Roll over icons to start

P + 0

ANNUAL REPORT 2010

Skip Navigation Links
Home
Overview
Management Discussion and Analysis
Sustainable Development
Corporate Governance Statement
Directors' Report
Financial Report
Additional Information
List of Abbreviations
Shareholder Reporting Timetable
Corporate Directory
Skip Navigation LinksManagement Discussion and Analysis > Review of Operations > Namibia - Langer Heinrich Mine

Namibia

Langer Heinrich Mine

LHM in Namibia is owned 100% by Paladin through its wholly owned Namibian subsidiary Langer Heinrich Uranium (Pty) Ltd (LHUPL). Paladin purchased the Langer Heinrich project in August 2002 and following development and construction commenced producing in 2008/2009 with production of 2.7Mlb of U3O8 achieved. The commissioning of Stage 2 during the year has increased production to 3.7Mlb pa, this rate having been achieved for the first half of 2010. Stage 3 expansion has commenced with a budgeted increase in production to 5.2Mlb pa. Construction of Stage 3 is expected to be completed in the March quarter 2011.

Langer Heinrich is a surficial, calcrete type uranium deposit containing a Mineral Resource of 74,415t U3O8 at a grade of 0.06% U3O8 (250ppm U3O8 cut-off grade) in seven mineralised zones designated Detail 1 to 7, within the 15km length of a contiguous paleodrainage system. The deposit is located in the Namib Desert, 80km from the major seaport of Walvis Bay. The attached figure shows the location of the uranium mineralisation along the length of the Langer Heinrich valley.

Operations

Production totalled 3.352Mlb, up 24% from 2.7Mlb the previous year. The successful Stage 2 expansion to 3.7Mlb pa finalised commissioning in the last months of 2009 and design production was achieved for the balance of the financial year.

The 164Mlb deposit has a minimum 16 year mine life based upon proposed Stage 3 production rates. During the year 5,812,821t of ore was mined at an average grade of 773ppm. Additional low-grade material totalling 1,745,172t at 308ppm was mined and stockpiled for future down-blending and potential heap-leach. The average strip ratio for the year was 0.57:1 with crushed ore totalling 2,004,000t at an average grade of 958ppm. An overall recovery of 80% was achieved.

Karibib Mining and Construction Company, a Namibian mining contractor, continued successful operations during the year, expanding in late 2009 to increase feed tonnage for Stage 2. Mining continues on several working faces namely Pit A cutback, Pit F and Pit D. Mining activities have been advanced prior to the Stage 3 commissioning together with tailings management, with the first in-pit tailings deposition expected to take place during the upcoming financial year.

Planning and design of the previously announced Stage 3 expansion, which will bring the nameplate production design from the current 3.7Mlb to 5.2Mlb pa, was well advanced by the end of the financial year. Construction activities have also been initiated, with an expectation of commissioning in early 2011. Several advancements to key processing equipment are expected to deliver efficiencies to the expanded operation. A second crushing system, with a much larger scrubbing unit, is to be installed and is expected to improve plant availability and increase scrubbing efficiencies. Heating slurry will be improved with the introduction of “flash/splash” technology, reducing the dependence on spiral heat exchangers. In addition, a new NimCix ion exchange system will be installed to reduce the dependence on pure clarified pregnant liquor and provide higher wash efficiencies in the CCD circuits. Construction of Stage 3 is not expected to significantly impact on Stage 2 production volumes during tie-in.

In October 2009, plans were announced for a Stage 4 expansion targeting 10Mlb pa (including 1Mlb heap leach). Following recent drilling, an upgraded resource estimate is expected at the end of the September quarter to underpin the Stage 4 feasibility study.

Resources stand as announced in 2008. Following completion of drilling for the Stage 4 resource update, a new resource is expected during the September 2010 quarter. It is anticipated that the majority of Mineral Resources will fall into the Measured and Indicated categories. The Mineral Resource is detailed below at a cut-off grade of 250ppm U3O8.

Mineral Resource estimate (depleted for mining) for Details 1 to 7
250ppm Cut-offMtGrade % U3O8t U3O8Mlb U3O8
Measured Resources32.80.0619,58243.16
Indicated Resources23.60.0613,27629.26
Measured + Indicated56.40.0632,85872.42
Inferred Resources70.70.0641,55791 .6

(Figures may not add due to rounding and are quoted inclusive of any Ore Reserves)

Ore Reserve

Economic analysis on this resource has indicated a break-even cut-off grade of 250ppm. This is unchanged from the previous resource due to a number of factors including changes in reagent and running costs.

Ore Reserve Estimate (250ppm U3O8 cut off) for Details 1, 2, 3 and 5
250ppm Cut-offMtGrade % U3O8t U3O8Mlb U3O8
Proved Ore Reserve300.0617,92439.5
Probable Ore Reserve20.60.0611,95026.34
Total Ore Reserve50.60.0629,87465.84 

Ore Reserve has been depleting for mining

Compared to the previous ore reserve of 25.6Mlb announced in 2005 the 2008 Ore Reserve estimate represents a 175% increase in contained U3O8. The Ore Reserve has been estimated from the Measured and Indicated Mineral Resource of 56.4Mt at a grade of 0.06% U3O8. The resource estimate is based on Multi Indicator Kriging and incorporates a specific adjustment based on expected mining parameters. As a result additional dilution and mining recovery are not included in the Ore Reserve estimation.

The cost parameters used in the reserve estimation are now well established and as such their inclusion can be reasonably justified. The revenue rate used in the estimate was US$60 per lb which is regarded as conservative when compared to the Ux spot price and existing term contracts.

These reserves form the basis of the detailed mine planning for the Project. The revised mine model will allow a remaining mine life of 13 years, based on the expansion of processing capability to 5.2Mlb pa. The mine model does not include any contribution from the 91.6Mlb of Inferred Mineral Resources, (as announced 28 August 2008) either from the open pit area or Details 4 and 6 (to the east) or Detail 7 (to the west) outside the current pit design.

The Ore Reserve is quoted exclusive of ROM stockpiles which, at the end of May 2008, contained an additional 3.5Mt at a grade of 514ppm U3O8 for 1,796t (3.96Mlb) U3O8.

Exploration (EPL3500)

EPL3500 abuts the Langer Heinrich Mining Lease to the west and includes the sediment covered western extension of the mineralised Langer Heinrich palaeochannel.

Following on from initial drilling undertaken in 2009 an additional airborne EM survey was carried out in EPL350, adjacent to the Langer Heinrich mining lease. This survey was much more detailed and had more appropriate electronic parameters and consequently returned much better results. As part of the resource definition drilling programme for the Langer Heinrich Stage 4 processing expansion, approximately 600m of the eastern portion of the EPL was drilled to good result. This information will be incorporated into the greater Langer Heinrich resource once all information has been validated.