March 28, 2007, Toronto, Ontario: Due to the audio difficulties experienced by some during Tuesday\'s, March 27, 2007 conference call we would like to provide the following summary and elaboration of the topics discussed so as to clarify any miscommunication that may have resulted. We apologize for any inconvenience.
Dag Kullmann’s opening comments:
The Valencia resource was originally reported and documented within the Snowden technical report issued in October 2005.
This was based on a review of existing information and the generation of a preliminary resource model.
The resource was declared based on the economics of the day and an understanding of some of the technical aspects of the Rössing mine.
This new resource declared by Snowden is based on:
- Additional in-fill drilling within the previously defined area
- Twin drilling to confirm previous results
- Metallurgical test work that confirms extraction of uranium
- Initial mining studies to demonstrate the extraction of ore
- Define geotechnical parameters (pit slope designs)
- Ability to mine the orebody
- Application of a practical design and mining schedule
Financial parameters have been updated to reflect the economics of the time:
- Using a uranium price appropriate at the time
- Pits based on some conservative parameters as optimisation work is still ongoing
- Plant recoveries, using latest test results
- Process costs are conservative as test work continues
- Mining costs being reviewed as mine planning is being finalised
Moving forward to the feasibility phase
- Additional drilling in satellite orebodies and extension of the main orebody
- Optimisation work is ongoing on the plant design
- More detailed geotechnical work and mine costing
Q and A:
The lower cut-off grade being reported is a reflection of the increased confidence that we have in the financial and technical parameters of a Future mining operation. Not only can we mine the high-grade areas of Valencia, but we can also economically treat the lower material as well.
In fact, at this time we believe we have a potential process plant recovery of over 90%. Rössing historically has achieved a significantly lower recovery. Their ore contains substantial amounts of betafite, a uranium mineral that is not acid leachable, which is the cause of their lower recovery. And in future, Rössing will be mining more ore with betafite in it.
Preliminary testing shows that Valencia contains virtually no betafite.
We previously had an Inferred Resource of 32Mt containing about 15Mlb of U3O8.
Now we have Measured and Indicated Resources of 119Mt containing 34Mlb
with an additional 56Mt of Inferred Resource containing another 15Mt U3O8.
In terms of total declared resource, that’s 3 times the contained U3O8 within the classified resource that we had previously.
We haven’t increased our resource area, but we have increased our declared resource by reducing the cut-off grade through improved technical and financial confidence.
The technical work done so far is not intended to increase the area of study. We have not drilled new ground or tried to define a new resource. The work conducted as part of the Pre-feasibility is done to increase the confidence in the resource, as noted by previously only having an Inferred Resource (lowest resource confidence), to now having a large portion of Measured and Indicated Resources. The potential outside of the main Valencia zone still needs further evaluation, has not yet been tested, and is not included in the resource calculations.
The extensions of the orebody, both laterally and at depth, have not yet been tested and provide an upside that will be pursued as part of the Bankable Feasibility Study.
The resource is reported to 380m depth as this is the extent of our information. We know that the orebody extends below that as we have drillholes that were stopped while still in the orebody. In short, we only have information to that depth, we don’t know how must deeper it extends. Therefore, the resource is declared to 380m due to information limitations, not mineralization.
The Pre-feasibility Study being conducted by Snowden is nearing completion,and it is premature for us to comment on at this time on various technical aspects, such as planned or preferred production rates or throughput.
The current share and financial situation is as follows:
Basic Shares Outstanding: 72.8 M
Options & Warrants: 14.8 M
FD Shares Outstanding: 87.6 M
Debt: None
Current Cash: $ 53.5 M
Cash FD: Approx $ 110 M
Of the 6 EPL’s that were acquired as part of the completed Ancash agreement,5 EPL’s have been granted. The remaining EPL has not yet been granted and it is felt that even though Namibia has recently declared a moratorium on issuing uranium EPL’s this EPL was applied for prior to the moratorium and we are hopeful that it will be successfully granted.
For further information, please contact Duane Parnham, Chairman of Forsys at +1-416-601-1286 in Toronto or visit www.forsysmetals.com
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