Thursday, December 10, 2009

Western Lands Uranium Gopher for 12/10/09

gopherThis blog post is an edited version of a report published in Fuel Cycle Week, V8:N356, 12/09/09 by International Nuclear Associates, Washington, DC.

This report contains additional details and late breaking news which occurred after publication.

China’s appetite for uranium may squeeze supply for India in the long-term

Reuters has a feature article on demand for uranium by China which plans to boost power from nuclear reactors to 40 GWe by 2020. It is the primary customer for uranium from Australia and competes on the world market for the metal. Australia’s government will not allow sale of its miners’ uranium to India because that country has not signed the Nuclear Nonproliferation Treaty. China is also buying uranium from Canada to provide fuel for two Areva 1,650 MWe EPR reactors as part of a November 2007 deal.

India is planning to rapidly build new nuclear power plants with plans for as many as 23 new reactors ranging in size from 500-to-1,000 MW. Much of India’s nuclear fuel is coming from Russia and France. For now, India’s current reactor fleet of just over 4 GWE is running at half power due to shortages of uranium.

American firms are negotiating to sell nuclear fuel, technology, and reactors to India, but they are competitively lagging behind Russia and France due to lingering domestic legal issues that remain unresolved by India’s parliament. So far China has not entered the U.S. market seeking uranium supplies.

However, Japanese conglomerate Sumitomo has a deal with Strathmore Minerals (CVE:STM) to develop the Roca Honda mine in New Mexico along with plans for a large regional uranium mill. Strathmore, which needs cash for its end of the deal, is selling its Reno Creek property to Bayswater (TSX:BAY). On Dec 9 the two firms amended the $31 million deal to stretch it out over a two-year period.

White Canyon Uranium begins production at Daneros Mine

White Canyon Uranium (ASX:WCU) has started production of uranium ore from its 100% owned Daneros uranium mine in Utah. Trucking of the ore to Denison's White Mesa mill in Blanding, Utah, will begin this month.

White Canyon Managing Director Peter Batten said this marks the transition of the firm from being an explorer to being a producer.

Work on the mine was briefly delayed earlier this year when two Utah environmental groups asked the Bureau of Land Management to consider impacts on wilderness study areas. One of their issues was a request that work on the mine be stopped until BLM carried out a regional impact assessment of all historical mining operations in Utah.

Megan Crandall, a spokesperson for BLM's Utah State Office, told FCW White Canyon "has moved ahead with an approved plan of operations."

Ur-Energy gets requested rezone of Lost Creek project

Ur-Energy (AMEX:URG) announced Dec 1 the County Commissioners in Sweetwater County, Wyo., unanimously approved the development plan for the Lost Creek uranium mine located in the Great Divide Basin northwest of Rawlins, Wyo. The plan describes the infrastructure and facilities to be built to support an ISR mine. The action by the County Commissioners follows a 5-0 vote to approve it by the Sweetwater County Planning & Zoning Commission last September.

According to a statement by the company, the NRC has informed the firm it can expect a license in June 2010. Additional regulatory actions are required by the Wyoming Department of Environmental Quality and the Bureau of Land Management. Ur-Energy said it expects to begin production at the mine in late 2010 or early 2011.

The current Lost Creek deposit holding NI 43-101 compliant report of 2008 describes indicated resources of 9.8 million pounds U3O8 and another 1.1 million pounds U3O8 inferred resources.

Ur-Energy announces new venture with Bayswater at Hauber project

Ur-Energy (AMEX:URG) announce that Bayswater (TSX:BAY) has joined the wholly-owned subsidiary, the Hauber project LLC, as an earn-in manager. Bayswater can earn a 75% interest in the project through exploration expenses of $1 million over the next four years. The first year's expenses must include core drilling to test recovery potential of mineralized zones.

The Hauber project is located in Crook County, Wyo., in the northeast corner of the state. It includes 205 unpatented claims spread over 5,160 acres. The historic Hauber mine, operated by Homestake Mining from 1958-1966 produced 2.6 million pounds of uranium by underground methods.

Energy Fuels submits uranium mill permit application in Colorado

Energy Fuels Corp. (TSE:EFR) formally applied for a permit to build a uranium mill in Montrose County in western Colorado on Nov 19. The mill, proposed for the Paradox Valley west of Naturita, would be the first new uranium mill in the country in 25 years. It will spur the re-start of numerous underground mining operations on the western slope of the state.

Last September Montrose County Commissioners unanimously approved zoning for the Pinion Ridge mill. The facility is expected to be a 500 ton/day mill with longer-term plans to expand to 1,000 tons/day if demand warrants it. It could operate for up to 40 years.

Energy Fuels said in a statement, at the higher level, the mill could produce 1.6-2.0 million pounds of U3O8 per year based on historic grades of ore in the region. At $50/lb the mill's output would be worth between $80-100 million annually.

The application with the State of Colorado starts a 10-15-month process that will include two public hearings. Steve Tarlton, radiation program manager for the Colorado Department of Public Health and Environment said his agency will look at health and environmental effects of the proposed mill.

Tarlton's office has 30 days to determine if the application is complete. Once it does, Energy Fuels has 75 days to hold two public hearings. Those hearings most like will take place in Montrose County said Energy Fuels spokesman Gary Steele. State law gives regulators 9-12 months to approve or deny the permit following the hearings.

Energy Fuels CEO George Glasier said he is confident his application will pass muster with the state.

A Telluride environmental group, Sheep Mountain Alliance, sued Montrose County in October claiming the commissioners abused their discretion in granting the permit for the industrial facility in an agricultural area. Travis Stills, a Durango lawyer who represents mill opponents, said Energy Fuels can expect opposition to the mill.

"There will be considerable technical, grass-roots and legal scrutiny of whatever it is they have proposed there," Stills said.

Energy Fuels CEO George Glasier has previously dismissed the lawsuits as being without merit.

Environmental groups sue feds over Denison mine near Grand Canyon

Environmental groups have filed suit against the Bureau of Land Management over its decision to allow Denison Mines (AMEX:DNN) to open its Arizona 1 mine. The Center for Biological Diversity, Grand Canyon Trust, and Sierra Club argue that Denison's mine plan was out of date and BLM's decision was based on a flawed environmental assessment. Denison's mine is 45 miles south of Fredonia, AZ, and 20 miles from the Canyon's northern border. The mining company received its final state permit in September and has started operations on the very rich ore body.

The environmental groups are trying to extend the ban on new uranium mining operations, which exempts current mines, to cover all mines. Denison's mine is exempt under a July 2009 order by U.S. Secretary of Interior Secretary Ken Salazar. He withdrew one million acres of public lands for the next two years from eligibility for new mining claims. However, existing mines, including Denison's, are allowed to continue operations.

The three environmental groups argue that Denison's opening of the Arizona 1 mine is a new operation and is covered by the ban. They claim Denison relied on data developed in the 1980s. Their logic is based on the fact the initial shaft was sunk in the late 1980s, but the mine was closed a few years later without being brought into production. They claim the current start-up is, in effect, a new mine.

Denison says it will start production in early 2010 shipping 335 tons of uranium per day by truck to its mill in Blanding, Utah. It plans production of 857,000 pounds of ore over the next three years. The ore is reported to have a very high yield of as much as 11 pounds U308 per ton. At a price of $50/lb, an average daily haul of ore will yield revenue of about $184,000. The mine will operate four days a week and employ 32 people.

Uranium Energy acquires Everest

Uranium Energy Corp. (AMEX:UEC) has reached an agreement to acquire 100% of the assets of Everest Exploration Inc. for 200,000 shares of common stock and $1 million. Total deal is worth about $1.7 million.

At market open on Dec 7, UEC was trading at $3.58/share against a 52-week range of $0.16-$4.16 with market capitalization of $203 million.

Strathmore's Roca Honda mine permit application docketed in New Mexico

Strathmore Minerals (TSX:STM) announced that its permit application for its proposed underground Roca Honda mine in McKinley County, NM, has been deemed "administratively complete" by the State of New Mexico Natural Resources Department. The Mining and Minerals Division will now start the technical review process including asking for comment from other state agencies.

The proposed mine site is located on land managed by the U.S. Forest Service. State and federal agencies will conduct environmental impact analyses to support regulatory reviews of the permit application.

The Roca Honda mine is a joint project of Strathmore and Sumitomo Corp. of Japan.

Uranerz gets draft EIS for Nichols Ranch

The Nuclear Regulatory Commission has issued a draft environmental impact statement (EIS) for the company's Nichols Ranch proposed ISR mine in Campbell and Johnson counties in Wyoming. The draft EIS is a supplemental document to the NRC's generic EIS for ISR uranium mining. The release of the draft EIS is a major milestone in the application by Uranerz (AMEX:URZ) to obtain a Source Material License to build and operate the mine. Wyoming is not an "agreement state" with the NRC. The federal agency directly licenses uranium mines and mills in Wyoming.

The Preliminary Recommendation by the NRC in the draft EIS states:

"After weighing the impacts of the proposed action and comparing the alternatives, the NRC staff, in accordance with 10 CFR 51.71(f), sets forth its preliminary NEPA recommendation regarding the proposed action. The NRC staff recommends that, unless safety issues mandate otherwise, environmental impacts of the proposed action (issuing a source material license for the proposed Nichols Ranch ISR Project) are not so great as to make issuance of a source material license an unreasonable licensing action."

The NRC staff concluded that the overall benefits of the proposed action outweigh the environmental disadvantages and costs based on consideration of the following:

Potential impacts to all environmental resource areas are to be SMALL, with the exception of:

1. historical and archaeological resources during construction,

2. visual and scenic resources during construction, and

3. socioeconomic (specifically; demographics, housing and local finance) during operation, where such impacts would be MODERATE."

There were no findings in the draft EIS of "large" environmental impacts associated with the Nichols Ranch ISR Uranium Project.

George Hartman, Chief Operating Officer for Uranerz, said, "The issuance of this NRC document represents a significant step in the permitting process, and along with the recent issuance of the Air Quality Permit, moves the construction phase at Nichols Ranch closer to fruition. "

Design of the facility is approximately 90% complete and equipment orders for long lead-time items may begin as early as the first quarter of 2010.

NRC seeks comment on draft EIS for ISR mines.

The Nuclear Regulatory Commission is seeking public comment on draft Supplemental Environmental Impact Statements (SEIS) for three proposed uranium recovery facilities in Wyoming.

The draft reports are the first issued by the agency under its Generic Environmental Impact Statement for In-Situ Leach Uranium Milling Facilities (GEIS, NUREG-1910), published in June. The GEIS analyzed environmental impacts common to in situ recovery operations in four regions of the western United States. The SEIS for each facility examines site-specific impacts unique to that proposed facility and its location, incorporating relevant discussion and conclusions from the GEIS.

The three draft reports cover license applications for the Moore Ranch Project, proposed by Uranium One in Campbell County; the Lost Creek Project, proposed by Ur-Energy's Lost Creek ISR, LLC, for Sweetwater County; and the Nichols Ranch Project, proposed by Uranerz Energy Corp. in Campbell and Johnson counties.

These reports were coordinated with the state of Wyoming, the U.S. Environmental Protection Agency, and the U.S. Bureau of Land Management, as well as potentially affected Native American tribes.

The reports contain the agency’s preliminary recommendations that, unless safety issues mandate otherwise, there are no environmental impacts that would preclude granting licenses for the proposed facilities.

The GEIS and the individual draft SEIS reports are available on the NRC’s Web site through the agency’s online documents database, ADAMS, at the following accession numbers;

  • ML093350050 for Moore Ranch;
  • ML093350051 for Lost Creek; and
  • ML093340536 for Nichols Ranch.
They will also be posted soon at the NRC Reading Room. Notices of the draft reports’ availability will be published Dec. 11 in the Federal Register.

More information on the in situ uranium recovery process is available at the NRC web site page about ISR mining.

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