Western Lands Uranium Gopher for July 25, 2008

Mining uranium exploration press releases for useful stuff

This column is an edited version of an article published in Fuel Cycle Week July 23, 2007, V7 N288, by International Nuclear Associates, Inc., Washington, DC.

(An occasional column on money and mining news items)

The rise of nuclear energy, a second act if ever there was one, has given 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 is based on what looks interesting mostly in 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 the series is titled the "western lands uranium gopher." These are news notes and the content is not to be considered investment advice.

Interior challenges ban on Grand Canyon uranium mining

The U.S. Department of Interior took the first step July 16 challenging a ban on uranium mining on one million acres of public land near the Grand Canyon. The agency said through a spokesman that the resolution isn’t binding under the law.

Interior Secretary Dirk Kempthorne sent a letter to Rep Nick Rahall (D-W.Va.), Chairman of the House Natural Resources Committee, saying the ban voted on June 25 can’t stand because the committee lacked a quorum. Rahall, who cares a lot more about coal than he does uranium, nevertheless wrote back objecting to the executive branch telling Congress how to conduct its business.

Rep. Raul Grijalva (D-Ariz.), who sponsored the original resolution after a field hearing in his home state, called the letter a “delaying tactic.”

“It’s an end run,” and he said it was “insulting” that the letter was ordered by Interior Sec. Kempthorne, but signed by “some low level Bush appointee.” He added, “We are at the point that our patience with the secretary is wearing thin.”

A reasonable translation is that it is Grikalva who is on thin ice with the measure because the provision of the law it relies on never been tested in the courts and it hasn’t been invoked by Congress in nearly two decades.

The committee’s emergency declaration invoked a rarely used provision of the Federal Land Policy & Management Act (FLPMA) and passed by a 20-2 vote after all of the republicans walked out. The committee has 27 Democrats and 22 Republicans so it is likely the measure would have passed with or without the Republicans.

The measure as passed contains a “finding” that an “emergency situation” exists and requires the Department of Interior to stop all new mining claims. The measure has no effect on the more than 10,000 mining claims that already exist on public lands around the Grand Canyon.

Colorado Democrats on hot seat over uranium bill

A Republican challenger to Colorado State Rep. Randy Fisher (D-Ft. Collins) says he played on voters fears about uranium mining and “overreacted” on the issue. Donna Gallup, who is challenging Fisher in the November election, said after doing her research believes that uranium mining is not dangerous and that Fisher exploited the issue to boost his image in an election year.

“He played on constituent fears. Now he’s a hero. I don’t want to play that game,” Gallup said.

Larimer Republican County Chairman Kirk Brush agreed. He said, “Fisher has kind of gone off the deep end.”

Fisher was one of two cosponsors of legislation that passed and was signed by the governor which imposes new groundwater protection requirements on ISR mines. Powertech is planning an ISR mine near Nunn, Colo, about 15 miles northeast of Ft. Collins. It was this mine proposal which sparked an uproar and led to the legislation.

Fisher is seeking a second term and said he disagrees with the charge that he over played his hand. “I believe she’s wrong,” he said.”

Fisher dismisses Gallup’s charge and says that education, not uranium is the most important issue in his district which is home to Colorado State University. Fisher said that if elected he plans to sponsor a bill for a state severance tax on all mining in Colorado to fund new education initiatives.

Midasco acquires Silverbell and Calliham Mines in Utah

Midasco Capital (CDNX: MGC:V) announced it has completed the acquisition of 100% of the mineral rights of the Silverbell Uranium Mine, a large uranium property immediately south and adjacent to the company's Calliham mine holdings near Summit Point in San Juan County, Utah.

The acquisition includes the control of the mineral rights for a term of 20 years, and consists of 960 acres of privately held mineral rights. Specifically, the Silverbell Mine has an existing, un-mined historical resource of 794,320 pounds of U3O8 with an average grade of 0.20% U3O8 and 5,099,400 pounds of V2O5 with an average grade of 1.27% V2O5 (Uranium:Vanadium ratio of 1:6.35) according to a 1992 Umetco Minerals Corporation internal resource summary prepared after mine shutdown.

The deposit was initially discovered by Homestake Mining in the late 1960's and was developed by Atlas Minerals. Union Carbide took over operations at the mine in the mid-1980's and operated up to January of 1991. Atlas and Umetco's production records at the mine from 1975 to 1990 record a total of 248,245 tons of ore with weighted average grades of 0.154% U3O8 and 1.058% V2O5 (total recorded production of 763,307 pounds of U3O8 and 5,250,055 pounds of V2O5).

The company also reported that similar to the Calliham Mine, the Silverbell Mine is entirely located on private property and only requires permitting through the State of Utah and not through any federal agency, enabling a much shorter permitting timeline. The company is currently drafting mine development plans and is moving forward to acquire mining and exploration permits.

At market close on July 14 the firm’s stock closed at $CAD 0.10/share very near its all time low in a 52-week range of $CAD 0.09-$0.36/share. According to interim financial documents filed on SEDAR on May 2008, the firm experienced a third straight year of losses with no operating income. For the three month period ending in March, the firm recorded a loss of $CAD 268,000.

Midasco did not state the value of the properties it has acquired in Utah, but according to the financial statement, the firm had just $CAD 1.5 million in cash and securities on its balance sheet as of March 2008. How the firm financed the current acquisitions remains a question and, more importantly, now that it has the properties, how will it development them?

Formation Resources to mine coal for uranium in North Dakota

Formation Resources, a U.S. business unit of Pacmag Metals (ASX:PMH) of Australia, said it is investigating building a plant in North Dakota to acid treat and burn coal to extract uranium. The company is exploring several sites and told the Bismark Tribune on July 17 it plans to use open pit methods to uncover coal down to 100 feet and acquire the first two feet of coal where the most uranium can be found. The most likely site is Belfield, ND, where it will said it is considering building a plant and will supply it with a new railroad siding.

Right now exploration is still underway to find likely hot spots. Mark Sexton, a spokesman for the U.S. Forest Service, which authorized the firm to prospect on 17,000 acres on the Little Missouri National Grasslands to Formation Resources, was doubtful there will be any production in the next few years. He said the Geiger survey methods had better work or, “they’ll be digging holes from here to eternity.”

Even if Formation Resources finds uranium, it could face significant delays in completing federal regulatory reviews. Lonny Bagley, field manager for the BLM, which would issue any leases, pointed out right now all Formation Resources has is permission to look for uranium and does not hold any leases to mine it. He said environmental studies would be need to make a decision on the leases, if Formation applies for them. The federal land management plan for the National Grasslands would have to be amended to include mining as an approved use.

Black Range faces lawsuit for Taylor Ranch mine in Colorado

Black Range Minerals Ltd, (ASX:BLR) a Perth, Australia mining firm, said its Taylor Ranch project in Colorado may be under threat following a lawsuit filed against the Fremont County Commissioners who approved a conditional use permit for exploratory drilling.

"The lawsuit has been filed on the grounds that the County Commissioners abused their discretion in awarding Black Range its permit," Black Range said.

The company's attorneys in the US reportedly were surprised by this action, but company officials said it remained on track to re-start drilling at the project by early August.

Uranium Energy nets $15M in stock offering

Uranium Energy Corp. (AMEX:UEC) has raised $15.3 million in its latest stock offering.

The Austin-based company focused on uranium exploration and development in the Southwestern United States says it's completed the sale of 6.4 million shares at $2.40 each.

The firm's stock closed on July 18 at $2.21 against a 52-week range of $1.80-$4.82 with market capitalization of $88 million and 39 million shares outstanding.

Uranium Energy says it will use the proceeds to continue work at its Goliad ISR Uranium Project, to acquire new land for exploration and development and for general corporate purposes.

Founded in 2003 by Alan Lindsay and Amir Adnani, Uranium Energy holds interests in nearly 71,000 acres of mineral properties in Arizona, Colorado, New Mexico, Texas, Utah and Wyoming. The company has 23 employees.

Mining company liable for pollution at former uranium mine in Washington

A federal judge has rule that one of the world's biggest mining companies is partly responsible for cleaning up massive pollution at a former uranium mine on the Spokane Indian Reservation.

The ruling on July 14 by U.S. District Judge Justin Quackenbush of Spokane was a victory for the federal government and tribal officials, who have been trying to ensure that Colorado-based Newmont Mining Corp. help pay for a cleanup that could cost $152 million. Federal lawyers had argued that Newmont was liable for cleanup costs under the federal Superfund law, because it had control over part of the mining operations through a subsidiary, Dawn Mining Co.

The company has claimed in court documents that while it was a majority owner of Dawn, it didn't make day-to-day decisions about how the mine operated. The judge still must decide how much of the cleanup costs Newmont is responsible for. Dawn Mining and the U.S. government have already been named as partly responsible for the pollution.

The ruling, which could be appealed, might help jump-start cleanup of the defunct mine, which has leaked radioactive and toxic chemicals into nearby streams, soil, plants and animals. The mine was started in 1954 and left behind two huge craters holding toxic ponds, sit in the middle of the mine site.

A water-treatment plant filters water that leaks from the ponds to keep pollution from reaching nearby streams. It hasn’t worked and contaminants, including uranium, have leached into plants and nearby creeks. Tribal attorney Shannon Work said that with the court's ruling, the tribe hopes that those responsible "will now step up and begin the much-needed cleanup."

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