Midasco collects uranium past-producers

Vancouver – It’s a good time to have acquired uranium past-producers, but it’s been tough selling them to the market.

That’s how Dustin Elford, president of Midasco Capital (MGC-V), boils down his junior’s experience over the past year as it has “bought pounds” and shifted its focus from a uranium exploration company in Colorado, to one that has been picking up uranium and vanadium past-producers in both that state and neighbouring Utah. Case in point: Midasco announced June 15 that it had acquired rights to the Silverbell uranium mine adjacent to two of its other acquisitions, the Dunn and Calliham mines, but still, its share price wouldn’t budge from 10 on the news.

The lackluster performance of its share price, however, belies a refocused company that sees potential in bringing uranium past-producers back online in the Uravan belt of Utah and Colorado, historically a significant uranium and vanadium district.

Elford doesn’t mince words. The shift in Midasco’s direction came after the company’s experience with uranium exploration and permitting in Colorado. “It’s a horror-show,” he says. “Colorado has become very mine unfriendly.” He describes a permitting atmosphere where there is too much, mostly environmental, red-tape.

“Mind you that has a lot to do with the Galactic days,” he says, referring to Galactic Resources’ Summitville gold mine that is now a US Environmental Protection Agency Superfund cleanup site, a designation mainly related to a dam failure. “So,” he adds, given Colorado’s history with failed, once poorly regulated mines, “you can’t blame them (for being mine unfriendly). That was a mess.”

But for an exploration company with eyes on pulling new uranium resources from the ground, it meant the hurdles to developing prospects were too great. Elford says that led the company to reconsider its goals and, through talks with past-uranium miners from Utah, to take a look at the cost of acquiring past-producing uranium mines both in Colorado and in mine-friendlier Utah.

“They welcomed us with arms wide open there,” he says of the latter state. In Utah the company has found a permitting atmosphere not only welcome to mining but also to processing, and where much of the land is private a bonus, he says, “because you don’t have to deal with the BLM (Bureau of Land Management) or the Forest Service.”

Although it has still meant complex negotiations to gather all the necessary mining leases together from private holders of mineral rights, it has also meant far fewer hoops to jump through when it comes to getting the necessary permits.

That has led to Midasco’s growing acquisition list of uranium and vanadium past-producers in Utah and, especially where there are existing mine permits, in Colorado.

To begin with, March 3, 2008 Midasco first publicly announced its plans to refocus its efforts on production with the acquisition of the Dunn and Calliham mines in the Uravan belt of Utah.

At Dunn, Atlas Mining (ALMI-O) originally pegged the historic resource there at 340,000 contained lbs. U₃O₈ at an average grade of 0.12% U₃O₈ and 2.7 million contained lbs. V₂O₅ with an average grade of 0.94% V₂O₅. Atlas put in a 1,200 metre decline at the Dunn mine but ceased development with unfavourable uranium prices in the early 1980s. As for Calliham, Umetco Minerals operated there for 20 years until it closed the mine in 1991 after producing over 1 million lbs. of U₃O₈. In 1990 Umetco pegged the remaining historical resource at the J.H. Ranch area of the property at 680,000 contained lbs. U₃O₈ at an average grade of 0.2% U₃O₈ and 4.5 million contained lbs. V₂O₅ at an average grade of 1.33% V₂O₅.

Then three months later on June 11, Midasco announced another acquisition, in Colorado, but this time one with existing state and federal mining permits. It optioned the Centennial/Sun-Cup mine complex (CSC) from B-Mining.

North American Uranium discovered and mined the Sun-Cup deposit in the 1970s, while Minerals Recovery did the same for the nearby, and connected, Centennial deposit. Operations ceased in the early 1980s, again due to low uranium prices, until privately held B-Mining acquired the CSC project and, according to Midasco, mined it periodically until 1998. Although how much of a resource there is left is unknown, 86 historic and mineralized drill intercepts look promising. These include 2.8 metres grading 0.2% U₃O₈ and 0.9 metres grading 0.42% U₃O₈.

And, four days after news of its acquisition of the CSC project, June 15 Midasco announced optioning the San Juan County Silverbell uranium and vanadium mine that is adjacent to the Calliham mine it acquired three and a half months earlier. The Silverbell mine has a historically estimated 790,000 contained lbs. U₃O₈ at an average grade of 0.2% U₃O₈ and 5 million contained lbs. V₂O₅ at an average grade of 1.27% V₂O₅.

Now the question is, what’s next?

Elford wants to either attract enough investors or to partner with another company to bring online one of Midasco’s newly acquired properties to take advantage of strong uranium and vanadium prices. At the moment Elford likes what he sees at the CSC project, what with permitting already in place.

“That’s sort of a start-up for us, a proving ground,” he says.

To that end Midasco is currently renting and purchasing equipment, Elford says, and rehabbing the Sun-Cup portion of the mine at a cost of about US$500,000. This includes putting in a second escape-way and shoring up timbering. He says Midasco could move forward on the CSC project as soon as six months from now and the company might use cash flow from that project to develop its other properties.

But no final decisions have been made. Elford says that instead of starting at CSC, they could move shop to the Calliham, Dunn and Silverbell mines in Utah, and with an estimated US$6.5 to 10 million, Midasco might make those sites production ready. The real trick right now, he says, is to partner or get funding without diluting the company’s value.

“We’re lean,” he says. “We don’t have a big burn right now.”