VANCOUVER (miningweekly.com) – Uranium-focused resource companies paid attention to the changing uranium landscape this week after major producer Kazakhstan said it would curtail output by 10%, pushing spot prices higher.
One of them was project developer U3O8 Corp, which is focused on uranium and by-product commodities at its three projects in Argentina, Colombia and Guyana.
“I do believe that we have seen the bottom of the uranium market and that this rally is the start of a sustainable uptrend. There is idle capacity around the world that can be brought back into production, but the fundamentals suggest that demand will outstrip supply in the medium term. The key, in the short term is to have low-cost production,” president and CEO Dr Richard Spencer tells MiningWeekly Online.
To this end, the company is currently busy with studies to reduce costs at its near-term Laguna Salada project, in Argentina. U3O8 believes that the project’s higher grade and lower processing costs make it a unique opportunity. “We are privileged to have a deposit that is flat-lying and close to surface – which means that we can start mining in the highest-grade area of the deposit from day one,” he said in an interview.
RESOURCE EXPANSION
U3O8’s preliminary economic assessment on Laguna Salada defines the cost of production by grade – allowing management to task the field crews with specific grade targets.
“We used to talk about doubling the size of the resource at Laguna Salada but, on limited budgets during this brutal downturn in the uranium market, this was too big a step to realistically achieve. We changed course: we asked the field crews to find an additional year’s worth of low-cost production material – that is, a million pounds of high-grade gravel.
“The team did more than deliver on that task – they found a style of uranium and vanadium mineralisation that we had not seen at Laguna Salada before – and it’s high-grade. It’s a bonus over and above the mineralised gravels, results of which we will be releasing shortly,” he explained.
U3O8 had on Wednesday announced assays from a second type of uranium – vanadium mineralisation that occurs in addition to the typical mineralised gravel at La Rosada, an area that lies within the larger Laguna Salada project. Trenching over the last couple of months has shown that uranium-vanadium in the volcanic rock constitutes a target in its own right, adding to the potential of the La Rosada target.
Since becoming involved at Laguna Salada, U3O8 has expanded the mineralised footprint by about 200 ha, but Spencer expects that figure to grow quickly as the company extends exploration efforts in the new area.
COST REDUCTION
“Our focus is squarely on reducing estimated production costs at the Laguna Salada deposit. One way of achieving that goal is by delineating additional higher grade material,” said Spencer.
U3O8 is focusing on concentrating the Laguna Salada gravel’s uranium into a smaller proportion of the gravel. Current results show that 82% of the gravel’s uranium can be concentrated by sieving the pebbles and coarse material away from the fine material, that represents only 9% of the gravel’s original weight.
“We’re testing a method that achieved significantly better results on a similar deposit. If the new method works more efficiently than our current method, we would process less material, which would lower operating costs, and in addition, the processing plant would be smaller, which would lower the capital cost of building a plant,” Spencer stated.
A reduction in both operating and capital costs, combined with higher grades, would have a marked impact on the economics of the project – it is likely to make Laguna Salada one of the lowest-cost potential producers in the industry, according to Spencer.
Following testwork on concentrating more of the uranium into a smaller component of the gravel, U3O8 expects to be able to start pilot plant testwork that will give it more precise cost estimates that can be incorporated into a feasibility study.
In parallel with the feasibility study, management plans to incrementally double the size of the resource, concentrating on areas with higher-grade potential – and looking for about one-million pounds at a time. “Once a positive feasibility study is completed, we will be in a position to take a mine decision. The budget to complete all of this work and reach a mine decision is about $7-million over two years,” Spencer advised.
PROJECT UPSIDE
Spencer pointed out that vanadium accounts for about 14% of revenue in the economic assessment at Laguna Salada.
“Not only is the vanadium market slipping into deficit this year, but we’re starting to see exponential demand growth from the battery industry from lithium-ion batteries that have a vanadium component, and also from vanadium redox batteries that have huge energy storage capacity potential. Given these fundamentals, we are putting a lot of emphasis on vanadium: there is room to improve the efficiency with which we leach and extract the vanadium,” he said.
Further, Spencer noted that Laguna Salada is located in the “Roaring Forties”, a latitude renowned for its wind in the southern hemisphere. Patagonia has one of the best wind resources in the world and U3O8 is looking carefully at the economics of using wind turbines to provide power for the project.
“If this proves to be economically sensible, we have an opportunity to produce uranium that has a miniscule carbon footprint. This would mean that U3O8 is contributing to reducing greenhouse-gas emissions all the way from the mine face, to production of electricity by nuclear reactors, to storage of power through its vanadium. This is a truly exciting opportunity,” Spencer said. 