(Peninsula Energy 74% / BEE Groups 26%)
Peninsula held a 74% interest in a total of 40 prospecting rights (PR’s) covering 7,800 km² of the main uranium-molybdenum bearing sandstone channels in the Karoo Basin (Karoo Projects) before embarking on a restructuring strategy during 2016 and 2017 aimed at reducing the Company’s existing tenement landholdings and applying for mining and prospecting rights over areas considered to hold the most significant development potential. Subject to completion of the various regulatory processes, Peninsula’s total tenement holding will amount to 3,669 km2. The residual 26% interest remains with the BEE partners as required by South African law.
Peninsula has freehold ownership over an area of 322 km² which covers a significant proportion of the reported resource and allows unlimited surface access.
Figure 1: New Prospecting and Mining Right Applications at Karoo Projects, South Africa
INtention to divest interest in karoo projects
In October 2017 the Company advised that it intends to complete a divestment of its 74% interest in the Karoo Projects through an active process over the remainder of the 2017 calendar year. Dependent on the nature of any transaction, Peninsula may opt to retain some level of exposure to the Karoo Projects, albeit at a significantly reduced level to that which it currently holds.
While the Company has advanced the Karoo Projects from exploration to early stage pre-feasibility over the past decade, it has decided to focus its future capital expenditures on the operating Lance Projects in order to take advantage of its long term sales contracts, which are well above current and forecast spot prices and extend out to 2030. Therefore, the Company does not wish to devote significant further capital to progress its less advanced secondary project. In addition, the recently completed internal pre-feasibility study now provides a more comprehensive suite of project data for potential acquirers to review.
During the September 2017 quarter, Peninsula concluded the major activities in support of an internal Pre-Feasibility Study for the Quaggasfontein, Ryst Kuil and Kareepoort mining right application areas. The outcomes of this study indicate that the Karoo Project would be economic at a uranium price of US$65 per pound. It also highlighted areas for further analysis and review aimed at enhancing the life of mine parameters from both a production rate and cost of production perspective.
Mining Right Applications
In September 2017 Environmental Impact Assessment (EIA) and Environmental Management Plans (EMP) were submitted to the Department of Mineral Resources (DMR) for Kareepoort in the Eastern Cape and Ryst Kuil in the Western Cape. Following the statutory 107 day review periods a record of decision from the DMR is expected no sooner than 7 January 2018 for Kareepoort and no sooner than 3 February 2018 for Ryst Kuil. The final EIA and EMP for Quaggasfontein will be submitted in the first week of November 2017.
Prospecting Right Applications
During the September 2017 quarter the Company received approval from the Western Cape DMR of the Environmental Authorisation applications submitted for the five prospecting right applications. These authorisations are now subject to appeals’ processes lodged by interested and affected stakeholders. Final determination by the Department of Environmental affairs is expected before the end of January 2018.
As reported previously, closure applications were submitted to the DMR for all prospecting rights that have expired or are deemed less prospective. As at November 2017, only one Closure Certificate has been received.
Acquisition and Drilling
Peninsula commenced activity in South Africa in 2006 and was awarded prospecting rights by the Department of Mineral Resources over six project areas located in the Western, Northern and Eastern Cape Provinces. These prospecting areas include three historic deposits that were explored by JCI and Union Carbide Exploration Corporation during the late 1970’s and early 1980’s.
The aim of exploration work on the original six project areas was to evaluate historic exploration targets and develop new targets throughout the Karoo. Since commencement of exploration Peninsula has completed approximately 31,000 metres of Reverse Circulation and Diamond drilling and geophysically logged an additional 15,000 metres of open historic holes at three of the original six PR’s.
The acquisition of AREVA’s assets in South Africa brought an additional 35 prospecting rights and 597,000 metres of drilling into the database. Work was then completed to compile and validate all data from Peninsula’s own drilling areas and the new data acquired from AREVA in order to produce a 3D geological model and JORC compliant resource estimate.
Various studies have determined that uranium and molybdenum mineralisation is hosted in fluvial channel sandstone deposits in the western and central parts of the Main Karoo basin within the Adelaide Subgroup and to a much lesser extent, the Molteno and Elliot formations of the Permian-Triassic Beaufort Group (Karoo Supergroup). The occurrences are epigenetic, tabular and sandstone-hosted and the thickest sandstone bodies tend to contain the highest proportion of mineralisation.
The prospecting rights acquired from AREVA are complementary, in terms of mineral endowment, geology and geographic location, to the assets that Peninsula held in the Karoo Basin prior to the acquisition. The combined Karoo Projects contain 56.9mlbs Indicated and Inferred Resource (JORC 2012 Code).
In February 2013 Peninsula announced an initial JORC Code-compliant Mineral Resource estimate of 50.1Mlbs eU3O8 at the Karoo Projects. This estimate included an indicated resource of 15.7Mlbs grading 1,020ppm eU3O8 above a cut off of 600ppm eU3O8. This was followed by an updated JORC Code-compliant Mineral Resource estimate of 56.9Mlbs eU3O8 at the Karoo Projects in March 2014. The increase in the Karoo resource was the result of the inclusion of data from the 2013 drill program and the adoption of a revised block model reporting methodology in line with the Local Uniform Conditioning formalism.
The current resource estimate, as shown below, is based on 7,230 drill holes from a database comprising 9,343 drill holes, which includes 1,245 additional holes probed or drilled by Peninsula since 2011, including 16 diamond holes and 801 reverse circulation holes.
Table 1: Classified JORC Code Compliant Mineral Resource Estimate, Karoo Projects
|Classification||eU3O8 (ppm) cut-off||Tonnes (millions)||eU3O8 (ppm)||eU3O8 (million lbs)|
The resource estimate was undertaken by independent consultants Optiro Pty Ltd. Mineral Resources have been classified on the basis of confidence in geological and grade continuity using the drilling density, geological model, modelled grade continuity and conditional bias measures (kriging efficiency). Indicated Mineral Resources have been defined generally in areas of 50m by 50m drill spacing.
Inferred Mineral Resources have been defined in areas of 100m by 100m up to 400m by 400m drill spacing. A bulk density of 2.67 t/m3, (based on 1,425 representative determinations), was applied to derive the resource tonnage.
The historic and current drilling is distributed over two main areas – the Western and Eastern Sectors - and includes results for more than 4,000 mineralised intervals. Drill-spacing varies from 100m by 100m to 25m by 25m with the majority of indicated resources drilled at an average spacing of 50m by 50m.The Eastern Sector covers the majority of the reported resources including the Ryst Kuil Channel and Quaggasfontein. The Western Sector encompasses the Maitjieskloof and Slingersfontein resources, together with the majority of the exploration targets.