(An occasional column on money and mining news items)
The rise of nuclear energy, a second act if ever there was one, has given the price of uranium a shot in the arm. In western states in the U.S. interest in uranium mining is growing and with it comes another growth industry - the production of press releases about the uranium mining industry. The purpose of this occasional column is to separate the really interesting stuff from promotional fluff.
The choices of the subjects based on what looks interesting to me and for readers. I'm focusing mostly on western states that are "west" of the 100th meridian, but this isn't hard and fast. The states of interest are WY, CO, UT, TX, NM, AZ, & NV. For this reason I call this series the "western lands uranium gopher." These are news notes and the content is not to be considered investment advice.
House Resolution Bans Uranium Mining, Exploration Near Grand Canyon
Democrats in the House Natural Resources Committee adopted an emergency resolution that requires the U.S. Secretary of the Interior to withdraw 1.1 million acres of federal land near the Grand Canyon National Park from any new uranium mining for the next three years. After Republicans left the meeting room, saying there was no threat to the park, the Natural Resources Committee voted 20 to 2 to adopt the resolution.
H.R. 5583, legislation which was submitted to Congress by Rep. Raul Grijalva, D-Arizona, on March 11, specified that 1,068,908 acres of federal land near the Grand Canyon National Park will be withdrawn from all forms of location, entry and patent under mining laws. More than 3,000 mining claims exist around the rim of the park according to the U.S. Forest Service.
H.R. 5583 targets BLM lands in the Tusayan Ranger District and Federal land managed by BLM in the vicinity of Kanab Creek and in House Rock Valley. It is co-sponsored by Rep. Maurice Hinchey (D-NY) and Rep. Ed Pastor (D-Ariz).
Grijalva, Chairman of the House Subcommittee on Natural Parks, Forest and Public Lands, in a news release on June 19 declared, "I feel compelled to submit this request for emergency action due to the grave and immediate threat to the Grand Canyon National Park, the crowned jewel of our national park system."
"We cannot wait while uranium claims continued to be filed and the Bush Administration continues to use the exclusionary clause to allow uranium mining exploration and eventual mining operations within public lands in close proximity to the Grand Canyon National Park."
Under this emergency clause, when the Secretary of the Interior determines that an emergency exists or when either of the two congressional committees specified in section 204 of the Federal Land Policy and Management Act of 1976 (FLMPA) notifies the Secretary that an emergency exists, the Secretary must immediately make a withdrawal which shall be limited in scope and duration to the emergency.
The Associated Press reported the resolution would have no effect on the more than 10,000 claims already secured on Bureau of Land Management and Forest Service property near the park, according to the Interior Department. A spokesman for the agency said it would weigh its next steps, given that a 1983 Justice Department opinion found similar resolutions to be unconstitutional.
Republicans, encouraged by Rep. Rob Bishop of Utah, left the room in protest before the vote. Bishop said the resolution "crossed over the line" and addressed a "supposed emergency that does not exist." "In essence, I'm leaving this committee," said Bishop. "I will not be part of this process."
The Nuclear Energy Institute in a letter sent to the committee accused lawmakers of mischaracterizing uranium mining practices and hampering clean energy development.
"Those practices do not cause cancer or debilitating illness, they are extensively regulated, and they are not a threat to the environment," wrote Alex Flint, the institute's senior vice president for governmental affairs.
House gives the controversy a belt and suspenders
Last April a federal judge issued an injunction against the British mining firm VANE Minerals and the Kaibab National Forest, halting uranium exploration on public lands within a few miles of Grand Canyon National Park.
The order came after a hearing in a case brought by three conservation groups - Center for Biological Diversity, Sierra Club, and Grand Canyon Trust - to challenge drilling taking place close to the Grand Canyon of the Colorado River without a public hearing and environmental review.
"This order stops uranium exploration on the banks of a national treasure," said Taylor McKinnon of the Center for Biological Diversity. "The Forest Service had allowed drilling to begin while the case was pending, so the order comes as a major relief. We're elated."
In December, the Kaibab National Forest approved exploratory uranium drilling by VANE Minerals at up to 39 locations across seven project sites just south of the Grand Canyon. The approval was granted using a "categorical exclusion," the least rigorous public and environmental review available to the agency under the National Environmental Policy Act.
Black Range gets permit for Canon City Drilling
Black Range minerals, which earlier this year had to delay planned drilling in the Taylor Ranch area of the Tallahassee mining district near Canon City, Colo., finally received a conditional use permit from the Fremont County Commissioners on June 9. The Commissioners voted 3-0 to allow the firm to drill 800 exploration holes in an 8,169 acre tract. The drilling program became controversial because over the past decade new residential subdivisions had encroached on the historic mining district.
Jim Hawklee, president of the local community association, said the group plans to file a lawsuit to stop the planned drilling citing potential threats to water, roads, and a “rural way of life.”
Black Range minerals managing director Michael Hayes said in a statement to the commissioners that the company was offering to set up free monitoring of local wells used for drinking water to insure no uranium seeped in.
Black Range Minerals is an Australian Stock Exchange-listed resources company. It's near-term objective in the U.S. is production. The company reports it has delineated a JORC Code compliant (Australasian Joint Ore Reserves Committee) resource base of almost 80 million pounds of U3O8 at its Taylor Ranch Uranium Project. This includes approximately 22 million pounds of high grade U3O8 which the Company is looking to develop in the near term. At $60/lb the resource could be worth $1.3 billion.
The Company holds interests in two other uranium projects which are the Cyclone Rim and Eagle in Wyoming. They are operating through a joint venture with Uranerz Energy Corp. The Cyclone Rim project comprises 1,720 acres. The project was started in June 2007.
Black Range has the right to earn a 50% equity interest in the projects by managing and meeting the first $750,000 in exploration expenditures on the projects. Black Range is obliged to spend at least $100,000 per year on exploration on the projects and to spend the first $750,000 on exploration within three years of inception of the joint venture agreement. It is expected that depth of the mineralization will run from 75 feet down to about 400 feet depending upon which roll front is targeted. ISR mining is expected to be the method used for extracting uranium should production be planned for the site.
Environmental groups form western states coalition to block uranium mining
Representatives from multiple environmental groups in four states met in the Ft. Collins, Colo., area in June to form an “anti-uranium coalition” according to one of the participants.
Representatives from the five groups, South Dakota-based ACTion for the Environment, the Western Nebraska Resources Council, Save Our South Park Water, the Tallahassee Area Community from Fremont County, and Northern Colorado-based Coloradoans Against Resource Destruction, all spoke out against their perceived common enemy which are uranium mining companies.
The five representatives spoke out against proposed in-situ leach mining. A key target is Canadian uranium company, Powertech which has proposed operating an ISR mine in Nunn, Colo.
Their argument is that uranium mining will lead to water and land contamination, although the participants from areas with mining activity reportedly had few specific examples of the effects in their areas.
There was no indication in a news media report of the meeting that anyone in the group understood that underground rock formations attractive for an ISR mine have, by definition, groundwater that is unsuitable for potable uses. Instead, the group relied on reports from mining that took place several decades ago.
“We’ve seen increases in arsenic and other heavy metals and uranium in the water supplies, as well as at stream level,” said Buffalo Bruce who is with Western Nebraska Resources Council. He qualified his remarks adding that those impacts come from uranium mines in western Nebraska from decades ago that were not properly taken care of.
All the members in attendance, which took place at Mustang Hollow Ranch northwest of Nunn, said public opinion is overwhelmingly against opening uranium mines in the area.
Jim Hawklee, president of the Tallahassee Area Community, located in Canon City, Colo., told the group exploratory drilling can lead to water contamination. He was referring to work which is now being undertaken by Black Range Minerals after it received a conditional use permit from Fremont County Commissioners on June 9.
U.S. agencies to continue clean up of uranium on Navajo land
The federal government has committed to spending tens of millions of dollars to clean up contamination from old uranium mines on the Navajo Indian Reservation in Arizona. The new five-year plan will also address sites in New Mexico and Utah. The act was billed as a “good step forward” by a spokesman for the tribe.
“It is a significant step, but there is still a long road ahead of us,” said Steve Etsitty, director of the Navajo Nation environmental agency in a statement to the Arizona Republic.
He said the government still hasn’t said what methods it will use to conduct the cleanup nor how it plans to pay for it. Last October the Navajo Nation asked Congress for $500 million for cleanup of 500 abandoned mines and four inactive mill sites.
A spokesman for the U.S. Environmental Protection Agency disputed these remarks. Clancy Tenley said the agency has already spent $153 million on cleanup of abandoned uranium mines on the Navajo reservation and will spend $7 million in 2008. He added that under the new plan the agency will provide the Navajo Nation with $34 million in grants for new public water facilities.
From 1944 to 1986 more than 4 million tons of uranium were mined from sites on the Navajo reservation. David Taylor, an attorney with the Navajo Nation, said the tribe wants justice in addition to cleanup. “The first step is acknowledgement of fault,” he said.
Bluerock to exploit Patti Ann uranium stock pile
Bluerock Resources Ltd. announced that a Letter of Intent (LOI) was signed with Uranium One Inc. to exploit the Patti Ann uranium mine surface stockpile, Lisbon Valley, Utah. This material will be included in Bluerock's White Mesa Milling Agreements with Denison Mines Corp.
Uranium One payment terms include 100,000 Bluerock shares and 20% of the net revenue of the Patti Ann uranium stockpile. The company must complete the first shipment to the White Mesa Mill within one year to maintain the lease in good standing. The last recorded trade of Bluerock's stock (CDNX: BRD.V) on June 20 was $0.42/share within a 52-week range of $0.28-0.90. At this price the stock in the deal is worth $42,000.
The Patti Ann uranium stockpile contains a historic resources of 92,000 tons of uranium enriched broken rock with an average grade of 0.09% U3O8, as reported by US Energy Corp. At this level, the resource could include up to 16.5 million pounds U3O8. At $60/pound, the resource could be worth up to $990 million. A 20% payment to Uranium One could be worth about $200 million if all the resource was realized in production.
"The Patti Ann LOI has reduced Bluerock's production and cost risk profile and will provide the company with increased flexibility for delivery into its White Mesa Milling Agreement," said Bluerock President & CEO Michael Collins. "Bluerock's access to the only operating conventional uranium mill in the USA has uniquely benefited the company's ability to add near term production assets to its existing portfolio."
The Patti Ann Mine and stockpile are located on Federal land approximately 60 miles from the White Mesa Mill in the Lisbon Valley, southwest Utah. Bluerock has started permitting exploitation of the stockpile for material assessment and transport to the White Mesa Mill.
Bluerock to build new mill in Emery County, Utah
Emery County, Utah, officials have signed an agreement with a Canadian company to build a $100 million uranium mill just west of Green River. The mill would be the first tenant in a new industrial park made possible through a lease of 2,547 acres west of Green River with the Utah School and Institutional Trust Lands Administration.
Stephen Glass, vice president of environmental affairs for Mancos Resources Inc., the U.S. subsidiary of British Columbia-based Bluerock Resources Ltd., said the $100 million mill would be modern, green and provide good jobs. It will produce yellowcake uranium to fill a growing shortfall of nuclear reactor fuel, Glass said.
"If today it isn't a bottleneck," he said of the uranium market, "in five years it will be."
Mancos has been expanding its holdings in the area as uranium prices have risen in recent years. The Green River mill would process about 1,200 tons of ore each day and produce about 2.4 tons of yellowcake. North America has just two uranium mills, one about 130 miles away in Blanding. That mill starved for uranium for more than a decade before being revived by higher uranium prices in the past few years.
Sarah Fields, program director for the Moab-based advocacy group Uranium Watch, said Green River and Grand County residents have concerns. The mill will generate air pollution and will put agricultural lands at risk, she said.
"A uranium mill will have a negative impact on the economics of Green River," she said, noting the area's dependence on agriculture and recreation.
Whirlwind mine gets public comments
BLM has closed the comment period on the federal agency’s environmental assessment of the plans by Energy Fuels Resources Corp. to reopen the Whirlwind mine near Grand Junction, Colo. The new mine will be a combined operation on 4,980 acres of the old Packrat and Urantah Decline mines which straddle the Colorado-Utah border.
The firm reportedly wants to mine up to 200 tons of ore per day by 2010 from the site, which is five miles from Gateway, Colo, and truck it to the White Mesa Mill at Blanding, Utah. Initial operations will be 100 tons per day. The mine will employ 24 people. The estimated resource at the mine is 657,000 pounds of uranium and 2.17 million pounds of vanadium. At $60/pound the uranium is potentially worth $37 million. At $20/lb the vanadium is potentially worth $43 million.
So far BLM has received 48 comments, mostly from local residents, and have to do with trucking operations on along Highway 141 and John Brown Road. In December the Mesa County Commissioners approved a conditional use permit for the Whirlwind mine with specific requirements about the timing and frequency of truck traffic from the mine on local roads.
According to a Colorado State Department of Transportation map of allowable weights on state highway bridges, a bridge near Uravan on Rt. 141 in Mesa County has a maximum capacity per three axle unit of 53,000-to-60,000 pounds. If the trucks use a combination of a triple-axle unit and a transfer trailer with another triple-axle unit, the combined weight could be 106,000-to 120,000 pounds of which approximately two-thirds would be ore.
If the mine produces 100 tons/day of ore, it would require three truck loads per day using this configuration to move the ore to a mill at Blanding, Utah. It’s 135 miles by state highways from Gateway, Colo, to Blanding, Utah, which means a truck could make the run once a day in good weather. However, operations would be limited in winter by cold, snow, and icy road conditions.
The outcome is that the mine would need three trucks making a run once a day to move 100 tons/day of ore. If Energy Fuels is able to open its planned mill at Naturita, Colo, three years from now, the distance is only 53 miles from Gateway which would allow two runs per day. Canon City Colo is 280 miles to the east which may mean, with diesel fuel priced at $4.50/gallon, it might not be economical to ship ore to that mill if it reopened.
Energy Fuels hopes to build the Pinion Ridge mill on 880 private acres between Naturita and Paradox, in Montrose County. In a recent presentation to the Northwest Mining Association Convention, Energy Fuels Vice President-Corporate Marketing, Gary R. Steele, said the rapid development of the Piñon Ridge Mill site can be attributed to licensing authority of the Colorado Department of Public Health and Environment (CDPHE), instead of the federal Nuclear Regulatory Commission Colorado is an Agreement State external link, to which NRC relinquishes the authority to license uranium mills.
The mill, he said, could employ about 100 people and process uranium and vanadium from mines all over the Western Slope. Other small mines in the region could be on the way, he said. It will take about two years for the state to license the mill, and nine months for Energy Fuels to build it, he said.
Initial engineering studies indicate the Piñon Ridge Mill will be designed with a capacity of 1,000 tons per day of ore throughput. At historical U3O8 grades typical for the region, this mill will be designed to produce between 1.6 million and 2.0 million pounds of U3O8 per year.
Steele estimated the planned mill site is large enough for more than 30 years of tailings disposal resulting in more than 10 million tons of tailings.
Powertech pursues drilling in Aladdin area of South Dakota
Mark Hollenbeck, project manger for Powertech’s Aladdin mine in southwest South Dakota told a public meeting in June sponsored by state agencies in South Dakota it plans an ISR operation on minerals claims over a 13,600 acre site. In response to questions from area residents, he said the firm was not engaged in “water mining,” and that the project isn’t scheduled to go into production for another two-to-three years.
In 2007 Powertech completed 60 rotary drill holes which totaled 26,680 feet, confirmed the presence of uranium mineralization in the area of the historical drilling and expanded these mineralized trends outside of the historic drilling area.
The historical drilling area is defined by 581 drill hole logs and unsurveyed drill hole location maps obtained from Teton Exploration. Of the total 16 of the drill holes intersected uranium mineralization in excess of 0.05% eU3O8.
Geovic updates plans for ISR mine in Weld County
Geovic minng plans a second ISR mine near Nunn, Colo., in Weld county located in northeast Colorado. For months Powertech Mining has taken political heat over its proposed mine in the same area. However, Geovic’s has not attracted nearly the same interest despite being considerably larger and it will use the same ISR methods. John Sherborne, CEO, told the Greeley Tribune in his more than 30 years of uranium mining he hasn’t seen a controversy like the one that hit Powertech. He said his firm was very quiet about its $2.8 million acquisition of mineral rights on 16,000 acres in Weld County.
He’s been here before and says he knows there is uranium in them thar hills. Sherborne was with Unocal in the 1970s which conducted exploration of uranium deposits in Weld County.
“The bottom fell out of the market before any mining took place,” Sherborne said, “but we know the uranium is there.”
He said the firm is just getting started on the permitting process which will require permission to get into production from the county, and from state, and federal agencies. He declined to put an estimate on the timeframe, but said it could be a minimum of two-to-three years.
As far as the threat of environmental contamination is concerned, a driving force that delayed Powertech’s plans, Sherborne said, “We’re very familiar with what’s up there in northeast Weld and have no intentions of doing anything that will harm the area.”
Geovic is based in Grand Junction, Colo. The primary focus of the company, until now, has been production of cobalt located at a large mine in Cameroon, on the west coast of Africa, about 640 kilometers east from the seaport of Douala.
URI Delays production
Uranium Resources Inc., reported a delay in the startup of a South Texas project.
The company's Rosita wellfield encountered "aquifer-related technical issues," the company said, adding that it expects the issues to be resolved in "the next couple of weeks."
URI also said its 2008 uranium production through the end of May was 140,000 pounds. As a result of the delay in the Rosita wellfield startup, the company's second-quarter production is expected to total about 80,000 to 90,000 pounds. At $60/pound the production for the quarter could be worth $4.8-5.4 million.
URI backs out of deal for NM mill
The Associated Press reports a Texas mining company, blaming sliding uranium prices and the difficulty of getting financing, backed out of a deal that could have led to the first uranium mill in the Grants, NM, area in two decades.
Uranium Resources Inc. agreed last Oct. 12 to buy Rio Algom Mining from Australian mining company BHP Billiton Ltd.
"The problem is that the market has changed since the time we signed this," Rick Van Horn, executive vice president and chief operating officer of Uranium Resources, said.
He described the decision by both companies to terminate the deal as "a temporary setback." Uranium is down to $57 per pound on the spot market, about half the $120 per-pound price when Uranium Resources and BHP signed their first agreement last July, Van Horn said. "It's really tanked on us," he said.
One of Rio Algom's main assets is a uranium mine mill site in northwestern New Mexico's Ambrosia Lake District, about 20 miles north of Grants, a town once known as "the Uranium Capital of the World."
Uranium Resources planned to use the site to build a facility which could have become the largest uranium mill in the United States. The old Kerr McGee mill there was torn down in 2003.
While Van Horn believes Rio Algom had the best site, it's possible other locations could be developed, he said. Those would take longer because Uranium Resources would have to acquire water rights and a license from the Nuclear Regulatory Commission — things Rio Algom had.
Changes in the equities market and the sluggish economy also played a part in terminating the deal, Van Horn said. "Going out and raising $180 million (to finance the acquisition) would have been next to impossible," he said.
Uranium Resources owns 183,000 acres of uranium mineral holdings in the Grants region. About half could be mined with newer, in-situ recovery technology, while the rest could be recovered with underground mines and a conventional mill such as the proposal at Rio Algom, Van Horn said.
Midasco gets option on Centennial Sun-Cup Mine Complex
Midasco Uranium LLC has entered into an Option Agreement with B-Mining Company ("BMC"), a Colorado Corporation, to purchase the Centennial Sun-Cup Mine Complex ("CSC Project") along with 27 mining claims encompassing 540 acres in San Miguel County, Colorado. The mine is located in the Salt Wash Member of the Morrison Formation, and is on the northeast limb of the Dolores Anticline, located in the southern portion of the Uravan Mineral Belt.
Midasco has an exclusive option to purchase the property until January 15th, 2009, at which point the company is required to pay to BMC US$160,000 as advanced royalty each year for five years.
North American Uranium Corporation initially discovered the Sun-Cup deposit in the late 1960s, and mining commenced in 1970. The nearby Centennial deposit to the southwest of the Sun-Cup Mine was discovered by Minerals Recovery Corporation ("MRC"), a division of Wisconsin Public Service.
Due to depressed uranium prices, MRC's large-scale operations at the mine ceased in the early 1980s, whereby B-Mining Company (BMC) of Nucla, Colorado acquired the CSC Project in the early 1980s and mined periodically until 1998. Production to date is estimated to have exceeded 1 million pounds of uranium and 10,000,000 pounds of vanadium. The last recorded 5,000 ton shipment of ore from the CSC Project averaged 0.22% uranium and 1.73% vanadium (uranium to vanadium ratio of 1:8).
UR-Energy drilling at Bootheel property
Ur-Energy Inc announced the commencement of the 2008 drilling program at the Bootheel Property in southern Wyoming. The Bootheel Property is a jopint venture with Target Exploration and Mining Corp. Target is the operator and is currently earning a 75% interest in the Project.
Following its preliminary compilation and analysis of the existing historic database in late 2007, Target's plan for the 2008 program consists of approximately 50,000 feet of drilling in 80 to 90 holes. The primary objective for the year is to prepare a National Instrument 43-101 compliant resource estimate.
Artha Resources plans exploration
Vancouver, B.C.-based Artha Resources Corp. has started phase one of a uranium exploration program in Wyoming.
The principal goal is to define in-situ recoverable resources and confirm historical resources in key districts. Areas of interest are in the Shirley Basin, the Powder River Basin and the Wind River Basin.
Calypso sets option agreement with EMI
Calypso announced it has entered into an option agreement with EM International Inc. ("EMI") to acquire a 50% interest in approximately 390 unpatented lode mining mineral claims with in situ recovery ("ISR") potential located in Converse County, Wyo, and known as the Sage Creek claims.
The Sage Creek claims comprise approximately 6,250 acres on the Smith Ranch trend. The Sage Creek claims surround a water well previously drilled by a coal operator on the property that reportedly encountered two uranium roll-front gamma log signatures which were not pursued by the coal company.
The option agreement provides Calypso with the option to expend a total of $1,000,000 over a two year period and to issue a total of 1,000,000 shares to EMI in two tranches of 500,000 shares to earn an undivided 50% interest in the claims.
Calypso's stock (CDNX: CLP.V) on market close June 20 was trading below its 52-week range of $0.40-1.45 at $0.29/share. At this price the total of shares in the agreement would be worth $290,000 at the current share price.
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