Figures for Mongolian uranium mine

17 October 2007

The Gurvanbulag uranium deposit in Mongolia could be developed to produce uranium oxide (U3O8) for an average cost of $24 per pound.

The figure is the result of a preliminary economic assessment of the deposit carried out for 100% owner Western Prospector Group by Micon International of Canada. It was based on resource estimates compliant with Canadian National Instrument 43-101.

Micon's report is centred on a plan to mine the deposit using inclined room and backfill methods. An on-site acid leach processing plant and nearby tails management facility were included, with half the mine tailings being used as paste backfill in the mine.

A production rate of 1500 tonnes of ore per day could be achieved, which would yield around 2 million pounds of U3O8 per year and exhaust the deposit in around ten years. Gurvanbulag has indicated resources of 13.6 million pounds of U3O8 at ore concentrations of 0.22%. Its inferred uranium resources are 8.6 million pounds at 0.15%.

The pre-production capital cost of the mine was put at $229 million.

Micon recommended that Western Prospector and itsMongolian subsidiary, Emeelt Mines, continue with a full feasibility study on developing a mine at Gurvanbulag. They should also continue exploring in the surrounding area in the hope of finding moreexploitable resources and extending the lifespan of any future mine.

The economics of any project would be sensitive to the international price of uranium. Western Prospector said that a 10% change in the uranium price would mean a 5% change in Gurvanbulag's rates of return. The projected average extraction price at the deposit was $24 per pound U3O8, which compares favourably to the current spot price of around $78 per pound and the recent high of $136 per pound, but less so to historical prices of $10-15 per pound.

Additional infrastructure needs identified for the possible development were a 117 km road and a new 110 kV line from a power station at Choibaisan. This would have the added benefit of connecting three local villages to the electrical grid.

Further information

Western Prospector Group

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