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Australian uranium developer Deep Yellow (ASX: DYL) says it will defer its final investment decision on its Tumas project in Namibia after experiencing delays in receiving final costing and quotes for detailed engineering work.
The decision, now expected in March 2025, will also take into consideration newly identified opportunities to further optimize the project, the company said in its December quarter-end results release. It also noted that the project’s timing will be “strategically determined according to the prevailing uranium price.”
Deep Yellow said its board believes the uranium price forecasts given by analysts are “overstated”, and “there is significant doubt” regarding the pace of available greenfield uranium developments in the next 10 years.
This, combined with the rapidly increasing demand for commercial nuclear power, does not justify the current uranium price as a basis for new development start-ups and it will need to increase to materially
incentivize new production, it added.
“The delay is minor in the scheme of the long-term aspirations for the project,” stated Deep Yellow’s managing director and CEO John Borshoff.
“Therefore, while we continue to progress early works and expect to be ready to make FID in March, improved uranium price will be a primary pre-condition to starting construction of the processing plant.”
Deep Yellow views its flagship Tumas project as one of the most advanced greenfield uranium projects globally, having released a definitive feasibility study in 2023 outlining a potential long-life (22.5 years) mine asset.
The company has been working on the Tumas project since 2016 and has to date delineated a resource totalling 118 million lb. of uranium oxide (U3O8) at a grade of 255 parts per million U3O8. Within the resource is an estimated ore reserve of 79 million lb. grading 298 ppm U3O8, which is a 16% over the reserves used by the DFS.
According to the report, the previously calculated reserves (67 million lb.) could support a long-life (22.5 years) mine with annual uranium production of 3.6 million lb. Initial capital of the Tumas project is estimated at US$372 million. At an 8% discount, its after-tax net present value would be US$341 million, with an internal rate of return of 19.2%.
While Deep Yellow continues to evaluate the project for an investment decision in March, its team will continue to work on the project engineering on site and conduct further drilling to boost the deposit’s reserves. The company will also look to secure its supply of water and power from Namibia’s utilities, as well as project financing.
By the end of December, it had A$238 million in cash and no debt.
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