Rio Plata drills Timmins property

Results were a bit more encouraging in the south block where previously unknown copper-zinc mineralization was located in three holes, the best of which yielded 0.11% copper and 0.12% zinc across 16 ft beginning at 236 ft.

Richard Somerville, president, confirms the zone has “considerably strike length” and he says “we are now investigating financing for 1989.”

Another drill hole on its Matheson Twp., property returned 14.1 ft of 0.35% copper from a geophysical anomaly. Somerville, who is from nearby South Porcupine, believes the Timmins camp has considerable base metal potential given the presence of the Kidd Creek mine which was discovered in the early 1960s. — 30 — file: V:URANIUM U.S. PAGE Uranium buys royalty interests in Kingsville Dome project

With a new long-term sales contract under its belt and projected earnings of $1 million(US) for 1988, Uranium Resources (NASDAQ) has bought out two onerous royalties for its Kingsville Dome uranium project in South Texas.

President Raymond Larson said the royalties represented a charge of $2 per lb or about $8 million based upon current sales contracts and future estimated production from existing reserves at Kingsville.

The $2.7-million purchase price will be amortized over mine life and he said without the royalties pre-tax income and cash flow should increase by $1.5 million in the next two years and by approximately $1 million in subsequent years.

A portion of the acquisition cost was funded by a $1.75-million loan from Elders Finance which owns just under 10% of the company. But it has warrants to acquire up to an additional 20% of Uranium Resources.

The company’s most recent long- term contract with a major U.S. electric utility involves up to one million pounds of uranium oxide beginning in the first quarter of 1989 and running through 1993. “The total estimated amount of the revenues under this contract is approximately $20 million,” he pointed out.

Larson said the Kingsville Dome in situ leaching project is currently producing about 5,000 lb of uranium oxide (1U3O8) per day or about 1.5 million lb per year. “Approximately 10% of all U.S. production is coming out of Kingsville Dome,” he told The Northern Miner.

Solution mining of uranium deposits in South Texas began over 10 years ago and he emphasized “it’s not new technology.” The uranium is contained in a water aquifer which is pumped out of bore holes and sent to a processing plant. Oxygen and sodium bicarbonate are added then it’s pumped underground, recirculated, and recovered with the uranium dissolved in solution. “We end up essentially with re-circulating water until the orebody is mined out,” he said.

Larson estimated their cash costs are about $3 per lb versus a current spot price of $11.35. But he emphasized the company has intermediate to longer term contracts for 7.3 million pounds of uranium oxide which has a future value of “in excess of $150 million.”

Compared to conventional mining, in situ leaching is not nearly as capital intensive as surface or underground mining, he said.

The Rosita project in South Texas will be the company’s next producer, followed by Churchrock in New Mexico. The former is expected to begin production by the end of 1989 but he said they have no definitive plans for Churchrock. Rosita would not have to be on stream to meet their long-term contracts, he emphasized.

“I think we are coming back into our own here and I believe that uranium is going to turn around this year,” he said.

“We still expect to meet our previously reported earnings projections of substantially in excess of $1 million for 1988, and that the first quarter, 1989 earnings will be record earnings for the company for any quarter, and will exceed the earnings for the entire year of 1988, he said.

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