More permits and more cash for Ur-Energy

Ur-Energy (URE-T, URG-X) continues to drive towards production at its Lone Creek uranium project in Wyoming’s Great Divide Basin.

The company passed another milestone by attaining a permit for the construction and operation of waste water retention ponds. That news comes just three days after it announced it received permits for the injection wells at the site, and that it had raised US$5 million in a private placement.

Lone Creek is set to become an in-situ recovery (ISR) operation, a process that the company heralds for its environmental friendliness and cost effectiveness.

ISR operations inject a modified ground water solution into the orebody where it dissolves the uranium and is the pumped back to the surface. The uranium rich solution is then sent to a processing plant where it is concentrated and dried into yellow cake.

Ur-Energy estimates it will cost US$30 million to build a 2 million tonne per year plant and with US$38.5 million sitting in the company’s coffers before the latest private placement, it says it has the cash it needs to get through to production. It plans to achieve such a status by 2011.

The latest permit authorizes Ur-Energy to construct and operate two water holding ponds for water management at the site. Combined with the injection well permits, the company says it is getting clear signals that progress is being made towards finalizing all permitting. The final permits are in the hands of the U.S. Nuclear Regulatory Commission and the WDEQ Land Quality Division.

“I am looking forward to completing work on the remaining licenses and permits with the various state and federal regulatory agencies over the coming months,” Wayne Heili, vice president of mining and engineering at Ur-Energy said in a statement.

Lost Creek currently has an indicated resource of 8.5 million tonnes grading 0.058% U3O8 for 9.8 million lbs. of U3O8 and an additional inferred resource of 0.7 million tones grading 0.076% U3O8 for 1.1 million lbs of U3O8.

The company expects to produce U3O8 at a rate of 1 million lbs per year for a minimum of 6.5 years. It says the site does have significant exploration upside and it expects to find additional resources.

Leach efficiency at the plant is estimated at 80%, which is above the industry average of roughly 70% while cash costs are expected to come in within the US$35 to US$38 per lb. range.

Clearly the mine will be a big winner if uranium prices can break out of their protracted slump in the US$40 to US$45 per lb. range.

The company is looking to domestic demand to fuel an appetite for its product and it points out that while the US generates 20% of its energy from nuclear power, it currently only produces 7% of uranium it uses.

On the global scene there are currently plans to double the 436 nuclear reactors that are currently in operation, a situation that could well improve uranium prices in the coming years.

In Toronto on June 4 the company’s shares were flat at 97¢ on roughly 88,000 shares traded. The company has 93.9 million shares outstanding.