PRL Polo Res.(See LSE:POL)

 

TIDMPRL 
 
RNS Number : 7789W 
Polo Resources Limited 
04 August 2009 
 

3 August 2009 
 
Polo Resources Limited 
("Polo" or "the Company") 
 
 
Extract Resources provides Rossing South preliminary cost estimates 
 
 
Study confirms Rossing South's potential to be one of world's largest uranium 
mines 
 
 
Polo Resources (PRL), the AIM listed mining company with uranium and coal 
interests in Africa, Australia, Europe and Asia, is pleased to provide an update 
released by Extract Resources Ltd ("Extract" or "the Company"), in which Polo 
resources holds a 9.06% interest. 
 
Mr.Stephen. R. Dattels, Executive Chairman, said, 
 
 
"We are very encouraged by Extract's announcement this morning which confirms 
our view that Rossing South could support a profitable, long life, low cost, low 
technical risk uranium mine producing 14.8M lbs U3O8 per year, making it one of 
the world's largest uranium mines. The area has good infrastructure and many 
other mining projects, including Rio Tinto's Rossing mine are located in the 
area. 
 
 
"We are also very encouraged by the upside potential of the exploration acreage 
contained within the field and see this as another value diver for Extract and 
for our significant investment in the business. 
 
 
"We look forward to further updates from Extract as they progress the Rossing 
South project." 
 
 
Contacts: 
 
 
+--------------------------------------------------+------------------------+ 
| Polo Resources Limited                           |   + 27 82 404 36 37    | 
| Neil Herbert, Executive Deputy Chairman          |                        | 
|                                                  |                        | 
+--------------------------------------------------+------------------------+ 
| Canaccord Adams Limited                          |  + 44 (0) 20 7050 6500 | 
| Mike Jones/Ryan Gaffney                          |                        | 
|                                                  |                        | 
+--------------------------------------------------+------------------------+ 
| Financial Dynamics                               |  + 44 (0) 20 7831 3113 | 
| Ben Brewerton / Ed Westropp                      |                        | 
|                                                  |                        | 
+--------------------------------------------------+------------------------+ 
 
 
Extract announcement: 
 
STUDY HIGHLIGHTS 
 
  * Production rate 15.0 M tpa 
 
  * Estimated head grade 487 ppm U3O8 
 
  * Mill Recovery 92% 
 
  * U3O8 production 14.8 M lbs / year (6.7 K tpa) 
 
  * Project capital estimate US $704M 
 
  * Production cost estimate US $23.60 /lb U3O8 
 
Australian-based uranium mine development and exploration company, Extract 
Resources Limited (ASX/TSX: EXT) ("Extract" or "the Company") today released 
the preliminary capital and operating cost estimates report which confirm the 
Rossing South project's potential to be one of the world's largest uranium 
mines. 
 
The report states that preliminary cost estimates on the granite hosted, uranium 
mineralisation at Rossing South in Namibia indicates that the project can 
support a viable open pit mining operation developed to feed a 15M tpa agitated 
tank sulphuric acid leach processing plant. Annual production has been estimated 
at 14.8M lbs U3O8 with capital costs estimated at US$704M and operating costs of 
US$23.60 per lb U3O8. 
 
Extract Resources Managing Director, Mr Peter McIntyre, said, "the preliminary 
cost estimates report indicates a conventional open pit mining operation with an 
agitated tank leach process plant is expected to support a profitable and 
sustainable mining operation for +20 years." 
 
"This report represents our base case study and we are continuing with 
our metallurgical testwork and engineering optimization that will consider other 
options including a heap-leaching component," he said. 
 
Namibia has outstanding infrastructure which would greatly assist the 
development of the Rossing South project. The project area is located about 55 
kms east of the coastal town Swakopmund and north east of the deep water port of 
Walvis Bay. Equipment and materials for constructing and running the mine could 
be brought in through Walvis Bay. 
 
Mr McIntyre said "the availability of infrastructure combined with the confirmed 
resource and the outstanding exploration potential still to be tested on the 
Husab project, should ensure a long and successful mining operation centred on 
Rossing South." 
 
The Rossing South Feasibility Study, managed by independent consultants 
GRD Minproc Limited, includes detailed analysis of the Rossing South project 
parameters with detailed study work ongoing. 
 
Work completed to date has incorporated a preliminary level of design and cost 
estimation, to establish the general economic viability of a new development. 
The study has included some key assumptions relevant to the current resource 
definition program and the metallurgical characteristics of the uranium 
mineralization, with work on these critical areas continuing. 
 
 
ENDS 
 
About Extract 
 
Extract Resources is an Australian-based uranium mine development and 
exploration company whose primary focus is in the African nation of Namibia. The 
Company's principal asset is its 100% owned Husab Uranium Project which contains 
two known uranium deposit areas: Rossing South; and Ida Dome. Extensive 
exploration potential also exists for new uranium discoveries, in addition to 
the already known occurrences. 
 
Extract is listed on the ASX and the TSX under the ticker symbol "EXT". For more 
information on Extract visit www.extractresources.com 
 
 
For further information, please contact 
 
Peter McIntyre Richard Henning 
 
Managing Director Investor Relations 
 
rhenning@extractresources.com 
 
ROSSING SOUTH PRELIMINARY COST ESTIMATE 
 
 1. SUMMARY 
 
  * Preliminary cost estimates indicate Rossing South could support a long life, 
low cost, low technical risk uranium mine producing 14.8M lbs U3O8 per year. 
 
  * Base case conventional load and haul, open-pit mining operation utilising 
agitated tank leach processing technology. 
 
  * Close proximity to road, rail and port and a pro mining culture adds to the 
prospects of developing a new uranium mining operation in central west Namibia. 
 
  * Uranium mineralisation on all zones drilled to date is still open at depth 
and along strike, and supports the expectation that ongoing drilling will 
increase the Company global resource. 
 
Preliminary cost estimates on the granite hosted, uranium mineralisation 
at Rossing South indicate that the project can support a viable open pit mining 
operation developed to feed a 15M tpa agitated tank sulphuric acid leach 
processing plant. Annual production has been estimated at 14.8M lbs U3O8 with 
capital costs estimated at US$704M and operating costs of US$23.60 per lb U3O8. 
 
Existing infrastructure and a supportive geopolitical environment make 
Namibia an outstanding location to develop a new mining project. 
 
The Company now looks forward to working closely with the Namibian Government to 
obtain the necessary permits to enable the mine to be developed in a timely 
manner for the benefit of all stakeholders. 
 
 2. INTRODUCTION 
 
The Husab Uranium Project is covered by Exclusive Prospecting License (EPL) 3138 
and EPL 3439. The licenses contain two (Rossing South and Ida Dome) of the 
five currently known occurrences of uraniferous granites (alaskites) within the 
highly prospective Central Zone of the Damara Orogeny in Central West 
Namibia (Figure 1). Only one of these occurrences is currently being mined and 
that is the Rossing Mine which has been processing ore through an agitated tank 
leach process plant for over 30 years. The Rossing operation currently produces 
about 7% of the global U3O8 mine production. 
 
The Rossing South deposits (Zone 1 and Zone 2) are the most advanced within 
the Husab Uranium Project and are the focus of a Feasibility Study which 
commenced in April 2009. GRD Minproc Limited was appointed lead consulting group 
because of their knowledge of the uranium industry and their extensive African 
experience. 
 
The next stage of the Feasibility Study is to complete a Prefeasibility Study to 
an accuracy level of ± 25%. The final Definitive Feasibility study report will 
be to an accuracy level of ± 10-15%. Once completed this information would-be 
sufficient to enable the Company to source finance for developing the project. 
The Feasibility Study is currently in an early stage with preliminary capital 
and operating costs defined for the base case processing option of agitated tank 
leach. Other processing options are also being considered, such as heap leach, 
with ongoing metallurgical test work aimed at defining the most appropriate 
option. 
 
 3. RESOURCE 
 
The Rossing South area contains two known zones of uranium mineralisation 
(Figure 1) which host one of the largest known uranium resources in the world. 
Significant detail on these resources, generated following JORC Code guidelines, 
has been previously reported to the market (ASX releases 2nd and 22nd July 2009) 
with a summary table shown below (Table 1). 
 
The currently defined Inferred and Indicated Resource at Rossing South has 
formed the basis of the preliminary capital and operating cost estimate. Ongoing 
resource definition drilling is required to increase resource confidence levels 
so that reserves can be defined for more detailed project evaluation. 
 
Total resources for Rossing South at 100 ppm U3O8 cut-off is as follows: 
 
 
+--------------------+--------------+--------------+--------------+--------------+ 
| Rossing South      | Category     | Tonnes       | Grade        | U3O8         | 
| Total              |              | (Million)    | (ppm U3O8)   | (M.lbs)      | 
+--------------------+--------------+--------------+--------------+--------------+ 
| Zone 1             | Indicated    | 21           | 527          | 24           | 
+                    +--------------+--------------+--------------+--------------+ 
|                    | Inferred           | 126          | 436          | 121          | 
+--------------------+--------------------+--------------+--------------+--------------+ 
| Zone 2             | Inferred     | 102          | 543          | 122          | 
+--------------------+--------------+--------------+--------------+--------------+ 
|                    | Total        | 249          | 487          | 267          | 
+--------------------+--------------+--------------+--------------+--------------+ 
Table 1: Rossing South Resource Table. Note figures have been rounded. 
 
 4. MINING 
 
The mining study is aimed at assessing the economic viability of an open 
pit operation at Rossing South. Conventional open-pit bulk mining 
utilising contract mining services and owner operator are both being considered. 
 
Mining costs have been derived by independent mining consultancy ORElogy. Mining 
rates are based on a 15M tpa processing plant. 
 
For this preliminary review an average strip ratio of 5:1 (waste:ore), including 
the overlying desert sands, has been used with more detailed mine design 
currently being completed on the most recent Zone 1 and Zone 2 resource models. 
 
 5. METALLURGY AND PROCESSING 
 
The base case process plant is designed to treat 15M tonnes of run of mine ore, 
on an annual basis, at an average head grade of 487 ppm U3O8 to produce an 
average of 14.8M lbs U3O8 (6.7K tonnes U3O8). Process plant capacity data is 
shown in the following table (Table 2). 
 
 
+--------------------------------------------------+-------------------+ 
| Description                                      | Value             | 
+--------------------------------------------------+-------------------+ 
| ROM throughput, M tpa                            | 15                | 
+--------------------------------------------------+-------------------+ 
| ROM grade, ppm U3O8                              | +/- 487           | 
+--------------------------------------------------+-------------------+ 
| Annual contained U3O8 (ROM), M lb                | 16.1              | 
+--------------------------------------------------+-------------------+ 
| Overall U3O8 recovery, %                         | 92                | 
+--------------------------------------------------+-------------------+ 
| Annual recovered U3O8, M lb                      | 14.8              | 
+--------------------------------------------------+-------------------+ 
| Annual recovered U3O8, K tonne                   | 6.7               | 
+--------------------------------------------------+-------------------+ 
Table 2: Process Plant Capacity Data. Note figures have been rounded. 
 
Metallurgical test work completed on core samples from Rossing South indicates 
agitated tank leach recoveries in excess of 90% are consistently being achieved. 
Agitated tank leach is currently the base case processing option. However, 
several other options, such as heap leaching, are still being considered with 
final outcomes to be based on the results from ongoing metallurgical testwork. 
 
 6. INFRASTRUCTURE 
 
This region of Namibia has good infrastructure which would greatly assist 
the development of the Rossing South project. The project area is located about 
55 kilometres east of the coastal town Swakopmund and north east of the deep 
water port of Walvis Bay. Equipment and materials for constructing and running 
the mine could be brought in through Walvis Bay. A rail line connecting Walvis 
Bay to the African network runs within 40 kilometres of Rossing South. 
 
Power is expected to be sourced from Nampower with an expected demand of about 
35 MW. Nampower is currently completing an Environmental and Socio 
Economic Impact Assessment to construct a new coal fired power station in the 
Walvis Bay area with three capacity scenarios being considered to provide 200, 
400 or 800 MW of electricity. 
 
Water for the operation is expected to be sourced from a proposed 
seawater desalination plant located between Swakopmund and Henties Bay. There 
have been discussions with several parties regarding the prospect of a 
collaborative desalination project to meet the needs of multiple industrial 
customers in the region. Namwater are expected to be the main supplier of this 
service. 
 
 7. CAPITAL COST ESTIMATE 
 
Capital cost estimates have been prepared by GRD Minproc. The capital cost for 
the project is estimated to be US$704M. 
 
The costs include EPCM and engineering contingency, but do not include the cost 
of off site water supply capital works (which have been included in 
the operating cost estimate, process costs), working capital, closure costs and 
owner's costs. 
 
Mining costs have been omitted from the capital cost estimate, as a total mining 
cost of US$2.10 per tonne has been defined which includes capital and all 
material movement during the course of mining (such as overburden prestrip, near 
surface and at depth within the open pit). 
 
 8. OPERATING COST ESTIMATE 
 
The operating cost estimates have been prepared by GRD Minproc Limited, with 
the exception of the mining costs generated by ORElogy. 
 
The estimated annual operating costs for the project are US$351M when 
full production has been reached. The operating costs estimated for the 
mining operation and process plant, as at July 2009, are shown in the following 
table (Table 3). 
 
 
+------------------------+------------------+------------------+------------------+ 
| Annual Operating Cost  |   Million US$ pa |   US $/t* of ore |    US$ / lb U3O8 | 
+------------------------+------------------+------------------+------------------+ 
| Mining Cost (includes  |              189 |             12.6 |             12.7 | 
| capital)               |                  |                  |                  | 
+------------------------+------------------+------------------+------------------+ 
| Process Cost           |              162 |             10.8 |             10.9 | 
+------------------------+------------------+------------------+------------------+ 
| Total Operating Cost   |              351 |             23.4 |             23.6 | 
+------------------------+------------------+------------------+------------------+ 
Table 3: Summary of the annual operating cost estimate. Note figures have 
been rounded. 
 
*Cost per tonne for mining is based on total (ore + waste) tonnes moved to get 
ore to the ROM pad, using a strip ratio of 5:1 (waste:ore). Processing costs are 
based on a 15M tpa processing plant. 
 
Sulphuric acid is the single largest reagent cost item within the process plant 
with the assumption that it would be imported through the Walvis Bay Port. 
However, there are opportunities for significant cost savings if acid is 
produced in Namibia. This option will be investigated in more detail during the 
course of the Feasibility Study. 
 
The information in this report that relates to Exploration Results, Mineral 
Resources or Ore Reserves is based on information reviewed or compiled by Mr 
Martin Spivey, who is a Member of The Australasian Institute of Mining and 
Metallurgy and Mr Andrew Penkethman who is a Member of the Australian 
Institute of Geoscientists. Mr Spivey and Mr Penkethman are both full time 
employees of the Company. Mr Spivey and Mr Penkethman have sufficient experience 
which is relevant to the style of mineralisation and type of deposit under 
consideration and to the activity which they are undertaking to qualify as a 
Competent Person as defined in the 2004 Edition of the `Australasian Code for 
Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Spivey 
and Mr Penkethman consent to the inclusion in this report of the matters based 
on their information in the form and context in which it appears. 
 
A full announcement with diagrams is available on www.extractresources.com 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCBXGDISXGGGCX 
 

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