Jan 3, 2014 - By Eric Blom, Staff WriterDespite its recent purchase by the company that opened western Wyoming's first new uranium mine in decades, the historic Lucky Mc property probably will not be put into production in the near future.
The company, Colorado-based Ur-Energy, is looking to develop its other new acquisition first, Carbon County's Shirley Basin mine --also an idled giant from the heyday of Wyoming uranium.
"The Shirley Basin project holds greater mineral resource potential than the Lucky Mc, so, based on the size of the project, we're looking at Shirley Basin first and foremost," Ur-Energy president and CEO Wayne Heili said in an interview.
The company estimates the Shirley Basin site still holds 10 million pounds of uranium, and Lucky Mc contains 4.7 million pounds.
Lucky Mc holds legendary status in U.S. uranium mining history. Its discovery in 1953 by local prospector Neil McNeice led to the large-scale development of the Wyoming uranium industry that once employed thousands of workers in Fremont County alone before the industry collapsed in the 1980s.
Though Lucky Mc, about 40 miles east of Riverton in the Gas Hills, is not its first priority, Heili said Ur-Energy does plan to develop it, and cooperating with another uranium company could speed that along.
"There's quite a bit of development going on in the neighborhood of Lucky Mc. Energy Fuels and Cameco, those two projects flank the Lucky Mc," Heili said. "So the possibilities of doing something jointly with those two other companies would elevate the project's stature."
Ur-Energy operates the Lost Creek mine in Sweetwater County which sold its first 90,000 pounds of yellowcake last month after starting production in August. Two U.S. utility companies bought the product at an average price of $62.92 per pound, and Ur-Energy netted $5.7 million in the deal. Set by long-term agreements, the price was nearly double the current spot price of $34.50 per pound.
From the 1950s until they shut down, the original Lucky Mc and Shirley Basin (also a Lucky Mc property originally) mines produced about 71 million pounds of uranium.
"The current temporary downturn in the uranium market has provided Ur-Energy with an excellent opportunity to make this strategic acquisition at a favorable cost," Heili said in a statement. "This transaction brings an accretive set of assets and historic mineral resources to Ur-Energy, as the Pathfinder assets hold clear growth synergies with our current Wyoming holdings."
Ur-Energy paid French energy company AREVA $6.6 million to buy Pathfinder Mines Corp., which owns the two Wyoming properties. The Colorado company is to also pay AREVA a 5 percent royalty on production from the Shirley Basin site, an agreement that lowered the purchase price by half.
A mining permit is in place for both the Shirley Basin and Lucky Mc mines. Ur-Energy is beginning the process to amend the Shirley Basin permit to allow new development, Heili said.
He expects the process to take two to three years, but less time than it would to obtain a new permit, as Cameco and Energy Resources are doing for their Gas Hills mines.
Ur-Energy is not seeking to revise the Lucky Mc permit yet, another sign it has no immediate plans to resume production there.
Both mines once had big labor forces mining in the open-pit method, but the new plans call for an in-situ mine at Shirley Basin, which would pump water into uranium ore underground to dissolve the mineral and draw the solution to the surface, where the product is removed. Ur-Energy expects it to produce about 1 million pounds of uranium a year.
In-situ mining requires far less manpower and equipment than open-pit mining.
The company would likely ship the product of the in-situ process, resin beads bearing uranium, to a facility at Lost Creek to be turned into yellowcake, which is the commercial-grade fuel. The mine at Lost Creek is expected to generate about 1 million pounds of uranium, similar to Shirley Basin, but the processing plant there can handle 2 million pounds, enough capacity to handle output from both mines.
"That's our business plan," Heili said. "You can see why we acquired another property -- so we could fill the capacity of the Lost Creek plant."
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