An old uranium frontier made new again

The number of Canadian miners poking the arid terrain of Niger is increasing, and the relative durability of the uranium price in a down market isn’t the only thing fuelling their inquisitiveness.

Possessing one of the world’s best uranium resources, Niger has long been all but closed off to foreign investors – unless they were French.

The one time colonizers discovered uranium in the country while looking for copper back in the late 1950s and managed to secure deals with the government that guaranteed the European power a virtual monopoly on Niger’s uranium assets for a long time after.

But things began to loosen somewhat in 2005 when the government drafted a mining code much in line with other western African countries. Some junior miners like North Atlantic Resources (NAC-T), which was doing work in neighbouring Mali, took notice and staked some claims.

But it wasn’t until the summer of 2007 that real change came. In July of that year the government took the extreme step of expelling Areva‘s director of operations in Niger from the country.

That move came amidst terse negotiations where the government was trying to get a better share uranium’s selling price – it had agreed in the past to settle for a severe discount – and appease Touareg rebels in the north who were violently complaining about the lack of benefice that Areva’s uranium mining had brought to them.

A new deal between the French nuclear giant Areva and the government was struck in the same year, one that saw the government take a larger share of the spot uranium price and, importantly for foreign investors, took away Areva’s preferential treatment with regards to exploration licences.

Areva operates two mines in the country, Cominak and Somair and the re-negotiation with government cleared the way for the development of its third and most ambitious mine in the country, Imouraren.

Areva describes the Imouraren deposit as the largest known uranium deposit in Africa, and the world’s second largest, after Australia’s Olympic Dam deposit. The company plans to begin mining in 2010 with annual production of 5,000 tonnes of U308 per year.

The US$1.5 billion project would propel Niger to the second from the fourth largest producer of uranium in the world. Only Canada would rank higher.

And while such a mega project is a ringing endorsement for the uranium industry in the country it doesn’t come without caveats.

While Niger has recently been in the news for kidnapping of two Canadian diplomats late last year, Robert Fowler and his assistant Louis Guay, Areva has had four of it employees kidnapped. And unlike the Canadians the perpetrators and the motives of the kidnappings are known. The disgruntled Touareg tribe claimed responsibility.

That atmosphere has made miners weary of exploring the grounds the so eagerly want to delve into.

But that too is changing according to North Atlantic’s president and chief executive Scott Waldie.

Waldie admits the unrest has slowed exploration down at its Abelajouad uranium permit – which sits just 5 km west of the Imouraren.

But despite the lack of a peace agreement between the government and the Touareg, Waldie says things have improved and plans to have his exploration team back on the ground in three months.

“It is not the rebel’s stated business to stop us,” Waldie explains. “GoviEx is going ahead; Areva is going ahead, so it’s very possible to work there.”

The GoviEx Waldie refers to is Govi High Power Exploration, a company that holds 2,300 sq. km of exploration property in the region around Arlit in northern Niger roughly 200 km from the Algerian border and another 2,400 sq. km near Agadez which is 175 km south of Arlit.

A quick look at the president and chief executive officer of GoviEx shows a name not unfamiliar with making the next big find – Friedland. In the case of GoviEx, however, it is not the much heralded head of Ivanhoe Mines (IVN-T, IVN-N, IVN-Q), Robert Friedland, but his son Govind Friedland.

And while Govind may well be on the way to a big find, it is still early days for miners outside of Areva. But Canada’s uranium giant isn’t taking any chances with regards to being left out of what could be shaping up.

Cameco (CCO-T, CCJ-N) has decided to get active in Niger by acquiring 11% of GoviEx for $28-million. If things go well, it can move up to a 48% stake over the next four years for a cost of between $145-million and $212-million.

Waldie says the presence of big players like Cameco and Areva can only help continue to improve the investment climate for smaller players who continue to file in around them in what is still a vastly under-explored region.

And the investment dollars they bring are most welcome in Niger – a country widely held to be one of the poorest countries in the world, with a GDP of just US$5.3 billion

“There’s tremendous potential there,” Waldie says. “We kept a crew there and we kept our offices going even through the rougher times for a reason.”

Aguila American Resources (AGL-V), Bayswater Uranium (BAY-V), NWT Uranium (NWT-V), Rockgate Capital (RGT-V), Southampton Ventures (SV-V) and Semafo are other Canadian-based company’s exploring for uranium in Niger.