Aura Energy to upgrade uranium and estimate vanadium resources


After a massive year of buildup on the already viable Tiris uranium project, Aura Energy shareholders are seeing first-half returns as AEE prepares for a regional exploration program aimed at improving resources as the company continues to move from a uranium explorer to a producer.

Aura Energy (ASX:AEE) fully licensed The Tiris uranium project is now positioned to upgrade inferred resources to the measured and indicated categories by reducing the drill hole spacing in the Tiris East project area.

Drilling is expected to begin in the first half of the year on the current inferred resource areas within the proposed plant site catchment area as the company considers its transition to becoming a separate uranium producer whole.

The previous resource drilling program in 2017 focused on converting inferred resources to measured and indicated resources to support the Tiris Definitive Feasibility Study, with areas not included in the 2017 program to be upgraded following similar drilling under the new program.

Aura will cover Tiris West resources in a separate future program.

The Uranium Renaissance

The once-forgotten feedstock is selling for over US$44/lb on the spot market, down slightly from the over US$50/lb uranium reached last year, driven by uranium purchases. investments out of the spot market by the emergency of the Sprott Physical Uranium Trust.

But with prices up around 40% since the start of 2021, spot and futures prices are on track to reach US$60/lb – a level widely seen as the margin beyond the US$60/lb. incentive for new production.

Vanadium resource

Aura is also deeply committed to completing a resource estimate for the vanadium contained in the project, which could reduce cash outlays on a project that AEE has already designed to reduce operational costs.

“We are pleased to announce the proposed resource enhancement program, aimed at expanding Tiris’ uranium resources while simultaneously advancing toward uranium production,” said interim managing director Will Goodall.

“We will focus on expanding existing measured and indicated resources and locate additional exploration targets that have been under-explored.”

Tiris Uranium Project

The Tiris Uranium project in Mauritania currently has a resource of 56 million pounds of U3O8 after a 10% upgrade in August 2021.

Tiris underwent a recently updated definitive feasibility study to align capital estimates with 2021 figures, taking into account the impacts of the global COVID-19 pandemic, promising a robust economy with value after-tax net present value and an internal rate of return – the two measures of a project’s profitability – estimated at US$79.9 million and 22%, respectively. The project is viable at the current uranium price and well positioned to benefit from any market upside.

Capital expenditure is unquestionably US$74.8 million, while cash costs are expected to be only US$25.43/lb U3O8, promising strong returns for shareholders. given the strength in uranium prices, with analysts looking at prices this year that easily double AEE’s cash costs.

Abduction offers, water drilling bonus and cash on tap

Aura has also secured a key part of the construction financing for the project through a drawdown financing agreement with London-based Curzon Uranium Trading, which has been finalized in October last yearwhich complements the uranium removal agreement signed with Curzon in 2019.

The US$10 million financing agreement includes an additional US$10 million facility which may be accessed at the lender’s discretion.

In addition, water drilling carried out at the end of last year confirmed the presence of water on the project, which will help keep operating costs low.

Work is also underway to further expand resources and reduce operating costs.

On the ESG front, the company completed the first stage of its Net Zero Emissions Study, which confirmed that Tiris would generate total Scope 1 and Scope 2 baseline greenhouse gas (GHG) emissions of 16,600 tonnes of carbon dioxide equivalent (tCO2e) per year. , or about 0.15% of Mauritania’s total GHG emissions.

A transformational restructuring of the board of directors

Aura recently revitalized its board of directors with a focus on uranium production by appointing Phil Mitchell as chairman, and Warren Mundine and Bryan Dixon as non-executive directors. Dr. Will Goodall was appointed as interim CEO in January 2021 to maintain the momentum of the project while the search for a permanent CEO is undertaken.

He also plans to spin off its Tasiast South Gold and Base Metals project held by its subsidiary Archean Greenstone Gold via a planned IPO with a cash distribution to existing shareholders.

Goodall said Stockheadthe timing and attractive capitalization – relative to AEE’s legacy uranium peers – offer strong upside potential for investors.

And it’s all set for early 2022, bringing together a year-long strategic execution that will give shareholders the opportunity to realize value from a project that has flowed seamlessly and quietly under the radar.

This article was developed in conjunction with Aura Energy, a Stockhead advertiser at the time of publication.

This article does not constitute advice on financial products. You should consider obtaining independent advice before making any financial decisions.

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