Western Lands Uranium Gopher for August 9, 2008

(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.

This column is an edited version of an article published in Fuel Cycle Week V7 N290 on 08/06/08 by International Nuclear Associates Inc., Washington, DC.

Lawsuits dog uranium miners across Colorado

The expansion of the uranium mining industry to feed ore into the nuclear fuel cycle has a new and now constant companion. It is a growing number of lawsuits by environmental groups, back country trophy home owners, and outdoor recreation enthusiasts. Counties approving mining operations through conditional use permits, by changing approved land uses from agricultural to mining, are being sued even though they are bound by their own ordinances to issue the permits to allow mining. July saw several lawsuits being filed in Colorado and all of them will create complications for the miners being sued and the supply chain that is expecting product from the proposed new mining operations.

At the federal level environmental groups have filed a lawsuit in Denver claiming that recent actions by the U.S. Department of Energy (DOE) to issue leases for uranium mining in a 42 square mile area of the Uravan Mining District was illegal due to inadequate environmental analysis. The groups want a more comprehensive analysis of the decision to issue the leases.

The groups complained that DOE didn’t release key information about the environmental impacts and said that uranium mining in western Colorado could pollute the Dolores River in the Paradox Valley. The groups also said the analysis was needed to insure protection of river habitat for otters, bald eagles and fish which the otters and eagles hunt for food.

Travis Stills, of the Energy Minerals law Center, which is representing the environmental groups, disputed DOE’s claim that the leases would have no significant environmental impacts. He said the information provided by the agency didn’t address contamination and waste from previous mining operations. He said his clients want the old uranium mine contamination cleaned up before the government authorizes new mines.

Amy Atwood, of the Center for Biological Diversity, which is one of the four groups that filed the lawsuit, echoed this view. She said her organization was worried about “another boom and bust cycle in western Colorado.”

The suit also claims the DOE failed to discuss impacts from the proposed Energy Fuels Resources (TSE:EFR) Piñon Ridge uranium mill in the Paradox Valley, as well as the White Mesa, Utah mill and Canon City mill. The Canon City mill isn’t operational and the Energy Fuels mill was just recently announced, but hasn’t been permitted nor has construction started on it.

Energy Fuels Resources President and CEO George Glasier told the Montrose Daily Press he wasn’t sure how it would be possible for the DOE to discuss impacts at Piñon Ridge.

“We hadn’t even announced the Piñon Ridge Mill at the time the DOE closed the [leasing] process,” he said. “That’s an interesting question, but how could the DOE do it when they didn’t even know about it?”

Glasier said the mill is not dependent on the four leases it obtained from the DOE and there is limited capacity at the mill in any event.

“Our mill is being built whether we’ve got those leases or not,” He said.

Energy Fuels submitted an application for a special use permit to Montrose County on July 24 for its mill site. It requested that 880 acres be designated as a ‘Mineral Resource Operation Facility’ changing it from a designation of ‘General Agriculture.” The firm said additional details about the mill are available on its website

BLM manager Steve Beverlin told the Herald, without commenting on the lawsuit by environmental groups, that the mission of his agency is to balance use with protection of existing resources. DOE officials did not respond to inquiries from the Durango Herald for comment.

The Herald reported that in Dolores County, Colo., alone uranium claims rose from 396 in 2006 to 5,399 in 2007. In San Miguel County, Colo., uranium claims rose from 1,119 in 2006 to 2,633 in 2007.

Black day for Black Range Minerals

Black Range Minerals (ASX:BLR), despite having finally received a conditional use permit (CUP) on June 9 to start hard rock exploratory drilling in the Taylor Ranch mining area in Fremont County, Colo., is facing a lawsuit that has been filed by homeowners who feel the county didn’t adequately address their concerns. The suit is an appeal of the county’s decision to allow Black Range Minerals, an Australian company, to prospect for uranium on the Taylor Ranch in the Tallahassee district of the county.

Jim and Kay Hawklee, which have been leaders of the homeowners objecting to the mine, told the Canon City Daily Record their issue is that the mining will take place within 500 feet of 44 homeowners. The land use conflict is a result of trophy home owners building in the backcountry and buying parcels for development in old mining districts.

Hawklee says the CUP is not consistent with the county’s land use plan that calls for non-agricultural land to be set aside primarily for residential use. The Hawklees also claimed that the CUP failed to provide for adequate fire protection and would lead to pollution of water supplies used by homeowners. They also claimed that property values would be hurt by the mining operation.

The appeal to the District Court will not involve a new trial. It will involve judicial review of the hearing transcripts and meeting minutes of the county commission. The resolution of the lawsuit could take some time. Fremont Country Attorney Brenda Jackson told the ‘Record’ there are over 2,000 pages of documentation and that’s before the hearing transcripts from several lengthy public meetings are added to the court’s review process. The lawsuit did not seek to stop operations under the current permit.

New Horizon Mining facing opposition

Nevada-based New Horizon Mining (CVE:NHU) probably needs to make a call to Powertech (TSE:PWE). An opposition group in northeast Colorado that made Powertech’s life miserable over a proposed ISR mine in Nunn, Colo., has shown up in Park County, Colo.

It will advise back country homeowners how to oppose a planned ISR uranium mine in a 4,000-acre area public lands in southeast Park County in the South Park Ranch area. Jay Davis, an organizer for Coloradoans Against Resource Destruction (CARD), spoke at the meeting of the Park County Democrats on July 16.

According to the Flume newspaper, Davis warned that it is possible for radioactive material left over from the mining process to travel great distances with strong winds. He was invited to speak to the group by ‘Save Our South Park Water 2008.’

New Horizon President Bill Wilson wasn’t at the meeting, but he told the Flume via email the firm is in the very early stages of its project there. Wilson also said that Colorado’s new mining law, HR 1161 will have little effect on his project because its requirements are redundant with existing state and federal requirements.

Wilson added the firm’s current focus is in Converse County, Wyo., where it is spending $2 million in an ISR mine over the next five years to earn a 70% interest in a joint venture with Canyon Resources.

Yellowcake Mining starts drilling in Montrose County

Despite all the lawsuits in western Colorado, one firm announced some progress there. Yellowcake Mining (OTC:YCKM) announced that it has received the necessary permits to allow drilling on its 3,000 acre Uravan-Beck Property in Montrose County, Colo. The permits were received from the Colorado Division of Reclamation, Mining and Safety and U.S. Bureau of Land Management. Permits are in hand and a reclamation bond has been accepted for the initial exploration phase.

The permits are for ten sites of known uranium-vanadium mineralization which will be tested by air-rotary drilling and gamma logging.

NRC to hold hearing on Crowe Butte expansion

Opponents of a request for expanded uranium mining near the South Dakota-Nebraska border have gained a hearing before the NRC.

The focus is a request by Crow Butte Resources mine near Crawford, Neb., in Dawes County, Neb., which wants to raise its annual production from 800,000 pounds of U3O8 to 1.2 million pounds.

The ISR mine is owned by Cameco Corp (NYSE:CCJ). Crow Butte has asked the NRC and Nebraska Department of Environmental Quality for permission to add wells and raise the amount of solution it pumps into the ground.

Several individuals and groups have been allowed to intervene in the NRC process. One of them, Debra White Plume, said her goal is to determine whether the mine is contaminating water on the nearby Pine Ridge Indian reservation and causing health problems for residents.

"We couldn't find a mine that did not affect the groundwater," said White Plume, who is from the Pine Ridge town of Manderson. "Until we can say with certainty they are not contaminating the groundwater, we have to oppose them."

Gord Struthers, a Cameco Corp. spokesman, said the geology of the area and distance to the reservation make that physically implausible. "It's impossible for our mining activities at Crow Butte to affect well water at Pine Ridge," he said.

The NRC's Atomic Safety and Licensing Board Panel already has accepted three of seven contentions brought by the petitioners.

Two of those deal with possible water contamination. The other concerns consultation with tribal leaders over a prehistoric Indian camp. The hearing will also include discussions on the involvement of the Oglala Sioux Tribe and what set of rules will be used in the proceeding, said Scott Burnell, an NRC spokesman. "We're still in the preliminary phases of the hearing," he told AP.

Denison Stock down on Arizona Air Permit Problems

Denison Mines Corp. stock (TSE:DML) fell more than 6% last week after the company said there has been a delay in securing an air quality permit at its Arizona 1 mine.

Shares in Denison dropped 44 cents to close at $6.56. The 6.3 per cent decline came with trading of nearly 1.3 million shares on the Toronto Stock Exchange.

Earlier, the Toronto-based company said it had expected no difficulties in securing the permit from the Arizona Department of Environmental Quality, but subsequently was informed that the agency wants more information.

Denison said the environmental agency has concerns about dust on public roads from trucks. The company said it plans to provide further information and analysis over the next six weeks.

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