ECONOMIC EVALUATION OF URANIUM PROJECTS: NIGER CASE STUDY
H. GARBA BARKE Ministry of Mines, Niamey, Niger
1. OVERVIEW OF NIGER
1.1. Geography
Niger is a landlocked country located in West Africa and covers an area of 1 267 000 km2. It has a population of 17.1 million. Niger is a democratic country with stable institutions and elected representatives at all levels. It is a decentralized country with eight regions: Agadez, Diffa, Dosso, Maradi, Niamey, Tahoua, Tillabéri and Zinder. Niamey is the capital.
1.2. Geological framework
The geological framework of Niger is characterized by the presence of four basement formations, which are host to both metallic and non-metallic resources:
1) Liptako Gourma (north-east of the West African Craton) with gold, lithium, phosphates, iron, copper, molybdenum, zinc, titanium, dolomite, vanadium, chromite and manganese; 2) The Air mountains in the northern part of the country possess reserves of uranium, coal, gold and molybdenum; 3) Damagaram Mounio and South Maradi in the central southern part has gold; 4) Djado to the north-east has gold, gypsum, phosphates and uranium.
2. OVERVIEW OF URANIUM POTENTIAL IN NIGER
Uranium minerals have been found in the Iullemmeden Basin. This sedimentary basin comprises two sub- basins:
1) The Tim Mersoi sub-basin, which is located in the north; 2) The Ader Doutchi sub-basin which is located to the south-west.
The Iullemmeden Basin contains reserves of coal, phosphate, gypsum, limestone, bentonite, manganese and oil. Uranium occurs mainly in the first sub-basin. Two types of uranium mineralization are present: (i) tetravalent uranium minerals (pitchblende and coffinite) characteristic of reduced deposits, and (ii) hexavalent uranium minerals (vanadates, phosphates, silicates, arsenides and molybdates) which are characteristic of oxidized deposits. These two types of uranium mineralization have been used to identify two types of uranium deposits: (i) Carboniferous uranium deposits (Akouta, Afasto–Ouest, Arlit, Madaouela, Tassa N’Taghalgué), and (ii) Jurassic and Cretaceous uranium deposits (Imouraren, Azelik, Assaouas).
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2.1. Uranium resources of exploration projects
Two major exploration projects were carried out in the 1980s:
1) The Sekiret project (1985–1986), undertaken by ONAREM–PNC [1]. All the activities were centred on the Iullemmeden Basin. Drill holes have cross-cut the Tchirezrine 2 to the Guezouman Formations. In the Guezouman Formation, uranium mineralization was detected over a 2.25 m interval with a grade of 0.04% eU3O8; 2) The Techili project (1989–1990) evaluated the uranium resources of the Madaouela and north Arlit sectors [2]. The thickness of the mineralization was 3.40 m with an average grade of 0.20%.
2.2. Uranium resources of the mining projects
Four companies were formerly extracting uranium in Niger. Unfortunately, owing to the fall in the uranium price, two companies (IMOURAREN and SOMINA) have mothballed their projects. The two remaining companies (SOMAIR and COMINAK) have initiated a social plan to reduce the number of employees.
3. ECONOMIC EVALUATION PROCESS OF URANIUM PROJECTS IN NIGER
Economic evaluation of mining projects includes the examination and the assessment of technical, financial, social and political aspects of the environment in which the mineral deposit is located. They include the estimation of mineable ore deposits, the production rates, capital expenses and cost of operations. The financial assessment will be set according to the fiscal regime of the host country to generate standard project evaluation criteria such as the net present value and the internal rate of return.
3.1. Steps of uranium projects evaluation
In Niger, any mining project evaluation is based on a specific guideline known as ‘canevas’ and as well as the deliberations of a working committee. The guideline is based on the following points:
1) General presentation of the project; 2) Presentation of the investors; 3) Juridical analysis; 4) Market analysis; 5) Environmental and social impact assessment; 6) Technical analysis; 7) Financial and profitability analysis; 8) Risks analysis.
The activities conducted by the working committee will be based on this schedule. For this, some ministries and other related structures will have representative making up this committee.
3.2. Parties involved in the evaluation process
The parties involved in the evaluation process come from the following entities:
— The General Secretary or representative; — The General Director of Mines; — The Director of Mines; — One representative of the Ministry of Finances; — One representative of the Ministry of Environment; — One representative of the General Direction of Customs;
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— One representative of the Ministry of Water Resources; — One representative of the Ministry of Agriculture and Wildlife; — One representative of the General Direction of Taxes; — One representative of the Bureau of Environmental Impact Assessment; — One representative of the Presidential Cabinet; — One representative of the Prime Minister’s Cabinet; — One representative of SOPAMIN; — One representative of each technical Direction within the Ministry of Mines.
After the selection, the committee will be set up by decree signed by the Ministry of Mines. The General Secretary or the General Director of Mines will be the president of this committee.
The report of the feasibility study will be completed through the following chapters:
— Chapter I: Introduction, summary and conclusions; — Chapter II: Geology and hydrogeology; — Chapter II: Resources; — Chapter IV: Mines; — Chapter V: Mineral processing; — Chapter VI: Alternative mines and processing designs: — Chapter VII: Infrastructure; — Chapter VIII: Transports and logistics; — Chapter IX: Employment and training; — Chapter X: Structure and organization of the project; — Chapter XI: Environment; — Chapter XII: Health, security and radiological protection; — Chapter XIV: Communication; — Chapter XV: Economic evaluation; — Chapter XVI: Social impacts on the country.
It is important to note that the demand for an exploitation licence is accompanied by the licence of environmental impact assessment and the report of environmental assessment. The report of the feasibility study will be sent to each member of the committee at least one month before the meeting of the committee. Before the convocation of this meeting, the Direction of Mines will present a preliminary economic evaluation.
Once the committee has convened, some working groups are to be set up according to the area of expertise of each participant. A place and time will be allocated to each working group. It should also be noted that representatives of the company submitting the feasibility studies will attend the workshop to answer the questions of the committee and to justify their work.
Once each group has made a decision to accept or reject the part on which they have worked on, all the groups will meet to take a final decision. A succinct summary of the deliberations may include either:
“The feasibility study submitted by such company is accepted, subject to integration of the observations made by the committee”; or
“The feasibility study submitted by such company is rejected for lack of conformity, insufficiency, etc.”.
The economic evaluation of mining projects is mainly based on the net present value and the internal rate of return, which are two parameters used to evaluate the degree of profitability of a project through its
150 lifespan. To determine these two parameters, a financial model needs to be built to confirm the results of the economic evaluation presented in the feasibility study.
After building the financial model, the sensitivity analysis will define which are the technical or economic parameters that most impact the net present value.
3.3. Sensitivity analysis
3.3.1. Sensitivity to the ore grade
The impact of a variation in the ore content may be small or significant in terms of cash flow, but the increase in the reserve may cause a decrease or increase in metal recovered, depending on the type of treatment applied (static or dynamic).
3.3.2. Sensitivity to the type of ore processing
This analysis always shows that the ore processing efficiency varies with the ore grade.
3.3.3. Sensitivity of technical and economic parameters
The analysis consists of evaluating the impact of certain parameters on cash flow. These parameters include: cost of mining the ore, cost of ore processing (static or dynamic), cost of metal treatment (static or dynamic), recovery rate of the plant according to type of treatment (static or dynamic), fixed costs and sale price.
4. THE SOCIOECONOMIC BENEFITS FOR THE COUNTRY
The socioeconomic benefits include the following:
a) Job creation; b) Capacity building; c) Creation of revenues (dividends, royalties, taxes); d) Sustainability of mining activities; e) Building of infrastructure, such as schools, health centres, roads, water infrastructure, etc.
5. RISK ANALYSIS
The risk analysis is based on the study of specific parameters, such as the political context of the country, security, stability of the fiscal regime, long term market price, etc.
6. CONCLUSION Mineral project assessment requires the evaluation of technical inputs such as mineable reserves, production rates, recoveries, costs and revenues. These parameters form the basis of mine project evaluation, together with the tax regime of the host country.
REFERENCES
[1] ASSOCIATION ONAREM–PNC, Projet Sekiret, rapport de fin de la 5ème campagne, 1985–1986 (1986). [2] ASSOCIATION ONAREM–PNC, Projet Techili, rapport de fin de la campagne 1989–1990 (1990).
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