Delecta Ltd looks set to ride the next uranium wave that is already starting to form with the ASX-listed company announcing this week it has picked up a controlling interest in a USA uranium project that is littered with old workings including high grade vanadium. Delecta will pay $150k and 20 million options with a strike price of $0.008 for 60% of Sunrise Minerals Inc that owns the REX uranium-vanadium project based in Colorado in America.
Delecta’s investment into the uranium space shows near perfect timing, with the uranium spot price recently reaching a four year high in the wake of key mine closures and a looming supply shortfall. It is estimated that US production levels dropped by an astounding 89% in 2019, with the industry now scrambling to make up for the deficit.
Delecta Managing Director, Malcolm Day, said: “I’m excited about the potential of the Project given the region’s history of uranium mining and the fact that it hasn’t been subject to any modern exploration. Its proximity to operating infrastructure and the prevailing supportive government regime will assist in the development of the Project.”
"The predicted uranium shortfall coupled with a positive price trajectory provides for a positive outlook for the US uranium sector. “The REX uranium-vanadium project takes in some 256 BLM contiguous claims covering 2,072ha in Colorado, USA.
It sits within the famed Uravan Mineral Belt that is home to a number of significant uranium deposits with historical mining in the region dating back to 1898 and past production estimated at an imposing 86 mlbs at 0.24% uranium (U3O8) and 441 mlbs at 1.25% vanadium (V2O5).
The REX project hosts at least four historical uranium mines including the Rex 38, South Blackfoot, Sunbeam and Helen C mines that have a long history dating back to the early 20th century.
Curiously Delecta says the project has seen almost no modern exploration, making it something of a blank canvas for the Perth based company.
The Uravan Belt uranium and associated vanadium mineralisation is hosted by near surface, flat lying carbonaceous sandstone and sediments with deposits occurring as individual ore bodies or in clusters. The size of these deposits varies but can range from a few hundred thousand tonnes to more than a million tonnes of ore – the average grade across the field is 0.24% U3O8 with a high-grade kicker of 1.25% vanadium pentoxide.
The US government has recently reaffirmed its commitment to the development of ‘home-grown’ critical raw material supply chains and whilst the mining of uranium typically faces many obstacles in other parts of the world, the Uravan region in Colorado boasts a mature mining industry and more importantly, the infrastructure to support it.
The REX project lies between the towns of Moab and Monticello and remarkably, lies within easy trucking distance of the only permitted and operating conventional uranium mill in the United States – the White Mesa Mill.
White Mesa is operated by Canadian-based Energy Fuels Inc and is presently operating at only 10% capacity. The mill offers a toll treatment option, with ores sourced from throughout the USA. It produces both high-purity vanadium oxide and uranium and could potentially represent a rapid pathway to production should Delecta’s ore body stack up.
According to the World Nuclear Association, nuclear power will play a significant role in the decarbonisation of the world with over 80% of primary energy consumption currently sourced from the burning of carbon, a figure that has remained unchanged since the 1990s.
The Intergovernmental Panel on Climate Change said that over 80% of the world’s electricity will have to go “low carbon” if global warming is to be kept below the 2℃ Paris Agreement target, set by the UNFCCC in 2018.
Interestingly, if China alone adopts the emissions reduction targets set in Paris, that country alone will require between 65,000 and 90,000 tonnes of uranium annually by 2050.
That is pretty much the equivalent of the entire global nuclear fleet consumption today.
With 20 new nuclear reactors scheduled to come online in 2020 and over ten reactors expected to be constructed per year between 2020 and 2030, is seems a significant amount of uranium will be needed to fuel these reactors and Delecta just might be in the right place at the right time with REX.
The company has teamed up with CPS Capital in Perth to raise $1.2 million to help fund both the initial transaction and the ongoing exploration over the project area, with directors Malcolm Day and Has-Rudolf Moser both hitting their kicks to support the raise.
There’s an old saying in many of the prolific mineral provinces around the world when a particular commodity starts to enjoy a price rise or renewed market interest and that is; “Here come the Australians”.
With the price of uranium recently jumping from US$24 to US$34 a pound, Delecta is one of a hand full of Aussie companies that have scrambled to re-inflate uranium projects in the USA that have historically shown to be quite lucrative.
This includes Superior Lake Resources, GTI Resources, Peninsula Energy and TNT Mines to name just a few.
Only this month TNT’s share price jumped 5 fold after it picked up a uranium project just to the east of Delecta’s new project, setting the scene for a new bull run in uranium.
Is your ASX listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By Matt Birney
