Western Australia lifts ban on uranium mining

Uranium explorers in Western Australia can move ahead with some certainty now that a ban on uranium mining is set to be lifted by the newly elected state government.

The new WA premier, Colin Barnett of the Liberal Party, plans to use about 25% of mineral royalties on rural infrastructure development projects — a demand made by the National Party. The Liberal and National parties formed an alliance to beat out the Labor Party, resulting in the first non-Labor government to win power in any of the states in the past decade.

Australia holds 23% of the world’s known uranium resources with 1.24 million tonnes of uranium oxide. Kazakhstan is next on the list for resources with 817,000 tonnes of uranium oxide, according to the World Nuclear Association, and Canada is No. 5 with 423,000 tonnes.

But uranium mining in Australia has been somewhat stagnant for the past three decades due to a moratorium on the development of new mines. Only three mines have been allowed to operate: in Northern State, Energy Resources of Australia’s (EGRAF-O, ERA-a) Ranger mine; and in South Australia, BHP Billiton’s (BHP-N, BHP-a) Olympic Dam; and the Beverly mine run by Heathgate Resources, a subsidiary of U. S. utility General Atomics.

Alone, these three mines make Australia the second biggest uranium producer in the world, topping 10,000 tonnes uranium oxide in 2007. Only Canada produces more, at well over 13,000 tonnes last year.

Barnett will allow uranium companies to develop their projects in Western Australia, hoping to see production start in the next three to five years.

It’s estimated that WA holds 7-10% of the country’s uranium.

The comeback of uranium over the last few years has prompted companies to snap up projects as various government leaders hinted at supporting an eventual change in policy.

There are several sizable deposits in WA, such as BHP’s 115-million-lb. Yeelirrie project, which the company estimates could support a 22- year mine life with annual production of 5.5 million lbs. U3O8 per year for the first 12 years.

Energy and Minerals Australia (EMA-a) holds the Mulga Rocks deposit, 250 km northeast of Kalgoorlie, which has a historic resource of 102 million lbs. U3O8. The company is drilling so it can compile an official resource estimate.

In August, Cameco (CCO-T, CCJ-n) finalized its acquisition for a 70% interest in the Kintyre project in WA for US$346.5 million from Rio Tinto (RPT-N, RIO-l).The remaining 30% is held by Mitsubishi (MSBHY-o). The project is located 1,250 km northeast of Perth and Cameco estimates it has the potential to hold resources of 62-80 million lbs. uranium oxide.

Mega Uranium’s (MGA-T, MGAFF-o) Lake Maitland project in the Eastern Goldfields region, 108 km southeast of Wiluna, has a 23.7- million-lb. resource that is located only 1-2 metres below surface. Mega says it’s on schedule to bring an open-pit mine and mill into operation by 2011. The company expects initial production capacity to be 1.65 million lbs. uranium oxide per year.

Paladin Energy (PDN-T, PDN-a), which operates the Langer Heinrich uranium mine in Nambia, holds the Manyingee and Oobagooma projects in WA; both in-situ leach projects are on hold at the moment.

Manyingee, located in West Pilbara, 85 km inland from the coastal township of Onslow, has a measured and indicated resource of 17.8 million lbs. uranium oxide and an inferred resource of 6.2 million lbs. A three-year feasibility study is on hold for the project.

Oobagooma, 75 km northeast of Derby in the Kimberly region, has a historic resource of 21.9 million lbs. U3O8.