Laramide Resources poised to crest the nuclear energy wave

A “company maker” project in Queensland, strategically located exploration assets in the US, and an America determined to become more self-sufficient in uranium — that, in a nutshell, is the story behind Laramide Resources (ASX: LAM) and its plan to be a key player in an increasingly energy hungry world.

As president and chief executive officer Marc Henderson recently put it, “nuclear has gotten itself back in the conversation as a big part of the clean energy solution”.

“This is a view that has started to gain many prominent adherents, both in energy policy circles, but also including thought leaders like Bill Gates and Elon Musk,” he added.

All-up, Laramide controls around 115 million pounds of uranium spread across its projects.

Secure uranium supply critical for US nuclear industry

Apart from the renewed interest in nuclear power generation, driven by it being the only reliable source of base load power not dependent on fossil fuels, there is the geopolitical considerations of the US Government in Washington.

Americans get about 20% of their electricity from nuclear reactors.

But where US utilities get the uranium to make that generation possible is another matter, with (as of 2021) 35% sourced from Kazakhstan, 15% from Canada, 14% from Russia, 7% from Namibia — and only 5% produced in the US itself.

It’s the Russia element which is concerning the Americans (apart from that country’s even greater market share of enriched uranium).

What Laramide offers consists of four projects in the US, and two in Australia — supply sources that (along with Canada) in American eyes are seen as politically reliable.

Queensland project got Laramide into the uranium business

The “company maker” project is Westmoreland in Queensland.

Last week Laramide announced the beginning of the second phase of the 2022 drill program at Westmoreland, with this new program focusing on a potential satellite deposit, Longpocket.

That target was subject to limited drilling in 2010 but was never included in the overall resource at Westmoreland.

Mr Henderson has previously noted that Westmoreland, the company’s longest held uranium project, was the acquisition that brought Laramide into the sector.

Rio Tinto (ASX: RIO), which had previously owned the project, also agreed to providing the asset’s complete database.

“None of this data — nor any of the previous data for that matter — was in the public domain because it had been discovered and advanced entirely by industry majors,” Mr Henderson recounted.

Australian project will be among world’s lowest quartile producers

Westmoreland is one of the largest undeveloped uranium deposits in Australia — and only one of a handful in the world not under the control of a major mining company.

Laramide estimates that, between its own work and from historical records, at least US$100 million has been spent exploring Westmoreland.

The company plans to develop it as an open cut operation consisting of several shallow pits.

It is expected to have a 13-year mine life, and will be among the lowest quartile uranium miners, with an expected cost of US$23.30 per pound of uranium — that being slightly above half the current spot price.

The Amphitheatre prospect within Westmoreland was the subject of historical exploration in the 1970s and was, says Laramide, then considered a “prime walk-up” target. The company considers it to be a potential satellite deposit.

The company has forecast producing around 5Mlbs per annum at Westmoreland, which it says is on a scale that utilities find attractive when they are seeking long-term contracts.

New Mexico deposit suited to ISR mining, mining licence granted

Laramide’s other key project is Churchrock in the US state of New Mexico.

Unlike Laramide’s other deposits, Churchrock is suited to in-situ recovery (ISR) and has an inferred resource of 50.82Mlb uranium.

The US Nuclear Regulatory Commission has granted this project a licence for the production of uranium.

Churchrock was drilled out at the tail-end of the US uranium boom of the 1970s — that boom triggered by the fact that, over 10 years, America had gone from zero nuclear power plants to about 100 of them.

The two oil shocks back then had set off a crash program to build nuclear plants as an alternative energy to oil.

Northern Territory supportive of uranium mining

Along the same trend that hosts the Westmoreland deposits sits Laramide’s other Australian project, Murphy, located across the border in the Northern Territory.

This also has a Rio Tinto connection: in 2011 Laramide entered a joint venture at Murphy with the global miner, then took control in 2017.

The Murphy uranium province produced high-grade uranium in the 1950s but as seen no meaningful exploration there since the end of the 1970s uranium boom.

The NT Government is supportive of uranium mining and hosts several large deposits, including Ranger which produced 120,000 tonnes of uranium over a 35-year period.

Laramide has two other projects in New Mexico — Crownpoint with 5.1MLb and La Jara Mesa containing 7.2Mlb of uranium.

There is also the small-scale La Sal underground project in Utah. The once powerful Homestake Mining developed a decline there in the early 1980s, but depressed uranium prices at that time led to its early closure.