The Wiluna project is presently the most advanced uranium project in Western Australia. Senator Scott Ludlam and the member groups of the Anti-Nuclear Alliance of Western Australia have commissioned Economists at Large to prepare an independent assessment of the financials of the proposed mine and to identify and quantify the critical uncertainties and sensitivities of the project.
Our modelling of the project economics suggests a positive net present value (NPV) of $A 34Mn, however, this does not include any closure costs for the project. There has been no official closure cost estimate submitted by Toro Energy that we are aware of.
We conducted an NPV sensitivity analysis and concluded that:
- Adding a closure cost to the model based on closed uranium mines in Europe and the USA will almost certainly deliver negative NPV even if incurred at the end of the project in 2029. Applying the low end of the range of global benchmark closure costs of $A10.3/lb U3O8 would result in a nominal closure cost of $A223Mn in 2029, which applied to our Mid case results in NPV $A -2.15Mn.
- An increase in capital contingency costs (excluding any closure costs) in the model from 13% (assumed by Toro Energy) to 33% would also deliver negative NPV ($A -8.33Mn).
- A 10% increase in operating costs per annum from the modelled Mid case (excluding any closure costs) would deliver a negative NPV ($A -11.52Mn).
