Highlights of the Preliminary Assessment:
PAH has reviewed the SRK 2009 resource estimate and believes that it was prepared in accordance with accepted industry standards, sufficient for purposes of preliminary assessment.
The preliminary assessment mine plan was based on an underhand drift and fill mining method and assumed an external dilution of 22% and an internal dilution of 13% both at zero grade.
Initial metallurgical test work is ongoing. Results to date suggest that uranium recoveries of 90% and molybdenum recoveries of 65% can be achieved using conventional flotation and alkaline leaching circuits that would produce separate uranium (yellowcake) and molybdenum concentrates. The average annual production of concentrates would be about 627 tonnes of uranium oxide (U3O8) and 42 tonnes of molybdenum in molybdenite. Project economics in the base case analysis are based on these figures.
At a 12% discount rate, the pre-tax net present value (NPV) is estimated at $117 million.
Total operating costs are estimated to be $31 per pound of U3O8 over the mine life and during the first five years of production $17 per pound of U3O8. These costs include a byproduct credit for molybdenum of about $1 per pound of U3O8. In addition, during the life of mine there will be sustaining capital requirements of about $88 million. The operating costs above are exclusive of mineral royalties, which are estimated at $4 per pound of U3O8.
“We are greatly encouraged by the positive results of this Preliminary Assessment which puts a value on our high-grade Kuriskova uranium deposit,” said Dorian L. (Dusty) Nicol, Tournigan’s president and chief executive officer.
“An important purpose of the Preliminary Assessment is to determine the potential viability of resources at an early stage. It appears that the project could be developed using conventional mining and processing methods. Among the encouraging conclusions of the Preliminary Assessment are project payback within approximately one-third of the projected mine life and production costs substantially below projected long-term sales prices. Our next step is to prepare a Prefeasibility Study that will continue to define project parameters to a higher degree of confidence.”
The development of the Kuriskova uranium project could provide Slovakia with a secure source of uranium for around 30 years at its current consumption rate. This potential energy source is in line with the Slovakian Strategy of Energy Security.
Tournigan is also encouraged by the extent of uranium exploration and development activities in other European countries including Sweden, Spain, Finland and Hungary. “We believe this indicates the increasing importance of nuclear power generation and uranium mining in the European Union,” said Nicol.
Potential Opportunities
There are opportunities which may provide improvements and cost savings for the Kuriskova project including the following:
Tournigan is planning a surface infill drilling program with the objective of upgrading more of the inferred resource to the indicated category, at a higher grade than the current inferred resource. The 2008 drilling program more than doubled the indicated resource while significantly increasing the grade;
Tournigan intends to conduct further step-out exploration drilling where the high-grade mineralization is open along strike and at depth;
Additional geotechnical and hydrological studies are required to evaluate alternative mine designs which may improve costs and schedules for construction and mine production.
Financial Analysis
The Preliminary Assessment economic evaluation of the Kuriskova project was based on a pretax financial model. The following pre-tax financial parameters were calculated based on longterm uranium and molybdenum prices of $65.00 per pound U3O8 and $12.50 per pound of molybdenum in molybdenite:
32.8% IRR;
5.3 year payback on $156 million preproduction capital cost;
$117 million NPV at a 12% discount rate.
The project is financially sensitive to the amount of U3O8 which is produced per year. This is directly related to the tonnage and grade mined and processed annually as well as to plant recovery.
