An increasingly popular method of uranium mining has emerged. It is called in situ leach mining (ISL), or solution mining, and about 16 percent of the world’s uranium production is mined this way. By injecting carbonated water (sodium bicarbonate is common, although hydrogen peroxide has been used) into a uranium orebody, mining can be done with minimal impact to the environment. They key to a safer, more environmentally friendly uranium mining is keeping the radon gas away from humans. Underground, and even open pit, mining had been hazardous until miners realized the radon gas had to be ventilated out of the mine. ISL mining contains the entire uranium operation, and when all the necessary precautions are followed, eliminates the hazards found in previous uranium mining.
ISL mining was first used in Wyoming, pioneered by Don Snow in 1957, a geologist at the Lucky Mc mine in Wyoming. ISL mining began as a version of heap leach mining, borrowed from gold miners who were eager to mine sub-economic grades of gold more profitably. The same principle applied to uranium mining, and its use was exported to Australia, Slovakia and Kazakhstan, where the geological formations in those countries also make solution mining possible. The sandstones of Wyoming are porous, and can hold economic grades of uranium. Under such geological conditions, ISL mining thrives and is a useful method to provide uranium, which is the fuel source for nuclear reactors. ISL mining costs can drop below $20/pound. Because spot uranium prices have soared to $39.50/pound, the profit margin at the current level is attractive.
Three uranium development companies talked about their initial ISL operations which they hope to commence in the Powder River Basin area: Strathmore Minerals, Energy Metals Corporation, and Uranerz Energy. Each hope to rapidly get an ISL operation into production, possibly within the next 36 to 48 months, if spot uranium prices remain at these levels or go higher. There is tremendous risk between a company’s plans to develop any mining operation and the actual establishment of that mine. Because ISL mining is not actually considered “mining,” by the die-hard miners, some environmentalsts have embraced it. ISL mining is not conventional mining. Capital costs, which can ran over $100 million (often $200 million), to establish a mine and mill complex, pale when compared to an ISL operation, which can be bootstrapped for as little as $10 million. Realistically, a better operation would cost between $30 and $50 million to establish. Let’s look at their properties.
Strathmore Minerals
It appears the first uranium development is likely to be in the Pine Tree-Reno Creek area. Composed of multiple ore bodies (as defined through historical drilling), the Pine Tree-Reno Creek project is located in Wyoming’s Campbell County. The Reno Creek-Pine Hills properties are about 20 miles southeast of the formerly producing Christiansen Ranch and about 30 miles north of Cameco’s Smith Ranch. The project is comprised of three potentially uranium producing areas located closely to one another.
Strathmore’s senior geologist Terrence Osier explained, “The area has been heavily drilled. There are tens of miles of roll fronts under the state lease lands and federal claims.” Osier explained there were thousands of exploration drill holes in the 1970s by various exploration companies, including industry giant Kerr McGee, Pathfinder (once owned by General Electric), affiliates of the Tennessee Valley Authority (TVA), and Rocky Mountain Energy. Not exactly small companies, but ones who spent millions of dollars defining the ore bodies.
The two main ore bodies at Reno Creek are said to have an historic resource of about 5 million pounds with an average grade of 0.056 percent U3O8. The depth of the first zone is 230 to 250 feet; the second zone reaches down 318 to 360 feet. Due west and nearly adjacent to the Reno Creek property is the state lease Section 36, which the historic ore body is reportedly about 350 deep. The Tennessee Valley Authority (TVA) affiliates apparently drilled it sufficiently to define an ore body, which may hold 1.3 million pounds grading 0.05 percent. Nearby are the federal Pine Tree claims, where Pathfinder had drilled several hundred holes in the 1970’s. According to the research files of Rocky Mountain Energy, there may be 3.4 million pounds with an average grade of 0.07 percent.
Ozier stressed why the Reno Creek area would be excellent for an ISL operation, “A satellite operation with tolling to the present facilities at either the Christiansen Ranch (Cogema) or the Highland-Smith Ranch (Cameco) or the company could make its own processing facility and eventually build satellite operations that feed it.” Osier added, “The Powder River Basin is active in methane exploration and production, and coal mining. This means excellent, nearby drilling and operational personnel and equipment.”
Uranerz Energy Corp
One of the biggest strengths a uranium development company can have is its lead geological expert. The more experience he has, the more favorably institutional investors will accept the project. Uranerz Energy Chief Executive Glen Catchpole has got the mandatory credentials. A licensed civil engineer, Catchpole was formerly the Uranium ISL Manager Wyoming’s Department of Environmental Quality, having helped write some of the environmental regulations. He has overseen the operations of two large Canadian uranium mines, and was the Corporate Manager for one ISL uranium mine in the United States, Crow Butte (now owned by Cameco). In 1996, he was appointed General Manager and Managing Director of the Inkai mining project in Kazakhstan, spending six years taking the project through feasibility, government licensing, environmental permitting, design, construction and the first phase of start up operations (1996 - 2002).
While extremely knowledgeable, Mr. Catchpole did not reveal his immediate plans of Uranerz Energy. It is unknown whether Uranerz has begun the permitting process on its Powder River Basin ISL-amenable properties. He explained, “We plan to develop an ISL operation in the Powder River Basin area.” While he hinted at possible pounds and the annual production level, Catchpole would not further discuss where he planned to establish the initial ISL operation. Catchpole admitted, “We are still putting our package together.” During Wyoming’s frenzied uranium staking activity, Catchpole wisely would not want to divulge where his company plans to solution mine. As is the nature of the game, a competitor might interfere with his negotiations or stall his development plans. (This was oft-remarked by those interviewed.)
Energy Metals Corporation
During a telephone interview with William Sheriff, Director of Corporate Development for Energy Metals and a successful geologist and prospector in his own right, he talked about the company’s flagship Wyoming properties: Moore Ranch, Peterson and Nine Mile Lake properties. Sheriff explained, “We hope to be in production within the next 36 to 48 months. Our five year goal is to produce five to seven million pounds annually through two to three central plants.” He said that one is planned in Texas and the other one or two would be located in Wyoming. Those are pretty ambitious plans, entirely dependent upon the sustained price of uranium at these levels.
The Moore Ranch has an historic resource of 5.2 million pounds of U3O8, as delineated by Conoco which drilled the property in the 1970’s. The claims cover more than 1800 acres along Highway 387 in Campbell County 23 miles southwest of Wright, Wyoming. Sheriff believes the roll front uranium deposit, grading 0.07 percent, could be mined at a depth of between 200 and 600 feet.
To the south is the Peterson property with an average grade of 0.076 percent, but which hosts a smaller historic resource, 2.5 million pounds. This property, covering more than 3,000 acres, is approximately 12 miles south of the Smith-Highland Ranch in the southern Powder River Basin. It is comprised of Wyoming state leases, federal mining Claims, and leases on private-fee interests. Sheriff thinks the uranium deposits can be found at a depth of 200 to 300 feet.
Finally, for the initial operations, there is the Nine Mile Lake property, which may hold 9 million pounds, grading 0.055 percent, and with an average thickness of 25 feet. Sheriff said the uranium deposit may be found at between 100 and 400 feet deep. This property was drilled and developed by Rocky Mountain Energy, with more than 200 drill holes delineating the roll front uranium occurrences. Sheriff said the deposit extends over a strike length of more than 6,000 meters and may be up to 900 meters wide, at its widest point. It covers more than four square miles. Between November 1976 and November 1980 a test ISL plant operated on the property with mixed results. A total of four well field patterns underwent testing and development. Based on the results from the well field testing, plans were made to build and permit a commercial ISL plant before the uranium price began its twenty-year bear market. And if another bear market arrives, as is often the case with commodity price cycles, then this operation might never see the light of day.
All three uranium development companies seem to hold strong promise during the current uranium bull market. As long as the spot uranium price continues to rise or maintain its current level, it would not surprise us if all three could establish an ISL operation in Wyoming’s Powder River Basin. All three are optimistic about moving forward. The general plan is to get a uranium mining operation established, and then lock in a long-term uranium supply contract with a utility, who will need to fuel its nuclear reactors. As long as uranium prices stay at these levels, or rise, then all three uranium development companies should be able to create excitement for their stories. However, should there be a market downturn, and the price of uranium stalls, staggers or declines, then it will be a matter of who has moved forward the furthest and how much cash they have in the bank to keep themselves in business. Very risky business, but with a bright side. As long as the commodity price cycles favors them.
James Finch contributes articles about uranium, mining, the stock market and the broader economy to StockInterview.com. His archived and unedited articles, with complete graphics, may be viewed in their entirety at http://www.stockinterview.com
