As the world moves steadily away from fossil fuels for electrical power production and adopts clean nuclear as the best alternative, we will see the demand for large uranium deposits with significant upside in production such as the A-Cap Resources owned Letlhakane uranium project become an extremely important component of the nuclear builds.
Australian mining company, A-Cap Resources is excited about the large increase of new, better and upgraded uranium resource estimates from its continuing prospecting work at Letlhakane in the Central District, following the completion of a prospecting technical study completed during this year, the company CEO, Paul Thompson said in a statement.
A-Cap Resources is becoming well positioned in this important global demand. The company is reportedly now in a strong position to capitalize on a predicted increase in uranium price going forward as well as completing trial pits and pilot plant work as part of a bankable feasibility study to be completed in the first quarter of 2017. Construction of the mine is expected to commence in the first quarter of 2018.
An important catalyst aiding the expected increase in the uranium price increase is threefold, says A-Cap board chairman, Angang Shen. First, Japan is restoring nuclear reactors after the 2011 accident at Fukushima. Japan alone has an annual usage of 20 million pounds of uranium in its 54 nuclear reactors. Secondly, 66 new nuclear reactors are under construction worldwide, with 50% in Asia. Each reactor will use around 400 000 lbs of uranium per year.
Third, is the anticipated Chinese nuclear build offshore where China has also become the world leader in nuclear plant design and construction and is currently constructing or engaged in nuclear reactor supply contracts in South Africa, Kenya and the UK, with more expected later.
China accounts for two-thirds of all reactors under construction, while South Korea, Taiwan, Pakistan, India and Japan are building new ones. Vietnam, North Korea, Bangladesh, Indonesia and Thailand are all planning new ones.
It appears environmental concerns about uranium and its dangers involves a lot of misinformation because by comparison, coal burning is a 1800 technology that produces a lot of air pollution per kilogram of thermal coal for just 30 mega joules of energy when burnt . Yet you get 500 gigajoules of energy per kilo of uranium, which is over 10 000 more efficacious as a fuel and can be moved in tomorrow if the political will exist, says former A-Cap Resources CEO Andrew Tanks.
According to Shen, the Letlhakane uranium deposit is shallow, soft and amenable to inexpensive open pit mining using a mix of conventional and surface miners. Detailed studies have been completed to understand the effect of utilizing surface miners on the resource and understand the costs and productivity.
Extensive metallurgical test work has demonstrated excellent recoveries from acid leaching and supports a low cost heap leach processing route using solvent extraction to recover uranium. A drilling programme was completed in September 2014 focusing on shallow high-grade zones earmarked for early mining in the project life.
This drilling was designed to test the continuity and mine scale variability of mineralization in three main project areas: Kraken, Gorgon and Serule West, and to provide data for further resource modeling and mine planning. This drilling yielded excellent results and confirmed the presence and continuity of high grade mineralization within these areas.
Further metallurgical test work was completed to optimize the process design and provide geotechnical; geochemical and hydrological data for studies on heaps and waste products. Column leach tests of 2 and 4 meters were conducted at ANSTO labs in NSW, providing the basis for the Projects recoveries and processing costs.
On the other hand, the coal resources on our Bolau and Mea coal tenements add an extra dimension to A-Cap activities in Botswana. A maiden resource was announced at Bolau of sufficient tonnage to support a thermal power venture.
Discussions with third parties are currently underway to decide on the best way to progress these projects. The resource upgrade was completed using localized uniform conditioning (LUC) which takes into account mining and upgrade control selectively.
The drilling programme targeted the early optimized shekels which typically represent the earliest production potential and had highlighted some of the better uranium grade, which would be exploited early in the potential production.
The result of the drilling programme is said, increased confidence in these early production areas within Letlhakane, namely, Kraken, Gorgon South and Serule West. The total areas concerned covers 14 km long and 11 km wide and is divided into the aforementioned main prospecting areas.
The outcomes of the technical study that was disclosed to the Australian Stock Exchange (ASX) on the 12th September 2015, utilized the findings of the 2012 mineral technical resource assessment and findings to determine the results.
“Following the assessment and review, the 2013 resource estimate was found to be unsuitable for mining optimization studies”. In comparison, new prospecting assessment method LUC revealed “a notable grade increase over prior resource estimations due to the incorporation of mining selectivity and the assessment of recoverable grade.
“This is a positive outcome for the economics of the Project and will be used as the basis of future mine schedules, optimizations and financial modeling”, says Thompson. The resources contain more tones and more grades in recoverable proportion.
This year has been one of the most unpredictable in the resource sector in recent memory, where not one or two commodities have dropped in value but almost all have severely declined, says Shen. Most of the company’s important work has been completed at the Letlhakane Unranium Project. An incredible amount of technical work has been completed on the project which has culminated in the submission to the government of Botswana of a mining license application in August 2015.
The company’s planned activities for the 2016 financial year will focus on planning, appraisals and the development of the Letlhakane Uranium Project. A-Cap has successfully secured the funding necessary to complete the feasibility work required for a Mining License Application for the Letlhakane Uranium Project through the financial support of its shareholders.
Following the completion of the feasibility work, the Mining License application was submitted to the Botswana Department of Mines in August 2015, consistent with the Company’s strategy of preparing the project for early development and production so that we can take full advantage of an expected recovery in the uranium market and the forecast increase in the price of uranium.
“We have been successful in securing the funding necessary to complete the feasibility work required for a mining license application for our Letlhakane Uranium Project”. The current price of uranium has been flat, but A-Cap fully expects the Uranium market to turn.
With Japan restarting their nuclear program, commencing with the Sendai No. 1 Reactor, coupled with an additional 66 new nuclear. A-Cap has positioned itself to have the project ready to take advantage of a forecast supply shortage and a rising uranium price.
The technical study required for the Mining License application comprehensively incorporated all of the work completed to date, providing a strong framework for the development of the project, based on shallow open pit mining and heap leach processing to produce up to 3.75 million pounds of U3O8 per annum over an 18 year plus mine life.
The results of the study indicate encouraging project economics in a rising uranium market and highlight a number of distinct advantages with competitive CAPEX and OPEX cost estimates.
The Environmental and Social Impact Assessment (ESIA) was completed and submitted to the Department of Environmental Affairs (DEA) in May 2015 in line with the Botswana Government requirements. All major infrastructures is in place with the project located adjacent to a main highway, railway line, national power grid with water supply already identified and permitted, and enabling capital costs to be kept to a minimum.
Shen says the Letlhakane Uranium Project is one of the world’s largest undeveloped Uranium Deposits. The Project lies adjacent to Botswana’s main North-South infrastructure corridor that includes a sealed all-weather highway, railway line and the national power grid, all of which make significant contributions to keeping the capital cost of future developments low.
In August 2015, A-Cap submitted the Mining License application for PL 45/2004 (Letlhakane) to the Botswana Department of Mines. The application was based on the results of a technical study and financial modeling.
The technical study was based on shallow open pit mining and heap leach processing to produce up to 3.75 million pounds of uranium per annum over a mine life of 18 years, incorporating the most up to date metallurgical results and process route, optimized mineral resources, mining, capital and operating costs developed by feasibility specialists in Australia and internationally.
The technical study confirms that the Project has the right mix of a good resource, low capital and operating costs and is well positioned to be taken into early production, reaping the benefits of projected shortfalls in supply in the uranium market and forecast rising uranium prices.
The outcomes of the technical study released to the market in September 2015 highlighted the following: Positive economics based on forecast uranium average contract price Initial construction CAPEX of US$351 million Initial working capital of US$40 million, Pre-tax NPV of US$383 million at a discount rate of 8% and IRR of 29% Operating costs of US$35/lb U3O8 over first 5 years, approximately $40/lb U3O8.
The Technical Study results and production targets reflected in this annual report are preliminary in nature as conclusions are drawn partly from indicated mineral resources and partly from inferred mineral resources. The Technical Study is based on lower level technical and economic assessments and is insufficient to support estimation of ore reserves or to provide assurance of an economic development case at this stage, or to provide certainty that the conclusions of the Technical Study will be realized.
There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realized.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”