Saturday, December 3, 2011

U.S. Nuclear Plants Will Favor Domestic U.S, Mine Supplies

Published on Saturday December 03 2011
Regulatory approvals in the U.S. regarding new and expanding uranium mines have come under the microscope at London financial analysts Libertas Partners. This follows the recent comment from Cameco (TSX:CCJ) that its subsidiary, Power Resources, has faced frustrations from the regulatory processes in Wyoming. They have been trying to bring into production new wellfields into production at the Smith Ranch-Highland mine.

Libertas has gone on to look at other companies operating within the U.S. and how they are affected by the American regulators. Even though the prospects for uranium post-Fukushima are poor, the report says, the demand outlook within the U.S. remains good due to the highly enriched uranium agreement is set to expire in 2013. This was the deal that allows recycling of Russian military stockpiles of uranium which now account for 13 per cent of world supply and, more importantly, 45 per cent of annual U.S. requirements.

Libertas notes that the Russians are looking to extend these contracts - hence the acquisitions of Uranium One and, through that former Canadian-owned company, the Australian uranium company Mantra Resources (whose project is in Tanzania). But because of security-of-supply concerns, the report says U.S. nuclear utilities are keen to secure greater domestic supplies.

In general, the new U.S. projects are modest in size. Production is generally below 1 million pounds a year, in-situ leaching costs are about $20/lb (against this week’s $US52.25/lb spot uranium price) while for underground mines it comes out at about $30/lb. The companies are:

Vane Minerals (AIM:VML) - operating in Utah and Arizona, began their mining lease application process in mid-2010.

Bayswater Uranium (TSX.V:BYU) - in application process in Wyoming, hopes to get into production in 2015.

Black Range Minerals (ASX:BLR) - this Australian company is aggressively advancing feasibility studies and mine permitting activities at its Colorado Taylor Ranch/Hansen Uranium Project. Combined, the Taylor Ranch and Hansen uranium projects are one of the largest  within the United States, with 90 million pounds of U3O8.

Titan Uranium (TSX.V:TUE) - has several advanced projects, especially Sheep Mountain in Wyoming. Has just agreed to merge with Energy Fuels (TSX:EFR) which plans to build a uranium-vanadium mill in Colorado. Approvals could be finalised in March.

Peninsula Energy (ASX:PEN) - this Australian company is going through permitting process for the Ross/Lance in-situ leaching project in Wyoming. Air quality permit received. Production target unclear.

Strathmore Minerals (TSX:STM) - partner with Sumitomo in Roco Honda underground project in New Mexico. Environmental Impact Statement scheduled for completion in December 2012, with a decision on mine permit shortly thereafter.

Uranerz Energy (TSX:URZ) - first production planned for late 2012 with all Federal and Wyoming permits in place.

Uranium Energy (NYSE:UEC) - has just begun production at the Palangana in-situ leach mine in Texas

Uranium Resources (Nasdaq:URRE) - two fully licensed facilities in Texas while New Mexico ISL mine due to produce in June quarter, 2013.

Ur Energy (TSX:URE) - five years into the regulatory process in Wyoming, this company now awaits only one final approval. State mining permit in place. First production expected in June quarter, 2013.

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