Finishing off the session, we have Greg Hall, Chief Executive Officer of Alligator Energy, the uranium and energy metals exploration and development company with a global portfolio of assets across Australia and Italy. The most promising of which, the Samphire uranium deposit in South Australia, just released an updated scoping study looking at producing up to 1.2 million pounds of uranium over 10 years. The Samphire Project bears similarities to Beverley, Four Mile, and Honeymoon, being an in-situ recovery asset. Welcome, Greg. Thank you for taking the time to present today. Over to you.
Thanks, Regan, thank you very much for the opportunity to chat. I'll quickly go through a few slides just to refresh on our project. The opening slide is a photo of our Samphire tenement area, with two drill rigs we had operating there last year, and we've recommenced drilling on resource extension this year. Just a disclaimer, in terms of the business itself, we raised around AUD 30 million later last year. We still have around AUD 37 million in the bank going forward. That certainly is enough to carry us forward for our immediate programs on the field recovery trial, the resource extension drilling, a feasibility study leading in, and mine approval preparation and advancement work. So that's all well underway.
Most people would know our board has a strong background in uranium, between myself and Peter McIntyre, and our new board member, Fiona Nicholls, who was head of ESG for Rio Tinto Energy, and was hence on the board of both Rossing and ERA. Our operating team has been enhanced. Andrea Marsland-Smith, our Chief Operating Officer. We've grown the business with some more senior people in with ISR experience and construction experience now, and ready to go forward. In terms of the Samphire project itself, I'll talk about mainly today. The JORC resource of just under 18 million pounds was enhanced by lifting the indicated portion dramatically, so it's dominantly indicated.
That allowed us to do a 1.2 million pounds per annum scoping study update, for a 12-year life, and certainly has added some exceptional value to the project. We'll go through the target information shortly. We also put an exploration target range on top of the resource. We went from a very conservative additional 14 million pounds, just immediately around Blackbush to some extent, up to 75 million pounds, looking just in the channels that have mineralization already, and there's a lot more than that. So I'll go through that shortly. The scoping study update we did in December, building off the one we did 12 months ago. Our capital was very similar, only marginally, a marginal increase. Payback was improved, a 42% IRR post-tax, AUD 257 million NPV post-tax.
An AISC of AUD 33/lb, slightly up on the first scoping study, but we think quite realistic. We did have some savings in the operational costs and cash costs, but they were offset by we increased some of the working capital or the all-in sustaining cost, in particular with well field drilling. We went a little more conservative and reduced the thickness of in-situ recovery thicknesses to about 2 m because we are seeing thicknesses of 4 m-5 m, but quite often they're split by a clay layer. So if that means it's a different roll front, then you need to mine them separately. So we've been a bit more conservative as we get more detailed view of the resource. Most people understand the ISR in-situ recovery process.
You circulate the existing groundwater fluids, in this case, ours are hypersaline, more salt than seawater. We circulate them. We do an RO plant on the circulation to drop the salt levels to within the bounds of the salt-tolerant resins that can operate, so down to about 12,000 to 15 ,000. Gradually add in the acid to lower the pH and add the recipient to dissolve the uranium. The good factor about our cost base is that we're close to Whyalla. 20 km south of Whyalla, which is a real support base, both in the iron ore projects nearby, but also the northern copper projects. So we have no fly-in fly-out, no camp requirement, no airstrip to build. Really only 20 km, 25 km power and water line. So that means that we've got a very good low capital horizon.
Despite that, we kept a 35% contingency in the scoping level, just because of the nature of the level of study it is. But we've got a capacity to increase that going forward. 1.2 million pounds is a great starter project. Most ISR projects start around that size around the world. Beverley, Four Mile, for example, started at 1.2 million pounds, now up to 4.5. Honeymoon started around that level and now going to be increasing. Same with the U.S. assets. So certainly we've got a good starter project. The Blackbush resource or Blackbush deposit is the prime one. The blue area is inferred, the pink is indicated. We've expanded that during the last year.
Now we are drilling resource extension to, to the left, to the north, out to the east, on the right-hand side. Some high grade. All of the intersections out there are historical from previous company drilling, that's Uranium SA. All of them are above cut-off grade. So essentially what we've got to search for is the channel and roll fronts that go in those directions to those high-grade hits. And we've already started that work in the last few weeks. So some good expansion opportunity immediately around our resource. But more than that, in looking at the exploration target range and the series of channels we, we already know are there, we've only well explored about 10% of them. Another 32% are mineralized, have had intersections in them, and we've only looked on the exploration target range in that 42% area....
So it's 58% of all channels here have no drilling. So therefore, we've got upside on top of what our exploration target range is. Particularly where that bottom arrow growth potential is, we're going on the ground this year to do ground gravity and get those channels identified, and we haven't even taken them into account. So we certainly believe we've got a long life project, which could also expand production rate in the future on the basis of discovery. The field recovery trial, we advised the market in December, we've delayed this. Part of the reason here is it's taking longer to get the approval required and for the retention lease.
We have to go from an exploration lease to a retention lease, so the field recovery trial can be operated with a greater level of scrutiny by the regulator, which we're fine with. We're okay to do that, but it is taking longer to get that in place. So we're now anticipating construction of this around mid-year, subject to those regulatory approvals. There are three rings marked by these red circles. You can see rings of holes where we'll be testing different parts of the initial Blackbush ore body, and the pilot process plant is nearly complete. It will be shipped up in March to Whyalla. two 40 ft containers, one with the blue IX columns, one with the wellhouse. You can see in the photo along with reagent distribution. So that's all in place and about to be shipped up. We already have all the resin.
We are next going to order the pipe work. We'll make sure everything's on site, ready to go. I will mention to Bell Potter viewers here that we made an investment into a private company, Enviro Copper. Enviro Copper's been doing some work for five or six years into ISR oxide copper work around Kapunda and the old Moonta mines in the Alford West area. We're quite interested in this, and Leon Faulkner and Brett, who've got experience in ISR uranium, worked quite hard to advance this. They have permission to do a trial of ISR recovery on an exploration lease in these areas. So we're very interested in this. We think there's a lot of opportunity for ISR in copper in South Australia, particularly because of the oxide resources which are available.
So we've taken the chance to get in and do some early work. Now, our team has a lot more production experience in ISR, so we think there's a good coalescing of information there. It is just an investment. We'll be on the technical committee, and if we invest further, ultimately on the board. And that's the summary that I wanted to give to your viewers, Regan. It's mainly focused around Samphire. We've enhanced our team in Samphire. Along with Andrea, we already have a principal geologist, a senior hydrogeologist, a senior process chemist, and now a project supervisor or manager for the field recovery trial and study manager, and certainly the environmental team in place that have been doing a lot of work for some time.
So happy to take some questions and talk further.
Thank you very much, Greg. Short and sweet, which is good. Potentially on the market first, obviously, you have, our viewers might not know this, but you have a background in uranium trading. So I thought it'd be a great place to start with you in terms of, the recent volatility that we've seen over the last couple of months in the uranium spot price. What's your interpretation of this, and, and where does it go from here?
No, happy to have that conversation. I purposefully didn't put any marketing slides in to keep things brief and talk, but happy to talk widely on this. Look, you're right. I didn't take the time to introduce the detail of our experience in the company. But I did long-term contract work for ERA and Rio Tinto for about five years, and I dealt with a lot of trade and material. I also did a lot of joint deals with enrichment companies and things like that. So it was a great learning curve for me some years ago. Where we see the market now, you'll be hearing similar things from most people.
You're seeing the spot price increase based around a few trades, a small number of trades, that then seem to set and consolidate with an increasing number of trades that tends to lift the interest up to that level. Certainly, it jumps on, let's call it uranium political news, which might be political, which might be market, which might be corporate, but uranium political news moves the market much more than sometimes any of us can. But certainly, that has occurred. You've seen the issues in Kazakhstan trying to ramp up production. Cameco seem to have got over their issues, and they're intending to ramp up more fully. So you're getting some of those signals to the market are a bit mixed. However, there will be a continuous amount of spot buying.
There's no question there are enterprises, whether they be financial traders, or utilities, willing to buy any available spot that comes on the market. They won't buy willy-nilly. They'll try to read the tea leaves and say, "Okay, is it stable? Maybe I should offer 4 lbs less, AUD 4 less because it's stable right now, so I'll get a 4 lbs off or something." So they will move the market, and most people know that. What I'm more interested in is where the long-term contracting price will go. At the moment, you're seeing many people contract in market-related deals with floors and ceilings. We've heard of, obviously, floors moving up. In one instance, we've heard of no ceiling, but of course, Cameco reported the other day, AUD 120 ceilings are possible.
So definitely the market-related prices are getting a much better color. In terms of fixed price, not many people are doing fixed price. No one wants to at the prices of, say, AUD 75 or AUD 65. But you have to believe that once prices get to AUD 80 or AUD 90, it's going to become attractive to do a mixed formula. Maybe a portion of fixed price base escalated, a portion of market-related, and get yourself into a stable layering situation of future contracts. So I think that's feasible over the next two years... and that suits because you're going to see the restart companies like Langer Heinrich. We just heard from Alex, and they've done a great job. You're seeing Boss, Advance, Ur- Energy, Peninsula will come on. You're seeing UEC wanting to start, and of course, enCore of restarting Southern Energy Fields.
So you're seeing those players bring on production, that's gonna get the utilities a little more comfortable that mines will start when and if they can. Maybe more of a risk to the next development stage, like, you know, we are some years out. We're going through the process of a pilot trial, full approved mine, and getting into production, and that's going to take at least through to 2027 or more, and most companies will be like that. So there'll be the restarts, the ones that are closer to development and then some beyond that. I also agree with what Alex said, we shouldn't underestimate the existing producers and what they can do to expand. It's so much easier sometimes to expand an existing mine than it is to even do a restart. So I think you'll see some increase in production.
Now, I'm going to put a damper on the market in this context here, because I think all of that will still not quite be enough. We are losing significant mines. We have lost significant mines. We are losing significant mines over the coming 10-15 years, so we have to find and develop new significant ore bodies. And, that's one of the reasons in Alligator, and I didn't talk about, we're still exploring. We've still got the second largest, accessible landholding in Arnhem Land. We're doing our third program on the Nabarlek North Project. We are doing a pure greenfields play over the Tipperary Basin, where the same sediments that host the Beverley and Four Mile and Honeymoon projects exist and, and also contain uranium, traces of uranium. So whether it's economically, coalesced anywhere, we've got to check.
So we believe there's room to find brand-new big deposits. Now, Samphire will expand if we get that started as a starter project. We know that. We've got the right attributes there, but we want to look for a second. So I read right through from the market, the pricing, the term contracting through into what's driving the market a little bit there, but without going into nuclear utilities, that's another whole question. And many of us look at that continuously. I won't go into it, but there's I think there's a firm 3%-4% growth in nuclear power number.
Certainly. Shifting to Samphire, and obviously you touched on it, and it is the focal point of the company. You did mention a little bit of the similarities between sort of proximate assets at Beverley, Four Mile, and also at out at Honeymoon. Obviously, your production sort of capacity at 1.2 million pounds were obviously of the same view that that should expand similarly to, I guess, Heathgate and Honeymoon. What's I guess what are the comparators between those projects and where you are now, and what's the forward path?
Well, the comparators are, we're all similar settings in terms of you've got compacted sand beds, and uranium that's formed around the sand grains, and essentially that's sometimes where the similarity finishes. Beverley, with roll front types, uranium is more similar to what Samphire has, a bit more similar to Honeymoon. Four Mile is larger sheet flow, so that's why it's got more consistent production and thicker grades. So there's some differences, but similarities. Groundwater quality-wise, in Beverley and Four Mile, you've really got a few thousand PPM, up to 4,000 PPM of salt. Honeymoon's higher, up to 10-12, we are at 40. So we have to do more work to improve the quality of the groundwater, power-wise and circulation water-wise, prior to going into the IX plant, or prior to leaching in the IX plant.
The uranium leach is fine in that salinity. There's no issue with that at all. We've tested that plenty, but we have to do that work. So we've got that additional cost, but we don't have the capital transport, fly-in-fly-out costs that those other projects have. We're close to a regional center. We've already got local employees out of Whyalla. So while there's good similarities in the settings and the chemistry to some extent, and we can all, we all have people who've worked at each other's operations in a way, there are enough differences that you've got to focus on them individually. And that's one of the reasons for doing the pilot field recovery trial, because there can always be a slight difference in chemistry in different areas that you've got to test and make sure it works.
There hasn't been an ISL project that started ever that didn't do a field trial, because you need to do that. So that's probably the similarities. I think, where the good thing about it is there's bound to be some more projects. Although Quasar, the exploration arm of Heathgate, has done a good job at looking for plenty, I think we're all, we're all going to find more uranium.
That field recovery trial, excited to see that sort of begin in potentially the middle of the year. What are you sort of looking to achieve there? What are some of the, I guess, the milestones that we should sort of get following that?
Yeah. Well, the key milestones are successfully installing fully grounded wells. While our team have had all that experience in doing it on other sites, we've got to do on our site. But we don't see that's an issue. Our rotary mud drilling crew is extremely experienced because they've worked in all the other sites. So fully installing the wells, getting the circulation, again, the porosity, permeability we've measured comfortably. Circulating the groundwater and doing the RO plant to lower the groundwater, to create this sort of plume in the pore volume space of the ring of lower salinity, which will mean that the pregnant liquid solution coming out has that 100 PPM uranium, but also has a lower salinity into the IX plant.
And that's because the spots on the IX resins that attract the uranium also attract salt ions. So you'll get a much lower, slower recovery through the IX plant if you don't lower the salts to under, at least under 18,000, preferably a bit lower. So the salt-tolerant resins have been proven to work in the test work, both at Honeymoon and our own through ANSTO up to about 18,000 salts. So that's the main part of the test we've got to do, and then the outcome of that is then the eluate, the clean eluate, which we're storing in tanks, and we'll know the quality of that. And that's easy then to predetermine the steps to go through drying, calcining, product packing. So it's really the you know, putting in the well field, we don't see any major issues.
Getting the circulation, we also see that'll work well, but we've got to prove it. Getting the salinity down, making sure we get the loaded pregnant liquor solution through ion exchange and extract the uranium at the rate we wish.
Potentially on your other projects, obviously, you touched on Alligator Rivers, which the business sort of started its focus on. We had DevEx give us an update on Nabarlek before. How are you sort of thinking about those other assets?
Well, look, Nabarlek North with 11 tenements, which was only granted just before COVID hit, and we've only done one and a half seasons on it. We're now in the middle of a workshop for Alligator Rivers, on that area in particular, but also our other areas. And we'll come out with a new program for this year, which we'll get on the ground in June, post the wet season, and start to work. We've got all our logistics set up well now. We've got a full team, which we can get a call. We've got them retained. We've got all logistics with camp and transport and all those things. So it's much easier now for us to get up there and do good work.
Last year, for the first time, apart from doing the geological stratigraphic drilling that we have been doing, we did some deeper RC, and we hit our first intersection to the north of U40, which is DevEx's project on their ground. So, we'll be looking for further extension to that to some extent, but we have a variety of other targets that we've now identified, both from IP surveys we've done looking at structure, plus some EM surveys, plus our own geological work. So, we've got a range of new areas to look at, plus now some deeper targets we want to find. The aim here is to really find those high angle to low angle structural settings in the lower Cahill Formation, which is, of course, the formation of the Ranger 3 and Ranger 1 ore bodies.
So that's exactly what we're looking for. We know there's Cahill Formation in the area, and so we've got to find out where it is. The beauty of the early exploration up there was it's all radiometrics and surface. All the ore bodies were exposed to surface. Now you're having to do geology, sometimes in some places like TCC and Beatrice under sandstone, but fortunately at Nabarlek North, it's not under sandstone, it's just under some overlying weathered material. So we will have another good program on that site this year.
Certainly. And, how about at Big Lake?
As I said, we've got the we had the full clearance done by an Indigenous group we've been dealing with, and that was completed last year. A little bit slower because one of the major oil companies were using them for their own clearances. But we should be on the ground by April this year, doing the first stratigraphic drilling, and I emphasize it's stratigraphic. So what we've done is we've used all available seismic data that's public, available chip data, holes that are in the core farm in South Australia, and had a good look at those sediments. A bit of EM survey and we've said, "Right, where do we think there could be accumulations of channels or groundwater wash that accumulates? Let's go and drill in these areas." And so we've got those areas cleared, ready for drill.
Now, we might find uranium. There's certainly intersections of 7 cm at 300 PPM from historical drilling, but we might not find accumulation in that area. But there's a lot more of the Cooper Basin to look at. So we have a big footprint. We're only working one tenement at the moment, and we'll be using that data to predict where we're going to drill on the other tenements up there as well.
I guess rounding out the next couple of questions, obviously, large focus of the business is within South Australia. How sort of beneficial is that being located in South Australia?
Well, South Australia and the Northern Territory have bipartisan support for uranium mining, uranium exploration, uranium development. Along with the federal government, which has also got bipartisan support, both sides of Parliament have approved uranium projects. So logically, to spend towards a discovery which you may be able to develop or if it's very, very big and someone else wants to develop it, logically, it's a good place to look. I've said this before publicly, we have looked at projects through Australia. We're also looking in the U.S. They're probably the two dominant areas we like to look at. We've bid on project in the U.S., didn't get them. We've looked at projects in other parts of Australia and still are. So we're not afraid to move, geopolitically into different areas, and take a political punt on things that might happen.
But we'll do it cautiously and carefully. And at the moment, at the moment, the market wants to see what we can do with Samphire. If we get it through to a successful field recovery trial, into feasibility and under approvals and then under financing, then, then there's a lot more value we can add to the company as, as, all your viewers know. In particular, we have had many, many utilities, and already we have anywhere from three to five of them that would be willing to do early offtake contracts, conditional upon approval and financing. Now, the earliest time we would consider that would be during the latter part of the feasibility. So you're talking late 2024, early 2025, and we'd have to consider whether it's worth doing that then or not.
But sometimes, on a financial basis, having something like 10% or 20% of your production with a favorable major utility in a reasonable deal that gives you some cash flow going forward, is something that's going to support financing. So it's something we'll consider at the time.
Certainly. And potentially just before you go, you touched on briefly there, the final sort of, I guess, the, the next milestones for Samphire post the field recovery trial, but potentially just going back over that, so potentially a, a feasibility study, all things going well with the field recovery trial is the next step?
Well, we've already... We've got to get through the potential lease approval, then that approvals team swings straight away across onto a full mining lease approval. We've initiated the flora and fauna work we have to update for that. That's already underway, the hydrogeological work, et cetera. So that approvals team swing straight across onto the mining lease approval, while the field trial and the feasibility is underway. You need the feasibility and the mine design to go into that approval, so we really wouldn't be submitting approval documents till the end of this year at the earliest, so probably early 2025. And that's a critical path to go forward in production. Post feasibility, there would be, maybe some updates to that because you'd probably look at an expanded project.
By that time, we would have had two years of resource extension drilling, and I would imagine we would have expanded the resource somewhat. So on top of the feasibility, some resource expansion, and then leading into financing.
Certainly. We've just slightly gone over a little bit of time there, Greg, but thank you very much for taking the time to present to the Bell Potter network at the 2024 Unearthed Conference. We're very, very interested in what's happening at Samphire, and we look forward to following the business over the next 12 months. Thank you.
Thank you very much for the opportunity, Regan. All the best.
Thank you.