Resource World Magazine

30 www.resourceworld.com a u g u s t / s e p t e m b e r 2 0 1 5 miNiNg Forsys MeTals on fast track to develop uranium mine tAKinG A PROJeCt from the exploration phase through to pro- duction can take more than a decade. Given the volatile nature of commodity markets, it is likely that a project developer will have to endure at least one bear market cycle while advancing through the process. Investor sentiment is notoriously unpredictable and it can be challenging to raise funds, even for good projects. Now consider the situation for Forsys Metals Corp. [FSY-TSX]. The company has been working for several years with the goal of achieving production at its Norasa uranium project in Namibia. Uranium is going through a bear market that is even more severe than that endured by most other metal producers. However, the fundamentals for uranium remain strong. Nuclear energy is likely to remain a significant part of electrical generation for many coun- tries for a long time to come. It has been estimated that nuclear power production will grow by more than 30% by 2020. More than 560 new reactors world- wide are either currently under construction or in the planning stages. Most of these new reactors will be built in nations with demographics supporting rapid economic growth. This means demand for uranium to fuel these reactors will likely continue to be strong even though uranium prices have been driven lower in recent years. Located in southern Africa, Namibia is a jurisdiction most investors are unfamiliar with and therefore may be less inclined to risk their capital there. These concerns are perhaps unwar- ranted. The country is a stable democracy with a history of successful mining, supported and encouraged by government policy. Namibia is currently the fifth largest uranium producer in the world, and the mining license for Norasa has already been granted. The project is just 90 km from a major deep water port facil- ity, and 35 km from a large uranium mine operated by Rio Tinto. Thus, much of the infrastructure required to support a new devel- opment is already nearby. Forsys recently presented a Definitive Feasibility Study (DFS) for Norasa that documented more than 90 million pounds of ura- nium (U 3 O 8 ) in the proven and probable reserves category grading 200 ppm, plus another 115 million pounds of measured and indicated resources. Favorable deposit geometry makes possible an open pit mine plan, with a low strip ratio resulting in lower operating costs. This is a key factor considering the current price regime for the metal. The overall dynamics for Norasa are indeed compelling. Based on the DFS, production can be sustained at this large, low-grade deposit for a long mine life, with low cost uranium output that is still projected to be profitable even during a price slump for the metal. The study estimated a capital development budget of US $433 million with a payback in just 4.4 years after production commences. If uranium prices recover, then the project economics become even more attractive. Construction for the first phase of mine development is planned to commence later this year, and after surface stripping has been completed in the first half of 2016, the company will begin stock- piling run-of-mine ore. Concurrent development of processing facilities should enable commercial production to be achieved early in 2017. Forsys has planned a mine of 15 years, with pro- duction of more than 5 million pounds of uranium per year. The major hurdle ahead for the development plan is to secure project funding. Again, this is a common problem for all aspiring mine developers across the sector, even those with robust projects that appear to hold strong potential economic advantages. The issue comes down to closing a deal to allow the proj- ect to move forward, without giving away the store. The clock is ticking and the planned window for construction start-up is rapidly approaching, so the urgency is cer- tainly there to address this issue. With a current market value in the range of just $20 million, Forsys Metals appears to be an intriguing value. With a fully permitted development prospect, a signifi- cant uranium resource that may sustain mining for many years, plus a positive DFS in hand, Forsys is certainly capable of achieving its goal to begin profitable mining operations at Norasa. If so, as the operator of one of the largest uranium producers in the world, Forsys Metals would certainly warrant a much higher market value. n Forsys Metals' Norasa Uranium Project located in the Erongo region of Namibia, Africa. Photo courtesy Forsys Metals Corp.

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