Uranium Developer Deep Yellow Digging Deep In 2011

Published on Friday January 21 2011

Uranium developer Deep Yellow promises that the next 12 months will likely prove beneficial to the company, with the prefeasibility study on its Omahola project, in Namibia, due to be completed this year, and a likely initial resources estimate and scoping study results of a magnetite iron project on the same tenement.

MD Patrick Mutz tells Mining Weekly that the prefeasibility study on the Omahola uranium project, which was initially scheduled for release during December 2010, will be delayed owing to the discovery of a new uranium deposit, dubbed Ongolo Alaskite.

The Ongolo Alaskite deposit will add a third source of ore for the planned Omahola project processing plant, with the Inca and Tubas Red Sands (TRS) deposits providing the balance.

“This is mixed news; the good news is that we have another source of ore to add to our total resources, and that is always positive. “The bad news is that it will cause a delay in the completion of the prefeasibility study because we believe the new mineralisation at Ongolo has the potential to positively affect the prefeasibility study, but we need to demonstrate this with metallurgical testwork,” says Mutz.

He adds that preliminary tests on the new deposit suggest that it contains similar mineralisation to that found in the Inca deposit. However, Inca also contained magnetite, which can potentially be separated from the uranium ore during the processing for sale as a by-product.

An initial resource for the Ongolo Alaskite deposit is expected by the end of March this year and, if proven viable, the deposit will be folded into the Omahola project.

“Preliminary tests certainly suggest that [Ongolo] will fit nicely into the Omahola project, because it hosts very similar mineralisation to the Inca deposit.”

Once the viability of the Ongolo Alaskite deposit has been established, and the Omahola prefeasibility study has been completed, a definitive feasibility study on the project will be undertaken immediately, and will be completed within nine to ten months, says Mutz.

The Omahola plant, which is expected to start production in 2014, will initially produce at a rate of around 1 000 t, or around 2,2-million pounds of uranium a year.

The Inca deposit is estimated to host a mineral resource of 15-million Joint Ore Reserve Committee- (Jorc-) compliant tons, at 405 parts per million (ppm) uranium oxide (U3O8), for 13,4-million pounds contained U3O8.

TRS hosts an inferred resource of 10,7-million Jorc-compliant tons, grading at 158 ppm U3O8, and a measured and indicated resource of 3,2-million tons, grading 168 ppm.

Meanwhile, Mutz says that Deep Yellow has re-evaluated 2008 drilling which identified a 300-m intercept of magnetite iron near the Inca deposit.

Follow-up drilling, in 2010, has clearly identified a magnetite deposit, dubbed the Shiyela iron project, around 15 km south-west of the Inca deposit and closer to the export hub of Walvis Bay. Mutz says that the project is “taking on a life of its own”.

“It is at a point where we expect to have an initial resource on the iron magnetite in that area by the end of March. “We have done the initial testing, which has shown that the material can make a very high-quality magnetite concentrate suitable for export.”

While an initial resource is planned for the first half of 2011, Mutz notes that Deep Yellow will also be undertaking a scoping study on Shiyela during the year.

“We are not looking to shift our focus away from uranium to iron, but we can’t turn our backs on a nonuranium project that has the potential to significantly add value to the company’s bottom line. “So, if it develops into a stand- alone iron project, we will have to decide how best to deal with it so we can keep our focus on our uranium assets – this could mean a joint venture or spinning it off.” Deep Yellow will be attending the Mining Indaba 2011.

DEEP YELLOW & TORO ENERGY - EXECTION OF THE NAPPERBY OPTION AGREEMENT

CLICK Image below To Access
7th May, 2007 "Execution of Napperby Option Agreement"
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The legal framework for this agreement was 3 years,
and the legal binding date was from Announcement. 7th May, 2007
"Execution of Napperby Option Agreement".

Therefore, a decision WILL be made within the next few weeks from TOE management to further this project and purchase it from DYL.

Here are the Details As Per Announcement on 7th May 2007

* Should the area not be fully diverted to JORC standards by this time, 13.2 million pounds will be assumed.

* A reference against the spot price of 8% will be used OR capped between $6 pound and $4.5 pound. Current spot price by UxC is $41.50 and 8% of the spot price is $3.32. Therefore, if Toro choose to purchase this deposit they will still pay the lower bound of $4.5 per pound.

* The latest JORC from Toro which I could find was released on 3rd March, 2009 which equated to 7.39million pounds (using 200ppm cut-off)

* Therefore, under this agreement if TOE was to purchase Napperby they will need to pay for the 13.2million pounds at $4.50 per pound OR $59.4million. The agreement states this can be by any arrangement by cash or shares.


NEWS AWAITS
Early May 2010

Could be some good trading opportunity's Swing Trading DYL & TOE over the coming weeks .

DEEP YELLOW INVESTMENT ALERT - REMEMBER NAPPERBY

Attention Future DYL & TOE Investors

One Issue to re-consider when investing in Deep Yellow is the soon to be Implemented decision by Toro Energy regarding their J/V Napperby Exploration.




Toros/Deep Yellow's Napperby 2007 (3 Year)Acquisition Agreement .

If undertaken by Toro Energy it will require payment of approximately $57-$75Mill based on a sliding scale of $4.50P/Lb (if u3o8 spot price is $56.00P/Lb or below) based on a 13.2Mill Lb Jorc Napperby Resource, to which on all accounts looking over Napperby's drill results will be attained.

Note* Plus 2-3% royalty payments to both PDN & DYL

This will eventually require a Cash Payment by TOE, or more likely Cash Payment + Share Holding to DYL, so one should keep this in mind, when considering.

Should bolster DYL's Share price over the coming period if Acquisition of Napperby goes ahead.


3 Year Acquisition Agreement Due Approximately July 2010

Cheers from a Long Term Uranium Bull

Deep Yellow & Rio Tinto To Possibly Enter Iron Ore Deal

 

Uranium play Deep Yellow could potentially enter into an off take agreement with the Rio Tinto-backed Rossing Uranium to supply iron from its INCA deposit to the Namibian uranium operation.

Subiaco-based Deep Yellow said it has signed an agreement with Rossing Uranium, which is majority owned by Rio Tinto, to investigate the potential of supplying ferric iron to the Rossing uranium operation and enter into a commercial offtake agreement.

Portions of the INCA deposit in Namibia contain massive iron oxide that is either uranium poor or totally unmineralised and could be supplied to Rossing, which it will use in its processing plant, Deep Yellow said.

"If the iron product is suitable, early indications are that it is, then exploiting it will serve a number of purposes while detailed investigations into a uranium processing plant at INCA continue in conjunction with the required Stage Two environmental and other studies," the company said.

Deep Yellow has also applied for a mining licence for its Omahola project,  which contains the INCA and the Tubas Red Sand uranium deposits, despite not having completed a definitive or bankable feasibility study.

Deep Yellow said it had presented a case for exemption to Namibia's Ministry of Mines and Energy based on a two stage environmental clearance procedure where no chemical processing would initially occur on site.

It said high-grade uranium bearing mineralised sand from Tubas Red Sand could be trucked to nearby uranium producers, like Rossing Uranium, for treatment.

INCA Project

Mineralisation at INCA, which is located 30 km inland from the coastal towns of Swakopmund and Walvis Bay has characteristics of both metasomatic and magnetite (calc-silicate) skarn types which is distinct and different from the known lower grade alaskite hosted uranium mineralisation being mined at Rossing and on the projects controlled by other companies in the district and also the higher grade Rossing South discovery of Extract Resources which in part exhibits some similarities to the INCA mineralisation.

Although discovered by Reptile in December 2007, the initial drilling returned 115 metre at 229 ppm eU3O8 from 14 metre in diamond drill hole ADM 02 which is typical of the wide intersections of around 200 ppm as commonly found in alaskites.

Reptile’s technical team had determined that a grade closer to 400 ppm is required for a viable hardrock mining operation and therefore did not pursue this project until later when it was recognised that uranium mineralisation may well be controlled by later alteration systems and not necessarily only with the granites. RC drilling was then undertaken over an approximate 2 by 2 km area on a nominally 100 metre square grid to a vertical depth of 100 metre.

This drilling delineated an area of 300 by 500 metre within which a number of holes contained 400 ppm U3O8 or better close to the surface and which was deemed prospective and have potential for an open-cut mining operation.

Reptile then set about drilling out this potential pit area on a 50 by 50 metre grid in order to delineate resources down to a nominal depth of 100 metre. While this programme was underway it was decided to deepen two holes in the northern portion of the grid to test an airborne electromagnetic (AEM) anomaly at depth. This drilling led to the discovery of the INCA Deeps mineralisation with hole INCR139 returning 1,734 ppm U3O8 over 20 metre from 206 metre associated with massive magnetite. This hole ended in mineralisation due to excessive amounts of water curtailing the RC drilling but testing of the AEM anomaly had successfully discovered a zone of mineralisation towards the north that is tens of metre thick located approximately 200 metre below surface.

The mineralisation appears to be at least partly structurally controlled and occurs within a partly overturned fold or syncline. There is a 20 to 70 metre thick crystalline marble unit within the metamorphic package which, for all intent, is totally unaffected by the alteration associated with the uranium and iron mineralisation and occurs below the mineralisation. This marble unit is being used as a footwall marker and all previously drilled holes that finished above the marble marker are being deepened to intersect it. Where the mineralisation has not been intersected in the 50 metre spaced holes on the southern and western margins of the deposit, the hole spacing is being reduced to 25 metre.

Along with the drilling programme, metallurgical and other scoping studies have continued and a shortlist of consultants, who will undertake the detailed investigations leading to a Definitive Feasibility Study (DFS), is almost complete. It is anticipated that an announcement with respect to the successful group will be made during October 2009.

The conceptual/initial mine and production scenario that DYL has modelled is to combine ore from the Tubas Red Sand project with that from INCA to produce around 1,000 to 1,500 tonne per annum of U3O8 at a feed grade of +400 ppm. It is estimated that an initial resource of 8,000 to 10,000 tonne will suffice to fund this development while drilling will continue with a view to increasing the resource as regional holes indicate a much larger zone of alteration and mineralisation is present at INCA.

Heap leach trials have also been carried out in columns using a blend of 20% Tubas Red Sand and 80% INCA uraniferous magnetite which was acid cured and then agglomerated. The agglomerate essentially remained intact after 17 days of leaching and washing. All testwork has been completed on unscreened and uncrushed RC drill chips with excellent recoveries of above 80%. This would appear to indicate that milling, which is an extremely energy intensive and expensive step, may not be required.

Consistent drilling results are being returned above 400 ppm U3O8 grade that is required by in-house modelling to support an open-pit mining operation at INCA. 

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