Thursday, January 31, 2008

A Two Kilometre Tunnel – the next big thing? We don’t think so.

Undated web report of Australian Tunneling Society:

Mt Gee - next underground uranium mine in SA
Marathon Resources is moving towards development of an underground mine at its Mt Gee project in South Australia. Marathon said interim results from its scoping study had found a 1000 tonne a year operation at Mt Gee was viable. Chief Dr John Santich said an underground mine appeared to be the best option in the environmentally-sensitive Flinders Ranges. The company is continuing to drill in a bid to improve the economics of its project and expects to release an updated resource in the next few months.

and this from,
Posted 9 August, 2007:

Marathon chief executive, Stuart Hall, told Minesite on the sidelines of a uranium conference in Western Australia, that the current mine plan was to drive into the Mt Gee orebody from outside Arkaroola, thus avoiding any surface disturbance. The exact direction and angle of the drive, which would run for about two kilometres, is yet to be decided because recent drilling is expanding the resource, and finding rich material at greater depth. “The structure appears to be getting richer at depth, so we need to do more work before finalising mine design,” Hall said. Ongoing drilling and environmental data collection is expected to last the rest of 2007, with 2008 taken up with pre-feasibility studies, leading into a full feasibility study in the first half of 2009, and a possible start on construction later that year.

How are they going to do that? The earthworks, tailing and blasting involved will ruin the locality. The area is full of seismic activity with numerous fault zones. There are important dreamtime stories based on these physical expressions, assigned to an ancient serpent, Akuru. Miners are not going to be happy or safe underground.

The Federal Government body Geoscience Australia conducted a field study of the Flinders Ranges region between September 2003 and January 2005 that showed over 500 earthquakes in the region. Many were small tremors, but an earthquake measuring 5.8 was occurred on March 26, 1939; another measuring 5.5 occurred on April 18, 1972; there was a 4.6 earthquake on December 27, 2006 and one of 4.8 on September 17, 2007 (see map, right). Earthquakes of magnitude 2.0 to 2.5 occur every few months around the region. Most are associated with the major Paralana Fault Line that exists because of tectonic plate movement (about 6cm per year) between the Australian and Indian plates.

There are underground “boiling zones” with patches high in radioactivity. Nearby Paralana has Hot Springs with bubbling radon gas and was abandoned for a reason. The Hot Springs are just twenty seven kilometres north of Arkaroola, and originate deep within the earth's crust along a great earth fracture. They are the last vestige of active volcanism in Australia, with near boiling water flowing from the ground.

Marathon has not got the money, or the expertise. The recoverable deposit is not as big as they thought it was. They downgraded it themselves from a 1000 tonnes a year for 13 years to 900 for nine years. Roxby’s moving to 13,000 tonnes.

Marathon’s share price continues to drop (left), and they are on the nose environmentally, so how are they going to raise the money and the permits to bring this minor mine into production?
Note 25 in their annual report said:

Economic dependency
As a junior explorer the Group has only sufficient funds on hand to meet ongoing minimum short term corporate and exploration commitments. As a consequence the Directors are considering the following activities:
- negotiate to farm out the Group’s surplus exploration commitments;
- steps to identify sources of additional capital; and
- reduction in the rate of expenditure.
The Group is economically dependent on the achievement of one or all of the above options.
(Marathon Annual Report, 2007, page 49)

As at 1 July 2007 they had $2,140,972 in cash. (Marathon Annual Report, 2007, page 45)

Director’s fees, now set at a minimum of $300,000 pa, and staff costs will consume most of that. No wonder some were having off site crisis meetings late in January after all sorts of changes were made to company structures.

1 comment:

Anonymous said...

Farm out exploration committments! I hereby absolve Marathon Resources, Talbot Group, CITIC and other mining raiders from all their outstanding exploration committments...have a break...find something less destructive to do with your time and money.