The pressure on the Australian Labor Party at a state and federal level to allow expanded uranium mining is building as fast as the uranium price is rising and new explorers are pouring into the market.
The pressure on the Australian Labor Party at a state and federal level to allow expanded uranium mining is building as fast as the uranium price is rising and new explorers are pouring into the market.
In 2003, there were just five companies actively exploring for uranium in Australia. In 2004 that figure was 15 and today it is more than 70, with more than 280 active projects.
The number of new explorers, and the heights some of their share prices have reached, is indicative of a growing belief that the wider mining of the key uranium oxide (yellowcake) ingredient in Australia is just around the corner.
However, despite that fact that Australia has about 37 per cent of the world’s known low-cost resources, there is a lack of new projects that can be brought into production in the short term, at least in this decade.
Most of these resources are in Western Australia, the Northern Territory and South Australia.
ALP leaders, including federal opposition leader Kim Beazley, have all gone some way to supporting an expanded uranium mining and supply industry outside the current three producers.
This week, SA premier Mike Rann said he was confident Labor’s ‘no new mines’ policy would be changed at the ALP national conference next April. WA Premier Alan Carpenter, however, remains opposed to any change.
Chairman of Perth-based uranium aspirant Nova Energy Ltd, Tim Sugden, said the WA government’s ban on uranium mining was preventing development of uranium worth $15 billion.
He said Nova’s Wiluna uranium deposit in central WA would generate $1 billion in revenue at current prices.
“We believe you could multiply that figure by 15 if all the potential projects in WA could be developed,” Mr Sugden said.
There is a simple driver to the uranium bandwagon.
Uranium spot prices have increased from $US7 a pound in 2001 to $US41.50/pound currently.
Hartleys analyst Andrew Rowell told WA Business News the price increase is a result of high oil and gas prices, speculators buying physical metal, a supply deficit and nuclear power plants rebuilding their stockpiles.
There are 440 nuclear power plants throughout the world that require about 77,000 tonnes of uranium oxide a year, which exceeds mine output of 42,000t/year. The balance comes from declining reprocessing tails and stockpiles, and recycled military uranium.
A further 23 reactors are currently under construction, 39 are planned or ordered and 73 are proposed. Nuclear power currently provides more than 16 per cent of the world’s electricity.
Last year, Australia, the world’s second largest uranium supplier after Canada, exported 11,000t of uranium oxide, a figure that’s expected to rise to about 11,500t this year.
This production comes from Energy Resources Australia’s (ERA) declining Ranger mine in the NT (currently 5,544t/year), BHP Billiton’s expanding Olympic Dam (4,356t/year) and Heathgate Resources’ Beverley mine (1,064t/year), both in SA.
However, while ERA’s Jabiluka deposit gathers dust over Aboriginal land issues, the company’s nearby Ranger facility is scheduled to end in 2011, after 25 years in operation.
At Olympic Dam, BHP Billiton’s faith in the future of nuclear power is behind a proposed $5 billion expansion and a four-fold increase in uranium output.
The mine is currently the focus of a $300 million pre-feasibility study, due by the end of 2007.
However, independent analyst Peter Strachan told WA Business News such an increase would go nowhere near satisfying near future global demand.
Last year, the Howard government assumed responsibility for uranium mining in the NT, adding to its powers to approve uranium mining federally. However, the states have the power to veto any decision made by the federal government.
Uranium ore cannot be exported without federal government approvals.
Against this background is a crop of Perth newcomers and others with some advanced uranium projects.
Nova Energy’s Lake Way and Centipede deposits, near Wiluna, contain 20 million pounds (9,000t) of near surface yellowcake amenable to simple excavation that could be quickly and economically developed.
Nearby, newly listed Perth company Encounter Resources Ltd is preparing a June drilling program on its Lake Way South project adjacent to Nova’s Centipede resource.
Encounter also has 80 per cent in more than 1,000 square metres surrounding BHP Billiton’s Yeelirrie uranium deposit, 60 kilometres south west of Wiluna.
Yeelirrie is the world’s largest calcrete associated uranium oxide deposit at 52,500t and Encounter plans drilling just north and south-east of it later this month.
PepinNini Minerals Ltd managing director Norman Kennedy said the company could have Australia’s first new uranium mine development if there was a change in Labor Party policy.
Scoping studies have indicated 12.65mt of low-grade resources at its Crocker Well-Mt Victoria project in SA’s north-east, which is not enough to justify a planned $160 million project that needs more nearby resources.
Process design envisages uranium oxide production of 585t/year, construction of which could begin within 15 months of a green light from the ALP national conference.
Perth-based Arafura Resources NL has identified 8.7 million pounds of uranium oxide at its Nolans Bore rare earths project near Alice Springs in the NT, which it is planning to substantially increase via current drilling. The uranium could be produced as a low-cost by-product.
Local veteran Summit Resources Ltd is carrying out resource definition drilling and sampling on eight advanced uranium prospects near Mt Isa that are expected to produce resource estimates later this year.
All have returned high-grade intercepts and include ground held 100 per cent (Bikini prospect) and 50 per cent with local Valhalla Uranium Ltd (Valhalla and Skal).
Valhalla is 83.3 per cent owned by Resolute Mining Ltd and also has 41.7 per cent of the Bigrlyi uranium-vanadium project, 390km north-west of Alice Springs with dedicated Perth uranium explorer Energy Metals Ltd (53.3 per cent).
Work is currently focused on establishing a database from historical data as a precursor to a resource calculation mid 2006.
Energy Metals has seven projects in the NT and WA of which Bigrlyi, with 15 uranium prospects over a 14km strike length, is the most advanced.
Redport Ltd has five prospects in WA and SA, the most advanced being its Lake Maitland project, 130km south-east of Wiluna, which it describes as one of Australia’s largest proven unmined uranium deposits. As yet has no resource calculation. Exploration to date has revealed two enriched zones that could form the basis of initial mining.
Compass Resources NL has some promising ground west of Batchelor in the NT, including the previously producing Rum Jungle Creek South mine.
The primary objective is the Browns Oxide copper, cobalt, nickel project, with uranium production at Mt Fitch from 2009.
Local Deep Yellow Ltd is pressing on with its Napperby project, 150km north-west of Alice Springs, after failing to confirm previous good grades that came when it bought the prospect from successful Namibian explorer Paladin Resources Ltd.
Subsequent trenching by Deep Yellow has located high-grade channels within the overall deposit.
Perth-based Giralia Resources NL spin-off U308 Ltd is scheduled for listing soon after closing oversubscribed late last month. Its major asset is a 25 per cent stake in the big Lake Frome prospect, which surrounds the operating Beverley uranium mine in SA.
