Uranium developer Paladin Energy, listed on the ASX, has announced improved economics to restart its flagship Langer Heinrich Mine (LHM) in Namibia following the completion of the first stream of the Pre-Feasibility Study (PFS1) examining the potential resumption of operations. The study has focused on a rapid, low capital and low risk restart at a production level of approximately 5,2 Mlb/a. The study has also identified an opportunity to increase production to 6,5 Mlb/a.
Langer Heinrich was transitioned to care and maintenance (C&M) in August 2018 due to the sustained low uranium price. Subsequently, Paladin completed a concept study in February 2019 that identified multiple options to reduce operating costs, improve process plant performance and potentially recover a saleable vanadium product.
Aerial photo of Langer Heinrich Mine taken in March 2018 (photo: Paladin).
Paladin commenced a two-stream Pre-Feasibility Study in March 2019 (PFS1 and PFS2) to improve the details of the Langer Heinrich restart plan and to pursue further improvement options to clearly present a compelling investment case. This included Paladin conducting: a study of numerous initiatives to reduce operating cost and to improve operability; approximately 16 200 m of resource verification drilling; an update of the mineral resource model for uranium and vanadium; and further de-risking of the rapid restart plan.
Paladin has now completed PFS1, which focused on confirming effective C&M plans, practices and costs, while also developing a more detailed plan to execute a rapid restart at Langer Heinrich in an improved uranium market.
Importantly, PFS1 has confirmed that Langer Heinrich could be back in production within 12 months of financing being in place. This assumes an appropriate return on investment for shareholders and that studies have been fully completed during the C&M period.
Paladin estimates the initial capital for the rapid restart to be US$80 million, including US$38 million for plant repair and improvement and US$42 million for working capital. This is consistent with the restart capital estimate from the concept study.
Upon restart, Langer Heinrich would have a production capacity on average of 5,2 Mlb/a while processing high and medium grade ores for approximately an eight-year period (after a 12-month ramp-up period) followed by a production capacity of 2,7 Mlb/a while processing low grade ores for approximately 12 years. This would result in an average life of mine AISC of approximately US$33/lb.
In addition, Paladin has identified opportunities to significantly debottleneck existing mining and mineral processing operations for a modest and discretionary additional capex of approximately US$30 million to achieve an increase in production capacity to 6,5 Mlb/a. This can be done during execution of the rapid restart plan and does not extend Paladin’s commissioning time of 12 months from a restart decision. This would initially target processing high and medium grade ore for approximately a six-year period. Processing of low-grade ores for a further ten-year period yields a production capacity of approximately 3,4 Mlb/a, resulting in a reduction in overall average life of mine AISC to US$29/lb, compared to Paladin’s aspirational AISC target of US$30/lb.
This improvement results from a review and reconciliation of ten years of operating history and data by an experienced and diversely skilled technical team, specifically mandated to identify opportunities in the operation by overlaying current best practice for optimising mineral processing and mining systems.
Opportunities that were identified in the PF1 plan include:
- increasing process plant surge capacity to enable the leach facility to operate at full rate as the primary bottleneck;
- increasing water storage capacity on site to avoid production interruptions from pipeline maintenance and supply disruptions;
- increasing automation to enable remote, semi-automatic monitoring and operation; and
- making numerous operational configuration and management changes that will enable the entire facility to increase rate and reliability to operate at its full potential.
The PFS1 mineral resource definition programme has been completed and has achieved its aims, which included drilling high grade mineralised zones to basement to confirm and ensure the mineral resource is included in the restart mine plan; and verifying the grade and characteristics of mineralisation that is beneath an original, above ground dry tailings storage facility to increase confidence of inclusion in the mine plan. It has also provided samples for the geo-metallurgical processing response testing programme, which has increased knowledge of the processing response of ores not yet processed, de-risking future production.
Paladin has declared a maiden vanadium mineral resource estimate as part of the updated Langer Heinrich mineral resource. Based on the updated mineral resource estimate, when mining was suspended in December 2016, there was 31,0 Mlb V2O5 remaining in the ground and, at the suspension of processing in August 2018, an additional 7,8 Mlb V2O5 contained in 30,8 Mt of medium and low-grade stockpiles giving a combined total of 122,1 Mt at 145 ppm V2O5 for 38,8 Mlb V2O5.
Outlining its next steps, Paladin says the PFS2 scope has been reduced to focus on completing in-progress test work and updating the pipeline of improvements for further development after Langer Heinrich is restarted.
The scope of the proposed rapid restart Feasibility Study (FS1) in FY2020 has also been reduced to focus on further optimisation and governance of C&M and the rapid restart plans. Completion of the full scope of feasibility study work to Paladin’s standards has been deferred to when restart is imminent. The feasibility study work was budgeted to take nine months (June 2020) with the reduced scope now expected to be completed in March 2020.
The estimated cost from commencement to completion of the Pre-Feasibility Study and the proposed Feasibility Study scope to be conducted in FY2020 is US$5,2 million, compared to an original budget of US$6,2 million for the PFS, a saving of approximately US$1 million, all fully funded from existing cash.
Commenting on the results of PFS1, Paladin CEO Scott Sullivan said: “The Langer Heinrich mine is a world class uranium asset and this study confirms Paladin’s key position as a first mover back into production in a recovering uranium market.
“Paladin has assembled a first-class team to conduct these studies and they have systematically reviewed in detail the entire Langer Heinrich production history and processes, challenging past practices where necessary and have brought in diverse experience from other companies and commodities to envision an exciting new future for Langer Heinrich.
“Achieving production of over 5 Mlb/a at a cost of under US$30/lb AISC and with a 12-month lead time on execution were key targets of the board and executive team and will see Langer Heinrich in an enviable position when uranium prices recover. This study continues to demonstrate the high quality and potential of the asset and provides a solid foundation for a confident and successful restart.
“We also believe there is the opportunity for further cost improvements progressively after restart and we are excited about the prospect of vanadium production in our future. We will continue to explore these opportunities, once the market shows signs of improvement.”
Langer Heinrich is located in the Namib Desert in Namibia, 80 km east of Walvis Bay and about 40 km south-east of the world’s longest running open-pit uranium mine, Rössing. It commenced production in 2007 with a capacity of 2,7 Mlb/a but subsequently underwent two stages of expansion to give it a capacity of approximately double this level.
Paladin owns 75 % of Langer Heinrich Mauritius Holdings Limited, with 25 % owned by CNNC Overseas Uranium Holdings Limited (CNNC) since January 2014. Langer Heinrich Mauritius Holdings Limited is the holding company of Langer Heinrich Uranium (Pty) Ltd which holds 100 % of the Langer Heinrich tenements.
