Positive PEA for Virginia Energy’s Coles Hill

An aerial view of Virginia Energy Resources' Coles Hill uranium project, 10 km northeast of Chatham, Va.An aerial view of Virginia Energy Resources' Coles Hill uranium project, 10 km northeast of Chatham, Va.

VANCOUVER — A preliminary economic assessment (PEA) concluded Virginia Energy Resources’ (VAE-V) Coles Hill uranium project could profitably produce 2 million lbs. of yellow-cake annually, but the project’s future depends on whether the state of Virginia lifts the current moratorium on uranium mining.

The PEA investigated several mining and processing methods for Coles Hill and determined the mine should be an underground, sublevel stoping operation, tapping into 3,000 tonnes of ore daily. Alkaline leaching would then recover 83% of the uranium contained in the ore.

To build the mine should cost US$203 million, including a 25% contingency.

Current resources support a 35- year mine life for a Coles Hill mine, during which time the operation would produce 2 million lbs. U3O8 annually at an average cash cost of US$36.83 per lb. Based on a uranium price of US$65 per lb. and a 7% discount rate, the project carries a net present value of US$404 million and should generate a 36.3% internal rate of return. The mine would pay back the initial capital investment in less than three years.

Coles Hill is home to two uranium deposits. Both deposits continue to surface, which means their upper portions are amenable to open-pit mining. Minable zones below open pit depths are generally continuous for more than 35 metres vertically. Because of this continuity, primary stoping should extract 70% of the resource while pillar retreat should recover another 20% of the deposit.

Currently, the resource stands at 34.2 million measured and indicated tonnes grading 0.103% U3O8, for 77.4 million lbs. contained uranium oxide. Virginia Energy says it expects to grow that resource, as much of the historical drilling only targeted mineralization at open-pittable depths; both deposits remain open at depth. In addition, the deposits remain open along strike. That includes the area between the zones, which was historically protected by mining leases that prevented surface exploration so as to preserve the Coles Family homestead. Now the company says that, with the decision to pursue underground mining, it will consider exploration drilling in the protected area for underground tonnage.

As for the moratorium on uranium mining in Virginia, there has recently been some progress. The state government has engaged the National Academy of Science to complete a study on the safety of uranium mining for the state, which should be complete by the end of 2011. If the study’s conclusions are positive towards mining, the state would be in a position to consider lifting the ban.

Virginia Energy certainly provided some positive incentive for such a move with its Coles Hill PEA, saying the mine would sustain some 325 permanent jobs and contribute millions of dollars to the county’s government. The company also pointed out that roughly 37% of the power generated in Virginia comes from nuclear reactors, which cumulatively consume 1.7 million lbs. U3O8 each year. As such, a Coles Hill uranium mine could allow the state to become self-sufficient with respect to its nuclear fuel requirements.

The PEA results gave Virginia Energy a healthy lift: the company’s share price added 9.5¢ or 33% to reach 38¢, a new 52-week high. The company’s year-long low is 14¢. Virginia Energy has 77 million shares outstanding.

Print

 

Republish this article

Be the first to comment on "Positive PEA for Virginia Energy’s Coles Hill"

Leave a comment

Your email address will not be published.


*


By continuing to browse you agree to our use of cookies. To learn more, click more information

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.

Close