Marenica Uranium Project – Namibia

Marenica Energy Limited – 75%

Xanthos Mining Limited – 20% (Namibian)

Millennium Minerals – 5% (Namibian)

Exclusive Prospecting Licence (EPL) 3287 covers 527km² and lies in the same uranium province as the Rossing and Langer Heinrich uranium mines and immediately north of the large Trekkopje Mine.  Resource Area EPL 3287 was initially granted for a 3 year period commencing 30 November 2005 for Base and Rare Metals, Precious Metals and Nuclear Fuel Groups of Minerals and renewed until 30 November 2014.

In November 2011 Marenica Energy Ltd delivered a Resource, based on historical and new data. The Company delineated a uranium resource totalling 276Mt grading 94ppm U3O8 comprising of an Indicated Mineral Resource of 26Mt grading 110ppm U3O8 and an Inferred Mineral Resource of 250Mt grading 92ppm U3O8 for a combined total of 57 million pounds of contained U3O8.

In addition, a maiden inferred resource at the adjacent MA7 deposit was announced during the second quarter 2011 of 22.8Mt grading 81ppm U3O8 for a total of 4.0Mlbs of contained U3O8 (at 50ppm cut-off grade).

HISTORY:

In April of 2006, Marenica Energy entered into a Joint Venture agreement approved by the Ministry of Mines and Energy on 31 May 2006, whereby it could earn an 80% interest in the project. Due to high uranium prices in the 1970's, Namibia underwent considerable exploration for uranium particularly along a 100km wide corridor extending east from the coast. The Geological Survey of Namibia flew several airborne radiometric surveys which outlined a number of potential targets. Rio Tinto, Anglo America and Goldfields all conducted exploration in the region that delineated hard rock, palaeochannel and calcrete deposits.

Previous exploration notably by the Goldfields Group of South Africa, over the north east portion of the EPL, outlined several uranium mineralised areas. Extensive drilling was conducted in the delineation of secondary uranium deposits associated with palaeo drainage channels and weathered bedrock. Drill intersections included 9.7 metres at 980ppm eU308, 8.1 metres at 500ppm eU308 and 3 metres at 754ppm eU308. The collapse in the uranium price resulted in Goldfields withdrawing from the project at the end of 1982.

The regional geology of this area consists of basin and dome tectonic features, where massive marbles of the Karibib Formation form three prominent domal structures, while steeply dipping biotite schists (Kuiseb Formation) form the basins similar to that of the Rossing Mine. Potential to find a hard rock deposit is therefore encouraging. The recent discovery of uraninite bearing alaskites on the Marenica Project further enhances the hard rock potential of the area.

In late 2011 a group of consultants completed a review of the October 2010 Scoping Study prepared by SRK Consulting (SRK Study) and established that the Project was seriously sub-economic using conventional Heap or Tank Leaching processing methods.

The focus of the 2011 metallurgical testwork had been on Heap Leaching, with and without scrubbing and pre-screening.  Whilst the Heap Leach extraction results were encouraging, the rejection of coarse material ahead of Heap Leaching resulted in material handling issues that significantly increased the process complexity and risk and increased the capital and operating costs of the planned process facility.

BENEFICIATION OPPORTUNITY:

The consultants reviewed the metallurgical testwork results and identified that the ore and the uranium mineral known as carnotite, had unique characteristics which presented an opportunity to be exploited to upgrade the uranium by beneficiation to significantly improve the Project economics.  This has presented a very exciting opportunity for the Project and is the primary focus of the Company.

The metallurgical consulting group concluded that the calcrete hosted carnotite mineralisation at the Project potentially had unique characteristics that could result in upgrading the Carnotite into a reduced mass concentrate for Tank Leaching.  This concept was taken further with an assessment of new scoping level capital and operating costs based on a proposed upgraded flowsheet.  The outcome was encouraging with an expectation that this upgrade process could significantly impact on the Project economics. 

As the resource is relatively well known as a large low grade resource, the Company suspended all drilling activities on the resource or on exploration targets whilst it progresses the metallurgical process development stage, as the future of the Project is dependent on metallurgical beneficiation success and not additional resource definition success.

TECHNICAL STEERING COMMITTEE:

A Technical Steering Committee (TSC), made up of independent industry experts and Marenica personnel (including the technical Directors), was formed to initially assess the proposed upgrade concept and once confirmed, oversee and guide the metallurgical beneficiation programme.  One of the metallurgical consultants believed so strongly in the success of the beneficiation programme that he accepted the position of CEO of the Company. 

The first work initiated by the TSC was detailed mineralogical testwork at the Australian Government owned Commonwealth Scientific and Industrial Research Organisation (CSIRO) on a representative composite from five diamond drill holes.  This work concluded that the uranium mineralisation in the Marenica deposit has distinctive characteristics including:

  • The uranium occurs as a single uranium mineral – carnotite.
  • The carnotite is extremely well liberated.
  • There are virtually no composites of carnotite and gangue minerals.
  • The carnotite with a Specific Gravity of 4.2 is heavier than the host rocks.
  • The carnotite occurs in a distinct size band – the vast majority confined to the -125+5 micron size range.

These characteristics present a rare opportunity to concentrate the uranium into a high grade - low mass product, which in turn reduces the mass feeding the high unit cost leach circuit, resulting in a significant reduction in the leaching circuit costs.

Unit processes identified for detailed evaluation are well established unit operations that are used extensively in the broader minerals industry but to date with limited use in the uranium industry.  They are comparatively low cost techniques that are scalable to large tonnage operations.  Such concentration techniques (either in parallel, in sequence or individually) will result in an upgrade of the ore. 

The initial technical review by the TSC confirmed that the Project should be amenable to lower capital and operating cost metallurgical processes than those previously considered.  Successful implementation of these processes would reduce the amount of material to be treated and lower the capital and operating costs compared to conventional uranium concentration process – resulting in enhanced project economics.  The TSC believed that these characteristics present an opportunity to significantly concentrate the uranium, targeting in excess of 30 times at high recovery.

BENEFICIATION PROCESS:

The Programme included excavation of seven test pits on the resource to recover bulk mass of samples for metallurgical testing. The first batch of these samples were received in Perth in July 2012.  The understanding of the geological, mineralogical and metallurgical properties of the resource continues to increase. 

The beneficiation testwork has produced an upgrade of >60 times at a recovery >65%, which is above Marenica’s expectations.  The upgrade process has been very successful and has reduced the leach feed to about 1% of the beneficiation plant feed due to significant rejection of the major gangue mineral of calcite.  This successful calcite rejection has also enabled the proposed leach circuit to be changed from an alkali leach (with higher operating temperatures and slower kinetics) to an acid leach (at ambient temperature and rapid kinetics), reducing expected capital and operating costs.  The leach feed tonnes are therefore expected to be 200,000tpa from 20,000,000tpa mined, and the leach feed grade is expected to be >5,500ppm U3O8.

The rejection of 99% of the mass using low cost mechanical processes are also expected to result in a relatively benign environmental impact, with only 200,000tpa expected to be leached.  The unit processes used in the beneficiation circuit testwork are well established and commonly used in the wider mining industry and at scales of operation suitable for the Marenica Uranium Project.

Marenica have named this beneficiation technology “U-pgrade™”.

Due to the novel approach of the proposed metallurgical process, the Board has taken the decision to lodge a Patent over the process to protect the Company’s Intellectual Property.

OTHER:

As part of a proactive move to embrace broad based black economic empowerment and to contribute to community uplift in the Marenica area, the company signed a Memorandum of Understanding in October 2009 with local company Millennium Minerals (Pty) Ltd. Millennium Minerals is owned by Mr Mathews Hamutenya, a well-respected businessman in Namibia.

Black Empowerment

Under the agreement, Millennium Minerals has acquired a 5% interest in the Marenica Project. Marenica Energy Limited has reduced its holding in Marenica Minerals Pty Ltd, the entity which owns the Project to 75%. The sale of the 5% interest in Marenica Minerals Pty Ltd to Millennium is subject to a number of conditions. The Millennium Minerals company charter incorporates the Marenica Millennium Community Trust to benefit disadvantaged Namibians and specifically assist with educating the youth of the general community.

Both Marenica Energy and Millennium Minerals have contributed funds to this Community Trust. The Trust's opening assets consisted of A$150,000 (N$1 million) which have been distributed as bursaries to deserving Namibians. Over the past 5 years 13 successful bursary candidates have been awarded their bursaries.

Current Status

Marenica has applied to the Minister of Mines in Namibia for a Mineral Deposit Retention Licence to replace the current Exclusive Prospecting Licence, which if approved would effectively allow Marenica a period of 5 years grace with respect to exploration expenditure obligations (noting that all Marenica’s environmental responsibilities are in order), to allow short to medium term focus on process development.

Using U-pgrade™ with the Marenica deposit remains an ongoing option available to the Company once uranium prices improve.

During this hiatus in the project in Namibia, it has unfortunately been necessary to retrench the site staff and relocate the Swakopmund office to Windhoek.  Samples and appropriate records have been securely stored and unwanted capital equipment sold.

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