Friday, September 26, 2008

Western lands uranium gopher for September 27, 2008

An occasional column on money and mining news items

gopherThe 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 N296 on 09/24/08 by International Nuclear Associates Inc., Washington, DC. ~ Portions of this blog post did not appear in FCW. ~

NI 43-101 report for Coles Hill property in Virginia

While there is plenty of action out West, in Virginia a NI 43-101 report was released for the (map) Coles Hill uranium property. Although the report has a June 2008 date, it was covered by an industry trade newsletter for the first time this week. Last July the Wall Street Journal reported that the site is a "mother lode" of uranium. The latest technical report, reportedly prepared in compliance with Canadian government and uranium industry standards, confirms that assessment.

The Ux Weekly for 09/22/08 (sub req'd) reported that the resource estimate for the South Coles Hill deposit varies from 23 million pounds U3O8 at 0.225% grade to 72 million pounds U3O8 at 0.070% grade.

The Ux Weekly also reports that at the North Coles Hill deposit, the resource estimate varies from 4.5 million pounds U3O8 at 0.262% grade to 47 million pounds U3O8 at 0.050% grade.

The two deposits combine for a total of 119 million pounds at a cutoff grade of 0.025%. In 1982 a resource estimate came out at 100 million pounds at the same grade according to Ux Weekly. The deposits are near or at the surface and could be mined using open pit methods.

Uranium mining is banned in Virginia, and opposition is so strong that in March 2008 the state legislature couldn't even get the votes together to study the issues. The value of the property, and demand for uranium, could change the face of Virginia politics.

NRC's GEIS still generating political dust devils in Wyoming

The Nuclear Regulatory Commission (NRC) is working through a series of public meetings in western states asking for comment on their generic environmental impact statement (GEIS) for in-situ leach (ISL) uranium mining. In Wyoming Governor Dave Freudenthal is pushing the NRC to complete the review by January 2009 even though it has already announced it won’t be done until June 2009.

In Nebraska the NRC startled a hearing in Chadron by explaining that returning groundwater to conditions prior to mining isn’t likely. However, the agency also explained that groundwater in a subsurface formation amenable to ISL uranium mining isn’t fit for potable uses to begin with. In New Mexico so far it looks like the GEIS may be a moot point. The NRC has received four letters of intent for new mill operations in that state, but none are for ISL mines.

NRC officials said they expect 28-30 license applications in the 9,000 square mile area comprised of the intersection of Nebraska, South Dakota, and Wyoming. Alan Bjornson, GEIS project manager, said it already knows of 14 new permits and eight restarts. He said the agency’s approach is based on the fact that the process is similar for every ISL mine. The GEIS will allow the agency to focus on site specific aspects of each application.

Bjornson said, “ISL is relatively standard, no matter where it is done. We want a consistent approach and a focus on the truly unique features of a site.”

So far with hearings held in Nebraska, Wyoming, and New Mexico the agency has received 1,400 comments. More public hearings are scheduled through the end of September.

  • Wyoming wants fast action

In Wyoming Governor Freudenthal told the Casper Tribune the reason for his push for completion of the GEIS by January 2009 is the rising demand for uranium. To be successful, he said, “miners need clear, consistent direction from regulators in order to make the investments required to develop production facilities.”

The Wyoming Mining Association agrees. Marion Loomis, the association’s executive director, says the group’s members wants the NRC to finish by January. The NRC announced in a Federal Register notice in July it was pushing the completion date back to June 2009.

At the same time the governor said his state was taking a tough line on violations of existing regulations.

“This in situ stuff needs to be closely monitored because you don’t always know what’s happening underground if you don’t keep a firm hand on the monitoring.”

Wyoming has levied fines on uranium miners in recent months backing up the governor’s tough talk with regulatory action. Power Resources, operating the Smith-Highland uranium mine, agreed to pay a $1 million fine to settle a violation notice that it delayed restoration of groundwater and cleanup of spills. Power Resources also paid a $50,000 fine for failure to cap exploratory drill holes. A settlement with Cameco, the parent firm of Power Resources, requires the company to increase its reclamation bond from $40 million to $80 million.

  • Nebraska wants protection for groundwater

In Nebraska the NRC told a large group turning out for a hearing on the GEIS on Chadron that although ISL mine permits require groundwater to be restored to its former condition when the mining work is done, achieving “baseline parameters” has proved to be technical impossible. There are 30 such measures according to the NRC.

Bill von Till, NRC’s regional licensing branch chief, told the Chadron News, that the materials used by the mine remaining underground are immobile, but the parameters still have not been met. That said, von Till noted that groundwater in mined areas wasn’t fit for potable uses to begin with so not much is really lost.

Environmental groups in Nebraska are not happy with that news and the NRC’s interpretation of mining reality. Specifically, they are opposing the North Trend expansion of the Crowe Butte ISL mine in Dawes County, Neb, operated by a subsidiary of Cameco. The Western Nebraska Resources Council and an Oglala Lakota Indian tribe cultural group are challenging the license application because of concerns about pollution of groundwater. They pointed to a $50,000 penalty assessed by the Nebraska Department of Environmental Quality against the operation last May for a variety of permit violations.

However, the mining industry says that sometimes regulators are unreasonable in their demands. Mike Griffin, speaking for Uranium One, said that typically it is not possible to bring water used in mining back to exactly match the 30 parameters that are measured as baseline standards. “That usually isn’t realistically achievable, because of geochemical changes.”

A second goal is to restore the water to “Class of Use” standards that it met before mining, said Griffin. “Generally that water was not useable beforehand. In the state of Wyoming it’s called industrial use water.”

Failing that, the mining company has to insure that the water won’t escape from the mine site, according to Griffin. “If you can’t achieve those you have to go back to NRC and show that it’s not going to migrate off site.”

Griffin added his firm has two applications pending in Nebraska. He complained about the time it takes to prepare them and the costs. He said his firm welcomes the GEIS process because it will focus the NRC on site specific issues and get his operation off and running more quickly.

  • Cultural resources are a concern in New Mexico

In New Mexico NRC official Larry Camper said none of the pending applications for mining received by the NRC are for ISL operations. Still, 150 people showed up for a hearing last week (Sept 11) in Grants, NM. Most of the meeting was devoted to explaining the need for the GEIS and how it would work.

Camper said the GEIS is “not designed to cut corners or streamline the process.’ It takes two years to complete one Camper said and he emphasized each application will get a site-specific review. Camper also reassured people attending the hearing that cultural resources will be considered as part of the review. He acknowledged the many “heartfelt comments” about the specifics of the NRC’s review of license applications.

Canadian firm pursues Wyoming ISL mine

Uranium One (TSE:UUU) is pursuing its first ISL mine on a ranch in southeastern Campbell County, Wyo. Donna Wichers, Uranium One VP, told the Casper Tribune the firm has leased 3,500 acres but the initial site will only include 200 acres. Construction is expected to start in 2009 after completion of state and federal regulatory reviews and production is expected to begin in 2010.

Uranium One also announced it had appointed Steve Magnuson as Chief Operating Officer. He will be based in Denver, Colo. Magnuson is a professional engineer with 30 years mining experience. Most recently, he was VP for Operations at Cameco’s U.S. subsidiary with responsibility for ISL mines in Wyoming and Nebraska. He worked on the Crowe Butte mine in Nebraska. His international experience includes commercial development and operation of the Inkai ISL project in Kazakhstan.

International Ranger (PK:ING) has boosted its investment in a Four Corners uranium project located in the Green River mining district of Emery County, Utah. The firm bought the property, which is the site of uranium mines formerly worked by Atlas Corp. The firm will pay $1.1 million over the next four years to develop the property and earn 100% interest in it. The project was acquired from Energy LLC and John McDonald.

Strathmore Resources (CVE:STM) has applied to the U.S. Forest Service for permission to do exploratory drilling on Mt. Taylor in Cibola County, NM. The request is the firm to test a designation of the area as a traditional cultural property. Juan Velasquez, a spokesman for Strathmore, said the actual drill site will be 180 feet by 180 feet and use existing roads. He said the site has been disturbed by uranium drilling in the past.

Terry Fletcher, President of the New Mexico Mining Association, said the cultural resource designation of the area has “put a damper on the mining business.”

Valasquez agreed and added that the cultural resource designations of various areas in New Mexico were causing investors to look on the state as being “difficult “ to deal with. In the case of Taylor Mountain, the New Mexico Mining Division turned down a request for a quick review and instead demanded that Strathmore use a general permit process which is expensive and time consuming. Valasquez said that in the past the request for a small pad drill site would have gone through quickly.

Target Exploration and Mining (CVE:TEM) announced preliminary drilling results on the Boothell uranium property in the Shirley Basin in southern Wyoming. The firm reported mineralization of 0.043% U3O8 after drilling 65 holes for a total of 35,000 feet. The total drilling program is 50,000 feet over 90 holes. All of the holes drilled so far have been outside of the existing historic resource. The firm plans to issue a 43-101 report within a month. The total property is 10,500 acres. Target is exploring the site in with Ur-Energy (TSE:URE).

Magnum Uranium Corp. (TSX:MM) announced that it has completed, and filed with SEDAR, a National Instrument Policy 43-101 Mineral Resource Technical Report for the "Deep Gold" deposit portion of its San Rafael Uranium Property, Emery County, Utah. The Deep Gold Mineral Resource Report estimates an indicated mineral resource of 1,536,900 pounds of U3O8 contained in 282,600 tons at an average grade of 0.272% eU3O8 and an additional inferred mineral resource of 78,200 pounds of U3O8 contained in 24,000 tons at an average grade of 0.163% eU3O8.

The NI 43-101 table above provides an Indicated and Inferred resource estimate of 1,615,100 pounds at an overall average grade of 0.263% eU308.

The Deep Gold is one of a number of known uranium deposits contained within Magnum's larger 6,000 acre San Rafael Uranium Project area that comprises a joint venture with Energy Metals Corp. and which Magnum has earned an 80% interest in.

Atlas Minerals' historic Snow Mine at this site produced 650,292 pounds of U3O8 from 173,330 tons of material at an average grade of 0.188% U3O8 between 1973 and 1982. The Deep Gold deposit area comprises approximately 5% of Magnum's entire San Rafael land holdings.

Formation Resources of Australia doing business in North Dakota as PacMag (ASX:PMH) said that while looking for uranium in coal seams it found high-grade germanium, a scarce silicon-like mineral used in making semiconductors, transistors and fiber optic cables.

According to an Associated Press report, a brief mention in a half-century-old document has led the company to a large and potentially valuable deposit. A consultant says it may be the first time a "significant" germanium deposit has been found in a coal seam in North America.

PacMag was granted a state permit in April to drill about 600 test holes for uranium in southeastern Billings County and north central Slope County, in southwestern North Dakota. The company said about 336 test holes have been completed, and results so far have been positive for uranium and molybdenum.

PacMag Metals tested for germanium because of a brief mention in state documents studied by company officials. A geological survey from the 1950s found in state records provided the clues.

David Guberman, a USGS mineral commodity specialist, said germanium is fetching up to $1,590 a kilogram, up from $1,200 a year ago and $380 in 2003. A kilogram is about 2.2 pounds. "The price has gone up dramatically," Guberman said.

The USGS told AP supplies are tight while demand is growing for such things as fiber optic networks, solar cells, night vision lenses and gamma ray detection instruments. a result of an increased focus on homeland security.

PacMag is the only company to apply for a drilling permit for uranium in North Dakota. The firm has leased about 25,000 acres of private land in North Dakota in search of uranium. The company refers to the drilling effort as the "Sentinel Project."

The most promising area the company has tested is a 1.5-mile long "rock outcropping," near an old Stark County mine that produced uranium in the 1960s. The land is owned by the Evangelical Lutheran Church in America.

PacMag Metals also wants to expand its search for uranium in the Little Missouri National Grasslands. The company has asked to explore on 18,000 acres of the grasslands, mostly in Slope County, using radioactive reading instruments and taking soil samples. No drilling would be involved, the company said.

The U.S. Forest Service said it would make a decision on the request early next month. If the company decides to move forward, it would use an open-pit mine. A processing facility would also be built in the area.

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