Development of nuclear power continues to steam ahead throughout the world even as Australian uranium miner Toro Energy said its Wiluna project in Western Australia is economically viable following a pre-feasibility study that indicated significant scope to increase the value of the development.

Only a few days back, a proposed expansion of the nuclear power generation capacity of the American state of Texas got underway with a joint venture being formed between Luminant, the generating arm of Energy Future Holdings Corp., and reactor vendor Mitsubishi Heavy Industries. The consortium proposes to build two reactors near the existing Comanche Peak nuclear power plant. (See: Texan nuclear power production to double with Luminant-Mitsubishi consortium new reactors)

The South Australian explorer's move towards production continues the West Australian uranium revival work sparked by the election of the new pro-mining state government. The study estimated the net present value of Toro's Wiluna project was $78 million based on conservative operating parameters.

Western Australia has never had a uranium mine, but the recent change in state government means it is open to mining applications from uranium explorers for the first time. Toro's project, near Wiluna, could be in production as early as 2012 pending the outcome of a positive bankable feasibility study and successful financing.

Toro managing director Greg Hall said this could be boosted because of the potential to substantially increase processing recovery and an external consultant's assessment that there was scope to improve the ore grade estimate.

"Even a moderate grade increase scenario of 20 per cent has the potential to lift the project's net present value by an additional $88 million to $166 million with an internal rate of return of 24 per cent," Hall said, "The Wiluna uranium project is an exciting development opportunity for Toro and represents the best medium-term option for moving to producer status."

"We are pressing ahead immediately with a project optimisation study … to ensure Toro is in a position towards the middle of next year to consider a possible bankable feasibility study for Wiluna." Hall said "that the findings cemented Lake Way / Centipede among the top five most likely uranium project contenders in Western Australia to move "realistically along a pathway to commercial fruition".

He referred to the change in the official stance when he said, "With the change in policy in Western Australia, it does open up a potential new industry in the region.'' He added Toro was open to several financing options, including equity raisings and joint ventures.

Toro said it would cost between $196 million and $247 million to construct Lake Way, which would have cash production costs of $38 to $41 a pound. The uranium spot price, which spiked at $138 a pound last July, is now $58 a pound. But the price for long-term contracts, under which the vast majority of the metal is sold, is about $80 a pound.

The study also assumed this price until at least 2015-16 because of ongoing supply-demand pressure. The study warned that additional capital expenditure would be needed for a water treatment plant because the ground water was highly saline, which affected production. Capital costs had also increased due to competition for construction services and the increased cost of concrete and steel, it said.

An optimisation study assessing heap leach and conventional leach process routes will be done in preparation for a bankable feasibility study of the site slated for mid-2009. Toro's share price rose 1c to close at 22c yesterday.