Salman Partners
Metals Morning Note
Thursday June 19, 2008
Source: Patrick Donnelly, Salman Partners
Namibia
In a world in which so many jurisdictions are closing the door to uranium mining, here's why acquirers must be focusing
their attention on Namibia
Areva SA, the integrated French nuclear power plant manufacturer and uranium miner, has received a mining license for its
Trekkopje uranium mine in Namibia, according to Bloomberg this morning. Uranium production at Trekkopje, which is
expected to have a capital cost of approximately US$750 million, is expected to commence in 2009 at rate of approximately 8
million lbs per year. While the granting of the mining license was not unexpected, we do view the above development as positive because the
development of the project includes a US$180 million desalination plant which could provide water to other uranium mines
in the area.
In another Bloomberg article, NamPower, which is the state-run power utility in Namibia, announced that it plans to build an
800 megawatt coal-fired power plant in order to meet the demand from uranium mines. NamPower stated that it intends to
announce the capital cost of the project once it has consulted with local residents. NamPower is planning on investing
approximately US$1.11 billion over five years to expand electricity generation.
Meanwhile, the Namibian government is looking at liberalizing its immigration law so as to address a shortage of skilled
workers in the country, according to Mining Weekly. The government is looking at granting three-year work permits to
foreigners with critical skills instead of the one-year permits that are currently being granted. Given the current social
upheaval in neighboring South Africa, the new law could draw much-needed skilled labour from South Africa into relatively
stable Namibia.
We see the above developments, water, power and labour, as highly positive for Forsys Metals Corp. (FSY - TSX;
Cdn$4.40; TOP PICK) which is developing its Valencia uranium project in Namibia. We expect, because of the highly
proactive Namibian government, that there should be enough water and power and skilled labour available to meet the
requirements of the Valencia project.
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