Re: MTN - Marathon Resources
yes i think they will be substantially higher than what they are today but you also have to look at type of mine they will operate. people went on and on about comparing SMM to MTN and if MTN was the same market cap as SMM they would be $15 per share.
THERE is some crucial reasons why they arent $15 a share
1 - enrivonmental concerns
2 - type of mine
ill just put up a little comparison of mining method to prove my point
http://www.ccnmatthews.com/news/rel...ctionFor=646025&searchText=false&showText=all
Westmoreland
On Apr. 17, 2007, Laramide Resources Ltd announced the completion of the scoping study. In the study, the mine is planned as an entirely open cut operation using conventional acid leaching and solvent extraction technology in the process plant. A mining and milling rate of 1.5 million tonnes per year at an average grade of 0.10% U3O8 for average annual production of 3 million pounds of U3O8 [1154 t U] was used in the scoping study. Production costs for a pound of U3O8 average US$ 19.02 for the first 6 years of the mine life, during which time the strip ratio will be 2.3 to 1. From year 7 onwards, the average production costs of U3O8 will increase to US$ 25.17 per pound as the strip ratio increases during the mining of the smaller Junnagunna and Huarabagoo deposits. Life of the mine will be greater than 11 years.
http://www.uranium1.com/index.php?section=uranium projects&page=2
In August, 2006 Uranium One announced the results of the feasibility study conducted by Mayfield Engineering Pty Ltd. and Aker Kvaerner Australia.
Highlights from the feasibility study include:
Indicated mineral resource estimate of 1.2 million tonnes at an average grade of 0.24% containing 6.5 million pounds U3O8
Steady state production level of 880,000 pounds U3O8 per annum, assuming a 70% rate of recovery
Average cash operating costs over the life of the project are expected to be US$14.13 per pound U3O8
Start-up capital costs of US$35.9 million, with an additional US$5.6 million required for working capital
http://ezinearticles.com/?Conventional-Mining-Will-Keep-Uranium-Price-High&id=316788
A research report by Orion Securities in Toronto, which participated in raising money for Forsys, suggested the all-in cost to mine the company’s Valencia project could come in under $25/pound and would have an IIR of 30 percent after tax. Early estimates show the Valencia project might annually produce 2.5 million pounds of U308 over ten years. This was sufficient to interest the fuel broker for a major U.S. utility. Felker said, “We’ve started the process of marketing our uranium after the utility sent a consulting geologist to study the property.” Due diligence was done on site in Namibia. Felker explained his company’s Valencia project was about 30 months away from where Paladin’s Langer Heinrich is today.
He calculated, from studies he was recently involved with, that the operating costs for an underground mining and milling operation would cost about $80 to $120/ton. An average grade of 0.1 percent U3O8 would yield two pounds per ton, but a feed grade averaging 0.2 percent would yield four pounds per ton. Uranium ore yielding four pounds per ton would cost about $25/pound. Miller explained that grades at Green Mountain, which SXR Uranium One is currently investigating for purchase, and his company’s Roca Honda property, should be profitable using the $100/ton benchmark. Both properties have reported economic grades through various studies.
http://ezinearticles.com/?U.S.-Uranium-Mines-Could-Produce-25-Million-Pounds-in-10-Years&id=335587
StockInterview: How large would a uranium deposit have to be to justify the conventional mining method?
David Miller: Near-surface, open-pittable deposits could be as small as a few hundred thousand pounds to be economic if a mill is nearby. To justify a new mill, for example in New Mexico, a critical mass of about 50 million pounds of uranium is needed. Grades can vary greatly. If the deposit is shallow and mined by open pit, with a mill nearby, then grades could be as low as 0.05 percent U3O8. With a 1500 to 2000-foot underground mine, grades above 0.20 percent may be required.
from these articles and research we get the following:
westmoreland -
open pit resource at 0.10% and strip ratio of 2.3 to 1 = US $19.02
honeymoon -
in situ leach resource at 0.24% = US $14.13
it was also stated in one of the articles that for an underground uranium mine grading 4 pounds per tonne or 0.2% would costs an average of $25 per pound. now the average of MTN uranium deposit is 0.068% indicating to me that since the head feed percentage of uranium is much lower the costs would be higher.
another point is made that an underground uranium mine would be feasible at grades above 0.2% much higher than mt gee.
even say on an avg of 0.1% we can assume the costs would be much higher than 0.2%.
so i am not writing the company off merely pointing out different costs in different types of mines. and mt gee may be quite more expensive per pound than everyone thinks. hence the difference in SMM and MTN, the valhulla resource should be open pittable i believe making it much cheaper per pound basis.
so typically for an underground mine you want high grade resource to be financially viable. the grade at mt gee is comparable to a mine that can be viable from insutu leach not underground mining. IMO its like comparing apples with oranges, there are completely different factors in each type.
and for me much less risk lies in a company that can produce low cost in situ leach type mine. and might i add much quicker to set up also.