REG - Aura Energy Limited - FEED study confirms excellent economics for Tiris
28/02/2024 07:15
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RNS Number : 7581E Aura Energy Limited 28 February 2024
28 February 2024
FEED study confirms excellent economics for
the Tiris Uranium Project
Tiris Uranium Project is a near term, low cost, long life mine with
exceptional further growth opportunities.
KEY POINTS:
· Front End Engineering Design ("FEED") study confirms excellent
economics and capital efficiency to develop Tiris into a globally significant
near-term uranium operation:
o NPV(8%) of US$366 million
o IRR of 34% post tax and 2.5 year payback
o Uranium price of US$ 80/lb U(3)O(8)
· Average base case production of 1.9Mlbspa U(3)O(8) over a 17-year
mine life
· Shallow free dig open pit mining and beneficiation delivers a low
cost, high-grade leach feed averaging 1,997ppm U(3)O(8) for first five years
and 1,743ppm U(3)O(8) life of mine
· Low AISC of US$34.5/lb U(3)O(8) demonstrates strong margins
· Efficient capital cost of US$230 million supporting a long mine life
· Final Investment Decision expected late in 2024 for an 18 month
construction timeline to first production
· Processing facility designed for future expansion beyond 2Mlbspa
· Extensional drill program underway targeting further resource growth
Aura Energy Limited (ASX: AEE, AIM: AURA) ("Aura" or "the Company") is pleased
to advise that the recently completed FEED study for the Tiris Uranium Project
("Tiris" or the "Project") in Mauritania has confirmed excellent economic
returns. The study also updated the technical and financial parameters of the
2023 Enhanced Feasibility Study 1 (#_ftn1) ("EFS").
Importantly, the FEED study has confirmed the adoption of a 2Mlbspa U(3)O(8)
processing plant as the base case for the Project development confirming
globally significant scale of the operation. The FEED study reinforces that
the Project is a near term, low cost and long life mine.
The exploration drilling program currently underway 2 (#_ftn2) , aimed at
expanding the Mineral Resources at Tiris East, aims to demonstrate the
potential to extend the mine life beyond the initial 17 years, as well as the
potential to expand production significantly above the current base case of
2.0 Mlbspa U(3)O(8) production rate.
To view the Company's most recent corporate presentation, please click here:
http://www.rns-pdf.londonstockexchange.com/rns/7581E_1-2024-2-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7581E_1-2024-2-28.pdf)
Aura's Managing Director and CEO Andrew Grove said,
"The FEED study clearly demonstrates that Tiris will be a low-cost, high
value, near-term uranium producer with the ability to scale in a very strong
uranium market. The market is in structural deficit and likely to continue
that way for an extended period. The strong economics at Tiris are supported
by the simple, low risk mining and beneficiation that delivers the high-grade,
1,750ppm to 2,000ppm U(3)O(8,) ore to the leach plant and there are no
requirements for crushing or grinding the ore. These high grades are only
matched by the deep underground mines in Canada and exceeding any current or
proposed open pit uranium mines worldwide."
"The Board believes the current exploration drilling is likely to deliver near
term resource growth around Tiris East. This will enhance the strong economics
delivered in the FEED study, and also provide optionality to further expand
the production rate beyond the current design of 2Mlbs pa U(3)O(8) and extend
the mine life."
"Mauritania is open for business, and we look forward to working with the
government and all our stakeholders to develop the Tiris Uranium Project."
Key highlights and outcomes of the FEED Study:
The FEED study progressed the design of the processing plant and
infrastructure to enable a detailed capital and operating cost estimate to be
prepared, with an accuracy level of between +10% and 15%.
• Robust base case project financial economics demonstrated by
post-tax NPV(8) of US$ 366M (A$ 523M) IRR of 34%, and a 2.5 year payback at
realised uranium price of US$ 80/lb U(3)O(8)
• At uranium prices of US$ 100/lb U(3)O(8) the economics increase to
post-tax NPV(8) US$ 596M (A$ 851M) and IRR 49%
• Initial mine life of 17 years producing an average 1.9Mlbspa
U(3)O(8) from the 2.0Mlbspa capacity process plant
• Life of Mine (LOM) uranium production in this study was 30.1Mlbs
U(3)O(8)
• 91% Measured and Indicated Mineral Resources in mining schedule
during the first five years, LOM Inferred material totals 33% mostly beyond
ten years in the mining schedule
• The open pit mining is a simple, low-risk, shallow, free digging
operation without the need for crushing and grinding
• Beneficiation of the ore delivers a high-grade leach feed
averaging 1,997ppm U(3)O(8) (first 5 years) and 1,743ppm U(3)O(8) (LOM) at a
very low average cost of US$ 8.1/lb U(3)O(8)
• AISC has increased to US$ 34.5/lb U(3)O(8), an escalation of 16%
on the 2023 EFS estimate(3). This is largely due to a 40% increase in the fuel
price
• CAPEX of US$ 230M, an escalation of 29% on the 2023 EFS
estimate(6) as a result of industry wide escalation and increasing the
filtering and water treatment capacity to allow for greater flexibility and
lower risk when operating. CAPEX forecast includes a 12% contingency
• Uranium production planned within 18 months of Final Investment
Decision
• FEED result confirms and delivers an upgraded process design to
de-risk the Project
• Exploration drilling underway to expand Mineral Resources beyond
the current 59Mlbs U(3)O(8) 3 (#_ftn3) with a defined Tiris East Exploration
Target of an additional 8-32Mlbs U(3)O(8) 4 (#_ftn4)
• Modular design provides opportunities for further capital
efficient expansion and scalability
• The construction and operation of the Tiris Uranium Project will
deliver significant and ongoing benefits to the people of Mauritania
Units 2023 EFS 5 (#_ftn5) FEED FEED
Base Case Base Case Spot Price
Uranium Price US$/lb U(3)O(8) $65 $80 $100
Valuations and Returns
Post-tax NPV(8) US$M 226 366 596
Post-tax IRR % 28% 34% 49%
Payback period Years 4.5 2.5 1.8
Cashflow Summary
Initial Life of Mine Years 16 17 17
LOM Production Mlbspa U(3)O(8) 25.5 30.1 30.1
Annual Production Mlbspa U(3)O(8) 1.6 1.9 1.9
Gross Revenue (LOM) US$M 1,562 2,257 2,818
Free Cashflow pre-tax (LOM) US$M 906 1,327 1,876
Margin (LOM) % 58% 58% 79%
Free Cashflow post tax (LOM) US$M 554 1,061 1,486
Unit Operating Costs
All in Cost US$/lb U(3)O(8) 35.6 42.1 43.2
All-in Sustaining Costs US$/lb U(3)O(8) 28.7 34.5 35.5
C1 Cash Cost US$/lb U(3)O(8) 25.2 30.1 30.2
Capital Cost
Development Capital US$M 178 230 230
Table 1 - Tiris Uranium Project Financial Summary demonstrates robust
economics
Figure 1 - Tiris Uranium Project key operational parameters and systems
There is significant potential to grow the 59Mlbs U(3)O(8) of Mineral
Resources 6 (#_ftn6) currently defined at Tiris. Tiris East Exploration
targets 7 (#_ftn7) outline potential for an additional 8-32Mlbs U(3)O(8) and
a 15,500m drill program is currently underway targeting extensions to the know
mineralisation and testing previously un-drilled radiometric anomalies.
Phase 1 of the current drilling program was completed in late February 2024
with approximately 50% of the planned drilling completed. Initial results
from the Phase 1 program are expected to be published shortly. Phase 2
drilling is underway and involves infill drilling the Phase 1 targets. The
Phase 2 drilling program is expected to be completed by end of March 2024
followed by an update to the Mineral Resources planned for the second quarter
of 2024.
The modular configuration of the processing plant is well suited to capital
efficient and simple expansion to accommodate future growth in Mineral
Resources as indicated below.
Ø 2.0Mlbspa U(3)O(8) production capacity = US$ 230M development capital (Base
Case)
Ø 2.8Mlbspa U(3)O(8) production capacity = US$ 83M expansion capital (from 2
to 2.8Mlbpa)
Ø 3.5Mlbspa U(3)O(8) production capacity = US$ 166M expansion capital (from 2
to 3.5Mlbpa)
Next Steps
The next steps in progressing towards the construction and development of the
Project planned for 2024 include:
• Drilling and update to Mineral Resources -
currently underway
• Project funding inclusive of debt, strategic
investors and equity
• Securing offtake contracts for future production
• Confirming water infrastructure to support future
operations
• Further geometallurgy, engineering and design work
to support development activities
• Drill results, resource re-estimation and mine
plan optimisation
• Completion of Project Execution Plan
• Final Investment Decision
Authorised for lodgement by the Board of Aura Energy.
This Announcement contains inside information for the purposes of the UK
version of the market abuse regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ("UK MAR").
For further information, please contact:
Andrew Grove Paul Ryan SP Angel Corporate Finance LLP
Managing Director and CEO Citadel-MAGNUS Nominated Advisor and Broker
Aura Energy Limited Investor & Media Relations David Hignell
agrove@auraee.com (mailto:Agrove@auraee.com) pryan@citadelmagnus.com Kasia Brzozowska
+61 414 011 383 +61 409 296 511 +44 (0) 203 470 0470
About Aura Energy (ASX: AEE, AIM: AURA)
Aura Energy is an Australian-based mineral company with major uranium and
polymetallic projects in Africa and Europe.
The Company is focused on developing a uranium mine at the Tiris Uranium
Project, a major greenfield uranium discovery in Mauritania. The FEED has
confirmed Tiris to be a potential high-value low-cost low-risk commercial
scaled near term uranium mine.
Aura plans to transition from a uranium explorer to a uranium producer to
capitalise on the rapidly growing demand for nuclear power as the world shifts
towards a decarbonised energy sector.
Beyond the Tiris Project, Aura owns 100% of the Häggån Project in Sweden.
Häggån contains a global-scale 2.5Bt vanadium, sulphate of potash ("SOP")
and uranium resource. Utilising only 3% of the resource, a 2023 Scoping Study
outlined a 27-year mine life based on mining 3.5Mtpa.
Disclaimer Regarding Forward-Looking Statements
This ASX announcement (Announcement) contains various forward-looking
statements. All statements other than statements of historical fact are
forward-looking statements. Forward-looking statements are inherently subject
to uncertainties in that they may be affected by a variety of known and
unknown risks, variables and factors which could cause actual values or
results, performance or achievements to differ materially from the
expectations described in such forward-looking statements. The Company does
not give any assurance or guarantee that the anticipated
results, performance or achievements expressed or implied in those
forward-looking statements will be achieved.
Front End Engineering Design (FEED) Study Summary
The Tiris Uranium Project is a greenfield calcrete uranium project located in
Mauritania that was first discovered by Aura Energy in 2008. It represents the
first planned development in a significant new global uranium province in
Mauritania with a Mineral Resource Estimate of 59Mlbs U(3)O(8) 8 (#_ftn8) and
considerable exploration upside and project growth opportunities. The
mineralisation is naturally suited to low capital cost development and low
operating cost extraction of uranium, presenting an opportunity for near term
development of the Project.
The FEED Study scope was to focus on improving engineering definition for each
of the three modular circuit components of the Tiris Uranium Project,
including the Beneficiation, Concentrate Processing and Precipitation and
Packaging Circuits. The scope was defined in this manner to provide
scalability to fully utilise additional Resources as they were defined.
All targeted outcomes were achieved by the FEED, including:
• Finalisation of key technical and strategic
project decisions
• Produce foundation technical documents for
detailed design
• Confirm product specifications
• Refine budget, scope, and schedule for the project
• Initiate project procedures and systems
• Prepare tenders for key long-lead procurement
items
The FEED study focused on progressing the design of the processing plant and
infrastructure to enable a detailed capital and operating cost estimate to be
prepared to a level of accuracy of +10% -15%.
List of FEED Consultants
The independent consultants responsible for the FEED study scope of work have
been summarised in Table 2.
Consultant Scope
METS Engineering Beneficiation circuit
Infrastructure
Engineering Integration
Wallbridge, Gilbert, Aztec (WGA) Concentrate processing circuit
Adelaide Control Engineering Precipitation and Packaging plant
Anandarasa Advisory Financial modelling
Table 2 - FEED study contributors
Tiris Project Background
The Tiris Uranium Project is 100% owned by Tiris Ressources SARL, which is 85%
owned by Aura Energy Ltd and 15% by the Mauritanian Government's Agence
Nationale de Recherches Géologiques et du Patrimoine Minier ("ANARPAM").
A Scoping Study was completed in 2014. This was updated into a Feasibility
Study ("FS") document in May 2017, to support an application for exploitation
licences. FS and an extensive Environmental and Social Impact Assessment
("ESIA") were submitted on 24 May 2017 to the Mauritanian Ministry of
Petroleum, Energy and Mines, and formally approved by the Mauritanian
Government on 5th October 2017.
A Definitive Feasibility Study ("DFS") for a 1.25Mtpa mine and 230ktpa process
plant was completed in 2019 9 (#_ftn9) . The process plant has been designed
to take full advantage of the characteristics of the material which responds
well to concentration of uranium by scrubbing and screening, whilst providing
a low capital cost and rapid project development and construction.
The Capital Estimate for the DFS was updated in August 2021 10 (#_ftn10) . In
March 2023 an Enhanced Definitive Feasibility Study ("EFS") was published
including additional Ore Reserves and Mineral Resources defined in ASX and AIM
releases, "Major Resource Upgrade at Aura Energy's Tiris Project", 14 February
2023 and ASX Release, "Tiris Uranium Project Enhanced Definitive Feasibility
Study", 29 March 2023. The EFS presented a staged development approach,
including a 2-year ramp up at 1.25Mtpa mined ore, expanding to 4.1Mtpa mined
ore in year three to produce an average of 2Mlbspa U(3)O(8).
Exploitation licences (2491C4 and 2492C4) for the Ain Sder and Oued El Foude
permits, Figure 2, were granted on the 8 of February 2019 11 (#_ftn11) and
Mining Conventions for these permits were signed in January 2023 12 (#_ftn12)
.
Resources and Reserves
The declared Ore Reserve Estimate, at a 110ppm U(3)O(8) cut off is shown in
Table 3. The definition of the Ore Reserve Estimate cut-off grade as set out
in the ASX release, "Tiris Uranium Project Enhanced Definitive Feasibility
Study", 29 March 2023. Aura completed numerous metallurgical and
geometallurgical studies on composite samples of mineralisation at Tiris,
which were summarised in ASX and AIM announcement, "Tiris Uranium Project DFS
complete" 29 July 2019. These results together with updated mining and
processing costs, and other cost inputs support the application of a marginal
cut-off grade of 110ppm U(3)O(8). This cut-off is comparable to peer projects
with similar mineralisation types and processing assumptions. Assessment of
material assumptions has determined that changes in cost estimates presented
in the FEED study were not material to the Ore Reserve Estimate.
Description Mt U(3)O(8) (ppm) U(3)O(8) (Mlbs)
Lazare North
Proved 0.9 298 0.6
Probable 7.9 251 4.4
Lazare South
Proved 6.5 264 3.8
Probable 2.6 291 1.7
Hippolyte
Proved 5.7 270 3.4
Probable 7.1 231 3.6
Sadi
Proved 6.1 232 3.1
Probable 3.3 261 1.9
Total Ore Reserve
Proved 19.3 257 11.0
Probable 21.3 251 11.6
Total Ore Reserve 40.3 254 22.6
Table 3 - Updated Ore Reserve Estimate
Notes to Table 1:
Ore Reserves are a subset of Mineral Resources
Ore Reserves conform with and use the JORC Code
2012 definitions
Ore Reserves are calculated using a uranium price
of US$65 /lb U(3)O(8).
Ore Reserves are calculated using a cut-off grade
of 110 ppm U(3)O(8).
Tonnages are reported including mining dilution
All figures are rounded to reflect appropriate
levels of confidence which may result in apparent errors of summation
The Ore Reserve Estimate was generated from the Mineral Resource Estimate
produced by H&S Consultants (Sydney) in 2023 with the appropriate
modifying factors to apply for mining dilution. This Resource model was used
in an open pit optimisation process to produce a range of pit areas using
operating costs and other inputs derived from previous studies. Mining costs
were built up from estimates derived from equipment supplier and mining
contractor submissions and applied to a detailed mine schedule.
Figure 2 - Tiris East Resource outlines for the Tiris Uranium Project
This Ore Reserve is based upon consolidated Mineral Resources reported in the
ASX announcement entitled "Major Resource Upgrade at Aura Energy's Tiris
Project" released on 14 February 2023 and available to download from
asx.com.au (ASX:AEE). In that report, Measured and Indicated Resources were
listed at 62.1Mt of ore for 29.6Mlbs U(3)O(8), at 216ppm. The combined Mineral
Resources Estimate, including an Inferred Resource Estimate, is 113Mt of ore
at 236ppm for 58.9Mlbs U(3)O(8). All resources were reported at a 100ppm grade
cut-off and summarised in Table 4.
Area 13 (#_ftn13) (, 14 (#_ftn14) ) Class Tonnes (Mt) U(3)O(8 ) (ppm) U(3)O(8) (Mkg) U(3)O(8) (Mlb)
Hippolyte North Measured 8.0 236 1.9 4.2
Indicated 5.8 217 1.3 2.8
Inferred 4.7 212 1.0 2.2
Sub-Total 18.5 224 4.1 9.1
Hippolyte Marie & West Inferred 8.2 310 2.5 5.6
Hippolyte South Indicated 4.6 192 0.9 2.0
Inferred 2.7 176 0.5 1.1
Sub-Total 7.4 186 1.4 3.0
Lazare North Measured 1.0 282 0.3 0.6
Indicated 10.1 229 2.3 5.1
Inferred 3.7 210 0.8 1.7
Sub-Total 14.8 228 3.4 7.4
Lazare South Measured 8.6 233 2.0 4.4
Indicated 5.2 226 1.2 2.6
Inferred 4.8 222 1.1 2.3
Sub-Total 18.6 228 4.2 9.3
Sadi Measured 11.5 189 2.2 4.8
Indicated 7.4 200 1.5 3.2
Inferred 10.3 228 2.4 5.2
Sub-Total 29.2 206 6.0 13.2
All Deposits Measured 29.1 218 6.4 14.0
Indicated 33.0 215 7.1 15.6
Inferred 34.5 237 8.2 18.0
Total Tiris East 96.6 224 21.6 47.7
Total Tiris West: 16.4 305 5.1 11.2
Oum Ferkik Inferred
Total Aura Resources 113.0 236 26.7 58.9
Table 4 - 2023 Mineral Resource Estimate
Production Schedule
The sequencing and material inclusions for the proposed production schedule
was published in ASX and AIM Release, "Tiris Uranium Project Enhanced
Definitive Feasibility Study", 29 March 2023, where it was developed based on
pit optimisation in the Ore Reserve Estimation. No material change was made to
the production schedule, other than acceleration of mining for the first two
years of operation.
Base Case Production Schedule
A base case production schedule was developed and initially outlined in ASX
and AIM Release, "Tiris Uranium Project Enhanced Definitive Feasibility
Study", 29 March 2023. The production schedule has been updated, without
alteration of the pit shells or mining sequence, to accelerate mining in the
first two years of operation to 4.1Mtpa, including a six month ramp up period
(Figure 3). In addition, a small proportion of residual material in Inferred
Resource category was included at the end of the mining schedule. The
accelerated mining schedule includes 9% inferred material in the first five
years and 15% in the first ten years of operation, all of which was sourced
within existing pit shells. Over the Life of Mine ("LOM") a total of 33%
Inferred material was included in the mining schedule. The Project remains
strongly viable with removal of Inferred material.
Figure 3 - Base Case Mine schedule ore profile by area at average mining rate
of 4.1Mtpa ore.
Note: There is a low level of geological confidence associated with Inferred
Resources and there is no certainty that further exploration or evaluation
work will result in the determination of Indicated Resources or that the
production targets reported in this announcement will be realised. The Company
confirms that the use of Inferred Resources is not a determining factor to the
Tiris Project's economic viability.
The Base Case concentrate grade profile for U(3)O(8) has been presented in
Figure 4, demonstrating an average concentrate grade to leaching of 1,743ppm
U(3)O(8) life of mine. A full description of concentration of uranium through
the beneficiation circuit by scrubbing and screening, including recovery
assumptions, can be found in ASX and AIM Release, "Tiris Uranium Project
Enhanced Definitive Feasibility Study", 29 March 2023.
Figure 4 - Concentrate grade profile for base case mining schedule
highlighting higher leach feed grade profile in early years. Average
Concentrate production rate of 500,000tpa
The base case U(3)O(8) production profile can be seen in Figure 5. Over the
life of mine the average production rate has been estimated as 1.9Mlb U(3)O(8)
pa, ranging from 2.3Mlbpa in Year 2 to 1.5Mlb U(3)O(8) in Year 13.
Figure 5 - Uranium oxide production profile for base case scenario.
Process Configuration
The processing of mined material is undertaken in modular circuits, with
design throughput capacity defined by the number of modules used in each
section. The FEED study focused on improvement of engineering definition for a
single train of modules, which may then be combined to achieve target
throughput capacity to match the mining schedule.
A detailed process description and summary of module configuration can be
found in ASX and AIM Release, "Tiris Uranium Project Enhanced Definitive
Feasibility Study", 29 March 2023.
The design basis for the FEED study maintained the same design criteria for
the beneficiation and precipitation and packaging plants as for the 2019
DFS 15 (#_ftn15) .
Design criteria for the concentrate processing plant was updated to include
allowance for the results of the beneficiation pilot plant program 16
(#_ftn16) and definition of the water source 17 (#_ftn17) . The outcomes of
implementation of these risk mitigation measures were increased dilution
within the leach and ion exchange circuits, leading to increased tank volumes.
The total filtration capacity was increased based on outcomes of the
beneficiation pilot program.
The layout of the Concentrate Processing Facility can be seen in Figure 6.
Additional water treatment capacity was included into the design to allow for
processing of raw water sourced from the C22 water target identified in
2021(11).
Figure 6 - 3D FEED layout of concentrate processing facility
Capital Cost Estimate
The FEED Capital Cost Estimate ("CAPEX") for the development of Tiris was
completed using a design basis of a single modular processing train, with
units combined to generate an Estimate for total production capacity of 2Mlbpa
U(3)O(8) in Table 7. The total CAPEX was estimated to be US$230 million
(including a contingency allowance of approximately 12%), which is within 29%
of the EFS estimate (US$178M) presented 29(th) March 2023.
The level of confidence in the Capital Estimate has increased with completion
of the FEED, summarised in Table 5.
Using the modular design basis allows the Company to efficiently assess
multiple growth scenario options with greater confidence.
Circuit Single train capacity Single train confidence Additional train confidence
Beneficiation 1.25Mtpa Run of Mine ore Class 3 (90-95% confidence) Class 3 (90-95% confidence)
Concentrate Processing Plant 250ktpa concentrate Class 3 (90-95% confidence) Class 4 (65-70% Confidence)
(Leaching, ion exchange, precipitation)
Precipitation and Packaging 3.5Mlb U(3)O(8) pa Class 3 (90-95% confidence) NA
Table 5 - Modular circuits available for Tiris project with engineering
confidence
The final production scale capital cost estimate was developed based on
combining modules to achieve the target capacity. A summary of the module
configuration for throughput capacities assessed can be seen in Table 6.
Circuit 4.1Mtpa Base Case
2Mlb U(3)O(8) pa
Beneficiation (5Mtpa) 4
Concentrate Processing plant (500ktpa) 2
Precipitation and Packaging (3.5Mlbs pa U(3)O(8)) 1
CAPEX US$230M
Table 6 - Process configuration for Base case mining schedules.
A comparison of the Capital Estimate for the base case scenario between the
EFS 2023 and FEED update can be seen in Table 7. This shows escalation of 29%
overall, with the most significant variation in processing, infrastructure and
EPCM costs.
Area FEED 2024 EFS 2023
US$M US$M
Mining 4.3 4.9
Beneficiation 25.6 22.0
Processing 84.2 72.5
Infrastructure 54.1 37.1
EPCM 22.5 8.4
Owner's cost 19.3 21.3
Contingency 20.1 12.1
Total Capital Cost 230.0 178.2
Table 7 - Comparison of Project CAPEX between EFS 2023 and FEED 2024.
The variance of FEED capital cost to EFS is as shown in Figure 7.
1000 Mining
2000 Process Plant
3100 Transportable Front End Site Services & Utilities
3200 Process Plant Site Services & Utilities
3300 Process Plant Site Infrastructure
3400 Construction/Operations Camp
3500 Off Site Infrastructure
3600 Contractors Distributable
5100 EPCM
5200 Auxiliary items
5300 Freight
6100 Owners Provisions
6200 Contingency
Figure 7 - Tiris Project Capital Estimate
The primary drivers for variance in CAPEX were a combination of the global
inflationary environment and several risk mitigation measures that were
included in the FEED design. Primarily, based on outcomes of vendor test work
on filtration 18 (#_ftn18) , which recommended increasing total filtration
area. In addition, more water treatment capacity was included to manage the
concentration of chloride anions in ion exchange, corresponding to
recommendations from ANSTO Minerals to improve yellowcake purity 19 (#_ftn19)
. These improvements will increase the flexibility of the process in
operation, allowing acceleration of throughput increases.
Operating Cost Estimate
The operating cost estimate for the Tiris Project was developed by Aura Energy
with input costs generated by METS Engineering, WGA and MiningPlus. The
estimate is based on the LOM ore schedule, process design criteria, steady
state mass and energy balance and metallurgical test work undertaken as part
of the Feasibility Study.
The estimate includes all costs associated with production of an average
1.9Mlbs U(3)O(8) per annum after ramp-up, including:
· Owner mining
· Labour
· Fuel
· Power
· Reagents and consumables
· Maintenance
· General and administration
· Product transport
· Sustaining capital
· World Bank Community contributions
· Royalties
The operating cost estimate is presented in US dollars and is considered to
have an estimated accuracy level of between +15% and 10%. A 17-year LOM has
been used in development of the operating cost estimate.
Cash costs were broken down into their fixed and variable components to
accommodate cash flow scheduling. Variable costs were linked to uranium
production.
Mining and key reagent costs, including diesel, sodium carbonate and sodium
bicarbonate were updated for the 2024 FEED study. The mining costs were also
validated against four mining contractor submissions allowing for the
inclusion of a suitable profit margin.
The operating cost estimate has been summarised in Table 8. The average LOM C1
cash cost will be US$ 30.2/lb U(3)O(8) and LOM AISC, inclusive of royalties,
LOM sustaining capital, insurances and product transport will be US$ 34.5/lb
U(3)O(8). These costs have been estimated as an average of annualised
expenditure.
The FEED operating costs for the first five years of operation have been
presented in Table 8. These demonstrate higher efficiency through this period,
with AISC of US$ 33.8/lb U(3)O(8).
FEED FEED EFS Variation
Years 1-5 Average Average
Q1 2024 Q1 2023 Absolute %
US$/lb U(3)O(8) US$/lb U(3)O(8) US$/lb U(3)O(8)
Owner Mining $7.6 $8.1 $8.1 $0.0 0%
Labour $1.8 $2.0 $2.0 -$0.1 -3%
Reagents $6.3 $6.9 $6.9 $0.0 1%
Power $9.3 $8.6 $5.0 $3.6 73%
Maintenance $1.6 $1.8 $1.7 $0.1 5%
Environment $0.3 $0.4 $0.3 $0.1 47%
Site G&A $2.2 $2.5 $2.1 $0.3 15%
CASH COST $29.2 $30.2 $26.1 $4.2 16%
Transport & Marketing $0.5 $0.5 $0.5 $- 0%
Royalties $2.7 $2.7 $2.2 $0.5 22%
Communities $0.7 $0.7 $0.5 $0.2 37%
Sustaining Capital $0.7 $0.3 $0.3 $0.0 0%
ALL-IN-SUSTAINING COST $33.8 $34.5 $29.6 $4.9 16%
Table 8 - FEED Operating Cost estimate, including comparison to EFS average
OPEX.
A summary of the variance between the FEED study and 2023 EFS can be seen in
Figure 8.
Figure 8 - Tiris Project All In Sustaining Costs
Savings were achieved in reagent usage and costs, as well as by optimising the
owner mining model.
The increases were mainly in power costs. These were driven by a 40% increase
in diesel price from US$ 0.86 to US$ 1.20 per litre following the removal of
the government subsidy. In addition, moving to a BOOT power model added
capacity charges for lease of power generation plant that were not included in
EFS assumptions.
Work will continue in 2024 on the power generation optimisation with a focus
on greater renewable energy storage with opportunities to reduce power costs.
Market Analysis
Aura has updated the comprehensive EFS 20 (#_ftn20) market assessment to
develop a pricing forecast for Tiris. This has resulted in 3 pricing scenarios
to assess the economic viability of the Tiris Project.
i. Low case: TradeTech FAM 1 term forecast. Mean forecast
term price to 2040 of US$ 70/lb U3O8.
ii. Base case: Base case price of US$ 80/lb U3O8
iii. High case: TradeTech FAM 2 term forecast. Mean forecast
price to 2040 of US$ 86/lb U3O8.
The FAM 1 based on a 'risk off' approach where published production target
volumes are readily achieved, and FAM 2 based on a 'risk on' approach where
there is a reduction in production volumes 148Mlbs between 2020 and 2040.
Financial Analysis
Financial analysis of the Tiris Project is inclusive of Mauritanian government
royalties and commitments relating to the offtake agreement with Curzon
Resources. This is outlined in the ASX announcement "Aura concludes offtake
agreement", dated 29 January 2019.
Results are on an after-tax basis in $USD, unless otherwise stated. Financial
modelling is inclusive of all capital items, including mining mobilisation,
process plant, project infrastructure and LOM sustaining capital.
The project financial analysis has been completed with a valuation date of 9
February 2024.
Table 9 shows the variance in NPV(8), IRR, payback period and net cashflows
for a range of uranium contract prices, including commitments to Curzon
Resources offtake agreement. At a base case uranium price of US$ 80/lb
U(3)O(8), the post-tax NPV(8) of the Tiris Project is US$ 366M. This is with a
post-tax IRR of 34%, and a project payback of 2.5 years from commencement of
production. At this price the project generates annual net cashflows (EBITDA)
of US$ 78M pa.
Units FEED FEED 2023 EFS
Base Case Spot Price
Uranium Price US$ /lbs U(3)O(8) 80 $100 $65
Avg Annual Production Mlbspa U(3)O(8) 2 2 2
Post-tax NPV(8) US$ M 366 596 227
Post-tax IRR % 34 49% 28%
Average All-in Sustaining Costs US$ /lbs U(3)O(8) 34.5 35.5 28.7
Annual average EBITDA US$ M 78 110 64.7
Initial Life of Mine Years 17 17 15
Capital Expenditure US$ M 230 230 178
Payback period Years 2.5 1.75 4.5
Table 9 - Summary of outputs recommended for presentation of FEED update
results
Sensitivity Analysis
The sensitivity of the project to market and project factors was examined.
Table 10 provides a comparison of project returns (NPV and IRR) at various
throughput profiles and U(3)O(8) price. This demonstrated robust returns for a
range of pricing scenarios for both the Base and Growth scenarios. This
analysis determined that the greatest capital efficiency could be achieved for
the base case production profile, targeting 2Mlbs U(3)O(8) pa production.
Spot U(3)O(8) Price - US$/lb.
65 70(*) 80 86(#) 90 100 110
NPV(8)% 192 244 366 424 482 596 711
IRR 22% 25% 34% 36% 41% 49% 56%
Table 10 - Economic comparison at varying U(3)O(8) price for Base Case 2Mlbs
U(3)O(8) pa production
* Tradetech Forward Availability Model (FAM) 1 average term price to 2040
(Real). Representing best case project development (supply) scenario.
# Tradetech FAM 2 average term price to 2040 (Real). Representing restricted
project development scenario.
The sensitivity of the project to key variables was examined in Figure 9. This
showed that the Project was most sensitive to revenue drivers, including mined
grade and U(3)O(8) spot price. The Project was least sensitive to operating
cost inputs.
Figure 9 - Tiris Project Sensitivity analysis
Growth Scenario
There is significant potential to grow the 59Mlbs U(3)O(8) of Mineral
Resources 21 (#_ftn21) currently defined at Tiris. Tiris East Exploration
targets 22 (#_ftn22) outlined potential for an additional 8-32 Mlbs U(3)O(8.)
A 15,000m drill program is currently underway targeting extensions to the know
mineralisation.
The modular configuration of the processing plant is well suited to simple
expansion as additional Resources are defined. Table 11 shows the incremental
Capital requirement to progressively increase capacity in the beneficiation
and concentrate processing circuits, to the point where it is expected the
precipitation and packaging plant would be fully utilised.
Circuit 4.1Mtpa Base Case 6.25Mtpa Growth 7.0Mtpa Growth
2Mlb U(3)O(8) pa 2.8Mlb U(3)O(8) pa ~3.5Mlb U(3)O(8) pa
Beneficiation 4 5 6
Concentrate Processing plant 2 3 4
Precipitation and Packaging 1 1 1
CAPEX US$230M US$313M US$396M
Table 11 - Capital cost estimate for growth configurations of the processing
circuits for the Tiris Project
In all the above scenarios it is expected that the operating costs would
remain similar to the base case AISC of US$ 34.5/lb U(3)O(8), with some cost
efficiencies potentially realised through a more efficient workforce and
consolidation of mining fleet.
Project Finance
The Tiris Uranium Project funding structure will be one of project financing
to minimise risk to the Project, maintaining flexibility and preserving
shareholder value. Aura will consider funding total pre-production capital and
working capital by some or all of the following:
• Senior project debt
• Mezzanine debt
• Offtake prepayment
• Equity
• Royalty or stream funding
The structure will be dependent on general industry and market conditions,
specific counterparty appetite and terms and Aura's views on optimal funding
mix and balance sheet configuration.
Senior debt may be sourced from several alternate providers including
commercial banks, export credit agencies, development financial institutions /
multilaterals, credit funds and the project bond market.
The Company's Board and Management have a successful track record of
developing and financing mineral resource projects globally.
The Company believes that there is reasonable basis to assume that future
funding will be available as and when required. Investors should note that
there is no certainty that the Company will be able to raise the amount of
funding required to develop the Project when needed. It is also possible that
such funding may only be available on terms that are dilutive or otherwise
affect the value of the Company's shares, or that the Company may pursue other
value realisation strategies such as a sale, partial sale or joint venture of
the Project (which may reduce the Company's overall ownership of the Project).
Project Risk
The key risks with their mitigations, are identified as follows:
1. The Project's success is fundamentally linked to the price for
uranium exceeding the operating cost for the project. Aura is in the process
of seeking additional offtake agreements with suitable long-term pricing, but
the market price risk is largely outside Aura's control.
2. The estimated capital costs for the project could prove optimistic,
requiring additional funding. The Capex estimate was composed of 85% external
pricing, so has a strong basis for its pricing. The project will rely on
competent Project cost control by the EPC company overviewing the project.
3. OHS management risk of radioactive dust in the mining and front-end
areas. Aura will ensure operators are in dust sealed cabins, use personnel
badges and will rotate personnel if necessary.
4. There are potential risks in obtaining Mauritanian statutory permit
approvals, in the time required. Aura would seek a high-level connection
between Government authorities and its senior management, to supplement the
usual project interfaces between Aura's local permitting supervisor and
Government authorities. It is expected given Aura's focus on maximising local
employment, that the Mauritanian Government will be quite supportive.
5. There are risks from terror groups in the Sahel region. Aura has
provisionally arranged for military supported security to be permanently based
close to the site. Aura will continue with its very close coordination with
police/gendarmes/military guarding the area.
6. A risk remains of insufficient water being available for the project.
A program designed to mitigate the risk that includes the drilling and test
work of the Taoudeni basin is planned to be completed in 2024. The Taoudeni
basin supplies water for the SNIM magnetite iron ore operations in Zouerate
and First Quantum's Guelb Morghein Cu/Au/Fe mine in Akjout. Tiris' water
requirements are between 2-3ML pa and it expected that there will be more than
sufficient quantities of water available.
7. Aura's hybrid diesel and solar generation plant will be the only
power source for the Project. Aura shall undertake rigorous engineering
selection of the power generation supply and hire experienced and competent
electrical support personnel to maintain the power plant.
Future Activities
The Company plans to undertake a series of activities throughout 2024 to
further grow the Tiris project potential and support financing and Final
Investment Decision. These will include:
· Securing offtake contracts for future production from major US
utilities to de-risk future cashflows and support funding initiatives
· Completion of current drilling program and updating the Mineral
Resources at Tiris East aimed at extending mine life and potentially
increasing the scale of the Project
· Commencement of trial mining to confirm baseline assumptions for
mining fleet and provide inputs for grade control and geometallurgical models
· Investigation and testing of water targets within the Taoudeni basin
target expansion of water resources in line with expanded processing capacity
· Ongoing baseline environmental and radiation monitoring, along with
commencement of community consultation along the product transport route
· Engineering optimisation for concentrate processing facilities to
investigate potential capital cost efficiencies of expanding capacity for a
single train circuit
· Completion of Project Execution Plan
Cautionary Statement: TIRIS FRONT END ENGINEERING DESIGN (FEED) STUDY
As the Front End Engineering Design ("FEED") analysis for Tiris Uranium
Project utilises a portion of Inferred Mineral Resources, the ASX Listing
Rules require a cautionary statement to be included in this announcement.
The FEED referred to in this announcement is based on a Mineral Resources
Estimate reported in accordance with JORC guidelines 2012 in the ASX
announcement entitled "Major Resource Upgrade at Aura Energy's Tiris Project"
dated 14 February 2023.
The Company advises that the Tiris East Uranium Production Targets set out in
this announcement uses Proved and Probable Ore Reserves, Measured Resources
(32%) and Indicated Resources (35%), as well as Inferred Resources in the
first 5 years (less than 10%) and over the 17-year life of mine (33%) for the
Base Case. The Company is currently drilling a 15,000 metre drill program
around the Tiris East mine plan.
In accordance with ASX Listing Rules 5.16 and 5.17, as well as the 2012 JORC
Code reporting guidelines, a summary of the information derived from the Tiris
FEED analysis is detailed in this report. The FEED analysis also draws on
information from the ASX Release, "Tiris Uranium Project Enhanced Definitive
Feasibility Study", 29th March 2023 which is available to be viewed at
auraenergy.com.au/investor-centre/asx-announcements.
(file:///C%3A/Users/Andrew/Dropbox/Aura/IR/Releases/auraenergy.com.au/investor-centre/asx-announcements)
The Company confirms that the use of Inferred Resources is not a determining
factor to the Tiris Project's economic viability.
There is a low level of geological confidence associated with Inferred Mineral
Resources and there is no certainty that further exploration will result in an
upgrade to Indicated Mineral Resources, or that the production targets
reported in this announcement will be realised.
The Company confirms that it is not aware of any new information materially
affecting the information included in the ASX announcement dated 14 February
2023, "Major Resource Upgrade at Aura Energy's Tiris Project". All material
assumptions and technical parameters underpinning the Mineral Resources
Estimates continue to apply. The Company confirms that the form and context in
which the Competent Person's findings are presented have not been materially
modified from the original market announcement.
The Announcement includes forward-looking statements. These forward-looking
statements are based on the Company's expectations and beliefs concerning
future events. Forward-looking statements are necessarily subject to risks,
uncertainties, and other factors, many of which are outside the control of
Aura Energy Ltd, which could cause actual results to differ materially from
such statements. Aura Energy Ltd makes no undertaking to subsequently update
or revise the forward-looking statements made in this announcement, to reflect
the circumstances or events after the date of this announcement.
The Company has concluded that it has a reasonable basis for providing the
forward-looking statements and production targets included in this
announcement. The detailed reasons for this conclusion are outlined throughout
this announcement, and in the ASX Release, "Tiris Uranium Project Enhanced
Definitive Feasibility Study", 29th March 2023.
1 (#_ftnref1) ASX and AIM Release: "Tiris Enhanced Definitive Feasibility
Study" 29 March 2023
2 (#_ftnref2) ASX Release: "Commencement of Extensional Drilling Program at
Tiris" 5 January 2024
3 (#_ftnref3) ASX Release: "Major Resource Upgrade at Aura Energy's Tiris
Project" 14 February 2023
4 (#_ftnref4) ASX Release: "Aura identifies new uranium Exploration Target"
17 October 2023
5 (#_ftnref5) ASX Release: "Tiris Enhanced Definitive Feasibility Study" 29
March 2023
Aura Energy ASX releases can be found at
auraenergy.com.au/investor-centre/asx-announcements
6 (#_ftnref6) ASX Release: "Tiris Uranium Project Enhanced Definitive
Feasibility Study" 29 March 2023
7 (#_ftnref7) ASX Release: "Aura identifies new uranium Exploration Target"
17 October 2023
8 (#_ftnref8) ASX and AIM Release: "Major Resource Upgrade at Aura Energy's
Tiris Project" 14 February 2023
Aura Energy ASX releases can be found at
auraenergy.com.au/investor-centre/asx-announcements
Aura Energy AIM releases can be found at
https://auraenergy.com.au/investor-centre/aim-notifications/
9 (#_ftnref9) ASX and AIM Release: "Tiris Uranium DFS Complete" 29 July 2019
10 (#_ftnref10) ASX and AIM Release: "Capital Estimate Update Tiris Uranium
project" 18 August 2021
11 (#_ftnref11) ASX and AIM Release: "Tiris Uranium Project Exploitation
License Granted" 8 February 2019
12 (#_ftnref12) ASX and AIM Release: "Transformational Agreements for Tiris
Project Mauritania" 31 January 2023
13 (#_ftnref13) The information in this announcement is extracted from ASX
announcement entitled "Major Resource Upgrade at Aura Energy's Tiris Project"
released on 14 February 2023 and available to download from asx.com.au
ASX:AEE. The Company is not aware of any new information or data that
materially affects the information included in the original market
announcement and, in the case of estimates of Mineral Resources that all
material assumptions and technical parameters underpinning the estimates in
the relevant market announcement continue to apply and have not materially
changed. The Company confirms that the form and context in which the Competent
Person's findings are presented have not been materially modified from the
original market announcement
14 (#_ftnref14) This Tiris Resource Inventory aggregates the 2023 Mineral
Resource Estimates by H&S Consultants Pty Ltd on the Lazare North, Lazare
South, Hippolyte, and Hippolyte South deposits and the 2011 Mineral Resource
Estimates by Coffey Mining on the Sadi, Ferkik West, Ferkik East, Hippolyte
West and Marie deposits. The 2011 Resource Estimate was the subject of Aura
ASX announcement dated 19 July 2011 "First Uranium Resource in Mauritania".
The 2011 Mineral Resource Estimate was produced in compliance with the 2004
edition of the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves'. Aura confirms that all material
assumptions and technical parameters underpinning the 2011 Mineral Resource
Estimates in the relevant market announcement continue to apply and have not
materially changed.
15 (#_ftnref15) ASX Release: "Tiris Uranium DFS Complete" 29 July 2019
16 (#_ftnref16) ASX Release: "Tests confirm Average 550% Upgrading of
Uranium at Tiris" 23 June 2022
17 (#_ftnref17) ASX Release: "Liquid Gold in the Sahara - Substantial Water
at Tiris" 13 December 2021
18 (#_ftnref18) ASX Release: "Tests confirm Average 550% Upgrading of
Uranium at Tiris" 23 June 2022
19 (#_ftnref19) ASX Release: "Quality of Tiris Project Uranium Yellowcake
Confirmed" 6 December 2022
20 (#_ftnref20) ASX Release: "Tiris Uranium Project Enhanced Definitive
Feasibility Study" 29 March 2023
21 (#_ftnref21) ASX Release: "Tiris Uranium Project Enhanced Definitive
Feasibility Study" 29 March 2023
22 (#_ftnref22) ASX Release: "Aura identifies new uranium Exploration
Target" 17 October 2023
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