To Our Shareholders
As an emerging uranium producer,
Forsys made significant strides in 2007 towards our highest corporate
priority; putting Valencia into production. By achieving this corporate
goal, Forsys will stand amongst a select group of uranium producers across
the globe. We believe this will enhance shareholder value for many years to
come.
In pursuing our corporate goals, we strengthened our Board of Directors and
corporate management team with the appointment of Mr. Martin Rowley,
co-founder of First Quantum Minerals, to the Board as non-executive
independent Chairman and Mr. Paul Matysek, formerly of Energy Metals, to the
Board as non-executive independent Director. Mr. Craig Bamford, formerly of
Denison Energy, was appointed as Chief Financial Officer and Dr. Roger Laine,
formerly of Areva (Cogema), was appointed as Chief Geologist.
In mid 2007, Forsys delivered a National Instrument 43-10 1 compliant
Pre-Feasibility Report outlining robust financial parameters which assisted
manage¬ment in our decision to accelerate the development of the Valencia
project into production. With the assistance of the Pre-Feasibility Report,
we identified that considerable value could be created by performing
additional drilling with the aim of upgrading the overall reserve/resource
and grade at Valencia. Initial drilling results are promising, returning
better than average grades and providing the opportunity to expand the
deposit. We anticipate delivering an updated resource calculation within the
next few months. The following list highlights some of the initiatives that
have been completed or are in progress:
• GRD Minproc was retained to provide engineering services for the
development of Valencia. We are now in negotiations with GRD Minproc for the
provision of engineering, procurement, construction and management services.
• Orders were placed for a gyratory crusher and three rod mills with an
expected delivery date to Valencia in late 2009.
• A regional power supply upgrade is being addressed by the Namibian
national power utility to help the Company meet the power demands of
Valencia and other new and expanding mines in the region. We also intend to
install back-up power generation capacity.
• Water for Valencia’s production needs will be supplied by NamWater, the
national bulk water utility. NamWater is constructing a seawater
desalination plant located on the western coast of Namibia that will meet
Valencia’s needs as well as the other needs of new and expanding mines in
the region. Water will be supplied to the site via a new pipeline that will
be constructed joining Valencia into the existing bulk water infrastructure.
Water for the construction phase will be sourced from local ground water and
we will follow resource management policies and work with the authorities on
a water management agreement.
• Detailed metallurgical and material property testing has been performed to
optimize the Valencia plant design.
• An industrial grade road linking Valencia to the main highway has been
designed and construction is planned to commence soon.
• Basil Read Ltd. continues to provide mine planning services and is
developing a strategy for the mine pre-strip programme scheduled to commence
in 2009.
• Cold commissioning of the various components of the plant are scheduled
for late 2009, with production scheduled for early 2010.
Since the inception of Forsys in 2000, we have contributed in many ways to
the Namibian economy and we remain committed to Namibia. I am particularly
pleased that the Company listed on the Namibian Stock Exchange in late 2007.
This provides an opportunity for Namibians to participate in our growth as
we continue to advance all of our projects.
One of the initiatives to explore financing for Valencia involved signing a
Memorandum of Understanding with the Korea Electric Power Corporation in
November 2007. These negotiations are ongoing, and we continue discussions
with other parties for the purpose of financing the development of Valencia.
The outlook for uranium oxide remains positive, however, long term pricing
did drop marginally to $90 per pound from $95 per pound. Management is
confident that uranium pricing will remain strong, regardless of the
volatile spot prices, through 2010 and beyond when Valencia is forecasted to
commence production of yellowcake and fulfill off-take agreements.
Our technical team has worked diligently over the past year in completing
the required environmental impact studies and management plans to
international standards in support of the Company’s mining license
application. The permitting process underscores that Namibia is a mining
friendly jurisdiction, and our success will undoubtedly result in additional
outside investment into Namibia.
With commodity prices at historical highs, we are excited with our portfolio
of non-uranium assets including one advanced gold project. With the
termination of the Beta Minerals spinoff, Forsys remains in control of our
non-uranium licenses, and we have bolstered our management team to advance
these projects. In fact, work is already underway towards an extensive
exploration programme for the non-uranium properties.
2008 should prove to be an exceptional year for the Company and its
shareholders. On a personal note, I look forward to continuing working
closely with the Board of Directors, the management team, the Namibian
Government and representatives of Namibia’s local communities. The further
development of Valencia will undoubtedly be rewarding in every aspect as a
result of the contributions of our employees and consultants in conjunction
with the continued support from the Namibian Government.
I would like to personally thank our shareholders for their loyalty and our
employees for their dedication. We look forward to continuing to reward that
loyalty and effort in the future.
Yours Truly,
Duane B. Parnham
President and Chief Executive Officer