$200m. uranium mine planned

Negotiations are in progress to form an international consortium charged with the task of building a $200-million uranium mine in Canada’s Arctic.

Headed by Urangesellschaft Canada Ltd., (UG), an affiliate of the giant West German mining company Metallgesellschaft AG, serious negotiations are under way with several prospective international partners which would lead to the development of UG’s Kiggavik uranium deposit, located 50 miles west of Baker Lake, N.W.T.

According to Michael Stuart, executive vice-president of UG Canada, a feasibility study will begin shortly and is expected to be completed sometime by late 1989. A pre-feasibility study recommended that the project proceed to the feasibility stage, with potential production targeted for 1994.

UG is offering to vend a 44% interest in the project, Stuart told The Northern Miner. Buyers are expected to include foreign utilities which will be looking for secure long-term uranium contracts for their nuclear power generating plants. “Our intention will be to negotiate long-term uranium contracts,” Stuart explained. “We hope to bring in partners who are also consumers,” he added.

Although considered uneconomic at current spot prices of $16(US) per lb of uranium oxide, the Kiggavik project is expected to generate a reasonable return from long-term uranium contracts which are usually established at prices considerably above spot prices. Also, Stuart believes that the uranium industry will experience improving prices shortly. “We see a market turnaround in the 1990s, probably in the next year or two.”

Kiggavik, which used to be known as Lone Gull, was discovered by drilling in 1977. Located in an isolated part of Canada’s eastern barren lands, the deposit hosts mineable reserves of 37.2 million lb of uranium oxide in the Main and Centre zones. Grade averages 0.6% uranium oxide per tonne. The Main and Centre zones, which outcrop in a series of frost- heaved radioactive boulders, have been drilled to a depth of 590 ft and 330 ft respectively. The shallow depth of the mineralization makes both deposits amenable to open pit mining.

Based on a milling rate of 1,000 tonnes per day, the Kiggavik mine will be capable of producing 3.5 million lb of uranium oxide per year during the mine’s 10-year life.

A large part of the projected capital costs is budgeted for the mill. “Although our ore is simple (metallurgically), uranium plants are complex and larger than base metal plants,” Stuart explained. Included in the capital costs are dock facilities at the Inuit hamlet of Baker Lake, a road to the mine site and an airstrip.

In order to facilitate a quicker payback period, UG plans to initially mine the higher grading ore of the Centre zone which averages 0.78% uranium oxide per tonne.