Toro Energy Limited (ASX:TOE) is an Australian uranium company with a highly prospective project development and exploration portfolio.
Toro Energy (ASX: TOE) is well on its way towards becoming Western Australia’s first uranium producer after receiving Federal environmental approval for the Wiluna Project.
“Wiluna is the first new Australian uranium mine since mid 2009 to receive Federal and State government approval,” said managing director Dr Vanessa Guthrie who added that first production was expected in 2015.
This is subject to successful finalisation of financing and marketing arrangements as well as design and cost work of the $269 million uranium mine.
A final investment decision is expected in the second half of 2013.
“Completion of the environmental approvals delivers Toro the regulatory certainty needed to fully underpin our negotiating capacity and to now advance commercial financing arrangements and product off-take agreements with potential partners,” she added.
“It also provides a clear pathway to complete detailed engineering design, infrastructure and cost estimates for Wiluna.”
This work had been placed on hold when Federal Minister for Sustainability, Environment,
Water, Population and Communities Tony Burke had initially deferred his decision on the project in November last year and then initiated a second deferral in December.
Gutherie confirmed that Toro’s ongoing engagement with potential project finance partners in a negotiating environment was “very encouraging”.
“Wiluna is one of the few projects in the world capable of bringing new uranium production to the market in the medium term, when a shortfall is predicted from 2015 onwards,” she said.
“The mine comprises two deposits (Lake Way and Centipede) processing 1.3 million tonnes per annum to produce approximately 780 tonnes of uranium oxide concentrate based on up to 14 years of mine life.
“The rigorous government assessment of the mine proposal at both State and Federal level has demonstrated that all impacts can be safely and sustainably managed.
“During the assessment process, the public had four opportunities for input and Toro consistently takes into account the views of the community and government agencies in the Company’s continuing design work.
“We are confident the mine will deliver important benefits to the local and regional communities in particular, including training, employment and business development.
“The Company continues to negotiate a mining agreement with Traditional Owners through which
Toro proposes to provide financial support for a range of Aboriginal community benefits.”
The approval comes with 36 conditions that Burke said would guard "against any negative impacts from radiation or to groundwater and surface water, and include precautions to ensure that once the mine is closed, the site is safe for humans and animals, and is non-polluting".
Toro has completed the first phase of the Wiluna Definitive Feasibility Study and has finalised the processing design, major equipment lists and plant layout.
Significant testwork, including a full scale hydrometallurgical pilot plant, resource evaluation and water barrier trials carried out over the last two years, have proven that a conventional alkaline tank leach process is the most effective economic recovery available.
The second phase of the DFS – consisting of engineering, infrastructure design and final cost estimates – is planned for completion this year.
Toro’s economic modelling for the Wiluna mine based on the process engineering from the DFS, pilot plant testwork and revised mine plan, indicates a reduced capital cost estimate of A$207 million in direct costs, $31 million in EPCM and $31 million in contingency for a total of A$269 million.
C1 cash operating costs are currently estimated at US$37 per pound of U3O8.
Wiluna has a current Measured, Indicated and Inferred Resource of 54 million pounds of U3O8 in five calcrete deposits with significant upside in currently held but under-developed exploration tenements located throughout WA’s northern goldfields.
The largest of these deposits, Centipede and Lake Way, currently form the basis of the Wiluna resource that will be mined in a shallow surface strip mining operation.
The project would process 1.3 million tonnes per annum of ore to produce about 820 tonnes of uranium oxide concentrate.
With the approval, Toro is set to become Australia’s sixth uranium producer and one of the few new projects in the world capable of production in 2015.
The attractive capital and operating costs also make for a high likelihood that the project will receive the financing and offtake it requires.
Dr Guthrie described the negotiating environment with potential project financial partners as “very encouraging” - this provides another strong signal.
Wiluna will be one of the few projects in the world capable of bringing new uranium production to the market in the medium term, when a shortfall is predicted.
To state the obvious, the approval is game changing, the company’s current share price of about A$0.13 leaves plenty of room for the market valuation to grow.
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