Newly U.S.-Listed ISR Uranium Miner Hits Radar
By Jon A. Nones
31 Oct 2007 at 02:19 AM GMT-04:00
St. LOUIS (ResourceInvestor.com) -- Uranium Energy Corp. launched on AMEX [UEC] today with uranium prices now up $4 from two weeks ago at $80/lb, according to UxC Consulting Co. Higher still, Trade Tech Uranium has prices at $84/lb. Although prices have fallen from this year’s high of $138/lb, the uranium market may now be making a comeback.
Uranium Energy Corp. is a U.S.-based junior resource company with the objective of becoming a near-term in situ recovery (ISR) uranium producer in the United States. ISR is a significantly less costly and less environmentally obtrusive technique for mining uranium than any other method currently in use.
The company has acquired historical uranium properties in Texas, New Mexico, Colorado, Wyoming, Utah and Arizona through exploration and development databases. The Goliad Uranium Project in southern Texas is the company’s flagship asset, although its Cebolleta joint venture in the Laguna mining district of New Mexico could prove to be just as promising.
Flagship Project
The Goliad Project uranium property is located in north-central Goliad County, in the Coastal Plain of Texas, and currently consists of 13 in situ uranium mining leases that cover approximately 1,421 net acres of contiguous properties.
Since the 1950s, uranium production in Texas has come primarily from the Coastal Plain, although some uranium also occurs in Trans-Pecos. Surface mining, uranium-ore processing at mills and uranium leaching from underground deposits brought to the surface through wells and stripped from the solution at ISR operations have all been conducted in Texas.
Uranium Resources [Nasdaq:URRE], based in Dallas, is a significant uranium producer in the United States and the only firm now mining in Texas, where it operates under its subsidiary URI Inc. Since its inception in 1977, URI has produced over 7 million pounds of uranium by in-situ recovery (ISR) in Texas.
Moore Energy Corporation acquired the leases to the current Goliad property from Coastal Uranium and drilled 479 holes during 1983 and 1984. Moore Energy calculated an estimate of approximately 3.36 million tonnes at an average grade of 0.05% U308 and disequilibrium factor of 1.494, which equates to about 5.2 million pounds of uranium.
In August 2007, UEC filed this historic NI 43-101 report on SEDAR outlining the uranium resources. However, the company is conducting further drilling and analysis to allow its independent geologist to generate a current NI 43-101 resource estimate.
Earlier this week, UEC announced that it had submitted a mine permit application to the Texas Commission on Environmental Quality (TCEQ) to commence ISR of uranium at Goliad. The permit received an administrative review by the TCEQ at the end of September.
Amir Adnani, CEO and President of UEC, told RI that it will take 90 to 120 days to perform further conventional analysis and collect more coring data to generate a current resource estimate. He forecast that the company will complete a feasibility study in Q1 2008, concurrent with permitting initiatives.
“We anticipate it should take 9-12 months to complete the application review and receive a permit,” said Adnani.
According to Adnani, Texas has a stated economic policy that encourages the development of the state’s energy resources. There’s existing production from Texas mines, Kingsville, Alta Mesa, Vasquez and there are two pending mine permit applications from Uranium Energy and Uranium One [TSX:UUU].
Texas is an agreement state, which means that all operational permits and licenses are now issued at the state level by the TCEQ. This allows for well defined, clear processes and timetables for the permitting process.
Cebolleta Project
The Cebolleta uranium project is operated by Cibola Resources LLC, whose members are Neutron Energy, Inc. (51% interest), a privately held uranium exploration and development company, and UEC (49% interest). The property is situated in the Laguna mining district, about 45 miles west-northwest of the city of Albuquerque, New Mexico.
The Laguna Mining district in New Mexico has accounted for a significant portion of the uranium production from the Morrison Formation in New Mexico. Nearby Grants was once the world’s largest uranium producer, developing about 63% of all the uranium mined in the United States, but nearly collapsed in the 1980s as uranium prices sank into a twenty-year depression.
Cebolleta is the site of the formerly active St. Anthony and L-Bar uranium mines. The St. Anthony group of mines is reported to have produced more than 2.5 million pounds of U308, and the L-Bar underground mine produced in excess of 1.75 million pounds prior to shut-down of mining and processing operations in mid 1981.
An historic resource estimate puts L-Bar at 4.075 million tonnes at a grade of 0.154% U308 for 12.65 million pounds of uranium, while St. Anthony hosts 4.32 million tonnes at a grade of 0.095% for 8.2 million pounds. UEC’s share at 49% is 10.22 million pounds of yellow cake.
“In 2008, we will start active programs in New Mexico and Wyoming and hence will have more info and new results available for other projects,” said Adnani.
New Mexico may promote more of a challenge with permitting, however, since the Navajo Nation has been focused on preventing in-situ leach mining of uranium. Even still, Strathmore Minerals Corp. [TSX-V:STM] remains confident of the area with four projects in the Grants Uranium District.
Management
Management’s expertise relies largely on Harry Anthony, Chief Operating Officer. Anthony, a professional engineer for 36 years, is an internationally recognized expert in the uranium industry, particularly noted as being a pioneer of ISR technology.
Anthony was a senior officer and director of Uranium Resources Inc. During his 20-year tenure at the company, he was responsible for all technical aspects of mine development. He has built 5 ISR uranium mines and developed 15 ISR feasibility studies for projects in U.S., Australia and Mongolia.
Doug Norris, Vice President of Engineering, has 20 years experience designing and constructing ISR uranium mines. He has held senior engineering and operational positions at uranium producers Rio Algom (now BHP Billiton [NYSE:BHP]) and Power Resources (now Cameco [NYSE:CCJ; TSX:CCO]).
Norris constructed the most recent uranium mine in the U.S. to begin production, Alta Mesa. He was also integral to the development of well-known U.S. ISR uranium mines, Smith Ranch and the Highland.
Share Analysis
Shares of Uranium Energy Corp. do not trade on any Canadian exchanges; however, the company became a reporting issuer in the Province of British Columbia, Canada, on March 5, 2007, in order to accommodate its Canadian institutional investors. Adnani told RI that this is mainly due to Sprott Asset Management.
Share prices were last down 4 cents at $3.85. With 37,612,088 shares outstanding, the company has a market cap of about $145 million.
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