BHP, & Canada's Mega Uranium Heat Up In WA Uranium Battle

Friday 9th October-2009

The race to establish the state's first uranium mine is heating up with Canada's Mega Uranium planning a $53 million capital raising for the Lake Maitland project while BHP Billiton's Yeelirrie operation received a setback.

In what is increasingly becoming a race to establish Western Australia's first mine, current front runner Mega revealed plans to raise $C50 million ($A52.5 million) through a public and private placement to North American investors.

Funds raised will be predominately used to complete feasibility studies on the Lake Maitland uranium project in the eastern Goldfields, which could be in production as early as 2011.

The uranium project is a joint venture with the Japan Australian Uranium Resources Development Co and ITOCHU Corporation.

Funds will also be used for Mega's other Australian assets and for working capital.

Meantime, Environment Minister Donna Faragher today extended the public consultation period by a month.

The mining giant has proposed an open-cut uranium mine, a processing plant and associated infrastructure, with the uranium oxide concentrate to be exported either through South Australia or the Northern Territory.

BHP has previously said that it could have the operation up and running by the end of 2014.

Mrs Faragher today said the project will be assessed at the level of Environmental Review and Management Program, the highest level of assessment for a project.

The minister also extended the public consultation period from the recommended 10 weeks to 14, after taking into consideration the nine appeals that were submitted.

"Appellants submitted that the level of assessment set for this proposal should be set at a public inquiry," Mrs Faragher said.

"A public inquiry is not a level of assessment and the level for this proposal will remain at ERMP, as it is the highest level available."

Mrs Faragher said appeals received had submitted that a public inquiry would be needed to cover issues dealing with environmental, indigenous heritage and other broader matters.

"However, whether the assessment is through an ERMP or public inquiry under the Act - it can only consider environmental matters relevant to the assessment of the proposal - rather than broader issues," she said.

"I have, however, considered the issues raised in the appeals and believe there is merit in extending the public consultation period.

"In particular, I acknowledge the challenges faced by community groups in regional and remote areas participating in consultation processes."

Another company vying to become WA's first uranium producer is Adelaide-based Toro Energy, with its Wiluna project where feasibility studies are currently underway.

Toro has previously said it could have Wiluna up and running in 2012.

Incident At BHP's Olympic Dam Could Impact Uranium Spot Prices

BHP Billiton's Olympic Dam malfunction

October 7, 2009 - 5:49PM

BHP Billiton Ltd and the South Australian government are investigating a major malfunction of the automatic ore haulage system at the mining giant's Olympic Dam operation.

BHP Billiton was unable to say whether the incident would harm production at Olympic Dam, which is a major producer of copper, uranium and other metals.

Nobody was injured when the automatic haulage system, which carries ore from underground to surface processing facilities, collapsed at (2300 AEDT) on Tuesday.

A secondary haulage system continues to operate at the mine.

"The safety of our workforce will take priority in determining any restart of haulage operations," BHP Billiton said on Wednesday.

In 2008/09 Olympic Dam produced about 194,000 tonnes of copper cathode, 4,000 tonnes of uranium oxide, 108,000 ounces of gold and 938,000 ounces of silver.

Commentators on Wednesday were cautious about whether the incident at the mine, which produces between eight and nine per cent of the mined uranium globally, could affect the commodity's price.

"It will have an impact on ore production, therefore copper and uranium production," RBS Morgans resources analyst Warren Edney said.

"It is possible it could affect uranium prices," Mr Edney said.

"It (Olympic Dam) represents about one per cent of global copper production on an annual basis, I don't think it will have an impact on the copper price," Mr Edney said.

A spokesman for SafeWork SA said the organisation was sending investigators to the site to examine the haulage failure.

"The haulage system of ore to the surface has had a major malfunction apparently and (caused) fairly substantial damage as it has collapsed," he said.

"Where serious damage has occurred it is notifiable, so the company contacted us as they should."

BHP Billiton said the company was making a full investigation into the incident to determine the cause of the failure and extent of the damage.

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Uranium Remains Undervalued

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The short-term uranium spot price has fallen $2.50 to $42 per pound U308 continuing its three month downtrend. The biggest factor affecting recent cuts is fear in the market over the US Department of Energy's (DOE) release of 1,200 tonnes of UF6 into the market next month.

However, some analysts point out that although these fears are influencing the short-term price, long-term prices have not been affected because strong fundamentals in the uranium market as a whole remain in place. Both Ux and TradeTech's longer term price benchmark is still at $65 per pound.

The stockpiles DOE might bring to market would probably only account for barely 2 perc ent or less of annual uranium supply and won't make much of an impact on longer term supply and demand, says Dundee Securities analyst David Talbot.

Market analysts at The Royal Bank of Scotland (RBS) recently forecasted uranium prices regaining strength soon and expect this trend to continue through 2011 peaking at $95 per pound with supply tightening as the Megatons to Megawatts program comes to an end in 2013.

Ray Goldie, senior analyst at Salman Partners, has projected uranium reaching a high of $150 per pound over the long term.

While supply factors are what have impacted spot prices as of late, it's the demand side of the equation to which investors should pay more attention. Talbot and Dundee Securities see demand rising around 2.2 per cent each year and expect demand to surpass supply within the next decade as new mines take years to come on line.

RBS expects "a deficit market" as early as 2014 along with rising nuclear energy usage around the globe. As it stands now, current supplies are not consistent with "logistical, statutory and operating bottlenecks" in producing countries like Canada, Namibia and Australia, say analysts.

A look at major uranium players' share prices this year indicates that there are investors who believe rising global nuclear power demand will make uranium a hot commodity again. Bloomberg reports that Paladin Energy [TSX: PDN] and Energy Resources of Australia [ASX: ERA] shares have climbed 84 per cent and 36 per cent respectively.

Uranium Mining in Western Australia

Western Australia (WA), according to the Liberal Barnett government, is "leading Australia through the financial gloom" as the state garners a 19 per cent increase in its minerals and petroleum exports in the year to June, reports The Australian.

Reg Howard-Smith, Chief of WA State Chamber of Minerals and Energy, expects a great increase in royalties to the state and as much as 30,000 new jobs by 2014 with new and advancing natural gas, iron ore, gold and uranium projects.

Robust investment is behind the recent growth in WA's mining industry, says Mines Minister Norman Moore. New capital expenditures totaled $22.8 billion, up 34 per cent from last year.

The Australian Bureau of Statistics reports that uranium exploration spending alone was up 77 per cent for the year. Premier Colin Barnett has said the uranium mining industry may possibly be WA's most important new sector, reported The Australian.

Last year, the newly elected Liberal government lifted Western Australia's uranium mining ban, sparking a race between uranium miners like Toro Energy [ASX: TOE] and Mega Uranium [TSX: MGA] to open the first uranium mine in WA.

Latest reports put Mega Uranium in the lead. While Toro hopes to have its Lake Way/Centipede project near Wiluna in production in 2012, Mega's Lake Maitland project, also near Wiluna, is anticipated to come on-line in 2011.

This month, Mega received approval from the WA government on its mining lease for the project.

Peter McNally, executive vice-president of project development, says the Lake Maitland deposit holds an estimated 12,000 tonnes, a number which is anticipated to grow.

"From recent exploration work, Mega increased the resource in the vicinity of 15 per cent, which is quite significant, and we're continuing to explore to the south," said McNally. "We expect to find more."

A small uranium processing plant is in advanced stages of the design phase and is expected to export around 750 tonnes a year beginning in 2012. The project is a joint-venture with the Japan Australia Uranium Resources Development (JAURD) and Itochu Corp. The Australian reports that over its 10 to 12 year life span the Lake Maitland has the capacity to export $3 billion of uranium.

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Montrose County Commissioners Approves Naturita Uranium Mill At Colorado's Paradox Valley

By DENNIS WEBB/The Grand Junction Daily Sentinel

Pointing to reasons including the desire to increase the nation’s energy options, the Montrose County Commission on Wednesday unanimously approved a proposed uranium mill in the Paradox Valley 12 miles west of Naturita.

The controversial project would be the first of its kind to be built in the United States in 25 Yearsyears, says Energy Fuels Inc., the company behind it. It next goes to the Colorado Department of Public Health and Environment for its review, county Commissioner Gary Ellis said in an interview.

Commissioners attached 19 conditions to their approval of the project and reserved the right to impose more after the county receives the results of a planned environmental assessment, Ellis said.

He said the mill would be located close to uranium mines, provide an economic benefit to the county’s west side and help meet the nation’s energy needs.

“One of my concerns was energy independence on the part of our country,” Ellis said.

Project opponent Michael Saftler of Telluride voiced disappointment in Wednesday’s vote and took issue with the idea that nuclear energy, and the mills required to provide it, can be part of a clean energy future for the United States.

“It’s not appropriate to put it in the context of clean energy, because it’s not clean energy,” Saftler said.

He said the entire process of generating nuclear power, beginning with getting uranium ore out of the ground, is so potentially hazardous “that the end effect is anything but clean.”

The mill proposal has attracted hundreds of people to county planning and commissioner meetings over the last several months. Some said it would provide needed jobs in the region, while others objected to it based on public safety and environmental concerns.

Ellis said he’s confident the state health department review will result in monitoring, dust mitigation and other measures to help ensure the project’s safety. But Saftler doesn’t think the state has a strong regulatory stance on uranium mills.

“I’m not sure how the health and welfare of the county, much less the actual inhabitants of Paradox Valley, are being served by the decision (county commissioners) made,” he said.

A recent report by a Naturita-based group, the Western Small Miners Association, estimated the mill would result in 623 direct jobs and 766 indirect ones. It said increased direct employment would include 85 mill site personnel and 282 mining personnel, along with transportation workers, managers and professionals, and others.

Colorado's Paradox Valley, in Montrose County

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