Wyoming's Uranium Mining Frenzy
By: James Finch | Posted: 08th March 2006
"Staking activity is up significantly," said Lynne Boomgaarden, Wyoming's Director for the Office of State Lands and Investments, referring to the number of claims filed for uranium development in her state. "We have really seen a significant increase since about June 2004. We took one lease application to the board in April 2004. In June 2004, we had 30 or so applications. That's when we really saw the increase." In June 2004, David Miller of Strathmore Minerals (TSX: STM; Other OTC: STHJF) quickly filed 10 minerals claims for uranium. On his heels, William Sheriff began filing claims as well. Since then, pages and pages of claims covering tens of thousands of acreage have been filed by Miller, Sheriff, their associates and their respective companies.
Subsequently, others jumped into the rush for Wyoming's state uranium claims. From Crook, Campbell and Converse counties to Carbon, Sweetwater and Fremont, most of the available state trust lands, where uranium rollfront deposits had been previously identified by drilling during the previous two uranium booms, were snapped up. From Wyoming's Powder River Basin, where most of America's uranium and coal is produced, to the Great Divide Basin, which has seen uranium mining, any serious players, who wanted to quickly establish an in situ leach (ISL) mining operation in Wyoming, marked their territory.
"Most of the activity we've seen in leasing has been speculative activity," explained Boomgaarden. "We don't have new mines and new operations right now." As noted in Part 2 of this series, permitting a property to put into place an ISL uranium operation may take two or more years. She added, "When I first came here in the spring of 2003, there was nothing." A few changes have taken place, which Boomgaarden and many others have noticed. Through the first half of 2003, spot uranium prices stagnated around the $11/pound level. On March 3rd, spot uranium traded at $39.25/pound, according to TradeTech LLC, which keeps track of weekly and monthly spot uranium sales.
Holding costs on Wyoming's state trust lands are affordable to speculators, when the underlying commodity in question has had a 500 percent increase in the past 62 months. Applicants file a lease application and pay an annual lease fee of $1/acre for each of the first five years of the lease. The application is presented to the Wyoming Board of Land Commissioners, which meets every other month. "Our royalty revenues from uranium have been pretty flat," said Boomgaarden. "We can only hope as fiduciaries that we will enjoy operations on these leases that result in royalty returns." And it appears her wish may soon be granted.
Uranium ISL's May First Start in
Wyoming's Powder River Basin
Of the six companies we interviewed, five expressed their initial ISL operation would be established in Wyoming's Powder River Basin. The most prolific coal- and uranium-producing areas in the United States, the tri-state Powder River Basin lies between Wyoming's Laramie Mountains, the Big Horn Mountains of Montana and Wyoming, and the Black Hills of South Dakota. According to the U.S. Geological Survey published in 2002, the Powder River Basin was estimated to have a mean of 16.5 trillion cubic feet of undiscovered natural gas, 1.5 billion barrels of undiscovered oil and 86.5 million barrels of undiscovered natural gas liquids. It has been geologically prolific for uranium because the host formation is the Eocene age Wasatch Formation, which occurs under the entire area.
At the southern part of the Power River Basin, Cameco's (NYSE: CCJ) wholly owned subsidiary, Power Resources, has been steadily producing uranium oxide (U3O8) at their Smith-Highland Ranch. In 2005, Cameco reported production of 1.3 million pounds. The property has published proven and probable reserves of 16.1 million pounds of U3O8. (In Part Five of the Wyoming Series, StockInterview.com will discuss the tour of the ISL operation at Smith Ranch and feature an interview with Pat Drummond, superintendent of the mining operation. During our interview, Mr. Drummond announced the expansion of uranium production on the PRI properties and the additional hiring of personnel.) Capacity could run up to 2 million pounds annually at each of their two processing facilities.
Three of the six uranium development companies we interviewed also stated they intended to fast-track their ISL operation by creating a "satellite facility." Such a facility would eliminate the need for a Nuclear Regulatory Commission (NRC) license. The uranium development company plans to "attach" its mining operation to an established producer. Under such a circumstance, the company would solution mine (also known as in situ leach mining) uranium on its property. The uranium would then be shipped to an established producer for processing. Because the spot uranium price is rising, and may hold around these levels (or soar higher), a profit-sharing arrangement negotiated by the newly producing uranium company and the more established company would probably make sense.
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About the Author
Occupation: Writer
James Finch is a contributing editor for StockInterview.com and other publications. http://www.stockinterview.com
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Tags: otc, coal, acreage, leasing, leach, uranium mining, changes have taken place, booms, respective companies