Having recently listed on the LSE, Neo Energy Metals, a new uranium and strategic metals focused mining and development company, which is advancing its flagship Henkries uranium project in the Northern Cape, is eyeing an inward African listing sometime this year, CEO Sean Heathcote, tells Modern Mining.
Located 80 km north of the town of Springbok, the Henkries project is an advanced, low-cost uranium project with a clear pathway to production. Following its listing on the LSE in November 2023, where it benefitted from global liquidity, Neo Energy is now eager for a secondary listing on the local bourse.
“We are committed to developing a long-term future in South Africa and a listing on a local exchange will give South Africans direct access to a uranium project developer.”
Discussing the LSE listing, Heathcote explains that it chose the LSE, which hosts a very small number of uranium companies, to bring Neo Energy to the market as the sole uranium exploration and development player listed on the main board.
Uranium bull run
While the uranium market faced several challenges in the past, given that during periods of resurgence the industry experienced two key nuclear power plant accidents, as well as the financial crisis of 2008, these days, the commodity’s fortune is on the rise.
“Nuclear incidents changed the course and appetite for the development of nuclear power stations, which subsequently impacted demand for uranium.”
The incidents included: the Three Mile Island in 1979, Chernobyl in 1986, and Fukushima in 2011, all of which impacted the development of the Henkries project at the time.
On a more positive note, Heathcote says there’s no better time than the present to be a uranium mine developer. He explains that the resurgence in demand for uranium and the commodity’s subsequent surging price profile is underpinned by the global drive for a transition to cleaner base-load energy.
“As governments make the jump from fossil fuels to clean energy sources, uranium is emerging as a fitting transition solution for base-load energy needs until the grid technology can be upgraded to handle renewables.”
According to Heathcote, the perception towards nuclear has changed dramatically, “to the point where the former head of Greenpeace, Patrick Moore, is now promoting nuclear as the new baseload fuel”, a pivot that further endorses the acceptance of nuclear energy as a suitable power source.
According to the World Nuclear Association (WNA), demand for uranium, which is used in nuclear reactors, is expected to climb by 28% by the year 2030 and nearly double by 2040 – this, as governments ramp-up nuclear power capacity to meet zero-carbon targets. Interest in nuclear power has gained further traction since Russia invaded Ukraine with several nations now looking for alternatives to Moscow’s energy supplies, the WNA’s biennial
Nuclear Fuel Report
“This is a great time to be developing uranium projects and, since 2018, there has been a massive drive for increased installations of nuclear reactors. In fact, there are an estimated 440 nuclear reactors currently powering power plants globally, with another +60 under construction and more than 100 in the planned phase.”
Heathcote adds that several governments are keen to revive nuclear power plants that were on care and maintenance, with Japan announcing the restart of all its nuclear reactors and the development of new reactors.
“At COP28, 21 nuclear power producing countries pledged to triple their installed capacity by 2050. Moreover, the US ban on Russian nuclear fuel means they will be seeking new sources of uranium outside of Russia, including from the African continent.”
Further to this, owing to challenges related to accessing acid and mining productivity, two of the world’s largest producers of uranium – Kazatomprom and Cameco – have lowered their near term production forecasts at a time when uranium demand is set to sky-rocket.
“With the resurgence in demand for nuclear power by nuclear generating countries, the WNA has forecast a deficit of around 30 to 40 million pounds of uranium by 2040, which includes demand emanating from the re-start of all new production, indicating demand for uranium will remain robust for several decades. As it stands, the uranium market is possibly the best it has been in the past 30 years.”
According to Heathcote, this fundamental shift in the clean energy market sees uranium prices hitting the sweet spot. “Since Neo Energy listed in November 2023, the price of uranium has rocketed from $50 a pound in October to over $105 a pound currently. Expectations are that the uranium market will be in a structural deficit for the next 20 to 30 years.”
Henkries Uranium Project
Discovered by mining major, Anglo American, in the early 1970s, the Henkries project was taken up the value curve by the diversified miner, which drilled some 12 000 metres worth of holes, 211 test pits and undertook 6 months’ worth of pilot plant tests work on acid and alkali leaching.
“Anglo American embarked on an extensive drilling programme in the region – we estimate the value of work undertaken to be as much as $30 million. The feasibility study produced showed the project to be attractive enough for Anglo American to be on the verge of establishing a uranium processing plant when the Three Mile Island incident occurred and subsequently devastated the nuclear energy sector with investment in uranium also taking a dive.”
The project was later acquired and upgraded by Niger Uranium, Namakwa Uranium and Desert Star respectively.
Neo Energy acquired the Henkries project, a 742 km² prospecting right in October 2021, which it believes to be one of the most advanced uranium assets capable of near-term production.
Since the acquisition, Neo Energy has raised sufficient funds to list on the LSE and advance the project.
Although the Henkries project is regarded as “small” by global uranium project standards with 4.7 million pounds of uranium in the ground, Heathcote argues that when coupled with surface samples of unanalysed material, the asset has a reserve base that is “probably closer to six million pounds in the ground”. The company is about to engage in drilling activities that are expected to lift the uranium reserve estimate to 10 million pounds.
“The small-scale nature of the Henkries project translates to a low capex requirement and a small footprint, with a further project benefit being that the resource is close to surface – with the bulk of the deposit between five and eight metres from surface, which negates the need for drilling and blasting. Essentially, it’s a matter of removing the overburden using a bulldozer. The total length of the current resource is roughly seven kilometres, which is less than 10% of the total strike length, where we anticipate there’s likely to be more uranium.”
Several prospective properties lie adjacent and around the Henkries project.
“Although we have identified a number of properties of interest in the area, we remain focused on developing the Henkries project, after which we will embark on expanding our footprint to either increase our production profile or the life of mine.”
Importantly, the Henkries project benefits from well-established key infrastructure, including power, water, and roads.
Aside from well-established road infrastructure, a 20 kVA powerline runs across the deposit. Moreover, the project is located just two kilometres from the Orange River and has a water pipeline that traverses the Henkries property.
The project is also surrounded by several communities that offer skilled labour options.
Advancing Henkries
The next step for the new kid on the mining block is to increase the size of the resource by drilling another 6 500 m, updating the mineral resource estimate (MRE) and the projects’ capital and operating costs, as it targets a development decision by the “end of 2024 or earlier”.
After completing a Preliminary Economic Assessment, Neo Energy will initiate a full feasibility study, which is scheduled for completion before year-end. An environmental impact assessment (EIA) will run in parallel and is earmarked for completion early next year, after which the company will apply for a mining right.
“After updating the PEA, we will be engaging with our key investors to determine their appetite for fast-tracking project development to significantly shorten the above timelines.”
Despite the DMRE’s snail’s pace in awarding mining licences, Heathcote remains optimistic, stating that “in our worst-case scenario, we anticipate the award of a mining right by 2025 and a move into construction and production shortly thereafter.”
Heathcote advises that the bulk of the project development will be undertaken by South African expertise, including drilling, engineering and project construction, which, he says, translates to investment flow into the country and in particular the Northern Cape, which is considered to be one of the least developed provinces in South Africa.
The company recently appointed Loni Gallant as Exploration Manager, bringing with her 20 years of mining industry experience, across commodities, including uranium, throughout Africa.
But does the attractiveness of the Henkries project translate to an appetite by investors to fast-track project development?
“As it stands, if we go to market with a project of this size, I believe it will be regarded as a highly feasible and economically viable project with robust returns. Moreover, we have options for ground in and around the region.”
Heathcote adds that there are also options to acquire land in Guinea, Zambia, Canada, and Namibia; however, the immediate focus is to upgrade the Henkries project and bring it into production before the company considers exploiting other opportunities.
“Following a decade long under-investment in the uranium sector, both the uranium market and Neo Energy’s advanced Henkries Uranium Project are well positioned to benefit from the robust rebound,” concludes Heathcote.
