Midasco sings Utah’s praises

VANCOUVER — It’s a good time to have acquired uranium past-producers, but it’s been tough selling them to the market.

That’s how Dustin Elford, president of Midasco Capital (MGC-V), boils down his junior’s experience over the past year as it has “bought pounds” and shifted its focus from uranium exploration in Colorado, to the acquisition of uranium and vanadium past-producers. Case in point: Midasco announced in June that it had acquired rights to the Silverbell uranium mine adjacent to two of its other acquisitions, the Dunn and Calliham mines, but its share price wouldn’t budge from 10 on the news.

The lacklustre performance of its share price, however, belies a refocused company that sees potential in bringing uranium past-producers back online in the Uravan belt of Utah and Colorado, historically a significant uranium and vanadium district.

Elford doesn’t mince words. The shift in Midasco’s direction came after the company’s experience with uranium exploration and permitting in Colorado.

“It’s a horror-show,” he says. “Colorado has become very mine unfriendly.” He describes a permitting atmosphere where there is too much, mostly environmental, red tape.

“Mind you, that has a lot to do with the Galactic days,” he says, referring to Galactic Resources’ Summitville gold mine — now a U. S. Environmental Protection Agency Superfund cleanup site. Given Colorado’s history with failed, once poorly regulated mines, “you can’t blame them (for being mine unfriendly),” he says. “That was a mess.”

But for an exploration company that’s eyeing pulling new uranium resources from the ground, it meant the hurdles to developing prospects were too great. Elford says that led the company to reconsider its goals and take a look at acquiring past-producing mines — both in Colorado and in mine-friendlier Utah.

“They welcomed us with arms wide open there,” he says of Utah. The company has found a permitting atmosphere not only welcome to mining in the state, but also to processing. Much of the land is private — a bonus, Elford says, “because you don’t have to deal with the Bureau of Land Management or the Forest Service.”

Although complex negotiations are still necessary to gather the required mining leases together from private holders of mineral rights, it has also meant far fewer hoops to jump through when it comes to getting the necessary permits.

That has allowed Midasco to acquire a growing list of uranium and vanadium past-producers in Utah and, especially where there are existing mine permits, in Colorado.

Midasco first announced its plans to refocus its efforts on production in March, with the acquisition of the Dunn and Calliham mines in the Uravan belt of Utah.

Atlas Mining(ALMI-O) originally pegged the historic resource at Dunn at 340,000 contained pounds U3O8 at an average grade of 0.12% U3O8 and 2.7 million contained pounds V2O5 with an average grade of 0.94% V2O5. Atlas put in a 1,200- metre decline at Dunn but ceased development with unfavourable uranium prices in the early 1980s.

As for Calliham, Umetco Minerals operated there for 20 years, producing more than 1 million lbs. U3O8 before closing the mine in 1991. In 1990, Umetco pegged the remaining historical resource at the J. H. Ranch area of the property at 680,000 contained pounds U3O8 at an average grade of 0.2% U3O8 and 4.5 million contained pounds V2O5 at an average grade of 1.33% V2O5.

In June, Midasco announced another acquisition in Colorado, but this time one with existing state and federal mining permits. It optioned the Centennial/Sun-Cup mine complex (CSC) from B-Mining.

North American Uranium discovered and mined the Sun-Cup deposit in the 1970s, while Minerals Recovery did the same for the nearby, and connected, Centennial deposit. Operations ceased in the early 1980s, again due to low uranium prices, until privately held B-Mining acquired the CSC project and, according to Midasco, mined it periodically until 1998. Although remaining resources are unknown, 86 historic and mineralized drill intercepts look promising. These include 2.8 metres grading 0.2% U3O8 and 0.9 metre grading 0.42% U3O8.

And, four days after news of its acquisition of the CSC project, Midasco announced optioning the San Juan Cty. Silverbell uranium and vanadium mine adjacent to the Calliham mine it had acquired three and a half months earlier. Silverbell hosts a historical estimated 790,000 contained lbs. U3O8 at an average grade of 0.2% U3O8 and 5 million contained lbs. V2O5 at an average grade of 1.27% V2O5.

Now the question is, what’s next? Elford wants to either attract enough investors or to partner with another company to bring online one of Midasco’s newly acquired properties to take advantage of strong uranium and vanadium prices. At the moment, Elford likes what he sees at the CSC project, especially since permitting is already in place.

“That’s sort of a startup for us, a proving ground,” he says.

To that end, Midasco is currently renting and buying equipment, Elford says, and rehabilitating the Sun-Cup portion of the mine at a cost of about US$500,000. This includes putting in a second escapeway and shoring up timbering. He says Midasco could move forward on the CSC project as soon as six months from now and the company might use cash flow from that project to develop its other properties.

But no final decisions have been made. Elford says that instead of starting at CSC, they could move shop to the Calliham, Dunn and Silverbell mines in Utah, and with an estimated US$6.5-10 million, Midasco might make those sites production- ready. The real trick right now, he says, is to partner or get funding without diluting the company’s value.

“We’re lean,” he says. “We don’t have a big burn right now.”