Uranium One commits to Honeymoon

19 December 2008

The Honeymoon mine in South Australia should begin production in 2010, following a fresh commitment from Canada-based Uranium One and an engineering contract with Ausenco.


Ausenco said that it has taken on an engineering, procurement and construction management (EPCM) contract for the project. From its newly established office in Adelaide it said the contract award follows the completion of the initial feasibility study, technical reviews and engineering program earlier this year.


Zimi Meka, Ausenco's CEO, said: "The contract award follows the conversion of initial front end engineering and design (FEED) work into a very strategic EPCM contract for Ausenco in one of potentially the future's largest energy sources, uranium. Our scope is to engineer and construct the uranium processing plant to produce uranium to a U3O8 state."


First production at Honeymoon, which will use the in-situ recovery method, is expected in mid-2010, later ramping up to 400 tonnes per year of U3O8. The remaining development is expected to cost A$70 to A$80 million ($50 to $56 million).


The award of the contract follows the establishment of a joint venture between Uranium One and Japan's Mitsui to develop Honeymoon, 75 km northwest of Broken Hill. Mitsui, now with 49% of Honeymoon, has the right to similar joint ventures for the Gould Dam and Billeroo deposits.


The development costs of Honeymoon will be borne in proportion to the two companies' respective shares in the joint venture. According to Uranium One, most of the A$104 million ($70.2 million) Mitsui paid for its share of the projects will be used to advance the development of Honeymoon through to commercial operation.




The science bit

The Honeymoon deposit itself occurs in porous sand of the Yarramba palaeochannel at a depth of 100-120 metres and extending over about 150 hectares. It has indicated resources of 2900 tonnes U3O8 at 0.24% - an average grade thickness (GT) of 0.42 metre percent (m%) U3O8 - with 900 tonnes U3O8 at a GT of 0.38 m% in East Kalkaroo adjacent. A drilling program in 2004 failed to extend these resources, which dampened plans for development. In January 2007, a ten-year export permit was granted, but some approvals from the state government are still pending.


Mineralisation at Billeroo West (including Gould Dam) in the Billeroo palaeochannel 80 kilometres northwest of Honeymoon is similar to that at Honeymoon. Following exploration in late 2004 of one kilometre of palaeochannel using prompt neutron fission technology, the indicated resource was stated as 2000 tonnes U3O8 at a GT of 0.33 m% or 0.12% U3O8. Much of the palaeodrainage system there is still untested.


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