Uranium Development and Exploration
The renaissance of US uranium
If one looks at a map of the United States highlighting the primary uranium deposits, attention is immediately drawn to the West, particularly to the Wyoming Basins and the Colorado Plateau.
In 2022, only five facilities in the US produced uranium. According to the US Energy Information Administration, Energy Fuels' White Mesa, the only fully licensed and operating conventional uranium mill in the US, accounted for 84% of the domestic production. The rest was produced at four in situ recovery facilities. The total output of triuranium octoxide (U3O8), or uranium concentrate, was 194,000 lb, an increase from the 21,000 lb produced in 2021 as White Mesa Mill in Utah resumed operations. Still, this figure is tiny compared to domestic production a decade ago.
Like many other minerals, the uranium material used in US nuclear power reactors is mainly imported from Canada, Kazakhstan, Russia and Uzbekistan. On the other hand, despite years of headwinds faced by uranium companies, the current tension between Moscow and Washington is favorable for uranium producers and developers. The US is keen to reduce its reliance on Russian uranium and post-Soviet satellite nations like Kazakhstan, which accounted for 43% of worldwide uranium production in 2022. Consequently, from exploration to production, players in the uranium industry are capitalizing on current spot prices and the projected supply shortfall.
“It is uncertain if miners can bridge the gap and supply the new forecasted uranium demand. It is still unsure if supplies from Russia and former Soviet satellites like Kazakhstan and Uzbekistan could be cut off, which would impact uranium prices.”
John Cash, President and CEO, Ur-Energy
Uranium production and ISR
Unlike other minerals and metals, uranium is not traded on an organized commodity exchange. Instead, it trades in most cases through contracts negotiated directly between a buyer and a seller. In recent years, low prices made it difficult for uranium producers to secure long-term contracts. "After the Fukushima incident, uranium prices fell significantly, making contracts scarce outside of Kazakhstan," explained John Cash, president and CEO of Ur-Energy, a company with a uranium in situ mine, the Lost Creek project, located in Wyoming's Great Divide Basin.
However, given the increasing recognition of nuclear power's carbon-free benefits and growing geopolitical concerns, uranium prices have risen during the last few months. Ur-Energy secured three long-term contracts that incentivized a ramp-up at its Lost Creek project: "180,000 lb of uranium are contracted for 2023, increasing to 600,000 in 2024 and 700,000 in 2025," informed Cash.
While the Lost Creek project is permitted to produce up to 1.2 million lb/y of uranium, the processing plant has a capacity of 2.2 million lb/y. "It provides the flexibility to process additional uranium from other sources, such as competitor mines or other facilities, allowing the Lost Creek to serve as a toll processing site," explained Cash.
Because of the in situ mine nature, the Lost Creek has no pits. In situ recovery (ISR), also called in situ leaching, is a process whereby small drill holes are made into the ground, and a mix of O2, CO2 and baking soda is injected to dissolve the uranium in the sandstone aquifer. Once liquid, recovery wells are used to pump the liquid containing uranium, and then the uranium-laden water is sent to a processing plant to purify and concentrate it. What sets this process apart is its reduced environmental footprint and the high recycling rate, with the potential to reach up to 99.5%, as highlighted by Cash: "In situ recovery has several advantages: low operating costs, minimal capital expenditure, and a negligible environmental footprint. Once mining activity ends, the land can be returned to its original use without any radiological concerns," he concluded.
The initial development of ISR dates back to the 60s and occurred in Wyoming, in the Shirley Basin. The US has large sandstone uranium deposits potentially amenable to uranium extraction by ISR, and many uranium exploration companies are considering leveraging this technology. One of them is Nuclear Fuels with its Kaycee project in Wyoming that covers a 43-square-mile claim package. Nuclear Fuels has been focusing on the Saddle zone, where it is undergoing a drilling campaign. The Kaycee project is a spin-off of enCore Energy, a uranium company with multiple projects spanning across Texas, Wyoming, South Dakota and New Mexico. Both companies maintain a partnership regarding this project: "Upon reaching a 15 million lbs measured and indicated combined resource, enCore gains a 51% interest, providing a clear roadmap to production with financial efficiency. This sets us apart from the typical dilutive path of exploration companies turned producers," explained Michael Collins, CEO of Nuclear Fuels.
“When engaging in conventional open-pit or underground mining, the permitting process includes waste rock piles and tailings facilities. The low-impact well-field design associated with in situ recovery resonates well with communities, garnering their support.”
Michael Collins, CEO, Nuclear Fuels
Uranium development: Leveraging mills
When discussing the role that the spot price of uranium plays in bringing new projects online, George Glasier, president and CEO of Western Uranium and Vanadium, said that prices must increase for production to commence. He also mentioned that if all ready-for-production projects in the US were activated, the US could meet half its demand within three to five years: "Developing new mines and justifying such investments require a sustainable price point and long-term contracts," he explained.
Western Uranium and Vanadium, located in Colorado, is focused on low-cost, near-term production of uranium and vanadium. Its flagship asset, the Sunday Mine Complex, has experienced intermittent mining activity and started stockpiling ore to feed an upcoming mill, which it plans to have fully operational by 2026. However, it halted stockpiling to focus on drilling and extracting core samples to identify more ore. The "State-of-the-art mill" will process high-grade ore using kinetic separation, a process that it is developing to remove non-uranium and non-vanadium bearing rock from the ore, reducing the quantity going to the mill: "By reducing the quantity milled, we cut costs and significantly reduce the mill's environmental footprint," concluded Glasier.
Hub-and-spoke model
Another company that plans to leverage a mill through a hub-and-spoke model is Anfield Energy, which owns the Shootaring Canyon Mill in Utah. "Our mill is one of only three licensed, permitted, and constructed conventional uranium mills in the US," said to Corey Dias, CEO, and Co-founder.
Anfield has been conducting engineering and design studies for the refurbishment of the mill that includes a vanadium circuit: "A key part of this plan is the addition of a vanadium circuit, as our mines in Colorado are primarily vanadium mines with some uranium. This allows us to tap into a new market and take advantage of the growing demand for vanadium, especially for flow batteries," explained Corey.
As part of the hub-and-spoke strategy, the Velvet-Wood mine in Utah and the Slick Rock mine in Colorado will feed the mill first.
Corey explained the benefits of conventional uranium mining compared to ISR: "ISR has a lower cost of entry into uranium production, but its sustaining prices are higher than hard rock mining. The latter requires significant upfront capex to build a large mill, but its sustaining cost is lower as it does not require the creation of well fields every time materials run out. Over 20 years, the costs probably balance out."
Kraken Energy is another company that is following a hub-and-spoke model. Matthew Schwab, CEO, and Garret Ainsworth, chairman, brought to Nevada and Utah their experience from the Athabasca Basin. Schwab considers the Western US a "relatively unexplored uranium jurisdiction". Indeed, while Nevada is recognized as a mature jurisdiction for precious metals and is emerging as a hub for lithium projects, uranium ventures are not as prevalent in the region. "Uranium exploration in Nevada often goes unnoticed, given the state's reputation as the "Silver State" and the prevailing focus on lithium projects. However, our properties in Nevada hold substantial economic potential for various minerals, including uranium, gold, silver, copper, nickel and molybdenum, providing multiple reasons to invest in them," stated Schwab.
The company's flagship asset is the Apex property in Nevada, where it recently commenced a drilling campaign after receiving permits from the BLM. Kraken Energy has two other projects in Nevada: Garfield Hills, where it concluded the maiden drill program in March 2023, , and is already planning a phase II campaign for 2024; and Huber Hills, which requires baseline geophysical and radiometric surveys, and a maiden drilling program will start in 2024. The last project, in Utah and close to the White Mesa mill, is the Harts Points: "Harts Point represents our newest addition through an option agreement. We aim to progress with a maiden drilling program either at the end of 2023 or early 2024," concluded Schwab.
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