An occasional column on money and mining news items
The rise of nuclear energy, a second act if ever there was one, has given uranium a shot in the arm in western states in the U.S. Interest in uranium mining is growing and with it comes another growth industry - the production of press releases about the uranium mining industry. The purpose of this occasional column is to separate the really interesting stuff from promotional fluff.
The choices of the subjects is based on what looks interesting mostly in states that are "west" of the 100th meridian, but this isn't hard and fast. The states of interest are WY, CO, UT, TX, NM, AZ, & NV. For this reason the series is titled the "western lands uranium gopher." These are news notes and the content is not to be considered investment advice.
~ This column is an expanded version of an article published in Fuel Cycle Week V7 N298 on 10/08/08 by International Nuclear Associates Inc., Washington, DC. ~ Portions of this blog post did not appear in FCW. ~
And so it begins - Blue Rock comes up short
The global financial crash crunch will have an impact on uranium mining and here's one of the first signals of what may be coming down the pike. Bluerock Resources Ltd. (CVE:BRD
) is shutting down development work for two weeks as it struggles to find adequate working capital in the midst of the current credit crisis.
The company said it continues to hold discussions with several public and private companies to get capital for its operations and to advance it's strategic plan to become a uranium producer in the U.S. Southwest. It currently produces uranium at its mine in Montrose County, Colo.
In a separate development, Bluerock Resources said that it had pulled out of the joint venture to build a new uranium mill at the Mancos site in a industrial park in Green River, Utah, and that Mancos had refunded $200,000 in expenses to Bluebird. (More news on the proposed Mancos uranium mill below)
International Isotopes scouts for $55M
Steve Laflin, (right) CEO of International Isotopes, is tenacious and he has to be looking for $55 million to build a plant to extract fluorine from depleted uranium for use in high tech electronics and pharmaceutical manufacturing.
His work a as the CEO of a small eastern Idaho company aiming to build a $55 million plant to extract industrial gases from depleted uranium has narrowed its search to four sites, including two in Idaho.
International Isotopes Inc. (OTC:INIS) Laflin said last Tuesday in Idaho Falls that one of the Idaho sites is near Idaho Falls, where France's Areva plans a $2 billion uranium enrichment plant. The other Idaho site hasn't been disclosed.
The company also is considering sites in Lea County, NM, where Louisiana Energy Services / Urenco is building a separate uranium enrichment facility, and in nearby Andrews County, TX, which has a low-level waste dump.
Laflin told the AP his proposed facility could be anywhere on transportation routes between uranium enrichment plants that produce depleted uranium and the facilities where uranium waste is disposed.
"We're meeting with all the elected officials and all the economic development officials" in areas where the plant could be built, Laflin said.
International Isotopes aims to take depleted uranium from the enrichment process and extract the fluoride gas into a very pure form for use in high tech industrial applications such as micro chip etching and pharmaceuticals. The 13-year-old Idaho company has 35 employees and sales of $4.5 million in 2007. It and produces isotopes such as cobalt-60 used in medical treatments.
The company is evaluating several ways to raise cash for its plant, a process Laflin said hasn't been easy in the current economy.
"There can be no guarantee the capital will be available, or available under acceptable terms," he said.
-- Prior coverage on this blog of INIS.
Uranium economics debated in New Mexico
Strong arguments against a new uranium boom in New Mexico were presented in Gallup the last week by Thomas Powers, an economist and research professor at the University of Montana. He told the Gallup Independent newspaper he has a “hard-nosed view” of the revival of the uranium mining and milling industries.
At a meeting sponsored by the New Mexico Environmental Law Center of Santa Fe, Powers, who consults widely across the West on resource issues, said that unrealistic expectations for a free lunch from uranium mining are based on “folk economic analysis.” Powers is the author of the book “Post Cowboy Economics”
in which he argues that fearful, crisis driven environmental and economic development policies are unnecessary and inappropriate, and often counterproductive.
Powers said people who believe there will be a new economic boom from uranium mining are are missing three important factors that will limit the economic benefits from new uranium mines.
The first, and most important, is that new mines and mills are highly automated. A new mine opening today will employ far fewer people than an operation of similar size in the 1950s. This means there will be a lot fewer new jobs than people expect, and the requirements for them will require a lot more skill and education.
Second, the costs of extracting and processing uranium have gone up. Even though the price of uranium is at a historic high, so are the costs of outfitting a new mine or building a new mill.
Finally, Powers said that miners now have to factor in the cost of cleanup and local governments have to provide services such as law enforcement, fire protection, and basic infrastructure. This means that property tax revenues will have claims on them even before they are collected once development starts up. “It’s not the wild west anymore,” Powers said.
The boom and bust cycle of uranium mining is inevitable Power said. More significantly, Powers said that New Mexicans are overrating the role uranium that could be mined in their state will have on world markets. Powers cautioned his audience against believing predictions that a return of the uranium mining industry “will provide an economic bonanza” for the state in terms of employment, payroll, and tax revenues. He added, “Caution is called for before people sacrifice permanent, unique, and irreplaceable” characteristics” of their communities.
According to Powers’ economic estimates, “New Mexico doesn’t have a corner on the uranium market.” He said that according to current estimates the U.S. has about 7% of the world reserves and New Mexico has only 2%. There may look like there is a lot of uranium to be mined, but in terms of global markets, New Mexico is just another player.
The beat goes on over new uranium mines
Powers wasn’t the only expert speaking about uranium mining to diverse audiences. In Grants the New Mexico State Legislature Indian Affairs Committee held a joint hearing with the legislature’s Radioactive and Hazardous Waste Committee to assess the potential for expanded uranium mining in New Mexico.
Public comment came fast and furious from both sides of the issue. Opponents of new mines told the Gallup Independent Newspaper their primary issues is that once the uranium was gone, abandoned mining works left a toxic legacy that polluted drinking water supplies.
Candace Head-Dylla, representing the Bluewater Downstream Alliance, told the joint committee hearing wells on private property were made unusable from abandoned mines. Like many others at the hearing, she called for a ban on all new uranium mining in New Mexico until the pollution from abandoned sites is cleaned up. Her views were echoed by Dr. Jana Gunnell, a member of Physicians for Social Responsibility.
She said that due to the radiation health risks, uranium should not be mined at all. She also said that uranium mining and the resulting pollution of drinking water supplies, may have contributed to cancer cases in the Grants area.
The uranium mining industry also got a chance to speak its mind. Terry Fletcher, president of Rio Algom Mining denied that the industry today leaves behind a toxic legacy. He said that today’s environmental laws require reclamation of mined sites. He said, “today companies cannot cut and run.”
Rick van Horn COO of Uranium Resources (NASDAQ:URRE), said that this firm must meet all cleanup obligations in its license to mine. He added the state regulations have specific requirements about groundwater restoration. He noted there are exceptions when a company cannot meet technical requirements, but the miner must file a request for a change to its permit with the state and a public hearing is held to get input. “It’s not something we do in secret,” van Horn said.
Goliad still vexed about uranium
While the future of uranium mining was being debated in New Mexico, in Texas the Goliad County Commissioners have filed a lawsuit against Uranium Energy Corp (AMEX:UEC) for allegedly contaminating the groundwater during initial drilling operations for an ISL mine. The county has filed a case in federal district court claiming UEC failed to grout the drill holes allowing storm water to drain into the subsurface formation.
Jim Blackburn, the attorney who filed the lawsuit for the county, also claimed that the Texas Commission on Environmental Quality (TCEQ) using the contaminated groundwater as a “baseline” for UEC’s subsequent permit. He argued that if the firm is allowed to proceed that the groundwater will have elevated levels of heavy metals at the end of the mining process.
For its part UEC said in a statement that the company is committed to “meet or exceed all applicable environmental regulations in the restoration of mined sites.” The firm also pointed out the restoration process is “carefully monitored” by the state government.
Blackburn disputed the effectiveness of state monitoring of uranium mines (video below). He told the Victoria Advocate newspaper that the TCEQ routinely allows mining companies to amend the levels of minerals in restored groundwater. He pointed to statistics that showed over the past two decades 51 requests have been granted out of 80 submitted to the agency.
Lisa Wheeler, a spokesperson for TCEQ, said that requests for amendments to permits regarding groundwater restoration are subject to public hearings. However, Ted Long, a member of the Goliad County Commission, said he came away from Blackburn’s statement with a clear impression that groundwater is almost always worse off after mining.
Blackburn also pointed out that TCEQ does not independently verify baseline groundwater monitoring data supplied by mining companies when they ask for changes to their permits. In response, Goliad County Commissioner Jim Kreneck said the whole process “is like the fox watching the hen house.”
Video interview with Blackburn
Texas environmental coalition calls for statewide ban
On Oct. 8 a coalition of South Texas residents and environmentalists called for a statewide moratorium on uranium mining, saying weak state laws are allowing uranium companies to threaten Texas drinking supplies.
“We want to put a stop to uranium mining until we have better protections in place,” said Cyrus Reed, conservation director of the Lone Star Chapter of the Sierra Club. “For too long, we have allowed uranium miners to explore, mine and leave behind contaminants that poison our groundwater.”
The Alliance of Texans for Uranium Research and Action released a report that analyzed already mined uranium sites in Texas. The report found that in 51 of 80 sites, the TCEQ relaxed water quality standards “by failing to enforce initial requirements and/or amending restoration levels.”
U.S. public is vexed by uranium mining
While Uranium Energy Corp was being hauled over the coals by local government in Texas, the CEO of another Texas uranium firm said he’s not surprised by the opposition to new uranium mining in his state and elsewhere in the U.S. Paul Goranson, VP of privately-held and Texas-based Mestena Uranium, spoke at a mining conference in Las Vegas, Nev., on Sept 23. According to a report in Mineweb, he said the resurgence of the U.S. uranium mining industry is being stymied by the public’s lack of understanding of how uranium benefits the economy.
Goranson said firms starting new mines, especially in areas which haven’t been disturbed by previous exploration, face the biggest challenges. However, there is a lot of activity. He estimates 60 firms are drilling for uranium and they employ 1,200 people mostly in western states. He said that “near-term production” will be derived from historic resource areas rather than greenfield sites.
He also complained of a “lost generation of uranium workers” who left the industry in the 1980s, but he said uranium firms are now hiring geologists from the oil & gas sector.
New mills for Colorado and Utah get first hearings
An open house in Montrose County, Colo., and a preliminary hearing in Emery County, Utah, both indicated progress for two new proposed uranium mills in the West. In both cases local officials are getting their first look at requests to approve land use decisions for the mill sites.
- Energy Fuels – Pinion Ridge
In Montrose, Colo, a public meeting held Sept 24 brought together officials from the county planning commission and the state department of public health and about 50 citizens. At issue is an application for a special use permit requested by Energy Fuels of Nucla to build the Pinion Ridge mill in the Paradox Valley.
Montrose County Commissioner Lana Kinsey told the Grand Junction Sentinel newspaper the application is “unprecedented” because it is the first uranium mill proposed to be built in the area in over 20 years.
Steve Tarlton speaking for the state health agency, told the public meeting that new technologies and “tougher regulations” to protect the environment mean companies will “face giant liabilities” if they compromise public safety.
However, San Miguel County Commissioner Art Goodtimes was not convinced. He said his county shares a watershed with Montrose County and is worried about the impacts of the mill on future generations. Despite the promise of high paying jobs related to the mill, he said, “I don’t think it is worth the short-term benefits.”
~ Prior coverage of Pinion Mill issues on this blog
In Emery County, Utah, a public hearing held on Sept 25 by the planning and zoning commission took a look at requested changes to land to be used for the Mancos Hills Industrial Park. The 2,547 acre parcel has two proposals for development. One of them is a new uranium mill which would use 640 acres.
A more controversial aspect of the new mill is its request for 800 acre feet of water. A hearing on that issue scheduled for August 27 by the Utah State Engineer has been postponed, perhaps for as long as six months. Protests are expected to be filed against the requested use of the water according to Sarah Fields of Uranium Watch based in Moab, Utah.
At the land use hearing the commission heard that the site is attractive because of the nearby interstate highway and railroad services. The type of industrial zoning needed for the mill is still at issue. The county wants to preserve the area for heavy industry and keep hotels, truck stops, restaurants, and retail in Green River City. The commission plans to hear more public testimony on the development of the industrial park.
In a separate development, Bluerock Resources (CVE:BRD) said in a press release that it had pulled out of the joint venture to build the Mancos mill and that Mancos had refunded $200,000 in expenses to Bluebird.
The other proposed use at the Mancos Industrial park is a nuclear power plant. The project is being developed by EnergyPath Corp., a consultancy, based in North Carolina, and Transition Power, a privately-held Utah firm. The two firms are proposing to build a 3,000 Mw plant to replace the now canceled coal-fired Intermountain Unit #3 which would have been a 900 MW facility.
The project’s economic prospects depend on a legislative effort to follow Florida’s model which allows recovery of construction costs while the plant is being built. So far the Utah State Legislature isn’t buying it. California cities, such as Los Angeles, which could be major customers for the electricity from the nuclear plant if it is built, haven’t yet publicly indicated whether they would invest in it.
Opposition to the nuclear project at the Mancos Industrial Park site comes mostly in the form of objections to its claims on water for cooling systems. In a strident editorial published on Oct 4, the Salt Lake City Tribune wrote,
“The nuclear power plant would be a first for Utah, and for good reason. It's stupid to even contemplate building a water-intensive power plant in the desert and particularly in the upper Colorado River Basin, where allocated water rights already exceed the river's flow during dry years. We understand the county's desire to create high-paying jobs and produce carbon-free energy, but there are better, safer alternatives than nuclear power plants.”
Aaron Tilton, the public face of Transition Power, now has an angry Salt Lake City Tribune to face among his other problems.
~ Prior coverage of Transition Power on this blog
Uravan mill cleanup complete
A 20-year $120 million cleanup of the old Uravan Mill along the San Miguel River in western Montrose County was completed in September. The U.S. Environmental Protection Agency certified the job is done. The Department of Energy will be responsible for long-term monitoring of the site.
Cleanup involved moving more than 13 million cubic yards of mill tailings and treating 380 million gallons of contaminated liquids.
Umetco, a subsidiary of Dow Chemical, had operated the mill since 1984. It reportedly paid $120 million to cover the costs of cleanup. A slice of the former site, 140 acres, has been donated to public use to the Rimrock Historical Society to house a museum about the history of uranium mining in the region.
Jeff Deckler, remedial programs manager for the Colorado Department of Public Health told the Grand Junction Sentinel even though the cleanup is done, the job of monitoring is not.
“We’ll keep watching that site pretty much forever,” he said.
Powertech moves forward in Colorado
Despite intense opposition to its plans for an ISL mine near Nunn, Colo, Powertech (TSE:PWE) is reportedly making quiet progress on its planned “Centennial” mining site near Nunn in northeast Colorado.
Richard Clements, Powertech CEO, (right) told the Ft. Collins news media on Oct 1 that the firm will complete drilling tests by December and apply for an underground injection control permit. The first production wells could be drilled by the end of 2009. The current drilling is being carried out to determine where to place the mine on a 15 square mile site northeast of Ft. Collins, Colo. Powertech also has a similar project in South Dakota.
Clements is bullish on the company’s future. He said once production gets underway the firm’s stock will rise to reflect the value of the operation. Powertech estimates the mine will produce 9.7 million pounds of uranium over its useful life. At $60/lb the resource is worth nearly $600 million.
Earlier this year Synatom, a subsidiary of Electrabel, purchased 20% of the Powertech’s stock for $9 million. The firm operates nuclear power plants in Belgium. Powertech’s stock closed on Oct 3 at $0.47/share near the bottom of a 52-week range of $0.40-$2.78.
Powertech is also facing some competition for uranium in northeast Colorado. Australia-based Geovic (TSE:GMC) is also developing an ISL mine in Weld County. Unlike Powertech, which has acted almost like a magnet for opposition to uranium mining. Geovic, which actually has a potentially much larger operation, has mostly flown below the radar in terms of public attention. The firm also announced it is moving its offices from Grand Junction to Denver to be closer to other uranium services and investors.
Statewide the Colorado Geological Survey reports that since 2005 more than 20,000 uranium claims have been filed with the state.
~ Quick Notes ~
Whirlwind mine moves closer to production – Six people are now working at the Whirlwind uranium mine located six miles from Gateway, Colo, in Mesa County. BLM approved the mine’s permit in September. Gary Steele, VP at Energy Fuels (TSE:EFR), said the firm will begin shipping ore to the Denison Mill in Blanding, Utah in “a few weeks.” In the meantime, the crew is getting ready to produce up to 200 tons a day of ore once the mine reaches full production. A second mine owned by Energy Fuels, the Energy Queen mine, located in LaSal, Utah, is also getting ready to produce ore and has a similar production target.
White Canyon Uranium (ASX:WCU) has acquired two additional uranium deposits in Utah comprised of 58 claims on 1,079 acres. The Blue Jay and Marcy & Look sites were located via exploration in the 1970s. White Canyon has started the exploration permitting process. Drilling operations will start as soon as practicable, initially on the Blue Jay Project.
The new projects were acquired from local Blanding prospectors Kevin Shumway and David Lacy for cash and shares of stock: Blue Jay $200,000 and 3.2 million shares, while Marcy & Look was bought for $100,000 and 1.6 million shares. The stock closed at $0.15/share on Sept 23. The combined value of the shares exchanged at this price is $720,000.
Fischer-Watt Gold acquires U.S. uranium assets – In its first foray into the uranium market Fischer-Watt Gold (OTC:FWGO) will acquire mineral claims and leases in Wyoming, South Dakota, and Arizona from Tournigan Energy (CVE:TVC) for $310,000. Tournigan will retain a potential 30% interest in the sites. So far the firm has drilled 80 holes in its Cyclone Rim claims in the Great Divide Basin in Wyoming. Previously, Fischer-Watt was focused on gold properties in Arizona and Nevada.
Uranium City Resources (CVE:UCR) has entered into an agreement with Running Fox Resources to earn up to a 60% interest in 178 lode mining claims (over 3,160 acres) located in an area of mineralization south and west of Albuquerque, New Mexico. This is the firm's first acquisition outside of Saskatchewan.
In the late 1970s, this area was the subject of exploration efforts by Gulf Mineral Resources, Pioneer Nuclear, Occidental Petroleum and Energy Reserves Group. The project was abandoned when the price of uranium collapsed in the early 1980s.
Uranium sought in Missouri
A Colorado firm plans to invest $5 million in Mississippi County, Missouri to validate the extent of uranium deposits first discovered in 1978. John Gustavson, of Water Research & Development from Boulder, Colo., is planning to drill 30 100-ft deep wells to map out a possible ISL mining operation. However, he told the Missourian newspaper on Sept 23 local farmers are strongly opposed to his drilling plans despite the fact that he has permits in hand from the local government in the area. Getting easements for some of the drilling is still a problem. He noted that ISL mining will not disturb surface water supplies and will remove about 60% of the uranium from subsurface groundwater.
Gustavson told the Sikeston Standard Democrat on Sept 21 his investors have put up $1 million for exploratory work this year and pledged an additional $4 million if testing shows good results. The firm is not publicly traded so all of the investments are private placements.
Once the resource is mapped production could start-up within two years. If the mine in Missouri is developed, Gustavson says he will ship the uranium from it to a plant in Paducah, KY, for further processing. He said there is enough uranium in the ground in the area to support ISL mining operations for the next 30-40 years. He added his firm is also engaged exploration for uranium in South Carolina and Kansas. Prior to the current uranium project, Gustavson worked all over the world on oil and gas exploration.