Sibanye ships first batch of uranium

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South Africa’s Sibanye Gold has produced and shipped its first consignment of uranium to the Nuclear Fuels Corporation of South Africa.

The shipment, in the form of 10 tonnes of ammonium diuranate (ADU), is then expected to be calcined to form uranium oxide or uranium ore concentrates.

“The revenue derived from this uranium by-product will be offset against costs, lowering the total cost of producing gold from the Cooke operation. As both gold and uranium production rises in the next 18 months, we anticipate a decrease in costs and increase in profitability at the Cooke operation,” said [DATA SGL:Sibanye Gold] chief executive, Neal Froneman.

“Sibanye remains positive on the longer term outlook for the uranium price and is currently exploring ways to secure more attractively priced longer term uranium contracts in order to limit its exposure to the weak prevailing spot uranium market.”

(READ MORE: Sibanye Gold production 2% higher in December quarter)

According to the gold mining company, the demand for uranium has been negatively impacted by sluggish global economic growth since 2008 as well as the Fukushima disaster at the end of 2011, which significantly depressed spot prices.

However, the longer term outlook for uranium demand seems to be positive, with the demand forecast set to significantly outstrip supply from 2017.

“This increase in demand is primarily expected to be driven by demand from planned nuclear power growth in China and reactor restarts in Japan. Reduced supply from the highly enriched uranium programme, as a result of the conclusion of the US-Russia HEU deal in 2013, is also expected to support the price in the long term,” said Sibanye Gold.

(READ MORE: S.Africa’s Sibanye Gold lifts reserves estimate)

“Uranium oxide production from Sibanye’s Ezulwini plant is forecast to build up to approximately 600,000 pounds per annum, by the end of 2016. Current ore reserve development at the Cooke 3 and 4 mines is expected to increase available face, thereby facilitating increased throughput from the uranium by-product areas.”

The company added that the Ezulwini plant is potentially a key component of Sibanye’s surface tailings retreatment strategy as it provides the opportunity to advance the extraction of value and enable a more efficient, phased allocation of capital.