Anatolia Energy (ASX:AEK) has announced the final outcome of a pre-feasibility study it conducted on its Temrezli ISR Uranium project in Turkey. The initial capital expenditures are very low at just $41M (with a sustaining capex of $90M, or approximately $9/lbs) and as the project is expected to produce an average of 825,000 pounds of uranium per year at an operating cost of less than $17/lbs, the payback period of the project remains very low, even at a long-term contract price of $50/lbs.
The pre-tax NPV8% using an uranium price of $50/lbs comes in at in excess of $100M and if one’s bullish on the uranium price and accepts the company’s base case scenario using a long-term uranium price of $65/lbs, the after-tax NPV8% is a stunning $145M which isn’t bad at all for a project which will produce less than 10 million pounds of uranium during its mine life. If you’d add the G&A and sustaining capex, Temrezli should still be in a position to produce uranium at an all-in cost lower than $35/lbs.
We will keep an eye on Anatolia Energy’s progress as the project definitely has its merits on a technical basis.
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Disclosure: The author holds no position in Anatolia Energy. Please see our disclaimer for current positions.
