SXR Uranium One’s Dominion project in South Africa is among the top ten uranium deposits in the world and accounts for half of South Africa’s uranium resources.

Officials have said said the company would not mine deeper than 500 metres in its first ten years of production. Dominion has a life of 80 years in terms of current production plans, but Uranium One is working on increasing the rate of production.

The average mining depth in South African is around 3 500 or 3 700 metres.

The CEO said the increase in uranium demand, stemming from countries such as India and China, has not filtered through to the uranium price yet.

“The reasons are that we are being very conservative in the industry regarding forecasting increases in demand. I think constrained supply is driving the uranium price at this stage. We are not even seeing the benefit of increased demand yet.”

Froneman said the industry could not afford a number of failures like Cigar Lake, but has to deliver for people to invest billions of dollars in new nuclear power plants.

The fact that a competent company such as Cameco suffered a failure of this size meant that end-users realised how difficult it was to see new uranium coming into production.

Production costs at Dominion will be in the region of $14,5/lb, while the current spot price for uranium is $72 per pound.

Uranium One announced four new sales contracts with “western” power plants for delivery of 3,2m pounds of uranium between 2008 and 2012 on Thursday. This brings production that has been contracted to buyers to 28% of production in this period.