Marilyn Scales is a field editor for the Canadian Mining Journal, Canada’s first mining publication. She is one of Canada’s most senior mining commentators.
The six-year ban on uranium mining in Western Australia has been lifted, newly elected Premier Colin Barnett announced on Nov. 17, 2008. New mining leases will no longer exclude the hunt for uranium.
Australia is the world’s second largest producer of uranium (19.7 million lb U3O8 in 2006), behind Canada (26.7 million lb). Between them they account for half the world’s production. With the hunt on again for new uranium producers in Western Australia, that country may give Canada a run for the its top-ranked status.
The change in policy will benefit companies with advanced projects in Western Australia.
Canada’s Cameco Corp. looks like it was ahead of the curve when it partnered with Mitsubishi Development (30%) to pay US$346.5 million to buy the promising Kintyre deposit earlier this year. The project, located 1,250 km northeast of Perth, is in the advanced exploration stage. The original uranium discovery was made in 1985, and former owner Rio Tinto eventually outlined eight separate deposits. Cameco estimates that the Kintyre project may host between 62 million and 80 million lb of U3O8 with grades averaging 0.3% to 0.4% U3O8. These numbers do not comply with 43-101 definitions.
Cameco thought it might be six or eight years before the uranium mining ban in Western Australia was lifted, and it was confident enough in the property that it was prepared to wait. The early policy change must be particularly welcome. The company finds itself with a foothold in a region poised to become very busy with uranium exploration and development.
BHP Billiton owns another promising uranium property, the Yeelirrie project 500 km north of Kalgoorlie. The company has already announced its intention to reactivate the project. First step will be a drill program to confirm resource numbers. At the same time a project team is being assembled in Perth. The team will evaluate development options, prepare an environmental impact statement and begin community consultation. The start of mining remains a few years in the future.
There is a third uranium project in Western Australia, the Lake Maitland project located130 km southeast of Wiluna, owned by Toronto’s Mega Uranium. The property contains a 43-101-compliant inferred resource of 23.7 million lb U3O8 at an average grade of 0.035 U3O8.. Mega announced in February 2007 that it was fast-tracking the project and has completed a scoping study. That study envisions spending US$85.1 million to develop a producer with an output of $1.65 million lb of U3O8. Averaging operating costs would be US$16.60/lb U3O8.
News of the lifted ban comes at a time when uranium prices have taken a downturn, as have all commodities. The heady days of 2007 when the price of U3O8 topped US$135 a pound and analysts were predicting US$500/lb are far behind us. This week the price of a pound of U3O8 has slid to US$53.00. Nonetheless, global demand continues to outstrip production, making the future quite promising.