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Marenica Energy

Changing with the times

Uranium company Marenica Energy has undergone many changes since 2004 and the development of a patent-pending resource upgrade process heralds its largest transformation yet.

In business, as in the natural world, sometimes you need to evolve in order to survive. That was the situation of uranium exploration company Marenica Energy Limited when metallurgical consultant Murray Hill came across it. Prior to Hill’s arrival, the company had already changed its name from West Australian Metals Ltd and dropped its involvement in base metal and gold activities to focus on uranium exploration.

Hill was consulting for Marenica when his review of the scoping study for its single asset, the Marenica Uranium Project in the Damara Province of Namibia, found that it was unsuitable for development.

“The project was sub-economic and really needed a high uranium price to work – we had to either fold the company, or find another way,” explains Hill.

“We decided there was potential here to do something and formed a technical steering committee. We gathered industry and outside-industry experts; some of them from CSIRO [Commonwealth Scientific and Industrial Research Organisation, Australia’s world-renowned national science agency]. These people are lateral thinkers, some have worked in uranium before, others have developed technologies and have experience in beneficiating mineral sands ore.”

The technical steering committee, initially five people and later eight, determined that the ore of the Marenica Uranium Project had some characteristics that might allow it to be physically upgraded. Led by Hill, the committee proposed developing a technology to upgrade the resource so that it could become more economic. Marenica agreed and gave Hill the position of Chief Executive in May 2012.

Refocusing the company

As Marenica’s new CEO having to push through a new focus on technological development, Hill had many tough decisions to make regarding the company’s objectives, activities and size.

“We determined that the Marenica Project was metallurgically driven and dependent, rather than resource dependent,” he explains.

“That meant there was no point in drilling additional holes to increase the resource from its current 57 million pounds (Mlb), because regardless of whether we had 57 or 75Mlb, we still wouldn’t have a viable project using conventional technology. So we haven’t drilled a single hole in the past two years; instead, we’ve concentrated entirely on developing the technology.”

With the cessation of exploration activity, the number of staff working onsite in Namibia was reduced. Office staff were let go too as the company downsized from a large office to a small one in shared premises, its only occupants Hill and a part time Administration Manager.

“We’ve gone into cash conservation mode in some respects, although we are spending money on metallurgical test work,” Hill adds.

“I see it as spending our money wisely and controlling all our outgoings.”

Marenica collected bulk samples of its ore on which to experiment and succeeded in developing a new beneficiation process that it trademarked and lodged a patent for under the name of ‘U-pgrade’.

Applying the ‘U-pgrade’ process to the ore enabled Marenica to reject approximately 99 per cent of its mass, meaning only 1.3 per cent of it had to be leached. Recovery was 72 per cent.

“We’ve upgraded the uranium by 50 times, taking our 94ppm plant feed grade to approximately 5,000ppm for leaching,” says Hill.

“Leaching is the highest unit cost operation in a uranium plant, so by managing to significantly reduce the tonnage feeding that circuit we’ve reduced the operating costs dramatically.”

Simple but innovative

U-pgrade is not a complicated or expensive process. It utilises unit processes commonly applied in the mining industry, but never before to uranium. “It’s just using conventional equipment to approach a problem differently,” Hill remarks.

The process has several advantages besides its primary function of upgrading calcrete hosted uranium ore. Significantly, U-pgrade is applicable to high-sulphate calcrete ore, which uranium miners tend to reject as waste because it is so difficult to separate.

“Areva has mothballed its Trekkopje project, which was under construction just south of our project, because with the current low uranium prices it is uneconomic to mine” says Hill.

“We believe our technology could not only process the ore at a significantly lower operating cost, but also transform the high sulphate ‘waste’ into ore and that we could make money out of it.”

In addition, Marenica discovered in the past year that the U-pgrade technology works with seawater just as well as with desalinated water, which in Namibia is expensive.

“That means we don’t have to go and spend a lot of money buying desalinated water – instead, we can just pipe seawater into the operation and use that,” Hill explains.

“It also means that you can use the water available wherever you are in the world, as its quality does not impact on the process.”

A game changer

Using the U-pgrade process, Marenica has succeeded in reducing the operating costs of the Marenica Uranium Project by half, down to US$40 per pound. Unfortunately, even a 50 per cent reduction in costs is not enough to make this project in particular economic at current uranium prices – but that doesn’t mean it couldn’t rescue other projects.

“We know we have a technology that’s effective and robust, and can be applied to the Marenica Project when the uranium price increases; but right now, we see tremendous opportunity in applying our technology to other resources that, although of a higher grade – maybe 500ppm or greater – are sitting in the ground uneconomic right now,” says Hill.

“Our operating costs model suggests that we could process those ores even now, at the current price, for a small profit; and when the price increases, for a very significant profit.”

To test this theory, Marenica has obtained 10 different samples from seven different uranium companies based in Namibia and Australia – one of them from Areva’s mothballed Trekkopje project – and is characterising the ores. If Marenica can prove that U-pgrade can be applied to other resources besides its own, it could make a new business out of providing the technology to other mining companies.

“If we can demonstrate that we can upgrade these uranium projects to deliver healthy financial returns, it means the companies affiliated with them can begin exploring for ore of that lower grade around Namibia and Australia,” says Hill.

“It potentially changes the landscape for calcrete-hosted uranium deposits in Namibia and Australia, in that it gives companies greater incentive to explore lower-grade deposits. There’s potential we could enable a new generation of mines developed on previously sub-economic resources made profitable through U-pgrade.”

The process could also enable the exploitation of resources too small to support a standalone mine, he adds. “If we could produce a concentrate from those resources, we could truck it to a central facility for leaching or sell it to someone else to leach.”

If U-pgrade delivers as anticipated, proving Marenica’s transformation into a technology company worthwhile, it could incite change on a much wider scale.

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