Koba confident of economic discovery in uranium elephant country

KOB confident of economic deposit potential at Yarramba uranium project in SA
Company already made three discoveries within 120km of two operating mines
Infill and extensional drilling planned for Q2 this year

In the last 12 months, Koba Resources has made three new high-grade discoveries within its Yarramba uranium project in South Australia, which is next door to operating mines in the yellow-cake friendly state.

The latest find, the Everest prospect, is immediately north of Boss Energy’s (ASX:BOE) 10.7Mlb Jason Deposit and the Honeymoon uranium mine. Watch: High-grade intercepts discover new peak at Everest.

That one brought the tally up to three new high-grade discoveries (>1,000ppm) for Koba Resources (ASX:KOB), including Berber (1.6m at 1,026ppm) and Chivas (0.5m at 1,028ppm).

Managing director and CEO Ben Vallerine says this early exploration success demonstrates the considerable potential to continue to discover additional high-grade uranium within shouting distance to two operating in-situ recovery (ISR) mines.

Particularly when you consider the extremely fertile Yarramba Palaeochannel hosts over 50Mlbs of U3O8.

“This paleo channel hosts 50 million pounds of uranium to the south of us, and it’s been sparsely explored through our project,” he said.

“We’re in the premier uranium district in Australia. There are two producing operations within 120 kilometres and we have 5000 square kilometres of tenure and over 250 kilometres of interpretive paleo channels that are all highly prospective to host similar style uranium deposits.”

Not to mention, too, the company’s tenure already hosts a known deposit – the Oban uranium deposit – which several of the discoveries have been quite close to.

Long-term contract price takes the (yellow) cake

Uranium prices have soared over the past 12 months – up to as high as US$106/lb last January – reflecting increasingly positive market sentiment as punters take a bullish stance on nuclear as a global green and clean energy solution.

And while the price has levelled out more recently, Vallerine says to avoid focusing too much on the spot price, as that really only represents about 20% of the market.

“The problem with the spot price is that it kind of controls market sentiment a little bit, which affects people like us down the smaller end with market sentiment and retail investors can get nervous,” he said.

“But really the uranium price is still strong. Long-term contracts are where the value is, because all those utilities need uranium to power their power stations so they can’t afford to be missing that.

“And the long-term contract price is still steady around $80 and quite strong.”

With a secure long-term market, and an extremely uranium-positive state in South Australia, Vallerine has high hopes for the project.

“We’ve made three discoveries and that really validates our ground, and we’ve got 5000 square kilometres and 250 kilometres of paleo channels,” he said.

“We think that’s a great start to making an economic discovery somewhere within our tenure.”

The next step for the company is infill and extensional drilling, with heritage survey recently completed to secure permissions to come back and complete drilling in Q2 of this year.

While Koba Resources is a Stockhead advertiser at the time of writing, it did not sponsor this article.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.