Uranium Honeymoon Fails Financial Test

June 7, 2001

Economic uncertainty over the controversial Honeymoon uranium project in South Australia is growing ahead of today┬╣sThursdays Annual General Meeting of mining company Southern Cross Resources in Ontario Canada. The company attempting to develop the controversial acid leach uranium mine near Broken Hill has been beset by delays and has failed to secure a joint venture. Southern Cross are seeking Australian Government approval before the next federal election as present Federal Labor policy opposes the project.

Mr. Robert Schuitema, Managing Director of global mining and metals for US based finance house JP Morgan Chase has outlined key requirements for successful financing in the May edition of the mining industry journal , the Minerex Report. The Honeymoon project fails each part of the checklist.

  • A Quality Sponsor: Southern Cross has failed to secure joint venture
  • Reserves: Honeymoon ore reserve estimates have dropped 15%
  • Project Delivery: Government approvals have stalled pending further field trials
  • Technology: Controversial technique not used elsewhere in OECD
  • Environmental: Project fails best practice, rehabilitation benchmark
  • Market: Spot price remains low with flooding of ex military uranium
  • Offtake : Hold agreements for only 2 years sales out of 8year minimum
  • Financing Structure: Will rely on joint venture capital to raise commercial plant capital

The following shows fluctuations in reporting of ore reserves during trial mining

Amount of uranium

  • Mid 1997 Estimates of uranium resources (Ackland, 1997 UI Symposium) Honeymoon - 3,400 tonnes U3O8, at 0.157%
  • May 1999 Estimates of uranium resources (1998 Annual Report) : Honeymoon - 3,900 tonnes U3O8, at 0.120% and 0.71 m.% (grade-thickness)
  • May 2001 Estimates of uranium resources (2000 Annual Report) : Honeymoon - 3,300 tonnes U3O8, at 0.12% and 0.84 m.% (grade-thickness)

"With both a depressed market and an uncertain political climate, Southern Cross have serious questions to answer at their annual general meeting. Far from signaling a uranium honeymoon, the project remains a marginal gamble" said Bruce Thompson for Friends of the Earth.

For further information contact:

Bruce Thompson
Mob: 0417 318 368