Jim Letourneau's Blog

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Southern Cross Delays Mine Startup

A news release by Southern Cross Resources this morning announced that they are delaying development of its Honeymoon in-situ leach project in South Australia because of rising capital costs.

"...the single biggest contributor to the increase in capital and operating costs in U.S. dollar terms is the weakening of the U.S. dollar. The capital cost has also been affected by 25-per-cent to 50-per-cent increases in unit costs for earthworks, concrete, structural steel and field labour that reflect a booming resources industry."

This news knocked the share price down over 20%.

This is not happy news for Southern Cross Resources shareholders but it bodes well for the future. The Honeymoon uranium project was one of the more advanced uranium projects in the world. Uranium prices need to rise further before significant new supplies will come on stream.

Many mining projects with feasibility studies completed several years ago are now in jeopardy because of rising energy and material costs. This delays the development of new commodity sources and contributes to higher commodity prices. It could be worse.

Not Advice
I currently own Southern Cross Resources
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