They Call it Mellow Yellow: Atomic Starts Drilling
for Uranium in the Colorado Plateau
By Hsiao Lin
These days, investors are just mad about saffron– to take a page from Donovan’s hit song. What with U3O8 trading at around $90/lb, yellow is definitely the color of money. Atomic Minerals’ (TSX.V: ATL) management has taken it upon itself to test this novel colour theory by kicking off the drill program at its Summit Point and Box Canyon uranium projects along the Dolores Anticline in Colorado. The first hole, SP9, completed upon reaching the Chinle formation at 2100 ft. Hole SP1, on the opposite flank of the Anticline, the Chinle formation at 1560 ft. Currently, the drill contractor has been working its way back across the Anticline, with completion of the 1st phase of drilling program slated for December 21, 2007. The company expects results to follow in early 2008.
As per the company’s November 15th news release, Atomic’s vice-president of exploration, Richard Dorman, says, “Our initial drill hole at Summit Point will be looking for the mineralized zone of the Moss Back member of the Chinle Formation. Upon completion of this hole, we will be working along the flank of the Anticline with the next eight holes.”
This first phase of the drill program involves several stages: crews are preparing and clearing roads, building thirteen 100’ x 100’ drill pads, drilling up to thirteen 2,500-foot drill holes, then doing reclamation work that includes filling in the drill holes. The company has planned a 30,000 foot drilling program based on recommendations contained within the property’s 43-101 report.
The property consists of 932 claims over 24,280 acres, located in both Dolores and San Miguel counties in southwestern Colorado, approximately 30 miles from Denison Mine Corp’s White Mesa Mill. The 43-101 report describes the property as being “associated with the Dolores Anticline, a salt-cored fold structure within the Paradox Basin Province of Colorado and Utah. The Moss Back Member of the Chinle Formation (Late Triassic) and Salt Wash Member of the Morrison Formation (Late Jurassic) are present within the stratigraphic section of the Dolores Anticline; these are the most favorable host rocks for uranium mineralization in the Paradox Basin region.”
According to Atomic’s website, “the Dolores Anticline is one of the last salt anticlines in the Paradox Basin which has not been extensively drilled to explore for mineralization in the Moss Back Member of the Chinle Formation.”
The Dolores Anticline is located only 30 miles from Lisbon Valley and lies within the Uravan Mineral Belt. Lisbon Valley is the home of the legendary Mi Vida uranium mine near Moab, Utah, discovered by Charlie Steen in 1952. The entire Lisbon Valley produced 49 million lbs of U3O8 from 1948 through 1965.
The Uravan mineral belt is the oldest uranium mining area in the US, and is historically the most productive uranium and vanadium region in Colorado. A 2007 circular released by the Division of Reclamation, Mining & Safety for the State of Colorado documents 1,200 historic mines that produced over 63 million lbs of uranium and 330 million lbs of vanadium from 1948 to 1978.
This district contains the only currently producing uranium mine in Colorado – the Sunday Mine (owned by Denison Mines), near what is now the ghost town of Uravan, Colorado. Today the Uravan belt is experiencing a renaissance, as there are 35 permitted projects for uranium mining in Colorado, and 28 uranium prospecting permits have been granted. Infrastructure in the region is also getting a boost, as Energy Fuels has announced plans to build (pending regulatory approval) what would be the first new uranium-vanadium mill built in the United States in 25 years west of Naturita, some 15 miles southeast of Uravan.
The Colorado Plateau is known for hosting roll-front deposits, which are considered the richest kind of uranium deposits. Roll-fronts are named for the crescent shape the uranium (in solution) makes at the interface between oxidizing and reduction conditions within the permeable sandstone or conglomerate host rock.
The 43-101 report draws a parallel between the regional geology and that of the property: “[based] on the literature review, geologic evaluation of the Dolores Anticline, and a radon survey, it is clear that there is good potential for undiscovered uranium deposits to exist beneath the properties considered here.”
Currently, the world‘s 435 nuclear reactors produce 18% of the world’s power– requiring 180 million lbs of uranium per year. However, only 110 million lbs are being produced annually worldwide. This shortage is highlighted by the fact that some of the world’s emerging economies have shifted their focus from coal to nuclear energy– with China and India being prime examples. China is currently building 40 new nuclear reactors and India is building 31. Add to that increased pressure on the supply from developed countries, and it’s easy to see why uranium is trading in the $90 range.
Despite having it made in the Colorado Plateau, management is nonetheless taking a global view with its exploration approach. Atomic also has a letter of intent with Geo Can Resources to enter into an option agreement to earn up to a 100% interest in a land package totalling approximately 3,600 km2 in southwestern Tanzania. This ground is considered to be part of the Malawi Extension – a location favourable for uranium enrichment, as it lies within the Karoo Supergroup formation. Other mining companies active in the region include Paladin Resources, Mantra and Western Metals.
Given the lag between world supply and demand, Atomic is well-positioned to step into the vacuum for several reasons: management is focused on uranium in areas well-known for rich mineralization; the company holds a balanced property portfolio in mining-friendly areas; and Atomic’s flagship property, the Dolores Anticline project, has been given the green light in its 43-101 report. These factors all add up to offer investors the chance to participate in the revival of one of the world’s great uranium regions – via a play that could well (as the song goes) “be a sudden craze” in the coming months.
This article is intended for information purposes only, and is not a recommendation to buy or sell the equities of any company mentioned herein. It is based on sources believed to be reliable, but no warranty as to accuracy is expressed or implied. The opinions expressed in the article are those of the author except where statements are attributed to individuals other than the author, in which case the opinions are those of the individual to whom they are attributed.
