Uranerz could produce 3.3 million lbs. U3O8 per year, study says

A preliminary economic assessment for Uranerz Energy‘s (URZ-T, URZ-X, U9E-F) Nichols Ranch uranium project in the Powder River Basin in Wyoming suggests building an in-situ operation that could produce nearly 3.3 million lbs. U3O8 per year over 5.25 years.

The plan includes building a central processing facility at Nichols Ranch and a satellite ion exchange facility at the company’s Hank property.

The processing plant at Nichols Ranch would have a licenced capacity of 2 million lbs. U3O8 per year and will process uranium-bearing wellfield solutions as well as uranium-loaded resins transported from the Hank satellite plant. Uranerz will also consider developing other satellite deposits on its other nearby properties.

Production would start in late 2010 and current capital costs are estimated at US$34.2 million.

The company expects operating costs would be about US$24 per lb. U3O8. Operating cash flow was estimated at US$18 per lb. U3O8 using an 8% discount rate and a uranium price of US$64 per lb.

Using these numbers, the Nichols Ranch project has a net present value of US$35.9 million and an internal rate of return of 56%. The internal rate of return increases to 95% when a uranium price of US$85 per lb. is used.

Capital payback was estimated between one and two years depending on the price of uranium.

Uranerz holds 463 sq. km of land in the Pumpkin Buttes uranium mining district in the Powder River Basin and hopes to complete 243,000 metres of exploration drilling by the end of the year.