Toro unveils annual $131.6m EBITDA for WA uranium project

Headshot of Michael Philipps
Toro Energy directors and the company’s Japanese joint venture partners during a recent site visit to Lake Maitland.
Camera IconToro Energy directors and the company’s Japanese joint venture partners during a recent site visit to Lake Maitland. Credit: File

Surging uranium prices have prompted Toro Energy to release an updated scoping study into its Lake Maitland project in Western Australia, with the new data showing a bulging EBITDA of more than $2.3 billion during its 17.5-year mine life.

The latest figures assume current prices of US$85 (AU$128.50) per pound of uranium oxide and US$5.67 (AU$8.57) per pound of vanadium oxide, which is expected to be produced as a byproduct at the site. The previous study into the project, released in October 2022, used a uranium oxide price estimate of just US$70 (AU$106) per pound.

Toro’s new study predicts a pre-tax net present value (NPV) for Lake Maitland of $832.8 million, a pre-tax internal rate of return of 48 per cent and a payback period of 2.1 years. The company expects an average EBITDA of $131.6 million per annum through the 17.5-year mine life and a capital cost estimate of $291 million, with a low C1 operating cost of US$17.28 (AU$26.13) per pound of uranium oxide in the first seven years while the uranium resource is being processed.

The life-of-mine C1 operating cost is predicted to come in at US$27.78 (AU$37.47) per pound.

While the initial figures are positive, management says it remains confident that further improvements to the project economics will be realised – largely driven by Lake Maitland’s close proximity to Toro’s 100 per cent-owned Centipede-Millipede and Lake Way uranium deposits within the WA desert town of Wiluna. It believes the potential integration of additional resources from those deposits have the potential to increase the production at Lake Maitland.

I don’t think the WA Government can reasonably hold out against the net-zero movement for much longer by continuing with its current policy on uranium mining. I sense a shift in the global environmental movement and left-leaning Governments that were once steadfastly against uranium mining and nuclear power. They have now started to tentatively embrace the inevitable conclusion that emissions-free nuclear power supported by a well-regulated uranium mining industry will ultimately provide the panacea for climate change.

Toro Energy executive chairman Richard Homsany

Homsany argues that uranium has been mined successfully in South Australia for years and WA’s highly-regulated mining industry is more than capable of following suit both safely and successfully.

“In fact ,WA is that well-endowed with uranium that any policy change in this area would bring about economic benefits to the State (and its Government), the likes of which we have not seen since (former WA premier) Sir Charles Court opened up the iron ore industry,” he said. “I feel it is more a matter of ‘when’ and not ‘if’ for WA now”.

The original Lake Maitland scoping study suggested the project could produce a total of 22.8 million pounds of uranium oxide at an all-in sustaining cost (AISC) of US$28.02 (AU$42.64) per pound during the 17.5-year mine life. The project was also expected to produce 11.9 million pounds of vanadium pentoxide.

According to the previous study, Lake Maitland was projected to produce an NPV of $610 million, with a capex of $270 million and a payback period of 2.5 years. Earnings before interest, taxes, depreciation, and amortization (EBITDA) was estimated at $100 million a year during the life of the mine, totalling $1.76 billion.

Lake Maitland makes up part of Toro’s wider Wiluna uranium project about 105km south-east of the township and 730km north-east of Perth. The bigger Wiluna mineral resource estimate sits at 52 million tonnes grading at 548 parts per million uranium for 62.7 million pounds.

There is also an extra vanadium resource of 96.3 million tonnes grading 322ppm for 68.3 million pounds.

While Toro did not reach the substantial commencement conditions for State environmental approvals for its Wiluna uranium project, it is hopeful that the favourable study results may allow an extension, or the opportunity for an amendment to allow its Lake Maitland project to be commercialised.

The latest study focuses solely on the Lake Maitland uranium resource of 22 million tonnes at 545ppm for 26.4 million pounds of uranium oxide. The company has also estimated the amount of vanadium oxide within the deposit and integrated it into the uranium resource being contemplated in the study.

The vanadium resource is inferred only and its worth has been considered immaterial to the overall value of the Wiluna uranium project.

In April, revealed plans to spin out its portfolio of non-core nickel, gold and base metal assets in WA to level its focus solely on uranium. Projects flagged for the spin-out into a new IPO include Toro’s wholly-owned Dusty nickel project 50km east of Wiluna and the Yandal gold and base metal project.

It now remains to be seen whether Homsany’s “sense” of a shift in sentiment for the global environment movement translates to uranium policy change in WA – and what effect it may have for the $39.69 million market-capped Toro.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au

Get the latest news from thewest.com.au in your inbox.

Sign up for our emails