Tournigan Energy Expands Resources in Anticipation of U308 Market Strength

While many uranium juniors are spinning wheels inhigher discount was used by our independent
over-regulated mining jurisdictions, Tournigan Energyconsultant.
has moved from exploration to prefeasibility in just aRI: What are the prospects for growing this deposit?
few short years in Slovakia. The company's KuriskovaDN: In addition to targets immediately adjacent to the
project has inferred and indicated resources, defined resource, recently completed ground
encouraging initial metallurgy and ongoing drillingradiometric and radon gas-in-soil surveys indicate the
continues to prove up high grade mineralization.presence of anomalies extending up to 300 metres
Tournigan's President and CEO Dorian L. (Dusty) Nicolnorthwest and 200 metres southeast of the currently
has a B.Sc. in geology from M.I.T. and a Master'sdefined resource. Further interpretation of these new
Degree in Geology from Indiana University.survey results may lead to identification of drill targets
Resource Intelligence: We've been watching yourwith potential to increase the size of the Kuriskova
company for a long time. Compared to many otherdeposit or indicate the presence of satellite deposits.
uranium explorers you've really stuck it out, explored,RI: What is the objective of the current drill program?
proved up a resource and are clearly moving towardDN: We want to continue expanding the resource, to
feasibility. And yet sentiment for the uranium sectorupgrade a significant portion of the inferred resource
has cooled somewhat since it's wild ride a few yearsto the indicated category, to increase the overall grade
ago. Do you think the sentiment is going to come backof the deposit and to provide subsurface geotechnical
soon?and hydro-geological data to be used for engineering
Dusty Nicol: Yes, and analysts point to a few reasonsdesign. The resulting updated resource estimate will
for this: A doubling of nuclear reactors before 2030, aprovide the basis for the reserve estimate in the
diminishing amount of secondary supply from nuclearKuriskova Project prefeasibility study. The 17 holes
warheads and other sources, and few sources of(excluding two abandoned holes) drilled in 2009 total
new primary supply. So the mid-term and long-term5,298 metres of a planned 15,000 metre program to
outlook for uranium are very good. The debate isprovide sufficient data for the prefeasibility study.
exactly when that kicks-in to take the spot price ofRI: What is the size of your land package in Slovakia?
uranium up again. Many say later this year.DN: We hold 150 sq. km of the what we know to be
RI: Let's talk about your flagship project, Kuriskova.the most prospective uranium licence along a 60 km
You've got an excellent resource here with quite highuranium/molybdenum belt along the Carpathian
grade uranium mineralization. How many pounds havemountains.
you proved up so far?RI: So with all this exploration at an advanced stage,
DN: Our last resource estimate includes  about 15when do you expect to be through the feasibility
million pounds uranium oxide indicated at 0.558% U3O8stage?
and about 18 million pounds inferred. We've been veryDN: By 2012.
pleased with the high-grade results of our 2009 drilling.RI: There was some talk about concern from special
One intercept hit 4.5 metres of 0.977% U3O8.interest groups about uranium mining here. Has that
We've also announced the results of four explorationbeen resolved?
drill holes which intersected high grade in what appearsDN: Whenever you have industry around communities
to be a new zone of mineralization adjacent to, but atthere are special interest groups who want to voice
shallower depth, than the Kuriskova Main Zone.their opinions.  We've found Slovakia, a member of
RI: You've already got a sense of what this mine willthe EU to operate much like most developed nations in
look like. Can you describe it's shape and size?this regard. There's a development and environmental
DN: The high grade Main zone is a 45 to 65 degreeprocess to follow, which includes public consultation.
vertical plane with average widths of 2 to 8 metres. ItWe've operated in the country for more than 6 years
runs from 150 metres to 650 metres in depth with aand have recently renewed our 4 year exploration
650 metre strike. Additionally there is lower gradelicences, so we're pleased with our progress in
material in the hanging wall where mineralization isSlovakia and we're optimistic for the future.
associated with stockwork veining in andesite flows.RI: Slovakia has nuclear reactors. Is this a potential
The deposit is open at depth and along strike.market for you?
We're looking at an underhand cut-and-fill miningDN: Slovakia has four operating nuclear reactors
scenario at about 800 tonnes per day. This is theproducing approximately 50% of its current energy
advantage of having such a high-grade deposit: Smallneeds. Currently these reactors require 312 tonnes of
footprint, lower production rate of 800 tonnes per dayuranium per year. About 30 percent of the annual
to yield 21 million pounds over the 15 year productionproduction of Kuriskova—at its current resource
life of the mine.  level—could accommodate this for 15 years.
RI: How much will you generate in cash flow?Obviously this is worth a consideration for a
DN: Modeling at base case metals prices with U3O8 atgovernment that is expanding its nuclear energy
$65 and molybdenum at $12.50 with 90% recoveriescapacity.
indicates that the project could generate a cumulativeRI: Let's talk about cash position. You just did a deal
before-tax cash flow of $378 million, a 35.8% IRR andwith SA Resources to divest of some Irish holdings.
a net present value of $135M discounted at 12%.What did you gain from that? What do you have in
RI: What is the cost structure of building a mine throughthe bank?
to reclamation?DN: Since I became CEO in the summer of 2007, we
DN: According to the recent preliminary Assessment,set a goal to focus on our Slovakian uranium assets.
preproduction costs for the project are estimated atSince that time, we've successfully sold off all of our
$168M, with a 30 percent contingency. Of thenon-core assets and trimmed our company size,
preproduction costs, $24 million of contingency andoverhead and internal burn rate significantly. Most
$7.3 million of working capital are also included.significantly, we've sold the Curraghinalt, gold deposit in
Life-of-mine sustaining capital is estimated to beNorthern Ireland to SA Resources for $5.5 million cash.
$60.7M with $10M estimated for reclamation at closure.As of December 31, 2009, we're sitting at $5.5 million in
RI: How sensitive is this deposit to changes in the pricethe bank, after completing over 5,000 metres of infill
of uranium?  and step out drilling in 2009, so we're in a very solid
DN: A key advantage to having such high grades isposition financially.
the ability to maintain robust economics even at lowerRI: How should investors evaluate Tournigan Energy?
commodity prices. This deposit remains viable even atDN: They should consider the size and grade of
ranges down to about $50/lb U3O8. If one was to useKuriskova and the robust economics we continue to
a lower price range, a higher U cut-off grade would beshed light upon as we move towards prefeasibility. We
used and an entirely different life of mine productionhave substantial cash to take the company to the
plan would be used to remain economically feasible.next stage with a trimmed down team of highly
RI: Let's talk about your forecast IRR of 35%. Thisspecialized individuals who are ideally suited for the
basically means that you could increase your discounttasks ahead. Investors should also understand that
rate up to 35% and still have a positive net assetSlovakia is a sophisticated EU-member nation with
value.world-leading nuclear energy program already in place,
DN: In our initial preliminary assessment, the operatingand as such this is not only an outstanding place to do
costs in the first five years of underground miningbusiness but also a potential market for any final
were US$17 per pound of uranium. Over the 15 yearproduct from Kuriskova.
mine-life, this averages $32 per pound. However, weRI: What aspects and members of your team do you
believe, with the high grade infill drill results we'vethink are inspiring investors?
received we will significantly extend that five-yearDN: We've trimmed our team down to the essentials
$17-per-pound term. And that will also bring down theand have reduced our internal burn-rate significantly.
life-of-mine average cost per pound. This will alsoAfter my appointment, I was very pleased to enlist the
significantly improve the IRR and NPV in our upcomingservices of Al Kuestermeyer, our VP Engineering and
prefeasibility study.Environmental. Al has 35 years of operational and
RI: Well, investors should also know that in your lastconsulting experience in the minerals industry with
study, you actually did use a very high discount rate ofextensive uranium experience and has worked on
12% and still come up with a significant net asset valueover 30 uranium projects and mines around the world.
of $135 million or over $1.10 per share. Why such a highOur country Director and geologist in Slovakia, Dr. Boris
discount rate—don't we normally use somethingBartalsky has remained with Tournigan since we
between 5 and 10%?started operating in Slovakia in 2004. Boris has been a
DN: We wanted to maintain higher level of confidencekey component in our ongoing relationships with the
in our preliminary assessment and stay on thelocal communities and governments at all levels in
conservative side. Therefore, in the PA our capitalSlovakia.
costs have a 30 percent contingency built in and the