There’s widespread confidence in the uranium recovery, and companies are pouring in
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Superior Lake Resources’ (ASX:SUP) is running the ruler over some US uranium projects, underscoring what is starting to look increasingly like a widespread revival of the uranium sector.
Prior to the COVID-19 pandemic, there were already signs that the uranium market was about to turn with the large inventories that were keeping prices low being drawn down.
Uranium demand was estimated to be about 180 million pounds (mlb) last year while production was just about 135mlb, leaving the remaining to come from secondary supplies and inventories.
Cue the outbreak and the resulting disruptions, which have seen major global producers halt their operations. The production deficit has now become clearer than ever.
To add more fuel to the fire, uranium demand is expected to increase further as new reactors in China and India come online. GoviEx Uranium chief executive officer Daniel Major estimated earlier this year that demand could reach between 220mlb and 260mlb by 2025.
Little wonder then that uranium prices have climbed sharply this year, up more than 35 per cent since January to the current price of $US33.40 a pound.
There’s every reason to believe that prices could increase further, as the next set of long-term contracts would need to be priced high enough to sustain production and support the development of new mines.
While these factors would be enough for companies to start taking a look at uranium, or dusting off their mothballed projects for a second look, US President Donald Trump’s 2021 budget has set aside $US150m to purchase uranium from US mines to create a national reserve.
This has certainly helped draw companies like Superior Lake to examine US projects with established regions like the famed Uravan Mineral Belt, which has been a major source of uranium and vanadium in the US for more than 100 years, taking the lion’s share of attention.
Superior Lake is the latest entrant into the sector with the company securing the exclusive option to conduct due diligence on Premier Uranium, which holds Sweetwater and Uravan projects in Wyoming and Utah/Colorado respectively.
This follows on last weeks’ agreement to conduct due diligence on the Aurora uranium project in Oregon.
More than 550 holes have been drilled on the Aurora project, which has an indicated resource of 36.7mlb of U3O8 – about 96 per cent of the total resource of 37.9mlb.
Indicated resources offer enough geological certainty and grade continuity to support mine planning.
The tenements that make up the Sweetwater in-situ recovery project are located over strategic “corners” in regional roll-front mineralised structures that traditionally were key sources for uranium while Uravan is located within the Uravan Mineral Belt.
TNT has just completed the acquisition of its East Canyon uranium-vanadium project in Utah with mapping and sampling of several underground mine workings that host visible high-grade uranium and vanadium now underway.
Results from this program will be combined with a review of historical data to characterise mineralised trends within its project and assist in generating high-priority targets for follow-up exploration and drilling, planned for the third and fourth quarters of 2020.
Meanwhile, Thor is conducting due diligence to acquire a private Australian company that holds the Wedding Bell and Radium Mountain projects in the Uravan Mineral Belt, southwestern Colorado, and the Vanadium King project in southeastern Utah.
The Colorado projects contained historical adits where some of the material had obviously been mined out while the Utah project was previously drilled by the mineral division of Hunt Oil back in the early 1980s.
Other companies with projects in the US include GTI Resources (ASX:GTR), whose sampling program at the Rats Nest project in Utah has returned up to 0.87 per cent U3O8 and 1.07 per cent vanadium pentoxide.
GTI is also moving to start its maiden drilling program at the Jeffrey project on Tuesday June 16.
It had picked up Rats Nest, Jeffrey and six other projects from its acquisition of Voyager Energy in September 2019.
These projects are located in the Henry Mountains mining district — a region which has already produced 92 million pounds of uranium and 482 million pounds of vanadium.
All three companies could benefit from the proximity of their projects to Energy Fuels’ White Mesa mill, the only fully licensed and operational uranium and vanadium processing plant in the US that has substantial available capacity for toll treating.
Meanwhile, Peninsula Energy (ASX:PEN) is raising $40.3m through a fully underwritten entitlement offer priced at 7.1c per share to repay its existing term debt and prepare for the restart of its flagship Lance uranium project in Wyoming using low pH in-situ recovery.
Lance has the largest defined US in-situ resource of 53.6mlb and is the only project permitted to use low pH in-situ recovery.
With processing and well field production facilities already in place, Peninsula can bring the project back into production within six months of a restart decision.
The company is already contracted to deliver 450,000 pounds of U3O8 per year in 2021 to 2022 and has five sales agreements in place with major US and European utilities for up to 5.5 million pounds U308 at a weighted average sales price of between US$51 and US$53 per pound U308 through to 2030.
It is not just the US where uranium players have recent activity.
In May, Deep Yellow (ASX:DYL) converted about 96.4 per cent of the inferred resource at its Tumas 3 deposit in Namibia into the indicated category.
Tumas 3 now has an indicated resource of 24.1mlb at 313 parts per million U3O8 while further resource infill drilling has increased the inferred resource to 12.7mlb at 358ppm U3O8.
Over in Australia, gold-focused Marmota Energy (ASX:MEU) has launched a strategic review of its existing uranium resource at Junction Dam in South Australia.
While Junction Dam has not being active since 2014, it already has a resource of 5.4 million pounds of U3O8 grading 557 parts per million U3O8 and is just 15km east of Boss Resources’ (ASX:BOE) Honeymoon uranium mine.
Alligator Energy (ASX:AGE) has signed a binding terms sheet to acquire the Samphire uranium project in South Australia.
Samphire has a near surface resource of 46.6 million pounds of U3O8, with laboratory testing indicating that the resource is amendable to in-situ recovery (ISR).
It is expected to augment its current and planned exploration work for potential ISR-style mineralisation at the Big Lake uranium project in the Cooper Basin, South Australia.
Vimy Resources (ASX:VMY) recently raised $5.5m through a share placement to advance its Alligator River project in the Northern Territory and complete the definitive feasibility study refresh for its Mulga Rock project in Western Australia.
At Alligator River, the work include exploration drilling at Southern Flank and Such Wow as well as carrying out regional geochemistry, mapping and geophysics.