Virginia uranium prospects heat up

Challenges include a state ban and the lack of a mill on the east coast

The prospects for uranium mining in Chatham, VA, may be heating up. The impetus for the change comes from two key developments. First, on Nov 6 the Virginia Coal and Energy Commission unanimously approved a study of the issue. It could be the first step to lifting the state's long standing ban on uranium mining. Second, Virginia Uranium, the company that wants to mine the estimated 119 million pounds of uranium, has a new partner. It is Santoy Resources (CVE:SAN), a junior uranium firm from Vancouver, British Columbia.

There is still a long way to go to actually mine the uranium. Even if a study is favorable to mining, the state legislature must still act, and the governor must sign, legislation that overturns the current 25-year old ban on uranium mining. Second, there is no uranium mill on the east coast to process the ore. A new mill to process 500 tons a day of ore could cost in the range of $25-50 million.

However, there are several nuclear fuel processing firms doing business 50 miles due north in Lynchburg, VA. It isn't known whether any of the nuclear energy firms located there would be interested in building a mill.

State study kicks off Jan 6

The Virginia Coal and Energy Commission Uranium Mining Subcommittee will hold its first hearing on Jan 6th in Chatham, VA, taking public testimony.

Lee Ware Jr., a state legislator from Powhatan, VA, issued a statement that the hearing "will take testimony from all interested parties on what environmental, economic, scientific, engineering, and related topics should be included in the study."

The Commission will reply on scientific expertise from Virginia Tech and the National Academy of Sciences.

Opponents want to uphold the ban

The Southern Environmental Law Center, which supports the ban on uranium mining, is expected to be one of the groups submitting testimony at the hearing. Caleb Jaffe, a senior attorney with the group, told the Associated Press, "We've got to proceed with caution because we are in uncharted territory."

Todd Benson with the Piedmont Environmental Council, told the Virginia Pilot, there needs to be accountability for uncontrolled releases of pollutants from a uranium mine that could threaten drinking water supplies.

Santoy merger boosts investment in the proposed mine

The announcement of a merger between Virginia Uranium, which has no publicly traded stock, and Santoy Resources, a uranium junior mining firm from Canada, brings money, expertise, and expanded outreach to additional investors to the proposed mining project.

The draw is what some geologists have called the largest untapped deposit of uranium in the U.S. At today's depressed price of about $50/lb on the spot market, the estimated 119 million pounds of would be worth about $6 billion. There is no NI 43-101 report for the Virginia deposit so the estimated amount of uranium is based on prior geological surveys. The deposit is described as being accessible on the surface, but also diving to a depth of 800 feet. If the mine is ever developed, it would likely be with a combination of open pit and hard rock methods.

Even if Santoy and Virginia Uranium get a green light two years from now to develop the mine, the firms will need to bring in additional investors to develop a deposit of this size.

Financial data for Santoy (CVE:SAN) shows the firm's stock had a Jan 2 market close of $0.15/share against a 52-week range of $0.16-$0.09. Market capitalization on 93.7 million shares was $14 million. The firm has not reported any income for the past three years. It reported $8 million in cash as of Sept 30.

The firm's executive team has long experience in the mining industry. Its primary uranium mining projects are in Quebec, Canada.

It will take 18-24 months for the Virginia Commission to complete its work. The sparks will fly between supporters and opponents of the proposed mine. If the pace of development of new nuclear power plants takes off in the next few years, demand for uranium will increase significantly putting pressure on state legislators in Virginia to overturn the ban. However, Virginia Uranium and its partners will still need a mill within economical haul distance to process its ore, and it remains to be seen how that challenge will be met.

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