White Canyon has confirmed that, based on the conditions in toll milling agreement, the Daneros mine is viable even at spot prices.
The agreement has a three year term with an optional two year extension and commences in January 2010. The execution of the toll treating agreement concludes the company’s participation in the ore purchase programme with only the first ore lot sold to Denison. Denison used samples from the first ore lot to conduct amenability tests and derive the processing variables necessary for the completion of a toll milling agreement.
Under the terms of the agreement, White Canyon will transport material produced to Denison’s White Mesa mill for processing of up to 55,000 tons per annum. The company will pay to Denison the costs to mill its ore, a capital charge and a toll milling fee per ton of ore, which will be partly linked to the long-term uranium price.
Processing will be scheduled by Denison and first processing of Daneros ore is expected in H1 2011, allowing White Canyon to meet expected delivery dates in H2 2011.
Initial production is expected to be sourced from the Daneros mine, which is located approximately 100km from the White Mesa complex and has been the source of material provided to date for analysis to derive processing parameters in determining this toll milling agreement. Additional production is expected to be sourced from the company’s Lark Royal, Geitus, Blue Jay, Marcy Look and Yellow Cat projects, which are also in proximity to the White Mesa mill.
The total tonnage will be negotiated at the completion of each 12 month production period for the subsequent full production year dependant on mill availability.
Peter Batten, managing director of White Canyon, said: “This toll milling agreement with Denison is testament to the fantastic work that our team has done over the past two years in transforming the company from an explorer at listing into a uranium producer. I wish to congratulate the team on this significant accomplishment and am confident that they will continue to deliver on our development and operational targets going forward.”
