Uranium developer and producer Deep Yellow has, in its latest quarterly activities report, published on April 22, reiterated that it has deferred a final investment decision on its Tumas project, in Namibia, owing to insufficient uranium price incentivisation to justify greenfield project development.

The company will continue to move ahead with early works infrastructure development and detailed engineering; however, full-scale project development will be delayed, allowing for what the board believes will be the inevitable improvement in global uranium prices owing to increasing demand and the precarious nature of the supply outlook.

A staged development approach has been adopted, with detailed engineering and early works continuing.

The latest optimisation work generated robust results at a uranium price of $82.50/lb triuranium octoxide (U₃O₈), further endorsing the project's economics and standing as a Tier-1, long-life uranium operation.

The post-tax net present value is $577-million, with a post-tax internal rate of return of 19%. Initial capital expenditure is estimated at $474-million.

The C1 operating expenditure over the first 20 years is projected at $24.52/t ore treated and $35.02/lb of U₃O₈.

Project financing continues to be advanced.

“We are at an extraordinary stage in the uranium supply sector. We have a situation where the long-term uranium market is essentially broken. This is due to more than a decade of sector inactivity, persistently depressed uranium prices and utility offtake contracting practices which are yet to support the development of greenfield uranium production.

“Although the Tumas project is economic at current long-term uranium prices, these prices do not reflect or support the enormous amount of production that needs to be brought online to meet expected demand. Also, we can expect from experience that supply shortages will only be exacerbated by likely delays and underperformance of the sector generally,” Deep Yellow MD and CEO John Borshoff said.

He stated that Deep Yellow had one of the most rigorously evaluated greenfield projects in the world ready to go and that the extended detailed engineering and associated studies that had already been completed provided significant confidence of what caould be delivered and how.

“Water and power supply agreements have been completed as we push ahead with the off-site infrastructure needs, and project financing is proceeding well. Combine this with the strong stewardship offered by our fully proven technical teams and leadership, unique to the sector of emerging producers, and it is clear we have all the ingredients and capability to move ahead positively when justified,” Borshoff said.

He said the Tumas project was ready to take the next step to development but noted that a healthy prevailing uranium market was a key prerequisite.

“The final project approval will therefore be delayed until uranium prices fully reflect a sustainable incentivisation environment essential to encourage development of new projects for much needed additional production.”

“Our unwavering view of the global uranium market and the long-term supply/demand equation remains clear.

“The demand outlook is undeniable, driven by decarbonisation efforts, forecasts of continued enormous energy demand growth, the prevailing structural supply shortages and now having to deal with the added, newly emerging requirements from the developers of energy-hungry data centres, give clear upside for the supply sector,” Borshoff explained.

He noted that there were a limited number of greenfield uranium deposits available for start-up globally over the next ten years to satisfy projected demand.

“New uranium supply will be virtually impossible to achieve in the current price environment. It is against this backdrop that we are comfortable with our decision to carefully progress areas of the project such as early works infrastructure and detailed engineering but not commit the capital to construct the process plant until uranium prices improve,” Borshoff said.