# NEL - Nova Energy



## exgeo (7 January 2007)

NEL currently have a JORC resource of around 9000t of U308 at 0.06% (600ppm or 0.6kg/t). They are doing a feasibility study on the Centipede/Lake Way projects using GRD Minproc engineers- GRD did the engineering for Langer Heinrich (PDN). They are currently doing a resource definition drilling programme to upgrade the status of the JORC resources from inferred and indicated to the higher levels of confidence. Some gaps in the previous drilling will be filled in and they plan to test for extensions of the resources around the margins. A large block of drilling data was missing from one area, so this will also be tested.

The project is made up of two resources seperated by about 20km across Lake Way. They are both around 4500t in size. In 1980 (the last time any serious work was done on these deposits) the plan was to mine them using a causeway across the lake, trucking to one mill. NEL plan to use one of AGC's old open pits as tailings storage (Agincourt own 57% of NEL's shares, in escrow at the moment. The NEL shares account for 30% of AGC's market cap at current prices). Mining will be open-cut. Test mining was done in 1980 at the northernmost deposit (named "Lake Way") but Centipede (next to the honeymoon nickel deposit) is less advanced. Both deposits had metallurgical testwork done on them and planned to use alkaline leach, the same as used at Langer Heinrich. This is proven technology (LH was not the first uranium mine to use this process). It seems likely that the drilling programme will lead to an increase in both confidence level and tonnage of the resource, perhaps 10-20% increase in U308 tonnes I'd guess, but not a doubling or anything as exciting as that IMHO. That's because these deposits are flat-lying and shallow, around 5m below the surface. They were pretty well-drilled in the 70's and 80's so it doesn't seem likely that large extensions were left undiscovered. Of course speaking as a NEL shareholder, I'd be happy to be proved wrong on this point!

NEL were also recently granted 3 exploration licenses in Namibia, one of them is 12km downstream from Langer Heinrich. NEL plan to test for buried LH-type targets. LH was discovered by a prospector in a light plane with a geiger counter on the floor of the plane. A non-outcropping deposit would not have been found using this technique (at LH, carnotite can be seen by eye at surface). They have also commenced fieldwork in Guinea, West Africa in Nov 2006. Historical work in Guinea in the 1970's showed uranium up to 0.5% U308 (5kg/t) and 7.5m thick.


----------



## canny (7 January 2007)

*Re: NEL- Nova Energy (Uranium in WA/Africa)*

Exgeo - taking your name literally, you're in a good position to run some comparisons.
Also need to use market cap and number of shares to find value, but have you looked at WME - also near PDN's territory in Namibia, and as yet still flying under the radar.
Meantime, I'll go and have a research hit on NEL
Thanks for the heads up.


----------



## exgeo (7 January 2007)

*Re: NEL- Nova Energy (Uranium in WA/Africa)*

Have a look at what I posted in the MTN thread- that'll get you started on calculating values per lb U308.


----------



## Sean K (7 January 2007)

Looks pretty good exgeo. Looks like it needs to consolidate a little after the past few days and might find lots of buying support around the green circle. Bit of a gap to fill too. Although, many U players have gone balistic recently and offer similar profiles. Doesn't necessarily mean they will stop......what are you holding atm?


----------



## 56gsa (30 January 2007)

So does the proposed OXR ownership make NEL more viable?


----------



## 56gsa (30 January 2007)

preliminary scoping parameters for NELs WA deposits (9000t) - not sure of capex although at US$72 (A$96) gives a A$70/lb margin which would be A$119m a year so payback very short...  also NPV very positive!

Life of mine 10 years
Mining rate (ore plus waste) 3Mtpa
Stripping Ratio < 1:1
Maximum depth of mining 10m
Mining cut-off grade 300ppm U3O8
Average head grade 0.06% U3O8
Plant type Conventional crushing and milling, 90oC alkali leach, CCD, ion exchange
Processing rate 1.5Mtpa
Recovery 85-90%
Average annual production rate 775t (1.70m lb) U3O8
Revenue per lb U3O8 US$ ?? /lb 
Operating cost per lb U3O8 US$21/lb (A$27/lb)


NEL licences in Africa are quite recent but the thing i like about NEL is that they have Lake Way deposit which was almost mined in 1980s... presumably back then companies had a lot to chose from and were picking over the best and most viable and this was one.  Just need WA to agree to mining...

think i'm talking myself into buying some!  is that a cup & handle in the chart?  does gap around $2.80 still need to be filled?


----------



## exgeo (30 January 2007)

In terms of uraniums I've got NEL, MTN, EME, SMM, GGY (until they sold it!), and a small UK listed company called Vane Minerals.


----------



## 56gsa (24 May 2007)

Can't believe its been so long since comments on this...  

Recent ann is on rights issue -  1 for 14 @ $3.80 with 29 May as ex date ... Maybe not the best time to be going to the market for $$$s but NEL seems to have held up relatively well.

Since Jan we've seen infill drill results on WA deposits confirm the potential...



> The previously reported Inferred Resource at Lake Way and Centipede is 15.5 million tonnes @ 0.06% U3O8 (1.27 lb/t) for 19.8 million contained lbs of U3O8 (using a cut-off of 0.03% U3O8 based on a uranium price of US$37.5/lb). The increased density of drill information will enable a JORC compliant Indicated Resource to be determined.




Being in WA this is going to need an election before things will take off but I think it has potential given it was one that was taken to almost mining stage in the 1980s.

But NEL has also got its fingers into Africa to keep the interest up in the meantime (and probably explains why sp has held in recent weeks) - with recent ann on drilling starting in tenement directly west of Langer Heinrich 9some nice pix in the ann of the deposits in that area)


----------



## Sean K (24 May 2007)

There are a few U players hitting the lower band of uptrend channel at the moment. MTN and BMN come to mind as well as this. Seemingly a critical moment to determine whether these keep generally trending up, or more uncertainty creaps in.


----------



## 56gsa (25 May 2007)

kennas said:


> There are a few U players hitting the lower band of uptrend channel at the moment. MTN and BMN come to mind as well as this. Seemingly a critical moment to determine whether these keep generally trending up, or more uncertainty creaps in.



cheers kennas wouldn't it be good if we had an aussie U index so these general trends could be seen more easily...


----------



## 56gsa (22 June 2007)

i see OXR has been selling of some of its assets as a result of the agincourt takeover - presume NEL has risen because of such speculation.... any other ideas?  entitlements closed today as well ...


----------



## 56gsa (11 July 2007)

I see the chief finance officer of OXR has joined the NEL board as non-exec director....  would this be to do the numbers on carving out parts of NEL for sale? 

NEL certainly progressing things at Lake Way and will be one of the best positioned juniors in WA to progress U project if / when State Govt changes (both party in power and legislation on mining U) - still a LT hold imo


----------



## 56gsa (3 August 2007)

Trading halt due to possible acquisition....  last quarterly said:



> Other African Projects
> In accordance with Nova Energy’s strategy of diversification into jurisdictions that are favourably disposed towards uranium exploration and production, the Company continued to assess exploration opportunities in northern and western Africa.




This has held up relatively well despite U and general market blues - although the buy side atm looks very bleak...  3.80 likely to become resistance as this was recent placement level


----------



## 56gsa (6 August 2007)

56gsa said:


> So does the proposed OXR ownership make NEL more viable?




well makes TOE more viable perhaps - and OXR now has 46% of TOE so nice foot in the U camp - based on TOEs last close this equates to $4.40 for each NEL share - think I'd take that in todays market climate...  nice timing for TOE



> TORO AND NOVA AGREE TO MERGER PROPOSAL
> The Boards of Toro Energy Limited (ASX: TOE) and Nova Energy Limited (ASX: NEL), owned as to 57% and 25% respectively by Oxiana Limited (ASX: OXR), have today announced a recommended merger by way of a scrip takeover offer by Toro for Nova (the “Offer”).
> The Offer terms are 5.5 Toro shares for each Nova share and, if successful, the merger will result in Oxiana holding about 46% of the merged company on an undiluted basis. Based on the closing trading prices of Toro ($0.80) and Nova ($3.70) on 2 August 2007, the Offer implies a market value for the merged company approaching A$400 million.
> When commenting on the merger from an Oxiana perspective, Mr Owen Hegarty (Managing Director and CEO) said:
> ...


----------



## 56gsa (7 August 2007)

strange - hardly any bids came in on this or TOE after the merger announcement...  

can someone tell me - if TOE is looking to open at around 85, and they're offering 5.5 shares why is the bid on NEL not closer to $4.65 - am I missing something????


----------



## powerkoala (7 August 2007)

56gsa said:


> strange - hardly any bids came in on this or TOE after the merger announcement...
> 
> can someone tell me - if TOE is looking to open at around 85, and they're offering 5.5 shares why is the bid on NEL not closer to $4.65 - am I missing something????




Market is trading sideways at the moment, even good news like this can't guarantee anything. True, price should be at least $4.40, but jitters of subprime concern seems haunting ppl at the moment. I think we have to wait maybe after FED meeting and RBA announcement.


----------



## 56gsa (7 August 2007)

this is very strange - despite these concerns you'd think the price should still track the TOE price - this seems an arbitrage opportunity.  I've only seen such discounts when the takeover does not look likely - but this merger is as close as you can get to a certainty?

Why would anyone be buying TOE at the moment?  You're paying 84/85 yet can buy NEL and get them in about 2 months for the equivalent of 72?  

i'm confused??


----------



## 56gsa (8 August 2007)

TOE got an absolute bargain here...

Based on last close ($4) current EV/lb is $4.73.  Based on TOE @ 85 it becomes $5.53 / lb based on NELS 20 m lbs JORC for Lake Way in WA.  You'd expect some discount because in WA but still this is well below other takeovers, even below market averages for EV/lbs, and also doesn't factor in anything for the other holdings, particularly those in Namibia near BMN and PDN.

still perplexed why NEL trading at such a discount to merger level??


----------



## 56gsa (8 August 2007)

Sorry my mistake - I didn't check the appendix 3B and took shares off a website...  still a bargain imo, but looks more reasonable now

Total shares:  63,105,410 
 share price:   4.00 
 mkt cap:      252,421,640 
 JORC lbs       20,000,000 (actually 19.8m but ann expected soon likely to increase this)
 EV/lb           $12.62 (or $14.75 at TOEs current SP)

Can someone tell me - does this then become TOE's first JORC resource? NO - I see they have about 1.5 mlbs which is 1/14th of the Napperby deposit - so TOEs first major JORC resource


----------

