IGO to record impairment against nickel assets in strategy shift
IGO has been undertaking a strategic review in an attempt to revaluate its resources.
As announced to the Australian Securities Exchange on Thursday, Australian-based company Aura Energy Limited (ASX:AEE) entered into a binding co-operation agreement with Areva Mines SA (Areva) regarding a potential strategic partnership for the Haggan uranium and polymetallic project in Sweden.
Under the terms of the agreement, Areva will undertake an agreed work program in relation to the Haggan Project during an initial four month period.
During the period of the co-operation agreement, Aura Energy and Areva will work in good faith to finalize a pre-feasibility study work program, and also conclude the terms of an option agreement and joint venture agreement under which Areva may acquire an interest in the project.
Dr. Bob Beeson, Aura’s managing director commented, “Key to the selection of Areva as a strategic partner for the project was Areva’s leading position in the uranium mining industry. This relationship will assist the company in the development of Haggan on which we plan to begin a pre-feasibility study by the end of 2013. Areva’s interest in the project is a strong sign of support and we look forward to establishing a productive working relationship.”
Current inferred uranium resources of the Haggan Project amounted to about 308 ktU with an average grade of 0.013% U — that makes this deposit one of the largest in the world.
On May 29, 2012, Aura Energy Ltd. announced that a revised scoping study financial model prepared by independent consultants RMDSTEM confirmed the Haggan Project is financially robust.
This project has its pros and cons. The main advantages are low mining costs with a strip ratio of only 0.75:1 and potential credits from nickel and molybdenum byproducts.
From the other side, this type of uranium deposit (in alum shale) was never mined profitably in the past because of highly complicated processing technology. The Ranstad alum shale project, the only uranium mine in Sweden, was in operation from 1959 to 1969 with total output of 215 tonnes of uranium oxide, and recognized as uneconomical.
Moreover, as a result of mining operations at Ranstad, a large territory was under threat of contamination, and high-cost restoration activities have been provided by governmental authorities.
All other attempts to develop uranium “alum shale” deposits in Sweden were stopped due to massive protests by local communities.
Thus, future plans of Aura Energy-Areva partnership regarding the Haggan Project will likely face a number of challenges — include development of feasible industrial-scale processing technology, strict environmental regulations as well as local opposition.
Image: Shutterstock / Jens Ottoson
