Australian juniors jump aboard the US uranium revival train

US uranium Australian juniors United States
In 2018, Australian uranium accounted for 20% of the US’s uranium needs, with many ASX-listed explorers preparing for the next rush and pegging up ground near previously producing mines across prospective areas in the US.

Uranium USA seems to be new destination for Australian juniors.

The move comes as US President Donald Trump’s administration in Washington is pushing to expand uranium production domestically in order to reduce or even end America’s dependence on imports.

Since that policy was announced, it has led to an upsurge in interest in reviving old mines, many of which were closed 40 years ago as uranium prices collapsed.

The number of those Australian juniors encouraged by US Government plans to revive increased domestic output of the nuclear fuel is small — so far.

But, the recent sharp spike in the uranium spot price has helped feed the hunger for new (or old) uranium projects, abetted by the increasingly strident warnings of a uranium supply squeeze.

This is not a smaller-scale replication of the 2007-08 Australian uranium frenzy, which saw more than 200 juniors jump into uranium exploration on the back of the spot price soaring to US$137/lb in June 2007, many of them with ground the Canadians call “moose pasture”, meaning worthless.

In comparison, the Australian-owned projects so far announced are all based around ground that has had previous uranium mining but been unloved since the price collapsed in the early 1980s. Until now, of course.

This Australian-led developments in Wyoming, Utah, Oregon and Colorado have been on the run for only a few months, and there’s plenty of time for other players to join the North American uranium exploration party.

For those juniors interested in uranium in the US, Texas, New Mexico and Arizona also have substantial numbers of exploration targets and old projects.

Even iron ore billionaire Andrew Forrest has joined the select group. While his interests are across the border in Canada, Mr Forrest’s involvement attests to the fact that uranium is seen to be at the beginning of an upwards run.

He, together with Hungry Jack’s owner Jack Cowin, are investing $30 million in Toronto-listed NexGen Resources which has the Arrow uranium project in Saskatchewan.

Another Australian junior joins the rush

The latest player in the US uranium scene is Superior Lake Resources (ASX: SUP), a company named after its zinc project in Ontario.

Now, in two steps, it has come south of the border.

Earlier this month, Superior Lake entered an exclusivity agreement to investigate the Aurora uranium project in Oregon which has an historic JORC from 2004.

Some 550 holes were drilled and 96% of the resource was classified in the indicated category.

Uranium was first discovered in Oregon in the 1930s, when several deposits were identified in the headwaters of the Deschutes River. More deposits were found in the Steens Mountain area in the late 1940s.

According to the Oregon Historical Society, it was not until the mid-1950s that a large-scale uranium rush developed in the state. By then the US Government was offering a US$10,000 reward to anyone who discovered a substantial deposit of the radioactive ore, which at the time was used primarily in the production of atomic weapons.

Then, this week, Superior Lake arranged a similar exclusivity arrangement with Premium Uranium, an explorer controlled by a uranium hedge fund. Premium has 514 claims covering 10,280 acres (4,160ha) in Sweetwater County, Wyoming, adjacent to Rio Tinto’s (ASX: RIO) Sweetwater uranium project (which has a non-operating mill).

Uranium was first discovered in Wyoming in 1949 but it was the 1953 Gas Hills discovery that put a fire under uranium exploration in that state.

The rollcall of Australia juniors is growing

Also this week, TNT Mines (ASX: TIN) completed its acquisition of the East Canyon uranium-vanadium project in Utah, which lies within the extended Uravan mineral belt which has been a source of uranium and vanadium for more than 100 years.

The Uravan belt and adjacent areas have over the past century produced 85 million pounds of uranium oxide and more than 60Mlb of vanadium oxide.

Mapping and sampling have already begun at some of the old underground workings at East Canyon.

In the latest development, TNT Mines said it is investigating a dual listing in the US through the over-the-counter trading market.

Another recent arrival is tungsten player Thor Mining (ASX: THR) which is diversifying into North American uranium and vanadium after taking an option over properties in Utah and Colorado.

That deal is with an Australian private company, Australian Vanadium, which has 100% interests in 199 contiguous claims in the Uravan mineral belt in south-western Colorado and 100 claims in south-eastern Utah, 40km from the town of Moab, once known as “the uranium capital of the world” after a huge 1952 discovery nearby.

One of the early movers was GTI Resources (ASX: GTR). In April it was readying to begin a new exploration program at its Jeffrey uranium project in Utah.

The Jeffrey ground is one of several projects held in Utah by the Perth-based junior in part of what it describes as the “prolific” Colorado Plateau uranium province.

That region contains hundreds of abandoned uranium mines that went out of business when uranium prices collapsed at the beginning of the 1980s, including the Orphan which has been among the largest uranium producers in the US.

But the Australian leader in the US is Peninsula Energy (ASX: PEN) which began in-situ recovery uranium operations in December 2015 at its Lance projects in Wyoming.

Now, with the whole uranium landscape change, Peninsula has launched a $40.3 million entitled issue to erase debt and establish a strong bank balance.

Its latest presentation notes that Lance is one of the biggest US uranium projects in size and scale, with a JORC resource of 53.6Mlbs (23,400t). The company is licensed to produce up to 3Mlb per annum.

It also claims to be unique among junior uranium miners as it has an established long-terms sales contract book and existing relationships with utilities and offtake partners.

Washington is driving the uranium search

Earlier this year, the US Department of Energy announced the working group report, “The Strategy to Restore American Nuclear Energy,” which includes a series of sweeping recommendations for potential future action that span the nation’s executive, regulatory and legislative landscape.

The plan is to spend $US1.5 billion to create a uranium strategic stockpile.

The uranium reserve would support strategic US fuel cycle capabilities and provide critical assurance of uranium availability in the event of a market disruption.

In 1980, U.S. companies produced nearly 44Mlb of uranium concentrate and provided most of the supplies purchased by nuclear power plants. By 2017 American miners produced 2.4Mlb and supplied just 7% of the uranium bought by domestic plants. That has now dropped further.

Once uranium miners were receiving government incentives (like the US$10,000 incentive) but in 1989 the US Commerce Department decided that Canada and Australia could provide uranium that was both of higher quality and at lower prices compared with American operations.

By then, the US was importing nearly 15Mlb a year and domestic output fell by about a third to roughly 13Mlbs.

In the early 2000s, Kazakhstan entered the uranium export business and has now become the largest exporter in the world.

Figures for 2018 show that Canada provides a quarter of America’s uranium needs Kazakhstan 24%, Australia 20%, Russia 14%, and other countries 16%.