Project options

In addition to selection of the mining and processing routes, there will be several other decisions to be made that will affect the project development.

4.5.1. Production rate

One of the most important criteria to be selected is the uranium production rate. The production rate has a major impact on the capital and operating cost, and the potential profitability of the project.

With a very large reserve, the higher the production rate, the lower is the overall cost of production expressed on a per kilogram of product basis and the higher is the project profitability. Yet, as stated previously, there must be a well defined commercial market for the product. However with finite resources, the life of the operation becomes important. This is illustrated in Fig. 7.

Figure 7, taken from a typical project, illustrates the importance of project life and how its selection can influence the profitability of the project. Too high a production rate requires an inordinately high capital cost and, because of the short project life, brings earlier decommissioning costs which adversely affect the cash flow. Conversely, a too low production rate increases the unit operating costs and might make the project uneconomic.

At the pre-evaluation stage, it is suggested that a production life of 10 years be considered. The processing rate may then be computed from the anticipated ore reserve. As an example we might consider a deposit with an expected reserve of about 15 000 t of uranium at a minable grade of 3 kg U/t. The pre-evaluation study would consider a production rate of 1 500 t U/a or an average ore processing rate of about 1 500 t/d. Subsequent stages of the development process would refine this estimate.

D C F R O R

16 14

12

10 8 6 4

2 0

0

40 000 t U RESERVES

30 000 t U

20 000 t U

1 2 3 4 5

Uranium Production - '000 t U/a

FIG. 7. Effect of reserves and production rate on DCFROR.

It should be noted that the configuration of the orebody might impose practical limits on the production rate. Furthermore, the production rate must reflect market conditions.

In the case of by-product uranium production, it is usual for the processing rate of the primary product to set the maximum production rate for uranium. As an example, a phosphoric acid plant producing acid containing 100 000 t/a of P²O^S might produce a weak acid containing 350 kg/m³ P²O⁵ and 100 g U/m3. This plant could produce no more than 29 t/a of uranium unless phosphoric acid production were increased.

4.5.2. Development strategies

The location of the uranium deposit with respect to other centres of population in the country can influence the way in which it is developed. If the deposit is within about 100 km from a population centre then it will probably be serviced and manned from that centre. However if the deposit is located at a great distance from an existing town it may be necessary to either establish a new town, or consider a fly-in/fly-out operation. In the later type of operation, the workers are flown to the site where they spend one or more weeks working 12 hours per day. They stay and eat in a company operated camp while they are on site. After spending their time on site, they return to their home for a similar time period. If this type of operation is likely, it should be recognized at an early stage. The capital cost to establish a camp and airstrip are considerable. The cost of operating the camp and the air shuttle service are also significant and must be added to the operating cost estimates.

Another consequence of the remote location must also be computed. A project at the end of a long supply line has special requirements regarding installed and warehoused spare equipment, reagent storage facilities, tankage for diesel and other fuels. This increases both the direct capital cost and the working capital for the project.

In some cases it may make sense to limit the activity at the mine site to mining of the ore. Factors that might, alone or in combination, influence this strategy include a very rugged, remote or inhospitable site, lack of tailings storage area, lack of grid supply of electrical power, and very high value ore. In such cases, ore might be transported to a processing site located in a more convenient area.

4.5.3. Economic evaluation

Except for unusual cases, the data available at the pre-evaluation stage will not be sufficient to allow a rigorous analysis of the economics of the project. Two alternative methods of analysis are available.

4.5.3.1. The comparison approach

The policy recommends that when preparing for the go or no-go decision, one can compare the project to existing operations or more advanced projects. This approach takes into account real experience and gives a good view of what is to be done.

Projects located in the same country

When the projects or the operations to be taken for comparison are located in the same country, the reconciliation of the different costs and other economical data is not too difficult. Some amendments are to be made such as:

the costs of the transport due to the location of the mines, the labour skills and costs,

the availability of consumables,

the cost of energy and electricity availability, and, the possibility of contracting parts of the job.

Projects located in different countries

When the projects are located in different countries, it may be dangerous but nevertheless is sometimes necessary to make a simplified mathematic calculation using the currency exchange rates.

It is recommended to send a small team, to the country where the model project is located. The task of the team is to collect the most accurate data on the unit costs, the working legislation, the possibility of contracting or not. When these data have been correctly collected, it is then possible to prepare a good analysis of the economies of the new project according to the specific costs and working conditions for the two projects being compared.

The main data to be collected are:

- the cost of labour,

- the cost of energy and the electricity availability, - the cost of transport,

- the cost of the most important other consumables:

explosives,

drilling rods and tools, spare parts, gas, oil, tires, timber,

cement and concrete, acid, ... and other reagents and others.

Similar data has to be collected for the capital cost, factors peculiar to the location of the project.

Data is also required on interest rates and taxes.

Having obtained such data, the economics of the project can be estimated and conclusions and recommendations made.

4.5.3.2. The handbook approach

If it is not possible to have access to data for existing operations, or if the size of the project under study does not bend itself to a comparative approach, a good alternative is to use the handbook approach.

4.6. COSTING