Western Uranium one to watch in manganese exploration in 2010
Perth-based Western Uranium (ASX: WTN), to be renamed Groote Resources Limited will have a busy manganese exploration program at its Groote Eylandt Manganese Project in the Northern Territory.
Perhaps not lost on all investors to date, Western Uranium owns a large tenement portfolio prospective for manganese adjacent to the world's third largest managanese producer and one of the world's largest high grade manganese deposits.
Western Uranium has six tenement applications including 1,722km², 57km² onshore including Winchelsea Island and 1,665km² offshore. The tenements are directly adjacent to BHP Billiton and Anglo American Corp's, Groote Eylandt Mining Company (known as GEMCO) world class manganese mine.
What sets GEMCO apart? It is the 9th richest mine in Australia, mining 1/5 to 1/10 the tonnage of its peers. 2009 profit was ~$1.1bil (for only 2.3mt mined). In short, and in perspective GEMCO is 7x more profitable than BHP’s iron ore mines for tons mined. Groote Eylandt remains one of the most profitable manganese mines in the world.
Hence, Western Uranium's tenements start to take on real interest, directly adjacent as they are to GEMCO's operations. The J-Deposit is 200m from Western Uranium's tenement boundary.
GEMCO immediately pegged surrounding Western Uranium's tenements.
Western Uranium's target geology is based on GEMCO. The tenements are Cretaceous sedimentary (stratiform) deposit, and a continuation of GEMCO’s orebody. Strike length exceeds 20km N-S and the ore bed ranges up to 11.5m thick. It averages 3m, with little to no overburden.
A$38 million market-capped (pro-forma) Western Uranium's prospective areas of offshore tenements are typically in less than 5m water depth. Over 300km² of highly prospective ground are directly down dip of GEMCO's orebody.
The company has lofty ambitions looking to rapidly grow to a world class explorer/miner, with an exploration target of 50Mt+ grading 35-50% Mn with low impurities. And, a mining target of 2-3mtpa DSO aiming high to become one of the world’s largest manganese miners.
At this level it would be equivalent to $1-1.5B pa in revenue for the company. There is still much exploration to be done by Western Uranium/Groote Resources to get anywhere near that. The company has cash of $3.4 million (post placement) for an exploration program.
Market capitalisation has jumped considerably since the sale and purchase agreement in November 2009 to acquire Reflective Minerals Pty Ltd's five mineral exploration licenses and an Authorisation under section 178 (“ELA’s”) covering approximately 1723 km² of shallow marine terrain immediately surrounding Groote Eylandt, plus Winchelsea and Connexion Islands in the Northern Territory
With 94% of manganese used as a ferroalloy in steel making, with no known substitute, manganese is a fair barometer of the health of global and in particular Asian economic growth. 75% of Manganese metal is produced from just four countries; South Africa, Gabon, Australia and China.
Australian has four operating manganese mines: BHP Billiton's (ASX: BHP) Groote Eylandt mine, Consolidated Minerals' (private company), Woodie Woodie mine, Om Holdings' (ASX: OMH) Bootu Creek mine and Mesa Minerals' (ASX: MAS) Ant Hill mine.
Other Australian manganese companies include: Shaw River Resources (ASX: SRR) with the Baramine manganese deposit in WA and Aurora Minerals' (ASX: ARM) Capricorn South deposit in WA.
Western Uranium has appointed Barrie Bolton as its principal geological advisor to their manganese project near Groote Eylandt in the Northern Territory. Mr. Bolton’s experience with manganese extends over 30 years and includes 18 years either advising on, or managing BHP’s exploration program for manganese, worldwide.
In summing up his appointment he said, "the adjacent land and shallow marine areas adjoining this remarkable deposit (at Groote Eylandt) must represent one of the best areas in the world for the discovery of high grade manganese in a location ideally suited to meeting the rapidly growing demand from China and the other nations of Asia."
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