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Uranium snapshot: Energetic juniors with attractive assets

January 28, 2020

Core racks in the winter at Denison Mines’ Wheeler River uranium project in Saskatchewan. Credit: Denison Mines.
Core boxes at Denison Mines’ Wheeler River uranium project in northern Saskatchewan’s Athabasca basin. Credit: Denison Mines.

While the price of uranium suffered a steep decline after the 2011 Fukushima Daiichi nuclear accident, growing pressures to decarbonize power generation provide support for the commodity, which is currently priced at cyclical lows. Below, we provide an overview of eight companies active in uranium exploration and development.

Appia Energy

Appia Energy (CNSX: API; US-OTC: APAAF) is involved with rare earth and uranium exploration in the Athabasca basin of Saskatchewan. It holds a 100% interest in the 143.3 sq. km Alces Lake property, 34 km east of Uranium City. Alces Lake is located in the Beaverlodge geological domain with a history of uranium production. A number of near-surface, high-grade, monazite-hosted rare earth element (REE) zones have been found at the property.

The company completed 44 diamond drill holes on the property in 2019, with 40 intersecting monazite, which presents potential for relatively simple metallurgical processing and extraction. In addition, Appia completed channel and grab sampling at Alces Lake last year that led to the discovery of eight new outcrops and showings. These discoveries have expanded the known footprint of mineralization within an area of 500 by 500 metres and identified the Biotite Lake zone, which potentially extends the mineralized strike to 1.8 kilometres.

In its 2019 exploration program, Appia applied its current understanding of the REE system to target more mineralization, which led to the discovery of the high-grade Richard zone, returning 9 metres of 7.58% total rare earth oxide (TREO). The Richard zone might be a connection of the previously defined Wilson and Charles zones at Alces Lake.

Additional intercepts from 2019 drilling at the Ivan zone included 16 metres of 16.06% TREO and 12 metres of 16.1% TREO. All of the zones remain open on strike and at depth.

Appia has started metallurgical testing of the REE mineralization from Alces Lake and is continuing with its geological modeling of the REE system. More geophysical modelling is planned to define drill targets for this year.

Appia also holds 100% interests in the Eastside, Loranger and North Wollaston properties in the Athabasca basin, and owns 100% of the Elliot Lake property in Ontario, with U3O8 and REE resources that are open on strike and at depth.

James Sykes, the company’s vice-president of exploration and development, has over 10 years of experience in uranium exploration and was involved with NexGen’s (TSX: NXE) Arrow and Hathor’s (now Rio Tinto’s [NYSE: RIO; LSE: RIO]) Roughrider deposits.

Appia has a $14.5-million market capitalization.

Blue Sky Uranium

Blue Sky Uranium (TSXV: BSK) is focused on uranium and vanadium exploration at its 2,500 sq. km Amarillo Grande project in Argentina’s Rio Negro province, where it has made uranium discoveries over the past 12 years. The Amarillo Grande project runs along a 145 km long uranium trend and features the Santa Barbara, Anit, Ivana and Bajo Valcheta properties.   

The Ivana deposit is the most advanced and features a 5 km long mineralized trend with a high-grade core. The mineralization is 200 metres to over 500 metres wide and up to 23 metres thick. A resource estimate for this deposit was released in September 2018 and features total inferred resources of 28 million tonnes grading 0.037% U3O8 and 0.019% vanadium oxide (V2O5) for a total of 22.7 million lb. contained U3O8 and 11.5 million lb. V2O5.

The results of a preliminary economic assessment on the Ivana deposit were released in February 2019, and outlined an open-pit mine with a 13-year life producing an average of 1.35 million lb. uranium per year at all-in sustaining costs of US$18.27 per lb. U3O8, net of vanadium credits. The pre-production capital was estimated at US$128.1 million with an after-tax net present value of US$135.2 million, at an 8% discount rate.

Blue Sky has found more exploration targets both nearby the Ivana deposit and extending into its wider Amarillo Grande holdings. Current exploration efforts are targeting three areas with uranium and vanadium anomalies at Ivana, with potential to expand the existing deposit and find new mineralized areas. Auger drilling and down-hole radiometric measurements are ongoing, with more reverse-circulation drilling planned for the first half of this year.

The company is a member of the Grosso group, which has been involved with exploration in Argentina since 1993, and played a role in finding Pan American Silver’s (TSX: PAAS, NASDAQ: PAAS) Navidad deposit and SSR Mining’s (TSX: SSRM, NASDAQ: SSRM) Chinchillas mine.

Blue Sky Uranium has a $13.8-million market capitalization.

Denison Mines

Denison Mines (TSX: DML; NYSE-AM: DNN) is focused on uranium exploration and development in the Athabasca basin in northern Saskatchewan. It has a 90% interest in the Wheeler River project, 35 km northeast of Cameco’s (TSX: CCO; NYSE: CCJ) Key Lake mill. The two deposits on-site are Phoenix and Gryphon. Total probable reserves at the project stand at 1.4 million tonnes at 3.5% U3O8 for a total of 109.4 million lb. U3O8, with Phoenix, the world’s highest-grade undeveloped uranium deposit, contributing 59.7 million lb. U3O8  based on 141,000 tonnes grading 19.1% U3O8.

In December, the company reported that it has completed an in-situ recovery (ISR) field test program at Phoenix and started metallurgical testing for uranium recovery. Denison would be the first to use ISR mining in the Athabasca basin. The in-situ testing evaluated the permeability of the Phoenix deposit and collected data on potential in-situ mining conditions.

The test wells installed confirmed significant hydraulic conductivity within the Phoenix ore zone. In-situ mining of Phoenix will require the installation of 300 large-diameter, commercial-scale wells. Denison has installed two such wells at Phoenix. In addition, preliminary tests suggest low permeability of the basement rock units, supporting an in-situ mining scenario for the asset.

A September 2018 prefeasibility study outlined an in-situ mining operation at Phoenix with underground mining planned for Gryphon. Upfront capital costs of $322.5 million were estimated for Phoenix, with production averaging 6 million lb. U3O8 at expected all-in operating costs in the range of $11.57 per pound. Plans include building a mine to extract the Phoenix deposit, with Gryphon as a potential second operation. In-situ recovery test work is ongoing at Phoenix, with plans to install commercial-scale wells. The company also holds a 22.5% interest in the McClean Lake mill (70% Orano Canada and 7.5% OURD Canada), with a processing capacity of 24 million lb. U3O8 per year.

Denison also owns 80% of the 242.2 sq. km Hook–Carter property (20% ALX Uranium [TSXV: AL]), which is transected by three corridors prospective for uranium mineralization.

Denison is part of the Lundin group of companies and has a $299-million market capitalization.

Energy Fuels

Energy Fuels (TSX: EFR, NYSE-AM: UUUU) is a U.S. uranium and vanadium producer with significant optionality to its output levels. The company is the country’s largest producer of the two metals. In the first nine months of last year, it produced 56,000 lb. U3O8 and1.3 million lb. vanadium oxide (V2O5).

The company’s assets include the Nichols Ranch ISR mine and processing facility in Wyoming and the White Mesa mill in Utah, the only producing uranium and vanadium mill in the country, with an annual licensed capacity of over 8 million lb. U3O8. White Mesa features a separate circuit for vanadium recovery.

Last year, the Nichols Ranch project was Energy Fuels’ primary uranium contributor, with expected output of 50,000 to 70,000 lb. U3O8. Based on a November 2019 release, the company has deferred the development of more uranium-extracting header houses at Nichols, and is operating the asset at lower levels due to uranium market conditions. Increased output is possible from Nichols Ranch within six months of a decision to increase production.

In November last year, the company also announced that due to weak vanadium prices, it would evaluate winding down its near-term production of vanadium pentoxide.

The La Sal complex in Utah is a series of uranium and vanadium mines in proximity to the White Mesa mill. Test mining at the complex was completed in April, and three of the mines within La Sal were refurbished last year.

The Alta Mesa ISR facility in Texas, currently on standby, produced 4.6 million lb. U3O8 between 2005 and 2013. Energy Fuels expects this asset to remain on standby until uranium market conditions improve. Additional assets on standby (which are permitted, and, for the most part, developed) include the Canyon, Whirlwind, Tony M and Daneros mines.

The company’s other assets, in the permitting stage, include Roca Honda, Sheep Mountain and Bullfrog.

On a company-wide basis, Energy Fuels’ measured and indicated uranium resources total 81.3 million lb. U3O8, with additional inferred resources of 49.1 million lb. U3O8.

Energy Fuels has a $214.5-million market capitalization.

Global Atomic

Global Atomic (TSX: GLO; US-OTC: GLATF) is focused on development of its Dasa uranium project in Niger while harnessing cash flow from its 49% stake in the Befesa zinc concentrate production facility in Turkey.

The 750 sq. km Dasa project, located 105 km south of Arlit, a uranium mining town, features the high-grade Dasa deposit. Based on a resource update released in July, the current resource inventory stands at 26.3 million tonnes in the indicated category grading 1,752 parts per million (ppm) eU3O8 for a total of 101.6 million contained lb. metal, and additional inferred resources of 22.3 million tonnes grading 1,781 ppm eU3O8 for a total of 87.6 million lb. metal.

Workers at Global Atomic’s Dasa uranium project in Niger. Credit: Global Atomic.

 

Global Atomic has commissioned CSA Global to complete a study on Dasa’s indicated resources, which appear suitable for open-pit mining. It is also planning follow-up work on the deeper inferred resources, which would be more amendable to underground extraction.

This year, the company expects to complete a technical report on the project as well as an environmental impact assessment and an application for an exploitation permit. Global Atomic expects a mining license by the first half of next year.

In 2018, the company released a preliminary economic assessment for Dasa that outlined an underground operation processing material on-site and producing 4 million to 7 million lb. U3O8 annually at all-in sustaining costs of US$28.51 per lb. U3O8.

Initial capital was pegged at US$320 million with a 15-year mine life. The report also suggested an alternate mining scenario, which would entail the sale of high-grade mineralized material to Orano Mining for fast-tracked cash flow.

Niger has produced uranium since 1971, and is the world’s fourth-largest producer, the company says.

In Turkey, Global Atomic holds a 49% interest in the Befesa Silvermet joint venture in Turkey, which includes a 110,000-tonne-per-year electric air furnace dust kiln capable of producing 50 million to 60 million payable lb. zinc concentrate annually from metallurgical waste.

Stephen Roman, the company’s chairman, president and CEO, has a long-standing history of uranium exploration and development. He spent 25 years with Denison Mines, and in 2005 set up Global Uranium (now known as Global Atomic).

Global Atomic has an approximately $68-million market capitalization.

Purepoint Uranium

Purepoint Uranium Group (TSXV: PTU) is an Athabasca basin-focused uranium explorer that holds 10 active projects within the basin.

The Hook Lake project, located within the Patterson uranium district, is jointly owned by Purepoint (21%), Cameco (at 39.5%) and Orano Canada (a private French company, with a 39.5% stake). The 286 sq. km project features the high-grade Spitfire discovery and has been operated by Purepoint since 2007. Three prospective structural corridors have been found on the property.

This year, exploration at Hook Lake will involve drilling targets that were identified last year through airborne gravity surveying, as well as additional electromagnetic surveys.

Purepoint also holds a 27% interest in the Smart Lake project, as part of a joint venture with Cameco. The 98.6 sq. km property sits in the southern part of the Athabasca basin and hosts the Athabasca unconformity at depths of less than 350 metres. Magnetic patterns at Smart Lake appear to show an extension of the patterns underlying the Shea Creek deposit (UEX [TSX: UEX] 49.1%; 50.9%, French-owned AREVA) located 55 km north.

In addition, Purepoint wholly owns the Red Willow project, located on the northern edge of the basin. The 401.2 sq. km property is within 10 km of Cameco’s Eagle Point deposit. Geophysical surveys on the property have outlined over 70 km of conductors that indicate favourable rock characteristics, with 21 exploration targets identified.

The 100%-owned Turnor Lake property covers 97 sq. km and lies in the eastern part of the Athabasca basin. The graphitic conductors at this project are associated with uranium showings on adjoining properties. Turnor Lake is close to Rio Tinto’s Roughrider deposit and Denison Mines’ Midwest and McClean Lake projects.

Purepoint’s 122 sq. km Umfreville project overlies prospective crosscutting faults, with a number of drill targets identified at the site. In addition, the company’s Henday Lake property is near the Roughrider and Midwest Lake deposits.

The junior’s undrilled McArthur East project, which adjoins Cameco’s McArthur River project, features a prospective conductor identified through airborne geophysics.

An assessment of the historic work at the company’s Rene Lake, Shearwater and Langley Lake projects is underway, with initial exploration plans for the properties to follow.

Purepoint Uranium has a $12.3-million market capitalization.

Uranium Energy

Uranium Energy (NYSE-AM: UEC) holds a portfolio of preproduction uranium, titanium and vanadium assets in the Americas, and owns 19.5% of Uranium Royalty’s (TSXV: URC) outstanding shares.

In the U.S., the company’s Texas assets include the Hobson processing plant, a licensed and permitted facility with an annual throughput capacity of 2 million lb. U3O8, as well as the permitted Palangana (production-ready), Burke Hollow and Goliad in-situ projects. Measured and indicated resources across the company’s potential in-situ mines in Texas near the Hobson plant total 6.6 million lb. U3O8, with inferred resources of 12.6 million lb. U3O8.

Uranium Energy also holds the permitted Reno Creek project in Wyoming, which is the largest undeveloped in-situ recovery uranium operation in the country, with measured and indicated resources of 26 million lb. U3O8 and inferred resources of 1.49 million lb. U3O8. A prefeasibility is underway for this asset, which was acquired in August 2017.

In Arizona, the company’s Anderson project hosts uranium resources of 29.5 million tonnes grading 0.029% U3O8 for a total of 17 million lb. U3O8 in the measured and indicated category, with additional inferred resources of 14.3 million tonnes grading 0.046% U3O8 for a total of 12 million lb. U3O8. The Slick Rock project in Colorado features an inferred resource of 2.5 million tonnes grading 0.228% U3O8 and 1.37% V2O5 for a total of 11.6 million contained lb. uranium and 69.6 million lb. vanadium. This asset is near Energy Fuels’ White Mesa mill.

Uranium Energy owns the 220 sq. km Diabase property in Saskatchewan, located along the prospective Cable Bay fault corridor. To date, over US$20 million has been spent on exploration at this project, with past diamond drilling intersecting anomalous uranium. Diabase is located within 75 km of Cameco’s Key Lake mill.

The company also has a presence in South America, where it holds three projects: Yuty, with an established uranium resource; Oviedo, with a uranium exploration target; and Alto Parana, one of the highest-grade and largest ferrotitanium deposits in the world. A preliminary economic assessment is underway for this deposit.

The company has a US$151.7-million market capitalization.

Uranium Royalty

Uranium Royalty is a first-mover in the uranium royalty and streaming market, and also holds physical uranium.

The company owns 8.6% of the outstanding shares of Yellow Cake (LSE: YCA), which purchased 9.6 million lb. U3O8 for US$208.6 million. Based on a supply agreement between Yellow Cake and Kazatomprom (LSE: KAP), the world’s largest uranium producer, Yellow Cake has the option to purchase up to US$1.07-billion worth of uranium over 10 years.

In connection with its stake in Yellow Cake, Uranium Royalty has the option to acquire up to US$31.25 million of uranium between 2019 and 2028, with the option of participating in any future royalty and streaming transactions on a fifty-fifty basis.

In its royalty portfolio, the company holds a 1.97% net smelter return royalty (NSR) on Rio Tinto’s undeveloped Roughrider project in Saskatchewan’s Athabasca basin and a 3% gross revenue royalty (GRR) on Uranium Energy’s Diabase exploration project, which is also located within the basin.

In the U.S., Uranium Royalty holds royalties on projects in various stages of development. Interests in potential in-situ, uranium-producing operations include a 0.5% net profit interest (NPI) royalty on Uranium Energy’s Reno Creek project, a 4% NSR royalty on Laramide Resources’ (TSX: LAM, ASX: LAM) Church Rock site, a 30% NPI royalty on Azarga Uranium’s (TSX: AZZ) Dewey–Burdock project, as well as a 4% GRR royalty on the Kendrick and Barber areas of Peninsula Energy’s (ASX: PEN) idled Lance project.

Royalties on potential future conventional uranium mines include 1% NSR royalties on Uranium Energy’s Anderson, Slick Rock and Workman Creek projects, as well as a 4% GRR royalty on Energy Fuels’ Roca Honda asset.

In Canada, Uranium Royalty also holds a 2% GRR royalty on the Michelin project in Labrador (55% owned by Paladin Energy [ASX: PDN]). This development-stage asset is one of North America’s largest deposits of uranium.

Beyond North America, the company carries a royalty of A12¢ (C11¢) per kilogram U3O8 on the Langer Heinrich mine in Namibia, 75% of which is owned by Paladin Energy. The operation was placed on care and maintenance in May 2018, with a review underway to assess and optimize processes.

In December, the company completed its $30-million initial public offering and started trading on the TSX Venture exchange.

Uranium Royalty has an $83.3-million market capitalization.

 

Source: Northern Miner

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