On October 20, 2009, African Energy Resources Limited, an Australian company working in minerals exploration and development projects in Southern Africa, made an exciting announcement.
The press release proclaimed a ‘new area of mineralization confirmed at Njame South,’ a deposit located on their flagship Chirundu uranium joint-venture project.
“It’s very close to the existing resource at Njame and the significance of this is that it looks like we’re going to delineate additional resource at Njame South. We haven’t discovered how much it will be yet –that’s the aim of this drilling program,” Dr Frazer Tabeart, African Energy’s Managing Director tells IRJ.
“Once we have assays from the remaining outstanding holes, we’ll be able to put together a resource estimate for the Njame South deposit. That then becomes part of the potential mining inventory for the Njame project.”
It’s certainly an impressive mining inventory too, with this announcement being the latest in a long line of great news on the project.
“It’s an important part of our expansion program that allows us to design a ten-year project life,” Tabeart says.
IRJ spoke with Tabeart about the planning and progress of the Chirundu project, African Energy’s goals for expansion and the host of other exciting efforts in the pipeline.
A Chirundu project overview
“Chirundu is a joint venture between African Energy and another Australian company, called Albidon Limited. We share a number of common directors and shareholders, so there is a long-term relationship there,” Tabeart explains.
“African Energy has a 70 per cent equity share in the project and, last week, we had our mining license approved for the project, so we’re quite a long way into our permitting task list as well. On that project, we have discovered two uranium deposits, one called Njame and one called Gwabe.”
Combined, Njame and Gwabe have a uranium oxide resource just shy of nine million pounds. “Those two projects form the basis of the bankable feasibility, study which is about halfway complete,” Tabeart says.
“Our proposal there is to construct a mine and processing facility at the Njame deposit, mine that deposit first, then process the uranium ore through low-cost, open-pit mining and very low-cost sulphuric acid heap leaching.”
At just 25 kilometres apart from one another, Tabeart explains that when Njame has been exhausted, the company will have everything in place to begin mining Gwabe.
“We’ll create an intermediate product at that mine site and then truck that to the Njame site for all of the downstream processing. It allows us to minimize the amount of initial capital investment required because we’re only purchasing, for example, the mining equipment which is needed to mine one deposit at a time rather than mining two at the same time; so you need half as many trucks and diggers and other machinery,” Tabeart explains.
“Because the intermediate product is quite a high value product, it allows us to feed that central processing plant from any deposit that we discover within about a 300-kilometre radius and that’s where two other projects start to take on significance.”
The first of these other projects is the Kariba Valley project—another joint venture with Albidon.
“We’re in our initial earn-in phase there; we’re getting very close to earning our initial 30 per cent interest and we can take that through to a 70 per cent interest, if we discover a deposit and take that through to a prefeasibility study,” Tabeart says.
“We’ve also embarked upon another joint venture with an Australian company called Aldershot Resources, which is literally adjacent to the Kariba Valley project. Both of those have a large number of prospects on them. If any of them were to turn into a mine, we could easily send that product through the central processing facility at Njame. We have the potential here to create a 10- to 15-year mining centre, a uranium mining province in Southern Zambia. I think that’s the really important context for what we’re doing here.”
African Energy: The next step
It goes without saying that African Energy Resources has stood out since its inception in 2005. Today this is truer than ever, as Tabeart explains there are not many companies seeking to put potential new uranium production into the market within the next couple of years.
“There aren’t many other companies out there who are at the stage that we’re at, with an almost complete bankable feasibility study. Due to the nature of the mines themselves, we’re looking at very short construction time,” he says.
“From the point where we make the decision to build the mine, which we think is probably about another 9 to 12 months from now, it is a relatively short time frame before commercial mining operation actually begins.”
African Energy is looking at potential production dating late 2011 to early 2012.
“That’s when most people are predicting that there’s going to be a shortfall in uranium for a two to three year period. We have the potential for production out there whilst there’s some upward pressure on prices,” Tabeart explains.
“The short-term goal is to define enough resource to support the 10-year mining license in Southern Zambia and there’s a major exploration initiative underway to do that.”
Looking long term, Tabeart says that the company is looking to get the Chirundu mining operation to develop cash flow revenue, “and also an appreciating share price which gives us the ability to leverage off that into future growth—be it mergers or acquisitions or organic growth.”
In addition, he talks of another project in Botswana which the company is currently drilling.
“Our goal there is to try and define enough resource to be capable of sustaining a standalone operation or joint venture with an adjacent project which has a significant resource,” Tabeart says.
With advanced stage exploration projects, solid shareholder and joint venture support and the various deposits within the Chirundu project perfectly positioned for expansion, African Energy Resources is set to continue as a standout company capable of great development for many years to come.