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‘Uranium to rocket’

Thursday, 21st November, 2013

By Erica Visser

South Australian company Marmota Energy has predicted a boom in the uranium market after taking on full rights for the Junction Dam project this week.

Junction Dam is west of Broken Hill, over the South Australian border and just 10 kilometres from the sandstone-hosted Honeymoon Mine.

Marmota has gradually built up rights for its “flagship” high-grade uranium project during three years of exploration and testing at the site.

This week the ASX-listed company announced it had finally acquired 100 per cent of the rights.

“This milestone now delivers greater certainty and control in our current and ongoing steps to assess and implement the optimal pathway to the project’s commercialisation,” Managing Director Dom Calandro said.

“While the uranium market has been challenging in recent times, we are buoyed by the sustained long-term outlook for uranium which remains strong and is showing signs of recovery.”

Mr Calandro told the BDT yesterday that the breakthrough was a “significant step” for the company and reflected its confidence in the project.

“It’s a project we’ve started late in 2009 and the drilling results have come back with high grade minerals. In line with that, there’s potential for expansion from the north to the south.”

“The mineralisation we have here is very comparable to mineralisation that they have at Honeymoon.”

The Honeymoon Mine, owned by Canadian company Uranium One, was mothballed last week taking with it 90 jobs.

Honeymoon told the BDT its small size made it particularly vulnerable to market changes, and an almost $100 drop in uranium prices since 2007 had taken its toll. 

However, Mr Calandro said that the news had not put a dampener on plans for Junction Mine.

“Given the current environment, I don’t think it was unexpected,” he said.

“Obviously Uranium One is going through a transition period and going through a process of assessing all their assets globally.”

Mr Calandro said he thought it wouldn’t be long until Honeymoon was up and running once again.

“My view is that the mothball period will be shortlived.

“We should start to see recovery in uranium price. I think you’ll find the reopening of the plant isn’t too far away.

“In the meantime, there will have to be some sort of ongoing maintenance at the site.”

Mr Calandro said that there would soon be a gap in the market for uranium providers.

“If you look at what’s happening, the world consumes more uranium than we mine globally,” he said.

“At the end of the day, there’s going to be an increase in demand.”

Another factor was the June announcement that uranium originally produced in Russia for nuclear warheads would soon run out.

The uranium source fuelled around 10 per cent of electricity in the United States under a contract dating back to 1994.

However, it was warned earlier this year that over 95 per cent of this resource had been used and would run out before the end of the year.

Mr Calandro said that he expected this would create a gap of 15 per cent in the uranium market and spur on price improvements.

Meanwhile, Marmota continues to patiently await approval for three new prospective tenements on the NSW side of the border.

The company was one of the first in the area to apply for uranium exploration licences, after the state government overturned a 26-year-old ban on exploration early last year.

“We are still waiting for those to be granted but you can understand (the government) is going to need time to put the right motions in place. Twenty-six years is a long time.”

Despite campaigning against uranium and the potential health effects, Mr Calandro insisted that it was in the government’s best interests to legalise uranium mining in the near future.

“I think ultimately the benefits to the NSW Government and communities involved are big in terms of royalty streams, assuming the right framework is in place; the right safeguards and assurances from stakeholders.”

But the company will now continue to focus most of its efforts to the SA side of the border, where it will continue going through the motions to make Junction Dam viable.

“We don’t like to look at things as obstacles - it’s just the regulatory process you have to go through to start up projects like this.”

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