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Continental Precious Minerls Prepares PEA on one of the Largest U Deposits on Earth

Continental Precious Minerals’ (TSX: CZQ) drilling and historical results last year confirmed what company Presdient Ed Godin has long believed: The Vikken MMS deposit is one of the largest deposits of its kind in the world, with billions of pounds of vanadium and other metals, too. With cash in the bank and ongoing discussions with some of the largest mining companies in the world, Mr. Godin plans to publish a completed preliminary economic assessment by April 2010.

Resource Intelligence: The last time we spoke was a year ago and we talked about your huge project in Sweden called the Viken MMS project, which has uranium, vanadium, molybdenum, and nickel. You’ve got 2.8 billion tonnes in the inferred category and 23.6 million in the indicated category. What’s happened there over the last year?
Ed Godin: Over the last year the bulk of our time has gone into the metallurgical studies. A month ago we put out a press release giving the results on the uranium, moly and vanadium tests. We got a 90% recovery on the moly, 90% on the uranium and 70% on the vanadium, which is really good. Our next step now will be calculating the cash flow sheets and the costing and then that will be plugged into a preliminary economic analysis that we’ll release at the latest in April.

RI: Wow, so that is coming up very fast and it is going to tell you a lot about one of the biggest deposits of this kind in the world.
EG: That’s right, it is. I think on BHP Billiton’s website they show Vikken MMS as the sixth largest deposit of its kind but I think in fact we are number two, right behind the Olympic Dam deposit in Australia. I think if we continue drilling we will increase the size substantially.

RI: Let’s talk about that. Obviously a big goal for Continental Precious Minerals has got to be moving some of the inferred resources into the indicated category.
EG: Our first goal is to establish positive metallurgy and that we’re able to recover on an economic basis. The next goal is to improve the certainty of the mineralization by moving some of the resource into measured and indicated categories.

RI: You have 2.8 billion tonnes of resource in the indicated category, which at your grades equates to a billion pounds of uranium and about 11.7 billion pounds of vanadium, and about 1.3 billion pounds in the molybdenum category. These are huge sums of metal. How do you approach going to production on a project like this?
EG: First of all, our recent recovery rates are much higher, so it is probably going to be more like 5 billion pounds of moly and probably close to 20 billion pounds of vanadium. We are nearing completion of the preliminary economic analysis, and we have already started conversations with several major companies, so eventually we are going to want to bring in a joint venture partner and that is ongoing now as we speak.

RI: Obviously this is going to require some deep pockets.
EG: Oh yes, it would have to be up in the top five mining companies in the world.

RI: Will you drill more of this off?
EG: We could drill it up to an indicated resource for another $3 million and we may do that, but I think there is enough evidence at Vikken that a major joint venture partner would want to drill that for us. That is our intent for now. We’d like a major partner to drill that and either we or they will do the pilot plant testing. We have sufficient money now to do a mini pilot plant test, which we’ll begin after the PEA is released.

RI: You have a tight share structure. You only have about 51 million shares outstanding. You have done a lot of work on Vikken, but also a lot had already been completed by the Swedish government. When you acquired this how much had been done and how far have you taken it?
EG: Well, we acquired it with 28 drill holes thirteen years ago. We did some metallurgy and established continuity through the whole structure, which is about 20 km long and about 1.5 km wide. Of course, one of the key aspects of Vikken is an area of three kilometres by 200 metres deep located right at the surface. This would be open pit with a zero strip ratio.

RI: So you’re in Sweden and carrying the uranium ball which can be a pretty hot one to handle in some jurisdictions. However, you have heard some positive signs from the Swedish government. Let’s hear about that.
EG: Yes, I understand that the present Prime Minster of Sweden favours and would support uranium mining. The national inspector of mines has also said that he does not have any problem with uranium mining. They are very collaborative, so we expect we can work out a good solid permitting timetable with the government.

Sweden has ten nuclear reactors, so they are a nuclear power in that sense. The country has also revoked a 1980 referendum decision to phase out nuclear power.
I think the realization is coming in most western countries that nuclear power is going to be a necessary component of any energy supply to a nation. Look at France going from 85% to 95% nuclear power and Germany now revoking a lot of the restrictions on nuclear power they had in place and a similar situation in England, Italy and Spain. Canada is the same way—Ontario is discussing building two or three more reactors. So when you look at the worldwide picture of greatly increased demand for uranium, it’s clear and there is certainly a general consensus in the engineering community that the other alternatives just aren’t adequate to supply the amount of energy required.

RI: What is Continental Precious Minerals’ end game, Ed?
EG: The end game will be to take the Vikken project to a point where we do a joint venture with a major. Failing that, we’ll go back and bring it up to an indicated resource and then raise a considerable amount of funds ourselves to start a preliminary production operation.

RI: Let’s look at the value of that Vikken rock, with the calculators at At today’s metal prices—and I am including nickel, moly, vanadium and of course uranium—times your grades and the recovery rates you have been looking at, it looks like the rock is worth about $73 per tonne. This is all based on your existing 43-101 data. What would you expect to be taking off for operating costs?
EG: I would be very cautious of predicting a value per tonne until the preliminary economic assessment is out. In terms of operating costs, you could compare two of the largest mines in Sweden with throughput of 30 million tonnes a year. Costs at those are running between $10 to $12 per tonne for both cap expenditures and operating costs, which is exceptionally economical. Our costs would be considerably more than their costs, but I am loathe to speculate until we actually have a preliminary economic analysis. Additionally there is a 2% royalty rate on Vikken, plus a 28% tax, which is less than in Canada.

RI: Looking at Vikken on the maps at I can see a lot of nearby infrastructure.
EG: The infrastructure is ideal. We have paved roads from the project to the highway. Vikken is a short flight from Stockholm. We also have an international airport nearby and the town of Ostersolm, with approximately 45,000 people. Vikken is just 20 km from Ostersolm.

Near the project the population density is low and the Swedes in the north have considerable experience with mining. We have a rail line beside the project and hydro that goes right through the project. So we have all means of transportation, power and communication. There is a substantial amount of water nearby with a couple of huge lakes that are in the neighbourhood of 25 km long and greater than five km wide, so there is no problem with water.

RI: What are your milestones for the next couple years?
EG: We hope to complete our metallurgical studies this year. We want to do some more bench testing and then plug that into the preliminary economic analysis, which as I said will be complete by April. At the same time, we are in discussions with several majors on possible joint venture deals. We are also doing our best to inform the public in that region that this is going to be very beneficial for jobs and the local economy.

The next step in terms of the project specifically after the preliminary economic analysis is done, if we have not completed a deal with a major or at least got to the basic points, then we’ll go on to do the pilot study ourselves and that should be finished by next fall. After that, we could move Vikken to final Feasibility Study for roughly $5 million dollars.

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