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.
In an effort to separate the really interesting from the merely informational, I'm posting my running notes on uranium mining in western states.
The choices of the subjects are a combination of what I find in the press release pile and 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.
Colorado Governor signs uranium mining bill into law
Colorado Governor Bill Ritter signed HB 1161 May 21 which puts new regulatory requirements on in-situ leach uranium mines. It requires groundwater testing to be conducted by third parties rather than mining companies themselves and imposes new requirements on groundwater restoration of ISR mining fields. The bill was specifically targeted at Powertech’s proposed Centennial ISR mine near Nunn, Colo., 15 miles northeast of Ft. Collins.
Powertech has identified 9.7 million pounds U3O8 under 5,700 acres spread over a 15 square mile area. At $70/lb the resource is worth approximately $680 million.
The bill signed by the governor was sponsored by two state representatives from Ft. Collins. State Rep. Randy Fisher (D-Ft. Collins), one of the sponsors, said, “Having this bill signed today will make sure we protect groundwater and our environment before new mining takes place not after.”
In signing House Bill 1161 into law, Gov. Bill Ritter said the bill "strikes a good balance. It allows for in situ uranium leach mining while taking into consideration the need to protect both ground and surface water supplies."
Powertech CEO Richard Clement had a decidedly different view. He said Colorado has “created a specialized regulatory regime for in-situ uranium recovery that is the most restrictive of any states in the United States."
However, he also said he didn’t think the new law would stop uranium mining in Colorado even though some supporters of the legislation had that goal in mind. He said, “the operational conditions (of the law) can be met by mining companies and will allow continuity of development in Colorado.”
The Colorado Mining Association (CMA) looked beyond the bill signing ceremony and issued a statement aimed at the development of implementing regulations by state agencies. Stuart Sanderson, CMA president, said, “we urge regulatory agencies to use care in drafting regulations under the Act to avoid unrealistic expectations of the mining industry.”
Some mining experts think the legislature and the governor have gone too far and may harm the uranium industry in that state at the very time that prices are at historical highs for the mineral.
The legislation lays out stronger requirements for reclamation notification to adjacent landowners. Also, it requires mining applicants may not have any existing violations to the Colorado Mined Land Reclamation Act or related acts issued by other states or the federal government. This requirement appears to set perfection as a regulatory standard and ignores the reality that all mining operations sooner or later have permit violations of varying degrees. State agencies will have a tough time writing regulations for this section of the Act and not wind up setting unenforceable requirements.
The Act requires there must be a description of at least five such operations that demonstrate that the proposed operation will not contaminate groundwater outside the permit area. This requirement will undoubtedly lead to “cut-and-paste” submissions based on industry technical reports and imposes additional costs on ISR mines documenting the obvious. It appears to add little real protection to the environment and will certainly kill more trees with the resulting paperwork.
The law mandates a baseline site characterization and monitoring plan. This is redundant since ISR mines already have to meet similar requirements from the NRC.
It sets criteria for the Mined Land Reclamation Board to deny or revoke a permit for in situ leach uranium mining. This section is most likely the key target of CMA’s comments.
Also, the expands oversight by the state Division of Reclamation, Mining and Safety during construction. A key issue for miners is whether the legislature, having added new requirements for state regulatory agencies to implement, will now fund new positions and provide related resources to pay for them.
In other legislative news the mining industry in Colorado dodged a bullet when the House Agriculture, Livestock and Natural Resources Committee voted to indefinitely postpone House Bill 08-1165, a bill which would have given local governments the power to override state laws and standards for environmental protection, and enact their own reclamation standards for mining operations.
CMA’s Sanderson said "House Bill 1165 would also have permitted local governments to ban any mining project outright, even if the permit applicant otherwise met all state, federal and local land use requirements," he added. "It further would have established a disturbing precedent for banning other lawfully regulated businesses in Colorado.”
Energy Fuels to form joint venture with Mesa Uranium
Energy Fuels said it has signed an agreement with Mesa Uranium to form a joint venture for exploration to take place on the DAR property in the Lisbon Valley Mining District of San Juan County, Utah. The two firms will share expenses on an equal basis for exploratory drilling on the site where prior exploration in the 1980s indicated a strong potential for uranium. Any subsequent mining on the site will be operated by Energy Fuels. Mesa also has 100% ownership of 46 square miles in the Lisbon Valley.
The boundary of the DAR site is near Energy Fuels’ Energy Queen Mine which is currently being refurbished for production. The DAR property consists of 60 recently staked mining claims over 1,240 acres. A nearby property staked by Vane Minerals reported grades of from 0.14% to 0.22% U3O8. The DAR property is also one mile from the North Alice Mine which reported substantial production prior to 1967 of 3.07 million pounds U3O8 at a grade of 0.275%.
Energy Fuels also reported progress toward a permit for the Whirlwind Mine. BLM has approved a consultant’s environmental assessment and released it for public comment. The comment period closes on June 20. Energy Fuels said in a statement it expects approval of the Whirlwind Mine plan of operations by BLM in July.
Ur Energy Wyoming permit application complete
Ur Energy announced it received notice from the Wyoming Department of Environmental Quality that the agency has found the Lost Creek Project Permit to Mine Application to be complete. Ur-Energy has been authorized to proceed with the formal public notice of the application. Ur-Energy said in a statement the notice is the first of its kind in that state in recent years.
Uranium Resources raises $14.3 million for Texas operations
Uranium Resources said it privately placed 3.3 million shares of common stock to raise $14.3 million or $4.33/share. The stock closed on May 23 at $4.54 which means the offering was placed at a 10% discount. Following the announcement share the price fell to $4.38 on heavy volume.
CEO Dave Clark said the funds will be used to achieve production levels in Texas of up to two million pounds a year by 2011. The company continues to develop properties in its Kingsville permit area. Clark also said funds from the deal would not be used for its planned acquisition of a property in New Mexico now owned by Rio Algom. He said in order to close on that deal the firm must be able to finance the purchase, fund remediation, and meet bond requirements for the NRC license. Additionally, the firm will have to separately raise working capital for operations. (See FCW 253)
The company reported a first quarter 2008 loss of $1.8 million on revenue of $5.7 million. In an SEC filing the company attributed the loss to higher production costs at its Kingsville Dome property at $49.78/ pound compared to $34.44/pound for the same period in 2007. Production at Kingsville was 79,100 pounds for the 1st quarter 2008 compared to 64,900 pounds for the same period 2007.
Uranium Energy plans 2008 Uravan Mineral Belt exploration program
Uranium Energy Corp has received authorization to published two 'Notices of Intent to Conduct Prospecting Operations for Uranium and Vanadium' in the Uravan Mineral Belt in Montrose County, Colo. from state regulatory agencies. The applications are for Uranium Energy Corp's Paradox Project and the Bull Canyon Project west of Naturita, Colo. A summer drilling program is planned for both properties.
Uranium Energy has a near term objective to conduct ISR uranium production on its Colorado properties. The company controls 12,000 acres of mining claims covering the sites of 15 past-producing uranium/vanadium mines. The aggregate production from these mines was approximately 5 million pounds of uranium, and 16 million pounds of vanadium. Grades of production in all cases were similar to the averages of 0.25% uranium and 1.7% vanadium.
The Paradox Project application covers 15 claims (the Gotcha claims) located approximately 10 miles west of Naturita adjacent to the Cotter Open Pit Uranium Mine, presently on standby status.
The Bull Canyon Project covers 13 claims (the Boo claims) in the historic Bull Canyon mining area, about 11 miles west of Naturita.
Thirty drill holes are planned for the Paradox Project to depths averaging 250 feet. In addition, bulk sampling will be performed from previously mined stockpiles at the workings.
Thirty drill holes at depths ranging from 180-220 feet are also planned for the Bull Canyon Project. An existing pile will be stabilized and samples will be taken in the workings for assays.
Uranium Energy Corp has opened a field office in Naturita to facilitate expeditious site development.
Western Uranium begins Nevada drilling program
Western Uranium Corporation announced drilling has started on the regional uranium targets: Bull Basin and Old Man Springs on the Kings Valley Project, Nev.
Currently, approximately 50 holes are planned in this phase, with 25 holes allocated to each respective target. The Company anticipates the program will take three-to-four months to complete with two core rigs drilling 24/7.
The company said in a statement both Old Man Springs and Bull Basin lie along a projected structural trend from the areas of known mineralization hosting 4.8 million pounds at a grade of 0.081% U3O8 (NI 43-101 compliant resource estimate).
A review of the data and drill program was undertaken with Cameco, a partner with Western Uranium, during a technical committee meeting that included an on-site visit in April.
Bayswater Completes Phase 3 Drilling at Elkhorn Project, Wyoming
Bayswater Uranium Corp announced the completion of the Phase 3 drilling program at the Elkhorn Project in Wyoming and the preliminary results from the program. The company drilled 312 holes including 11,073.5 meters (36,321 feet) around the historic Busfield Mine, and the company's NI 43-101 indicated resource. The best hole yielded 0.129% U3O8.
The historic Busfield and Vickers mines produced approximately 69,000 pounds of uranium from near-surface, sandstone hosted deposits that were operated in 1956-57. The company said in a statement its subsidiary, NCA Nuclear Inc. completed Phase I and II drilling programs with 70 holes at the Busfield resource area in 2006, which defined a NI 43-101 compliant indicated uranium resource of 250,000 tonnes at 0.08 % for 397,000 lbs eU3O8.
The Elkhorn project is located in the northeastern Powder River Basin and contains over 16,700 acres of land held under federal, state and fee agreements. Three uranium mines are in production in this region, including the Smith Ranch-Highland uranium project and the Crow Butte mine, owned by Cameco and the Christensen Ranch mine, owned by Cogema. All employ "in-situ recovery" processes to recover uranium mineralization. Operating mines are exploiting uranium mineralization that occurs in concentrations that range from approximately 0.1 - 0.3% U3O8.
KEPCO signs uranium development deal with Colorado miner
Yellowcake Mining Corp. signed a Memorandum of Understanding with Korean Electric Power Corp. (KEPCO) The agreement involves a detailed evaluation of Yellowcake's Uravan-Beck Project in Colorado.
The Beck property has 12 known deposits which have been subject to varying amounts of drilling in the past. The Beck property represents Yellowcake's second major development property after the Juniper Ridge project in Wyoming.
Under the deal KEPCO will secure a 50% interest in the mine which reportedly has proven reserves of 5,000 tonnes U3O8.
Korea has a total of 20 nuclear reactors generating a total of 17.5 GWe electricity. An additional eight new reactors are under construction or on order, making country, per capita, one of the world's most intensive users of nuclear generated electricity.
According to the World Nuclear Association the Korean Atomic Research Institute (KAERI) has developed both PWR and Candu fuel technology. It and Korea Nuclear Fuel Company (KNFC) have supplied PWR fuel since 1990 and Candu PHWR fuel (unenriched) since 1987. KNFC has capacity of 550 t/yr for PWR fuel and 700 t/yr for Candu PHWR fuel.
Uranium for fuel comes from Canada, Australia, and elsewhere - 3100 tU being required in 2008. KEPCO, KNFC, Hanwha and KHNP are together becoming involved with uranium exploration in Canada. The deal with Yellowcake mining is the first in the U.S.
In 2006 enrichment demand was 1.8 million SWU, supplied from overseas. Tenex, Urenco and USEC have previously supplied this, but in mid 2007 KHNP signed a long-term (10+ years) EUR 1 billion contract with Areva NC for enrichment services at the new Georges Besse II plant in France.
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