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VIM
RESOU
Mining a clean
MY
URCES
ner tomorrow
MINING | VIMY RESOURCES
Vimy Resources’ vision statement is ‘mining a cleaner tomorrow’. It is a clever double entendre referring not only to nuclear power as the cleanest source of reliable energy, but the way in which the ASX-listed company intends to mine; with low residual impact and realtime rehabilitation. Nuclear energy is emerging as one of the few low carbonemitting, 24/7 power sources that can help achieve the IPCC’s goal of a 1.5C limit on global warming. While renewables have grown significantly along with energy storage technology, their intermittency and low energy density means that other baseload sources must be included in a holistic energy mix.
MINING | VIMY RESOURCES
Vimy CEO and managing
Uranium fuels nuclear power
Young is a geologist and was
director Mike Young has
plants where controlled fission
born and educated in Canada
noticed a fundamental
of uranium produces heat
where he worked on several
change in public perception
that generates the steam to
uranium projects in Northern
towards nuclear energy. The
drive turbines and generate
Saskatchewan before moving
Fukushima accident influenced
electricity on a large scale.
to Western Australia in the late
opinion for many years, but
Put simply, uranium mining is
1980s. He gravitated towards
as climate change began
vitally important to the world’s
resource geology and 3D
to dominate headlines, the
decarbonising mission.
modelling when it was in its
positives of nuclear came into
infancy and, as a result, was
the ascendancy. And many
Introducing Vimy
countries provide hard data on
Vimy owns the largest
mining projects through his
the efficiency, safety and low
advanced, but undeveloped,
work as a resource consultant.
cost of nuclear; France and
uranium project in Australia.
Canada are two clear examples.
Australia holds the largest
Since then he has built a solid
known uranium resources
reputation in the WA mining
“I like to use electric vehicles
in the world and is the third
community, growing an iron
(EVs) as an example to really
largest producer globally,
ore company (BC Iron Limited)
understand how clean nuclear
behind only Kazakhstan and
from its initial listing to first
power is. Despite the hype,
Canada.
iron ore on ship within four
involved with many successful
years. During those years he
EVs are not emission-free and are only as clean as the power
The company is advancing
met Cheryl Edwardes - now
source used to charge them.
projects in Western Australia
Vimy’s chairman - a former
(WA) and the Northern
WA state politician and ex-
“In Queensland, where
Territory and has a globally
Environment Minister, who
electricity is powered by coal, a
experienced management
shares his passion for the
Tesla 3 will emit 17,500g of CO2
team and board of project
potential of uranium to reduce
per 100 km but in Ontario, a
developers and mine operators.
greenhouse emissions.
Tesla 3 only emits 880g per 100
Their experience and industry
km, 5% of Queensland’s Tesla,
contacts put Vimy at a strong
Alongside Young at the helm
because the grid is powered by
advantage in the obscure and
of the company is chief
nuclear and hydro.”
complex uranium market.
nuclear officer Julian Tapp, an economist who not only
manages the dark art of approvals, but has become expert in the uranium market Julian is the chair of the supply working group of the World Nuclear Association. The executive team also includes CFO Marcel Hilmer, a strategic thinker and former CEO of a uranium junior, and GM of geology Xavier Moreau, thought to be one of Australia’s best uranium geologists. Uniquely for a WA junior, Vimy also employs a USbased uranium sales and marketing expert in Scott Hyman. Scott has both buy and sell side experience as he worked for both a supplier, Cameco Corporation, and a utility, Dominion Energy, for almost thirty years and knows the industry and its players in the US very well. Vimy concentrates its sales efforts on the US utilities as they make up 30% of the global market. The team believes deeply that Vimy is best placed to
MINING | VIMY RESOURCES
capitalise on the ‘perfect storm’ of a looming supply shortage and a growing demand for nuclear power, due in part to the erstwhile climate emergency. “Looking at uranium production around the world at today’s spot price, very few producers can make money at the current spot price. Not even companies with the lowest cost mines in the world, such as Cameco at McArthur River in Canada, can make money and so that mine is shut until sustainably higher pricing is achieved. “Cameco has shut down an 18 million pounds (Mlbs) per year operation because the low prices aren’t sustainable, and Kazakhstan has curtailed expansion and is scaling back as well. Cameco will not destroy an asset like McArthur River by mining and selling it at low to zero profit. Why would you?
“But more importantly for long term investors, exploration has slowed to a trickle and as a result there are few projects that are close to production. The signs of a growing and systemic shortage going forward have become more obvious to many, and Vimy’s activities during the past five years have been predicated on taking advantage of this.” That shortage is being exacerbated by growing uranium demand, particularly in non-OECD countries across Asia and the Middle East, whose governments are seeking ways of providing cheap, low
already in operation. The
production. Uranium supply
emission power that can feed
new power plants will require
contracts are generally written
into national grids 24/7, unlike
an additional 250 Mlbs of
up to three years in advance,
wind and solar power which
uranium every year, in a
so utilities are sharpening
are subject to weather patterns
current market of 170 Mlbs.
their pencils now.
Considering the diverging
When supply becomes
There are currently 493
supply and demand factors,
tight, utilities’ sensitivity to
nuclear reactors in advanced
Vimy expects a structural
cost becomes secondary to
planning stages or under
uranium shortage to take hold
security of supply and so the
construction around the
even before it could be in
next twelve months could
and seasons.
world, adding to the 442
MINING | VIMY RESOURCES
The company has been very transparent about its path to production. Financing will be ‘contract-led’ whereby Vimy will need to secure longterm contracts in the US$50s to obtain debt funding. As a result, Vimy seeks to establish long term relationships and contracts with US utilities. “Our long-term plan has always been to write those contracts through 2020 then roll into financing and final investment decision (FID) in early 2021. Therefore, Scott Hyman’s job is critical and so he is constantly in front of the utilities, not only providing them with updates on our
see a significant increase in
Mulga Rock
uranium contracting activity
Vimy’s Mulga Rock project
putting upward pressure on
in WA is Australia’s largest,
contract pricing.
advanced undeveloped
“As a result of that intel, we
uranium project and has
are confident that the uranium
“We’re already seeing the
gained State and Federal
market is on the rebound and
US utilities ramping up their
primary environmental
we will be hosting the grand
contracting activities at a
approvals, completed a
opening of the Mulga Rock
time of slowing supply. It’s
definitive feasibility study
Project in the not too distant
the perfect storm,” Young
(DFS), and is progressing
future. So, it’s contracts in
proclaims.
secondary approvals.
2020, FID in early 2021 and
project, but gaining valuable intelligence on the US market.
then it’s a two-year build for
VIM Y R ES O U R CES AT A G L A N C E
the project, so we’d be in
“Mining will be very simple
production late early 2023 just
at Mulga Rock,” Young says.
as the shortage is really taking
“We will use an efficient and
hold.”
cost-effective strip-mining process, where pits are
STOCK TICKER ASX:VMY
MARKET CAPITALISATION US$9.1 million (as of March 30, 2020)
aj
“I like to use EVs as an example to really understand how clean nuclear power is. In Queensland, where electricity is powered by coal, a Tesla 3 will emit 17,500g of CO2 per 100 km but in Ontario, a Tesla 3 only emits 880g per 100 km, 5% of Queensland’s Tesla, because the grid is powered by nuclear and hydro” Mike Young, Vimy Resources CEO and managing director
The Mulga Rock DFS was
backfilled with tailings or
published in January 2018 and
overburden as we go. This
outlines a strategic, long-life
results in very low residual
project with annual uranium
impact to the environment – a
production of 3.5 Mlbs over
mining method that reaffirms
a 15-year life of mine. It also
the ‘cleaner’ in Vimy’s vision
showed a 25% IRR and NPV of
statement.
AUS$530 million on a AUS$490 million capital cost, with the
Alligator River
project reliant on a uranium
Vimy’s ambitions also extend
contract price of US$55-60 per
beyond Mulga Rock after
lb.
acquiring the Alligator River Project in March 2018
A peer review of the DFS in
from Cameco Australia. The
late 2019 found the study to be
project comprises the largest
world class with no design or
granted tenement package in
engineering flaws identified.
the Alligator River Uranium
“The reviewers confirmed
Province of the Northern
that the Mulga Rock DFS is an
Territory – a region which has
outstanding study,” says Young. striking geological similarities with the Athabasca Basin in “Now that almost two years
Canada.
have elapsed, we wanted to revisit the cost input data to
“The Athabasca is the premier
ensure that the capital and
location for uranium deposits
operating costs are up to
in the world because they are
date. We are also investigating
big and they are high grade.
opportunities to reduce capex
Some of the biggest deposits
and opex.
MINING | VIMY RESOURCES
in the world are located there
Despite these geological
three decades. Cameco’s
such as McArthur River and
similarities, the two uranium
drilling barely scratched the
Cigar Lake.
provinces have received
surface and that’s why we’re so
contrasting levels of
excited about the targets that
“As a geologist, the Alligator
exploration activity over the
have been thrown up by our
River Project really excites
last thirty years. While intense
fieldwork in the area.”
me. The similarities in the
exploration in the Athabasca
geology of the two regions are
Basin has led to a string of
One of Vimy’s targets in the
profound. Both provinces have
massive discoveries, Australia’s
Alligator River tenements
sandstone units lying above
regressive Three-Mines Policy
is the Angularli resource,
the mineralised formations as
(1984-1996) resulted in little
which yielded a positive
well as all the same structural
to no exploration in Alligator
scoping study late in 2018.
and alteration elements.
River.
The inferred mineral resource
Athabasca is where the large
was estimated at 0.91 million
deposits are found and our
“You’ve got this geological
tonnes (Mt), at 1.3% uranium
work so far indicates that will
province that’s really
oxide for 26 Mlbs of uranium.
be the same at Alligator River.”
prospective and hasn’t been explored for uranium for
EXECUTIVE OVERVIEW MIKE YOUNG, CEO AND MANAGING DIRECTOR
Young is a geologist and was born and educated in Canada where he worked on several uranium pr before moving to Western Australia in the late 1980s. He gravitated towards resource geology and 3 fancy and was involved with many successful mining projects through his work as a resource consu Since then he has built a solid reputation in the WA mining community, growing iron ore company ing to first iron ore on ship within four years. During those years he met Cheryl Edwardes - now Vim politician and ex-Environment Minister, who shares his passion for the potential of uranium to red
MINING | VIMY RESOURCES
“We’ve also drilled some holes
while the Mulga Rock Project
at the Such Wow deposit and
has fifteen years of mine
seen some exciting results
life, Alligator River has the
from that campaign. And late
potential to provide uranium
in last year’s field season,
products far into the future,”
we announced some really
Young explains.
exciting geochemical results from Southern Flank, our
To conclude, Young and Vimy
Jabiluka look-alike.
have high confidence in the improving fundamentals of
“US utilities look at long-
the uranium and nuclear
term reliability of supply and
power industries even after
rojects in Northern Saskatchewan 3D modelling when it was in its inultant. y BC Iron Limited from its initial listmy’s chairman - a former WA state duce greenhouse emissions.
the first three months of 2020 have been dominated by
very few new developments
uncertainty in global markets
that are as advanced as Mulga
due to the outbreak of the
Rock. Certainly, the consensus
COVID-19 pandemic.
view is that the uranium price will rise in the early 2020s
While the virus will certainly
and that’s about the time that
make conditions more
Mulga Rock will come into
challenging in the short term,
development.
uranium demand is inelastic, predictable and is being driven
“On top of all of the
by global decarbonising trends
fundamental uranium
and reactor builds in non-
economics, the COVID-19
OECD countries like Russia,
pandemic is resulting in mine
China, India and Saudi Arabia.
closures which will accelerate the shortage and highlight the
“We’re seeing a curtailment
importance of diversification
of large mines and there are
of supply.”
Published by Anderson Murray Media Ltd
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