Recent significant discoveries, strong local market sentiment and global shortage forecasts have helped focus attention on the Southern African nation of Namibia as a growing supplier of uranium to the world.
Considered by many as being one of the best African nations in which to operate a resource project, Namibia – already the world’s fourth largest supplier of uranium – is the home of a growing number of exciting new uranium exploration and development opportunities.
With mining for diamonds, uranium, gold, silver and base metals producing a major percentage of the nation’s economy, the country’s resource sector is backed by a highly supportive regime, which has developed a reputation for political stability and sound macroeconomic policies.
The nation’s natural riches and political stability has led the World Nuclear Association to forecast that Namibia has the potential to provide 10% of world mining output in the near term.
The Bank of Namibia is also tipping a promising outlook for the country’s uranium production. The nation’s central bank recently forecast that the uranium mining sector is expected to grow by 0.1% and 3.7% in 2021 and 2022, respectively. That follows a COVID-19-related decline of 12.4% in 2020. The bank’s forecast growth rates represent an upward revision on the growth outlook published in December 2020, which predicted an 8.7% contraction in 2021.
According to the World Nuclear Association, both China and India are particularly interested in acquiring uranium from Namibia. Chinese companies have taken major equity positions in uranium mines, notably with the Husab mine, but also the Langer Heinrich mine. In November 2018, Rio Tinto announced it had agreed to sell its majority stake in Rössing Uranium Limited to China National Uranium Corporation Limited (CNUC). India is discussing how to open the way to be able to buy Namibian uranium, which is, at present, ruled out by Namibia’s non-proliferation commitments.
Impending shortages
This demand for Namibian uranium comes at a time when markets are forecasting a significant shortage in production of the nuclear fuel across the globe.
In its recent half yearly report, leading Namibian uranium explorer Bannerman Resources (ASX: BMN) estimated that 2020 global U3O8 production will have fallen by approximately 20Mlbs (11% of consumption) as a result of all COVID-19 related supply disruption. The company said this effectively doubles the estimated structural deficit in the uranium sector, resulting in a shortfall of supply equivalent to more than 20% of 2020 uranium consumption.
According to Bannerman, against this back-drop of low uranium prices, the world’s largest uranium suppliers continue to exercise supply discipline. It noted that Kazatomprom (KAS: KZAP, LSE: 59OT, LSE: KAP) announced during the period that 20% of planned production reductions at all Kazakh mines will extend into 2022, reducing the global forecast for uranium production in 2022 by 14.3Mlbs. Furthermore, BHP Group Ltd (NYSE: NHP) announced a decision to abandon its brownfields expansion project at Olympic Dam, removing another substantial and low-cost source of potential supply.
Bannerman forecasts that uranium supply availability over the medium to longer term will be further impacted by mine depletion, including the closure of Australia’s Ranger uranium mine in early January 2021 and the closure of Niger’s Cominak uranium mine on 31 March 2021.
It forecast future uranium supply will further deplete as a result of mine closures, declining production rates from Kazakh in-situ recovery operations and a decrease in secondary supply as excess capacity in the enrichment market tightens.
Opportunities in Namibia
However, these forecasts of potential supply shortages are good news for a raft of junior uranium explorers now operating in Namibia, where the country’s mineral riches continue to excite the markets.
Marenica Energy Limited (ASX: MEY), the largest holder of uranium licences in Namibia, continues its path to project development recently with the discovery of an extensive, 19-km-long palaeochannel system from its maiden geophysical exploration programme in exploration prospecting license EPL7662 – an area now known as Namib IV.
Notably, managing director Murray Hill reported that the palaeochannel system at Namib IV is separate to the company’s large Koppies and Hirabeb uranium discoveries.
“Our exploration successes continue in Namibia, where Marenica is the holder of the largest area for uranium exploration leases,” Mr Hill said.
“The structure of this palaeochannel system at Namib IV is extremely promising and we look forward to mobilising a drill rig, within weeks, to test this expansive system.
“The other great news is that we are getting closer to commencing an airborne electromagnetic survey of the Namib area with final approvals expected this month. The airborne EM is expected to outline new and extensive palaeochannel systems and enable rapid planning of detailed drill programmes on highly prospective targets.”
Meanwhile, Deep Yellow Limited (ASX: DYL) continues to be very encouraged by its Barking Gecko prospect in licence EPL3669 where recent RC drilling intercepted uranium mineralization in eight of the nine holes drilled.
The latest results were highlighted by hole TN253RC and the discovery of two prospective zones, Barking Gecko North and Barking Gecko South.
Hole TN253RC returned assays of:
- 14m at 404ppm eU3O8 from 81m (including 4m at 1,067ppm eU3O8 from 85m)
- 45m at 222ppm eU3O8 from 120m
- 6m at 270ppm eU3O8 from 196m
- 15m at 168ppm eU3O8 from 206m
Managing director and CEO, John Borshoff, said the size of the area estimated at Barking Gecko South is 4km by 0.5km and the results indicate the potential for continuation of the mineralization to the northwest and southeast.
Further drilling is now planned in the second half of 2021 to test the extension of the mineralization in both areas.
Economic benefits
These drilling successes are also good news for the local economy. The Namibian Uranium Association (NUA) points out that uranium mining is an important economic factor in Namibia and in the Erongo region in particular, where it has created substantial employment opportunities not only in the mining industry, but also in the supply and service industry.
The NUA says that with more new nuclear power plants under construction worldwide than at any other time in the last 25 years, linked to the urgent need for electricity generation with low CO2 emissions, uranium prices are expected to improve with time. “This will enable the uranium mining industry to prosper and grow and continue to play its important role in the socio-economic development of the Erongo region and indeed Namibia as a whole,” the NAU’s website states.
