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Saskatchewan is ready to ride the rising uranium wave

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Saskatchewan is a home to the legendary Athabasca Basin, one of the largest, most productive and undeniably richest uranium provinces in the world

According to the World Nuclear Association (WNA), since 2012 nuclear generation has been on the rise and 2019 has been a record year for nuclear energy.

New demand for uranium is already in the pipeline. In total, there are 54 reactors under construction globally for a total net electrical capacity of 54.4 gigawatts (GW). Adding the reactors already planned but not yet in construction, there are nearly 100 new reactors coming online between now and 2030.

Uranium may have been overshadowed by gold’s bull run this year but, unlike gold, which is driven mostly by investment demand, uranium fundamentals rest primarily on demand for its power applications.

Uranium market dynamics are already offering interesting developments with increasing demand and decreasing production indicating that uranium is positioning itself as a commodity to follow in the years to come.

UxC predicts that utility uncommitted demand will increase drastically in 10 years and that opens the door of opportunity for aspiring uranium miners, developers and junior exploration companies.

Canada was the world’s largest uranium producer for many years, accounting for about 22% of world output, but in 2009 was overtaken by Kazakhstan.

In 2019, Canada produced 6,938 tonnes of uranium and was second largest uranium mining country worldwide, far behind Kazakhstan (Table 1). All Canadian uranium is produced from mines in northern Saskatchewan. Nearly 85% of Canada’s uranium production is exported.

Table 1. Uranium Production from mines (tonnes U). Source: WNA.

With known recoverable uranium resources of 606,600 tonnes of U3O8 (514,400 tU), Canada sits third in the world after Australia and Kazakhstan (Table 2).

Table 2: Recoverable uranium resources by country in 2017. Source: IAEA.

Identified resources recoverable (reasonably assured resources plus inferred resources), to $130/kg U, 1/1/17, from OECD NEA & IAEA, Uranium 2018: Resources, Production and Demand (‘Red Book’). The total recoverable identified resources to $260/kg U is 7.989 million tonnes U.

Identified resources in situ to $130/kg U are 8.122 Mt, and to $260/kg U, 10.653 Mt.

* IAEA estimate.

More than 90% of uranium resources in Canada located in the Athabasca Uranium Province of Saskatchewan. Athabasca contains both high-grade and high-tonnage unique, a.k.a “unconformity” bonanza-type uranium deposits with grades of up to 20% of uranium, which is approximately 100 times greater than the world average.

While Kazakhstan continues to dominate the uranium mining industry, the Athabasca Basin has been the world’s other production hub with the large Cigar Lake and McArthur River mines, operated by Cameco and affected by shutdowns, and has also been the host to some significant uranium deposit discoveries.

The Athabasca Basin already offers a pipeline of high-grade advanced projects of significant size with many major and junior players proactively searching for uranium. The companies with the most advanced projects currently are NexGen, with the Arrow deposit; Denison Mines, advancing its Phoenix and Gryphon deposits; and Fission Uranium, with its Triple R deposit – all of which are at the pre-feasibility (PFS) stage.

Major uranium players in Athabasca, a map of current projects. Source: DigiGeoData.

Here is the list of top 10 largest uranium deposits in Athabasca ranked by the total volume of uranium oxide contained in Reserves and Resources. To avoid double counting, Reserves that reported as included in Resources, were excluded from totals.

Top 10 largest uranium deposits in Athabasca, based on the most recent technical reports.

Deposit

Major Owner / Operator

Status

Reserves, millions

lbs U3O8

Resources, millions lbs U3O8

Total, millions lbs U3O8

U grade in P&P Reserves, % U3O8

U grade in MI&I Resources, % U3O8

McArthur River

Cameco

Suspended

391.9

12.1

403.2

6.91

2.48

Rook 1*

NexGen

PFS

234.1

348.3

348.3

3.09

3.2

Cigar Lake

Cameco

Production

172.5

125.3

297.8

14.69

12.89

Patterson Lake South*

Fission Uranium

PFS

81.4

135.2

135.2

1.61

1.89

Wheeler River*

Denison Mines

PFS

109.4

135.1

135.1

3.5

3.23

Millennium

Cameco

Suspended

104.9

104.9

2.61

Shea Creek

Orano

Advanced Exploration

95.9

95.9

1.34

Rabbit Lake

Cameco

Suspended

72.3

72.3

0.8

Midwest

Orano

Advanced Exploration

68.9

68.9

1.68

Fox Lake

Cameco

Advanced Exploration

68.1

68.1

7.99

Total

989.3

1,166.1

1,729.7

* Resources include Reserves.

1. McArthur River. 403.2 M lbs.

McArthur River uranium mine. Source: Cameco.

The McArthur River uranium mine which commenced production in 1999 is one of the two world’s largest (another one is Cigar Lake) uranium producing operations. It also has enormous reserves of high grade ore located 600 metres underground. Remote control raise boring methods are used to mine the ore, which is then trucked 80 km south to be milled at Key Lake, site of the closed mine that once produced 15% of the world’s uranium.

The production target was to reach 9,908 tonnes/yr by 2018, but in November 2017, Cameco announced the temporary suspension of production from the McArthur River mining and Key Lake milling operations from January 2018. The suspension, due to persistent uranium price weakness, was expected to last for 10 months, but in July 2018, Cameco announced that the mine was shut for an “indeterminate period”. Cameco earlier said that it would take 18-24 months for the mine to ramp back up to full production.

There has been no production from the Key Lake mine since 2002, but development of the zone 4 north orebody may return it to limited production.

Cameco is the majority owner and operator of McArthur River mine (69.8%) as well as the Key Lake Mill (Orano is a 30.2% and 16.7% partner, respectively). Orano (then Areva Resources) earlier applied for a licence to process some McArthur river ore at McClean Lake.

2. Rook 1. 348.3 M lbs.

Rook 1 uranium project. Source: NexGen.

The 100%-owned by NexGen, Rook I project hosts the land based Arrow deposit which has an Indicated mineral resource estimate of 179.5Mlbs U3O8 contained within 1.18Mt grading 6.88% U3O8 including a high-grade core of 164.9Mlbs U3O8 contained within 0.40Mt grading 18.84% U3O8 and an Inferred mineral resource estimate of 122.1Mlbs U3O8 contained within 4.25Mt grading 1.30% U3O8.

The deposit was based on only 200 drill holes and the Arrow deposit has a defined area of mineralization of 895 m x 308 m, depth starting at 110 m down to 980 m and remains open in most directions and at depth.

On November 5, 2018 NexGen released its independent Pre-Feasibility Study (“PFS”) of the basement-hosted Arrow Deposit. The PFS confirms a production profile supported by conventional long-hole stope mining. The mine production will be fed into a conventional uranium processing plant where uranium recovery is projected to be 97.6% over the life of mine.

All in break-even price per pound including initial capital and reclamation costs is US$12/lb U3O8 highlighting that Arrow’s economic cost of production is below the long-term nominal and inflation adjusted uranium spot price. At US$25/lb U3O8 Arrow returns 27% after-tax. (Current spot price is US$29.5/lb U3O8).

3. Cigar Lake. 297.8 M lbs.

Cigar Lake uranium mine. Source: Cameco.

Construction of the Cigar Lake mine began in 2005 with production originally scheduled to start in 2011. However, underground floods in 2006 and 2008 set the start date back until 2014 and increased the overall cost of the project from C$660 million to about C$2.6 billion. There are extra requirements for pumping capacity – now 2500 m3/h, and ground refrigeration. In February 2010, dewatering was complete and remediation remediation proceeded.

Mining commenced at Cigar Lake in 2014. The proven and probable ore reserves at Cigar Lake are extremely large and very high grade. A 480-metre-deep underground mine was developed in very poor ground conditions – the orebody is actually in the soft Athabasca sandstone. Hence it uses ground freezing and remotely-controlled high pressure water jets at this level to excavate the ore. Production ramped up to 8,200 t/yr U3O8 (7,000 tU/yr) in 2017 and remained at that level in 2018 and 2019.

Ore slurry from remote mining is trucked for toll treatment at Orano’s expanded McClean Lake mill, 70 km northeast. The McClean Lake mill was licensed only for 5900 t/yr, and in May 2016 Orano’s (then Areva Resources) application to increase this to 10,900 t/yr was approved by the CNSC and in 2017 the licence was extended to 2027. Cameco reported that capacity in 2016 had been increased to 8200 t/yr U3O8. The mill is also expected to treat other ores in due course, notably from Midwest.

Cameco, which has 50.025% ownership, is managing the joint venture, with Orano holding 37.1%, Idemitsu 7.875% and TEPCO Resources 5%.

4. Patterson Lake South (Triple R). 135.2 M lbs.

Triple R uranium deposit. Source: Fission Uranium.

Fission Uranium Corp. owns a 100% interest in the advanced, high-grade and near-surface Triple R uranium deposit. 

Located on the south-western edge of Canada’s Athabasca Basin, the Triple R deposit is part of a 3.2km mineralized trend on the Patterson Lake corridor.  This mineralized trend is the longest lateral footprint in the Athabasca district and is hosted entirely within Fission’s large-scale PLS property.  

Fission’s highly successful, dual strategy at PLS over the past several years has enabled the company to explore for new mineralization while advancing developing the core part of the deposit to prefeasibility.  High-grade zones have been discovered in both directions along trend of the main R780E zone and have been added to the overall resource estimate.  In 2019, the Company released results of two prefeasibility studies – one outlining a hybrid approach (combining open pit and underground techniques) and one outlining an underground-only mine plan. 

Both studies presented strong results, including low OPEX, fast payback and strong IRR, which highlight the potential for highly economic production at PLS. While both options remain viable, the upcoming feasibility study will focus on the best option, most likely the underground only scenario. 

The Company has the strategic backing of China’s CGN Mining, which has invested over $82M in Fission., at a substantial premium, in early 2016. 

5. Wheeler River. 135.1 M lbs.

Wheeler River uranium project. Source: Denison Mines.

Denison has a 90% interest in the Wheeler River Joint Venture consisting of 19 unsurveyed mineral claims totaling 11,720 hectares in northern Saskatchewan. Denison has been the operator since November 10, 2004. The other partner is JCU (Canada) Exploration Company, Limited (“JCU”) (10%).

Wheeler River is the largest undeveloped uranium project in the eastern portion of the Athabasca Basin region in northern Saskatchewan, Canada. The project is situated in close proximity to important regional infrastructure, including the Provincial electrical transmission grid and an all-season Provincial highway.

Wheeler River consist of two high-grade uranium deposits; Phoenix and Gryphon. Phoenix is the highest grade undeveloped uranium deposit known, including a high-grade core at Phoenix Zone A estimated to contain 62,900 tonnes at 43.2% U3O8 for 59.9M lbs U3O8.

A PFS was completed in accordance with NI 43-101 in September 2018 and is highlighted by the selection of the in-situ recovery (“ISR”) mining method for the development of the Phoenix deposit, with an estimated average operating cost of $4.33 (US$3.33) per pound U3O8.

Exploration activities are on-going, with a current focus on the discovery of additional high-grade uranium deposits following years of delineation drilling at both Phoenix and Gryphon.

6. Millennium. 104.9 M lbs.

Millennium uranium project. Source: Cameco.

The Cree Extension-Millennium project is a Cameco-operated joint venture located in the southeastern portion of the Athabasca Basin, approximately 35 km north of the Key Lake operation.

The project includes the Millennium deposit which was discovered in 2000. Cameco owns 70% of the project. Millennium Project is a proposed greenfield underground uranium mine. To support the underground mine, a 21 kilometre site access road and surface infrastructure will be required to support the underground operations, as well as ore transport, and freshwater intake and treated mine water discharge structures. The Millennium Project will use existing licensed mill and waste management facilities in northern Saskatchewan, the construction and operation of

which have previously been assessed.

Cameco believes that Millennium is one of the best undeveloped uranium projects in the world. However, in the current market environment its primary focus is on preserving the value of tier-one uranium assets. Cameco continues to await a signal from the market that additional production is needed prior to making any new development decisions.

Therefore, no work is planned at Millennium. Further progress towards a development decision is not expected until market conditions improve.

7. Shea Creek. 95.9 M lbs.

Shea Creek uranium project. Source: UEX.

The Shea Creek Deposits were the first new discoveries in what is now rapidly being envisioned as the new Western Athabasca Uranium Camp. 

Shea Creek is a joint venture between UEX (49.1%) and Orano (50.9%) and is located just 18 km south of the past producing Cluff Lake mine.  Four deposits combine to form one of the largest undeveloped uranium resources in the Basin and all four deposits remain open for significant expansion.

The Shea Creek Project is located in the western Athabasca Basin, approximately 15 km south of Orano’s past-producing Cluff Lake Uranium Operation and 50 km north of NexGen’s Arrow Deposit and Fission Uranium’s Triple R Deposit.

Four unconformity-related deposits have been discovered to date on the Shea Creek Project; Kianna, Anne, Colette, and 58B. These deposits occur along 3 km stretch of the >30 km long uraniferous Saskatoon Lake Conductor and were the first new discoveries in what is now shaping up to be the Western Athabasca Uranium Camp. 

8. Rabbit Lake. 72.3 M lbs.

Rabbit Lake uranium mine. Source: Cameco.

Uranium was discovered at Rabbit Lake in 1968 and it was brought into production by Cameco in 1975. Most of the deposit has been mined out, but reserves still exist at Eagle Point, where around 1700 t/yr of U3O8 from an ore grade of 2.1% have been mined underground in recent years.

In 2016 production was suspended and the mine and mill transitioned to care and maintenance, which is expected to cost $35-40 million per year. Cameco was continuing its underground drilling reserve replacement program in areas of interest north and northeast of the current mine workings. However, in the second quarter of 2016 Cameco wrote off C$124 million as the full carrying value of the mine. It was North America’s longest-producing uranium mine.

9. Midwest. 68.9 M lbs.

Midwest uranium project. Source: Denison.

The Midwest property is located in the eastern part of the Athabasca Basin in northern Saskatchewan within one kilometre from Points North Landing and 700 kilometres northeast of Saskatoon. It can be accessed year round by provincial highway to Points North, which is a privately owned service centre with an airstrip and accommodations available. Points North and Midwest are both located within 25 kilometres of the 22.5% Denison owned McClean Lake mill.

The project is owned by Denison (25.17%) and its joint venture partners, Orano Canada (69.16%) and OURD (5.67%) pursuant to the Midwest Joint Venture Agreement.Orano Canada is the operator of the project.

In 2007, Orano Canada completed an internal study evaluating the economic merit of mining the Midwest Main deposit via open pit mining methods and processing the resulting ore at the McClean Lake mill.In November 2007, the Midwest Joint Venture partners made a formal production decision to proceed with the development of the Midwest Main deposit.Subsequently, in November 2008, the Midwest Joint Venture partners announced that the development of the Midwest Main project would be delayed for an indefinite period due to delays and uncertainties associated with the regulatory approval process, increasing capital and operating cost estimates and the depressed state of the uranium market at the time.

In September 2011, the final version of the Midwest Project Environmental Impact Statement (“EIS”) was submitted to provincial and federal governments.A Comprehensive Study Report was drafted by the Canadian Nuclear Safety Commission (“CNSC”) and circulated for federal, provincial and aboriginal review. In September 2012, the Midwest EIS was approved.

At this time, no development or production is currently planned.

10. Fox Lake. 68.1 M lbs.

Area of Fox Lake uranium project. Source: CanAlaska Uranium.

In 2016, Cameco revealed uranium resource figures for the Fox Lake deposit at the Read Lake project in Saskatchewan’s Athabasca Basin, which has seen continuous drilling since 2008.

Cameco’s interest in the project is 78%.

Uranium explorer CanAlaska Uranium owns the adjacent West McArthur property, after buying out former partner Mitsubishi’s interest.

The Fox Lake conductor trends onto CanAlaska’s property at Grid 5, according to CanAlaska.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.