 11] 235 m.
Additional underground declines have been started and electro- hydraulic drill rigs have been deployed in the declines in an effort to hasten the rate of opening up the orebody for mining.
The plan for the Dominion project, a brownfield development project, consisting of the Dominion and Rietkuil sections and including two former uranium- and gold-mining operations, involves rapid build-up. This will be facilitated by the use of declines with mechanised development and multiple orebody access points.
COO Robert Van Niekerk says that the orebody lends itself to conventional narrow reef breast stoping.
The mining operation consists of three declines to a depth of 500 m below surface. Declines under construction are being developed with trackless equipment and the footwall development by means of a combination of hand-held drilling machines and trackless equipment.
He comments that the mine embodies an overall hybrid mine design with conventional stoping and ore being trucked to surface by rubber-tyred vehicles.
Drum’s first expansion phase, phase 2 of the project, will consider increasing production to 300 000 t/m. This will be achieved through two additional declines to depths of less than 500 m.
Production will again be increased to 400 000 t/m through a 1-km-deep vertical shaft.
The feasibility study for the 300 000-t/m expansion is currently being completed and will be submitted to the Uranium One board of directors by the end of the 2008 first quarter. The prefeasibility study for the first vertical shaft is also expected to be complete by this time.
Froneman says that the total budget for the development of phase 2, including the mine development and plant expansion, will only be made known on completion of the exercise. To date, expenses for the phase 2 expansion have included explor-ation of the area under consider-ation and the costs associated with the feasibility study.
PROCESSING TECHNOLOGY
The technology used to process the uranium will consist of a pressure leach circuit for higher extraction recoveries of up to 200 000 t/m.
The first of Drum’s two pressure leach circuit autoclaves was success- fully commissioned in October 2007, increasing recoveries from the entire plant. Nevertheless, Froneman says that the overall recovery will only be improved once the second autoclave, which is currently being commissioned, is successfully completed. The second autoclave, which should be commissioned by the end of this year, is expected to obtain higher recoveries up to a throughput of 200 000 t/m.
Drum phase 1 is planned to ramp up recoveries to 2,4-million tons a year by 2010.
The processing plant has a capacity of 2,4-million tons of ore a year and Froneman says it is the company’s intention to feed alternate surface sources to the processing plant to keep it operating at full capacity while underground production builds up.
He comments that recovery from this ore is directly related to the grade. At steady state, in 2010, the planned head grade of 770 ppm U3O8 will enable the realisation of a uranium recovery of 85%.
Uranium One has constructed an advanced uranium processing facility on the basis of existing infrastructure at its Drum mine, near Klerksdorp.
Underground ore, which is reduced in size through a conventional comminution circuit of crushing and ball milling, is passed through an atmospheric leach process followed by pressure acid leaching (PAL).
The PAL circuit incorporates the largest autoclaves in Africa, measuring 14 m long and 5 m in diameter. This high-pressure, high-temperature processing step reduces the required leach retention time to two hours and ensures uranium recoveries in excess of 85% at planned grades.
Downstream processing involves countercurrent decantation (CCD) and solvent extraction using pulse columns and conventional mixer-settlers. Pulse column technology has been proven successful and is necessary in achieving superior recoveries. To this extent, the solvent extraction also acts as a barrier to impurities, resulting in an exceptionally pure ammonia diuranate (ADU) product that is produced by precipitation with ammonia.
“Pressure acid leaching of uranium ores and extraction by solvent extraction is superior to the more conventional processes in respect of both recoveries and product quality.” Van Niekerk says that Uranium One’s first shipments from Drum to the converters all passed the stringent converter quality requirements. This is in stark contrast to lower-cost extraction processes that has resulted in product quality issues owing to iron carry-over.
CURRENT PRODUCTION
By September this year, some 86 835 lb of ADU, or yellowcake in the form of slurry, had been produced at Drum since production began on May 18. Froneman expects the operation to produce 200 000 lb of U3O8 by the end of the year.
The majority of the 86 835 lb has been calcined and, together with the production from the Akdala uranium mine, Uranium One now has more than one-million pounds of U3O8 in inventory. Froneman says that this amount is more than enough to honour all the company’s existing sales agreements.
The first shipment of U3O8 from Drum, which will be facilitated by commercial nuclear fuel trading and finance company Nufcor, is scheduled for December this year. Buyers include a number of nuclear power utilities in North America and Europe.
Froneman points out that Drum’s contracts stipulate market-related pricing at the time of delivery. The shipments of U3O8 from Drum to North American converters scheduled for December 2007 and January 2008 will be taken up by the power utilities from March 2008. As such, the price obtained from the power utilities will reflect the prices during this future period.
Uranium One’s average price received during the third quarter of 2007 averaged $115/lb, the highest of any existing producer.
SULPHURIC ACID SHORTAGES
The current global shortage of sulphuric acid, used in uranium extraction, could have an effect on higher costs of uranium production. The shortage is looming and could see the prices of sulphuric acid rising.
Froneman says, however, that the company could derive benefits from producing its own sulphuric acid in the future and that it is currently investigating the viability of such a project, although it is too early to comment on the feasibility of building such a plant in South Africa.
The pressure leach process consumes about half to one-third of the amount of sulphuric acid consumed by conventional atmospheric leach processes. Uranium One has, however, entered into long-term agreements for the supply of acid to the Drum uranium plant.
PROJECT FUTURE
Froneman says that the current long-term price of uranium of $95/lb makes the Drum project even more attractive than the original feasibility study, which was based on a uranium price of $46,5/lb and the exchange rate at the time, indicated.
“From an operational perspective, the higher uranium price results in resources that were not included in the production plan because of its marginality now becoming viable to mine. This additional resource, which has now become profitable, will increase the life of the operation and provide additional flexibility.”
Drum’s anticipated operating cost over the life of the project, based on 2006 money terms and inclusive gold sales, is about $14,5/lb. Ongoing capital expenditure costs are a few dollars for every pound of uranium produced.
Froneman says that the price of uranium would have to decrease from the current rate to less than $25/lb before the viability of the project is threatened.
Nevertheless, he views this as unlikely in the near future and estimates that uranium will reach $150/lb during 2008, but that the average price will be somewhat lower than this.
Edited by: Laura Tyrer