Conventional Uranium Mining In Upswing As Demand Surges
In response to escalating global demand for nuclear fuel, previously dormant uranium mines across the United States and allied nations are springing back to life. At least five American producers are reigniting operations in states such as Wyoming, Texas, Arizona, and Utah, regions once bustling with uranium production until the aftermath of the 2011 Fukushima nuclear disaster prompted governments to reassess their stance on nuclear energy.
Following Fukushima, a sharp downturn in uranium prices led to the closure of numerous American mines, compounded by initiatives in countries like Germany and Japan to phase out nuclear power. However, with governments increasingly turning to nuclear energy to combat climate change and major uranium producers grappling to meet demand, prices for the vital metal are soaring, providing a new lease on life for once-unprofitable mines and bridging supply gaps.
Uranium, a cornerstone of energy production for over six decades, fuels nuclear power plants worldwide, with the majority of global production hailing from Kazakhstan, Canada, and Australia. The resurgence of uranium mining took center stage at the Prospectors & Developers Association of Canada gathering in Toronto, drawing attention from industry leaders and stakeholders alike.
As nations pivot towards nuclear energy, the International Atomic Energy Agency forecasts a staggering demand surge, estimating a necessity for over 100,000 metric tons of uranium annually by 2040, nearly double current levels of mining and processing. Despite efforts by major players like Cameco Corp. (TSX: CCO) and Kazatomprom to ramp up production, operational setbacks and underinvestment in mining and exploration have hindered supply.
Scott Melbye, Executive Vice President of Uranium Energy Corp. (NYSE: UEC), emphasizes the supply squeeze, noting the increasing demand spurred by the commissioning of new reactors. Energy Fuels Inc. (TSX: EFR) and Ur-Energy Inc. (TSX: URE) are among the companies spearheading the resurgence, with plans to revive operations in several states, complemented by similar initiatives from mid-sized firms in Australia and Canada.
The revitalization of U.S. uranium mines marks a remarkable turnaround for an industry once on the brink of extinction. With American uranium production hitting an all-time low in 2019, the resurgence signals a strategic maneuver amid geopolitical uncertainty, as evidenced by the U.S. government’s efforts to secure a stable supply chain amidst global tensions.
Looking ahead, the Uranium Producers of America foresee the necessity for eight to ten new major mines over the next decade to meet demand.
The resurgence
Earlier this year, it was reported that the first conventional uranium mining in eight years has commenced at three mines spanning Utah and Arizona. Energy Fuels aims to stockpile and subsequently process the uranium at its White Mesa mill facility in southeastern Utah, the lone operational mill of its kind in the nation.
The firm underscores the confluence of factors propelling this decision, including soaring market prices for uranium, favorable governmental policies, and the escalating demand for nuclear power plant fuel. The domestic uranium mining sector had lain largely dormant for nearly a decade, with U.S. nuclear plants heavily reliant on Russian sources for their fuel requirements.
Recently, the US House of Representatives approved a bill poised to provide a massive $2.7 billion boost to the domestic uranium enrichment sector as part of efforts to reduce reliance on Russian nuclear fuel imports.
By mid- to late-2024, Energy Fuels anticipates fully ramping up production at the Pinyon Plain, La Sal, and Pandora mines, with an expected uranium output ranging from 1.1 to 1.4 million pounds per year. The extracted uranium will be stockpiled at the White Mesa mill, slated for processing in 2025, contingent upon market conditions, contractual obligations, and mill scheduling.
“Nascent nuclear renaissance”
But one of the firms already leading the charge in uranium mining resurgence is Anfield Energy Inc. (TSXV: AEC). The firm boasts an asset base in the prolific Uravan Mineral Belt of Colorado and Utah.
In 2015, Anfield Energy acquired the Shootaring Canyon Mill from Uranium One. Situated roughly 48 miles (77 kilometers) south of Hanksville, Utah, it is one of the three licensed, permitted, and constructed conventional uranium mills in the United States. This conventional acid-leach facility is authorized to process up to 750 tons of ore daily.
Originally constructed in 1980, the mill commenced operations in 1982 but only operated for approximately six months before ceasing operations due to the downturn in uranium prices. Throughout this short operational period, it managed to produce and sell 27,825 pounds of U3O8.
The surface stockpiles at the site currently hold an estimated 370,000 pounds of U3O8, with an average grade of 0.147%.
“This unique asset is integral to our pursuit of strategically acquired conventional uranium and vanadium projects in Utah, Colorado, Arizona, and New Mexico—areas with a rich history of production. Anfield is well-positioned to participate in the nascent nuclear renaissance,” the company said.
Anfield Energy’s conventional uranium portfolio comprises mining claims and state leases strategically located in southeastern Utah, Colorado, and Arizona, focusing on regions with historical uranium mining or exploration activities. These assets encompass the Velvet-Wood Project, the Slick Rock Project, the West Slope Project, the Frank M Uranium Project, and the Findlay Tank breccia pipe, along with twelve additional leases from the U.S. Department of Energy in Colorado.
Due to its prospects, the company was designated as a BUY with a target price of $0.20 in a recent report by Red Cloud assessing key uranium miners. Anfield is positioned as a developer with a market capitalization of approximately $86 million.
In 2023, the company relayed the results of a Preliminary Economic Assessment (PEA) for its hub-and-spoke uranium and vanadium production plan which incorporated the Shootaring Canyon Mill, and the core Velvet-Wood and Slick Rock assets. The report yielded a net present value of US$238 million at an 8% discount rate, based on a uranium price of US$70 per pound and a vanadium price of US$12 per pound.
“[The PEA] provided us with a baseline from which to pursue additional ‘spokes’ in our hub-and-spoke production strategy – while expanding our potential capacity – and to incorporate additional internal and external uranium and vanadium projects into our production roadmap,” Anfield Energy CEO Corey Dias expounded.
The hub-and-spoke model is a mining strategy that involves centralizing processing operations at a primary facility (the “hub”) while extracting resources from multiple satellite deposits (the “spokes”). In this approach, the primary facility typically has the necessary infrastructure for milling and processing, allowing for cost-effective and efficient handling of ore from various satellite mines.
Anfield Energy is set to submit its uranium production restart application for the Shootaring Canyon Mill in Q1 2024. This application aims to transition the firm’s Radioactive Materials License from standby to operational status, facilitating uranium production upon completion of the mill’s refurbishment. The review process is estimated to take around 12 months, during which initial refurbishment activities can commence. Following the license upgrade, refurbishment of the mill is projected to be completed within 24 months, from the submission of the restart application to the final refurbishment stage.
Information for this story was found via the World Nuclear News, KUNM, and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
FULL DISCLOSURE: Anfield Energy is a client of Canacom Group, the parent company of The Deep Dive. Canacom Group is currently long the equity of Anfield Energy. The author has been compensated to cover Anfield Energy on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.
