This article is a sponsored feature from Mining.com.au partner Toro Energy Ltd. It is not financial advice. Talk to a registered financial expert before making investment decisions.
If there exists a ‘commodity of the moment’, uranium would surely be a strong contender.
Its steady price gains throughout 2023 have in recent weeks turned into an all-out bull run, sparked partly by a warning in mid-January by the world’s largest producer, Kazatomprom, that it was likely to fall short of its production targets over the next two years. The Kazakhstan-based company, which accounted for 23% of global uranium production in 2022, cited poor supplies of sulphuric acid and delays in developing new deposits as factors that might make meeting its targets “challenging”.
The news followed a similar update from Cameco (TSX:CCO) in early September, in which the Canadian company — the world’s second-largest producer, accounting for 12% of global production — said challenges at its Cigar Lake and Key Lake operations were expected to impact its 2023 production figures.
But the volatility has been good for price buoyancy. Not only did uranium blast through the US$100-a-pound ceiling for the first time since 2007, but uranium-related stocks have also been climbing since the start of 2024 — Deep Yellow (ASX:DYL) by 34%, Bannerman Energy (ASX:BMN) and Paladin Energy (ASX:PDN) by roughly 23%, and Boss Energy (ASX:BOE) by 30%, as of Friday, 19 January.
Even junior companies have been riding the wave. Shares in Perth-based explorer Toro Energy (ASX:TOE) have slid since last week, but were up 25% since the start of the year — perhaps a sign that investors are betting not-yet-producers to one day fill apparent weak spots in the uranium supply chain.
Having listed on the ASX in 2006, Toro owns the flagship Wiluna Uranium Project in central Western Australia, the Dusty nickel and Yandal gold and base metals projects in the northern Goldfields region, the Theseus Uranium Project near Lake Mackay, and minor stakes in other projects across Australia, Namibia, and Canada.
But as supply chain jolts and the evolution of public opinion conspire to drive forward an increasingly compelling market, how might an early stage player like Toro Energy feature in the years to come?
Dusty and Yandal
While uranium is its dominant focus, Toro retains exposure to nickel, gold and base metals through its Dusty and Yandal projects. Though they share a portion of their tenure with the Wiluna Uranium Project, both Dusty and Yandal sit in a highly prospective corner of the Yandal Greenstone Belt, some 50km east of BHP’s (ASX:BHP) Mt Keith nickel deposit and 15km northeast of Northern Star’s (ASX:NST) Bronzewing and Yandal Resources’ (ASX:YRL) Mt McClure gold deposits.
The Dusty project was the focus of a diamond drilling program launched in late 2022, focusing on the Dimma nickel sulphide discovery — the southernmost of 4 massive and semi-massive nickel sulphide discoveries made at Dusty to date. The Dimma discovery — along with the Jumping Jack, Houli Dooley and original Dusty discoveries — sits within the same geological setting at the base of the Dusty Komatiite, of which just 4.5km of the total 7.5km trend has been tested.
“We believe Dimma has considerable potential with all five drill holes intersecting massive Ni-sulphide to date, leaving the discovery open both at depth and along strike, north and south“
Diamond drilling at the Dimma discovery led to a steady trickle of promising assays throughout the year — including 2.1m at 1.83% nickel, 0.29% copper, and 0.55 grams per tonne (g/t) platinum and palladium — as well as the confirmation or extension of several nickel sulphide zones.
“We believe Dimma has considerable potential with all five drill holes intersecting massive Ni-sulphide to date, leaving the discovery open both at depth and along strike, north and south,” Toro Energy Chairman Richard Homsany said in September.
“All four discoveries [at the] Dusty Nickel Project remain open at depth, with Houli Dooley still yet to be tested with a successful follow-up hole, and no drilling yet to be completed between Dimma and Jumping Jack, some 400m away. With all four discoveries along strike over some 2km of the Dusty Komatiite, we believe the Dusty Nickel Project will continue to deliver excellent exploration results as it reveals itself as an asset of considerable value.”
Drilling between the Dimma and Jumping Jack discoveries is currently prohibited by the location of Toro’s exploration camp and hardstand facilities. The company, however, has said this will be an obvious area for drilling once these facilities have been relocated.
While no exploration work was carried out at Toro’s Yandal Project in 2023, the most recent round of drilling in 2020 confirmed the prospectivity of gold veins at shallow depths.
“Given the consistency of the presence of gold in the veins,” Toro said in its 2021 Annual Report, “it is likely that higher grade gold is present between drill holes and that the veins remain open at depth.”
Theseus and Wiluna
Though the Theseus Uranium Project — discovered by Toro in 2009 on the Western Australia/Northern Territory border — boasts a JORC-compliant resource estimate measuring 6.9 million pounds of uranium oxide at 493 parts per million (ppm), exploration and development activities have been somewhat quiet.
That resource estimate, published in December 2012, also outlined an exploration target for the broader Theseus Project of 28 million to 35 million tonnes at between 450ppm and 520ppm triuranium octoxide (U3O8).
Of course, the quietness could be attributed to the leaps and bounds being made at the Wiluna Uranium Project, which hosts its own resource measuring 79 million tonnes at 482ppm for 84 million pounds of contained U3O8, based on a cut-off grade of 200ppm.
In October 2022, Toro published a scoping study for a standalone uranium and vanadium operation at Wiluna’s Lake Maitland deposit. Completed by SRK Consulting Australasia, the study outlined capital costs of $270 million, a pre-tax net present value (NPV) of $610 million, average yearly EBITDA of $98 million, annual processing capacity of 1.94 million tonnes, all-in sustaining costs of US$28.02 per pound of U3O8 for the mine’s proposed 17.5 years of life, and a payback period of just 2.5 years.
A pilot plant design for the Wiluna project was then commissioned in August 2023, which contemplates processing vanadium as a by-product of uranium production.
“The board is pleased to commission the pilot plant design following on from the outstanding scoping study results for the lake maitland uranium deposit, which illustrate the quality and global significance of Toro’s uranium assets,” Homsany said at the time.
“The modest capital and operating costs result from many years of extensive research and development by Toro to optimise the processing flowsheet“
“The modest capital and operating costs result from many years of extensive research and development by Toro to optimise the processing flowsheet.”
In a sign of things to come, Homsany also expressed his confidence that the scoping study results could be further optimised by Lake Maitland’s close proximity to Wiluna’s Centipede-Millipede and Lake Way deposits. Lo and behold, Toro announced in mid-January 2024 that an extension study — evaluating the inclusion of material from Centipede-Millipede and Lake Way into a processing operation at Lake Maitland — was well underway.
“We are pleased that strengthening uranium market conditions continue as we develop and seek to maximise the value of the Wiluna Uranium Project, especially our evaluation of extending our Lake Maitland uranium-vanadium processing operation to include materials from our nearby 100% owned uranium deposits, Centipede-Millipede and Lake Way,” Homsany said.
“The uranium resources at Lake Way and Centipede-Millipede are strategically located and considerable, and need to be thoroughly evaluated for viability.”
Lining the coffers
Indeed, Toro is staring down the barrel of some serious work, which of course requires some serious fundraising. The current pace and strength of the global uranium market has, fortuitously, presented a formidable opportunity to do just that.
Earlier this week, Toro announced it had secured firm commitments from institutional and sophisticated investors for a $12.3 million placement, the proceeds of which will support the pilot plant program as well as drilling and metallurgical testing at Wiluna. A separate share purchase plan is intended to raise a further $2 million.
That announcement, published on 22 January, sought to double down on the uranium sentiment, noting the changing perceptions of nuclear energy and the recent announcement by the United States — plus 20 other countries — that their nuclear power use will likely triple by 2050. Security of supply, however, remains critical.
“As global uranium markets continue to strengthen and public sentiment and government support align, Toro remains committed to developing the Wiluna Uranium Project to maximise its value,” Homsany said.
“With further work, Toro is confident its assets will emerge as attractive standalone projects and we very much look forward to the year ahead.”
Write to Oliver Gray at Mining.com.au
Images: Toro Energy
