Azarga Uranium (TSX: AZZ; US-OTC: AZZUF) has released a preliminary economic assessment (PEA) for its 100%-owned Gas Hills in-situ recovery (ISR) uranium project in Wyoming, about 72 km east of Riverton.
The PEA envisions Gas Hills producing about 1 million lb. of triuranium octoxide (U3O8) per year for a total of 6.5 million lb. of U3O8 over a seven-year mine life.
Initial capital costs are expected to be US$26 million. The resulting after-tax net present value is estimated at US$102.6 million, based on US$55 per lb. U3O8 and using an 8% discount rate, with a 101% internal rate of return. (In mid-June, TradeTech's spot price for U3O8 was US$32.50 per lb.)
The early-stage study was based on 6.37 million measured and indicated tonnes grading 0.077% U3O8 for 10.77 million lb. contained U3O8 and inferred resources of 466,650 tonnes of 0.048% U3O8 for 490,072 lb. of U3O8.
The PEA "demonstrates robust economics and expands the future production profile of the company into the state of Wyoming, which has a long history of successful ISR operations," Blake Steele, Azarga's president and CEO, stated in a press release. The results from the PEA, he added, "further validate our company's strategy of developing low-cost ISR projects as we continue to progress our flagship Dewey Burdock project towards construction."
The company said that construction of the Gas Hills project would consist primarily of wellfields in four separate resource areas connected by pipelines to a single satellite plant containing ion exchange equipment used to extract uranium from wellfield fluids.
The ion exchange resin would then be shipped from the Gas Hills to Dewey Burdock in South Dakota, about 90 km southwest of Rapid City, for uranium stripping and regeneration, creating a dried yellowcake product.
At press time in Toronto, Azarga was trading at 27 ? per share within a 52-week trading range of 16 ? and 36 ?. The company has about 234 million common shares outstanding for a $63.1 million market capitalization.