Next stop, yellowcake. This vat is the final step before U308 solution is pumped into dryers that turn it into solid yellowcake, the primary commercial product of uranium mining. Tony Loden was adding floculant to the solution to help it settle when this photo was taken at Smith Ranch-Highland near Douglas, Wyoming’s sole producing uranium mine in 2007.
Photo by Don Warfield
Uranium’s breakout year?
If it is, Wyoming industry could boom anew
By Don Warfield
Mining Edition Writer
Wyoming has heard it for years: Uranium is poised for a comeback.
But for a long time, Wyoming’s industry has been the Chicago Cubs of the uranium business — always waiting for next year.
In 2007, with uranium oxide prices climbing toward the stratosphere — nearing $130 per pound by early May — and U.S. and world demand projected to far exceed supply now and in the future, uranium is hot.
Plus, A new heavy hitter has joined the Wyoming lineup. Will Wyoming once again reign as the New York Yankees of the U.S. uranium industry?
Prospects and obstacles
Prospects are better now than they have been for many a decade, but as veteran miners are aware, natural resources production doesn’t just spring full-blown from the head of a New York or Toronto stock analyst.
Permitting, capital formation, expertise in a host of specialized fields, not to mention acquiring reserves worthy of development — all these factors and more conspire to make mining a long-haul process.
And an added limitation may come into play for restarting Wyoming’s long-dormant conventional mines — lack of processing facilities.
As of mid-2007, Wyoming had only one producing uranium property and one in “initial development,” according to the January 2007 report of the state mine inspector. Nine Wyoming uranium properties are either “on standby” or in various stages of reclamation.
Smith Ranch No. 1
Power Resources Inc.’s Smith Ranch in-situ leach site near Glenrock produced all of Wyoming’s 2,043,876 pounds last year, according to the state mine inspector’s report. That was about half of all U.S. domestic uranium production of 4.1 million pounds last year.
If price alone did not signify U.S. and world demand for uranium, the numbers do. Last year, 103 U.S. nuclear reactors in 31 states consumed approximately 70 million pounds of uranium. U.S. production supplied only about 5 percent of that total; the remainder was imported.
Worldwide, new nuclear reactors are under construction or planned in record numbers, especially in Asia. China, with nine reactors now, has at least 30 on the drawing boards. Japan, India and others have dozens of plants on tap.
The U.S. nuclear generation industry is not standing pat, either. Nuclear Regulatory Commission chairman Dale Klein, commenting during an October 2006 interview on C-SPAN, said, “I do believe that we will see license applications in 2007 and we are looking [at] ... up to about 29 new nuclear plants. So I believe that there will be a (nuclear) renaissance in the United States.”
Despite recent production increases, world demand for uranium continues to outstrip supply. While estimates vary, the International Atomic Energy Agency and others foresee a looming deficit in uranium supplies of 40 percent or more.
Companies lining up
All that demand could make veteran energy industry watchers wonder why everyone in the world isn’t in the uranium mining business. It is not for lack of trying. By mid-2006, industry watchers counted about 300 “junior” companies trying to get into the business. One industry insider estimated that number at more the 400 by mid-2007.
Increased demand and steeply rising prices for uranium didn’t just burst on the scene without warning. Prices — the best indicator of demand — have been rising steadily for over two years. Nevertheless, in Wyoming at least, only Smith Ranch actually produces and sells yellowcake.
That situation seems unlikely to change for at least two to three more years.
One in-situ operation, Uranerz Energy Corporation’s Nichols Ranch and Hang Ranch properties in the Pumpkin Buttes region of the Powder River Basin have set out to join Power Resources in the in-situ production game.
Uranerz has a goal — and president and CEO Glen Catchpole emphasizes the word “goal” — to begin production in 2010. Catchpole’s annualized production goal is 750,000 pounds of yellowcake.
Enter Uranium One
Toronto-based Uranium One burst on the Wyoming uranium scene in February when the gold and uranium giant announced an agreement to purchase uranium and related assets from Riverton-based U.S. Energy.
With stock transfers and cash payments, U.S. Energy could eventually receive over $100 million dollars for nearly 39,000 acres in uranium claims and other assets in Wyoming, Utah, Arizona and Colorado, plus its Shootaring Canyon Uranium Mill in southern Utah.
The two companies closed the deal effective May 1.
Then, on June 4, Uranium One also announced a deal the purchase Energy Metals Corp., which also has major uranium properties in Wyoming.
What Uranium One’s acquisitions mean for Wyoming remains unclear. A majority of the properties it acquired appear to be concentrated in Utah, Arizona and Colorado.
More telling, they are relatively close to the Shootaring Canyon mill. Shootaring Canyon is one of only four uranium mills left in the United States, and it has been idle for a quarter century. How fast it can be brought back to full operation is an open question.
Shootaring’s value to Wyoming miners is also open to question. The mill is located 48 miles south of Hanksville, Utah, and it does not have rail service. Transporting ore by truck to Shootaring would be a pricey proposition, although a possibility if prices continue to soar.
Rio Tinto’s Sweetwater facility at Green Mountain could offer processing for Wyoming ore, but thus far, no agreements between Rio Tinto and potential suppliers have surfaced publicly, although rumors are rampant.
Is uranium set to once again win it all for Wyoming? Perhaps. But, it would appear, not for several years, at a minimum. Wyoming may see production from a second in-situ operation in three years.
The picture for conventional open pit or underground mining is less clear.
For now, the state’s lone operating in-situ mine, Smith Ranch, can take pride in being the nation’s largest domestic producer.
Uranium One taking major plunge into Wyo resources
By Don Warfield
Mining Edition Writer
“Uranium One believes that a growing preference for reliance upon domestic sources of energy points to a need to develop domestic uranium resources within the United States,” the company said in an early 2007 news release.
The Toronto and Johannesburg-based company is pursuing U.S. domestic uranium resources with a vengeance.
On Feb. 23, Uranium One announced a definitive agreement to acquire U.S. Energy’s Shootaring Canyon mill and United States uranium properties. The two companies closed the potential $100-million-plus deal on May 1.
Fast forward to June 4. Uranium One announced a definitive agreement to purchase Energy Metals Corporation. Vancouver, B.C.-based EMC is heavily invested in U.S. uranium properties, including a long list in Wyoming. The EMC deal also gives Uranium One control of an extensive list of properties in Texas, New Mexico, Utah and Oregon.
“The acquisition will dramatically enhance Uranium One’s asset portfolio in the United States and solidify the new Uranium One’s ability to build a leading U.S. uranium producer,” the company said.
Acquisition of U.S. Energy’s uranium assets gave Uranium One a relatively strong land and deposit position in Utah, Arizona, Colorado and Wyoming. U.S. Energy sold some 39,000 acres of uranium leases to the Canadian company.
Uranium One also acquired the Sheep Mountain property near Jeffrey City as part of the U.S. Energy purchase.
A surface mine operated there until the uranium market collapsed in the 1980s. Later, U.S. Energy began preparations for an underground mine at the site but soon ceased work due to market conditions.
Uranium One has called the Sheep Mountain property “the most advanced” of those acquired from the Riverton-based company.
Sheep Mountain is close by Rio Tinto’s Sweetwater uranium processing mill, but Uranium One spokesman John Fraser said, “I think it is premature to expect any comment at this stage” regarding the possibility of Sheep Mountain supplying ore to the Sweetwater complex.
Earlier reports have said Uranium One hoped to resume mining in Wyoming in 2009, with the Sweetwater Mill expected to process the ore.
For Wyoming, at least, the U.S. Energy deal pales by comparison to the acquisition of EMC by Uranium One. According to the company, “EMC controls approximately 240,000 acres of uranium claims and leases...located in the Great Divide, Powder River and Shirley Basins.”
EMC and Uranium One believe that “over 60 percent” of the uranium deposits in the Great Divide in Carbon County can be mined by in-situ recovery.”
Ten “advanced stage project areas with historical resources” are located there, Uranium One says. Another significant property is located in Sweetwater County.
The Powder River Basin properties are mainly located in the southwest corner of Campbell County and in Converse County. Three “advanced stage project areas with historical resources” are found there, the company says.
In-situ recovery has been used before in the Pumpkin Buttes region, and a start-up company has begun delineation drilling for a new ISR mine there.
Uranium One also acquired two unspecified projects in the Shirley Basin as part of the EMC purchase.
Uranium One president and CEO Neil Froneman released a statement saying that “the combination of Uranium One and EMC will create a powerhouse in the United States uranium sector with the potential to become the domestic supplier of choice for U.S. utilities.”
While “potential” may be the operable word at this stage, Uranium One’s U.S. position looks strong: 263.8 million pounds of U308 in attributable “measured, indicated, inferred” and “historical” resources.
The company projects annual production from the U.S. asset base acquired from EMC of “eight to ten million pounds by 2013.”
With its acquisition of U.S. Energy’s uranium assets and the pending acquisition of Energy Metals, Uranium One has positioned itself to be a major player in the U.S. uranium industry.
Given the company’s newly acquired asset base in Wyoming, particularly in properties amenable to in-situ recovery, the state could soon see renewed strength in its uranium industry.
