Marenica Secures Key Chinese Funding to Progress Further
Feasibility Studies of its Namibian Uranium Project
ENCOMPASSES IMMEDIATE FUNDING OF $5 MILLION, WITH POTENTIAL FOR LONG TERM
FUNDING, OFF-TAKE AND STRATEGIC COORPORATION
KEY POINTS
• Marenica secures necessary funding to underpin the next phase of Pre-Feasibility work at
its Marenica Uranium Project in Namibia, Southern Africa
• Funding Deed signed with Hanlong Energy Limited to:
− Provide immediate funding of $3M through a $2M convertible note and $1M share
placement at A$0.07 per share
− Fully underwrite a A$2M rights issue at A$0.07 per share, to existing shareholders,
increasing the total funds raised to $5M
• Marenica and Hanlong has executed a Memorandum of Understanding (“MOU”) which
encompasses further funding support, development financing, uranium off-take and
support for strategic acquisitions during an exclusive period up to December 2011
• Hanlong is committed to supporting Marenica to become a successful uranium mining
company
International uranium company Marenica Energy (ASX: MEY) is pleased to advise that it has secured
$5 million of debt and equity funding through the support of China’s Hanlong Energy Limited
(“Hanlong”) to progress its flagship Marenica Uranium Project in Namibia, Southern Africa.
In addition, Marenica and Hanlong have entered into a Memorandum of Understanding (“MOU”)
encompassing longer-term feasibility and development funding, off-take arrangements and potential
cooperation on future strategic acquisitions in the uranium sector.
Hanlong Energy Limited is a subsidiary of the privately-owned China-based Sichuan Hanlong Group
Co., Ltd, a large diversified group with a broad portfolio of investments in mining resource
development, electricity production, infrastructure development and real estate. The Group has
over 12,000 employees worldwide and annual revenues of more than US$2.5 billion.
The funding paves the way for Marenica to progress to the next stage of evaluation and
development of the Marenica Project, where it has recently completed a Scoping Study on a
potential US$260 million heap leach development.
The Study concluded that the Project could deliver 3.5 million pounds of uranium per annum at a
competitive operating cost of US$38/pound, based on the recently upgraded resource of 648 million
tonnes at 97ppm, for 138M lbs U3O8 (see Table 1 below).
Funding Agreement:
The initial Funding agreement supports the Pre-Feasibility work that is currently underway at
Marenica. Hanlong has provided A$3 million in the form of:
• A 3-year $2 million convertible note at 8% interest per annum, payable annually in arrears
and convertible into shares at A$0.07 cents per share; and
• Share subscription for 14.26 million Marenica shares at A$0.07 per share to raise a further
A$1M.
In addition, Hanlong has agreed to fully underwrite a A$2 million rights issue at A$0.07 per share to
existing shareholders, increasing the total raised to A$5 million, ensuring that the Company is fully
funded for the next phase of work. Hanlong will also be given the opportunity to appoint one
representative to the Board of Marenica Energy Ltd.
Memorandum Of Understanding (MOU):
Marenica and Hanlong have also entered into an MOU describing further potential investments by
way of one or more funding agreements to be negotiated during an exclusive period to December
2011, covering:
• the potential for a further extension of funding to support the completion of a Definitive
Feasibility Study (DFS);
• potential development funding for the Marenica Uranium Project; and
• off-take of uranium product from the Marenica Uranium Project.
Use of Funds
Marenica has recently completed scoping work on the Marenica Project based on developing a 13-
year project producing around 3.5 million pounds per annum of U3O8. The results of this study
showed positive economics for a large-scale 10Mtpa heap leach operation.
Work is scheduled and underway for the remainder of 2010 and early 2011. Key activities leading to
a final decision on the Pre-Feasibility Study will include:
• Metallurgical testwork for Heap Leach process route
• A Reverse Circulation (RC) exploration drilling program
• Completion of an HLEM survey at Target MA7
• Environmental and social impact baseline studies
• Development of a detailed OH & S Radiation Management Plan
Key activities as part of the Feasibility Study scheduled for 2011 will include:
• Technical Economic Model update and review
• Trial mining/pitting for further bulk Metallurgical testwork at larger scale for optimisation of
process route
• A Reverse Circulation (RC) drilling program to optimise the conversion of Inferred Resources
to reserves
• RC exploration drilling to further define and increase resources
• Updated Resource Calculation / Mining Optimisation Study
• Environmental and social impact studies for inclusion in the Definitive Feasibility Study
Commenting on the transaction, Marenica’s CEO, Mr John Young, said:
“This intial funding by Hanlong represents a wonderful opportunity for Marenica to
concentrate on the current feasibility work in order to substantially progress the Marenica
Uranium Project to the point where a decision can be made to move to a Definitive Feasibility
Study.
“The MOU also sets out a timeframe for the negotiation of a future funding arrangements
and off-take for uranium product from Marenica. The successful conclusion of an agreement
on these fundamental components of the Project will deliver Marenica shareholders the
value benefits of a substantial funding package and a major project partner with a strong
balance sheet, diversified operations and mining interests.
“The Company could be in the enviable position of being fully funded and be in production by
2014, just at the beginning of the next major upswing in the uranium cycle, benefitting from
higher uranium prices in the mine’s early production years.”
Hanlong’s Managing Director, Dr. Steven Xiao, said:
“Globally, the number of nuclear power plants is expected to double over the next 20 years,
with China and India driving a large portion of the new developments. The uranium market
fundamentals are strong, supporting favourable long-term uranium prices.
“We believe that supplies from existing and near-term uranium mines will be insufficient to
meet future demand. Hence, investing in promising uranium developers such as Marenica is
a critical step towards evening out future demand and supply imbalances.
“As a Chinese private company, this initial investment in Marenica provides Hanlong with an
excellent opportunity to become a participant in and join the global uranium network. We
are committed to support Marenica to become a successful uranium mining company and
look forward to building a strong working relationship with Marenica. Through this
transaction, we hope to build our knowledge and understanding of, as well as our our
communication with, the uranium industry.”
The Hanlong Group – Background
Sichuan Hanlong Group is a large, privately held Chinese company with a wide portfolio of
investments including mining resources development, electricity production, infrastructure
development, pharmaceutical production, food and alcoholic beverages real estate development,
environmental technology, tourism development and high tech industries.
The Group has over 12,000 employees worldwide and annual revenues in excess of 16 billion RMB
(approximately US$ 2.5 billion), with total assets exceeding 36 billion RMB. Hanlong Group
Chairman, Mr. Liu Han, is well known for his philanthropic work in China, especially inHanlong’s
home province of Sichuan, having donated over 1.3 billion RMB over the last 3 years.
Hanlong Group’s overseas interests are solely in the mining resources sector; the company has a
base in Sydney, Australia where it has built a multicultural team of mining and finance specialists.
Marenica Energy – Background
The recent Scoping Study found the Marenica Project in Namibia could deliver 3.5 million pounds of
uranium per annum at a competitive operating cost of US$38 a pound. The study focussed on the
development of a heap leach operation with an estimated capital cost of US$260 million.
Undertaken by SRK Consulting, the study found the Marenica Project could produce a total of 45
million pounds of uranium over a 13-year life based on the existing defined Indicated and Inferred
Mineral Resource. This is a significant increase on the Company’s earlier expectations as a result of
the decision to develop a bulk open pit and heap-leach operation with a lower cut-off grade (COG) of
50ppm, rather than as a continuous agitated leach circuit fed by higher-grade ore.
The Mineral Resource Estimate was updated by SRK Consulting, and using a 50ppm LCOG, the
revised estimate defines a total resource of 648 million tonnes at 97ppm, for 138M lbs U3O8 (Table
1).
Table 1 - Mineral resource statement for the Marenica Deposit, September 2010 using a 50ppm cut-off (UC
model) (Rounding applied)
Marenica will now undertake additional drilling and metallurgical work in order to upgrade inferred
resources, which should continue to improve the economic parameters of the project. A definitive
feasibility study relating to the indicated resources is expected to be completed by the end of 2012.
For further information contact John Young, CEO at Marenica Energy Limited; PH: +61 8 93217355
Notes
The information in this announcement that relates to Mineral Resources is based on information compiled by a
team of full time employees of SRK Consulting (UK) Ltd which was directed by Dr Mike Armitage.
Dr Armitage who is a Member of the Institute of Materials, Minerals and Mining and a Fellow of the Geological
Society of London, both of which are 'Recognised Overseas Professional Organisations' ('ROPOs'), is the
Chairman of SRK Consulting (UK) Ltd and has taken responsibility for the Mineral Resource aspects of SRK's
work. Dr Rob Bowell, a Principal Geochemist with SRK and who is also a Fellow of the Geological Society of
London as well as a Fellow of the Institute of Mining, Materials and Minerals and a Member of the Royal Society
of Chemistry takes responsibility for any comments related metallurgical testwork.
Other team members, Dr John Arthur and Ms Tracey Laight are both Fellows of the Geological Society of
London, Dr Arthur is also a Member of the Institute of Materials, Minerals and Mining.
Both Dr Armitage and Dr Bowell have sufficient experience which is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which they have undertaken to qualify as a Competent
Persons as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'.Both Dr Armitage and Dr Bowell consent to the inclusion in this announcement of
the matters based on their information in the form and context in which these appear." |
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