Urangesellschaft planning uranium mine in the N.W.T.

Today, exploration activity in the Northwest Territories is generally directed towards precious metals. The reason? Shipping mineral concentrates out of the north is expensive when compared to a refined product like gold.

But some companies like Urangesellschaft Canada are looking for other metals in areas where favorable infrastructure reduces the cost element of concentrate shipments in project feasibility.

Much of the company’s efforts have been focused on the Thelon Basin, which is similar geologically to the Athabasca region of Saskatchewan where important unconformity-related uranium deposits have been found. Urangesellschaft has discovered significant uranium mineralization west of Baker Lake, N.W.T., a community with tidewater access (Hudson Bay).

According to M. Stuart, executive vice-president, “the project is sufficiently encouraging to warrant a full feasibility study” but he added the company would like to take on a partner before proceeding to production.

A full feasibility would take two years to complete and, if positive, financing arrangements would then have to be formalized. While no firm financing method has been worked out he predicted it will be at least 60% debt financed. A public share issue might also be considered.

Drilling began in 1977 and has continued in most subsequent years, he noted. Geological reserves are confined to two areas on the Kiggavik property which incidentally was previously called Lone Gull. These reserves total approximately 40 million lb of uranium oxide at an average grade of 0.6% U3O8 or 0.5% diluted. The potential to expand reserves is excellent and at least two other encouraging zones have been partially explored, he said.

A conceptual development scenario would include a mining rate of 15,000 tonnes per day from two open pits. The process plant would treat 1,000 tonnes per day and generate approximately 1,600 tonnes of yellowcake (U3O8) annually. A marine terminal would be required to handle cargo ships, tankers and ocean-going barges. Construction and operating material would be brought in over a winter road from the port facility.

The grade would be maximized in the early years of operation with production coming from the high grade Centre zone followed by the richest portion of the Main zone. Early mining of the Centre zone would leave the pit available for tailings or waste rock disposal.

Preliminary metallurgical work indicates no significant treatment problems using a conventional flow sheet, he added.

A study by Strathcona Mineral Services estimates the capital cost of the project at $200 million and Mr Stuart said operating costs have been evaluated and are “considered to be very reasonable.” Although uranium prices have been depressed in recent years, he argued that things were changing for the better. Referring to a February Uranium Institute report he said that nuclear generating capacity is forecast to rise by 44% over the 1986 level by 1995 and by 63% by the year 2000. “Every current indication, viewed from a free market perspective, points to a steady increase in uranium prices throughout the remainder of this century,” he said.