Uranerz Energy (URZ-T, URZ-X) says it has discovered a new uranium trend on its Monument project, 24 km southeast of where the company is building its first in-situ recovery uranium mine at the Nichols Ranch project in Wyoming’s Powder River basin.
“We consider the discovery to be a major find for Uranerz,” Dahlman Rose writes in a daily research note. “It is likely the discovery will increase reserves as further drilling is completed, and could make Uranerz a more attractive takeover candidate in the current depressed uranium environment.”
News of the discovery also follows the Japanese government’s decision on June 16 to restart two nuclear reactors at the Oi nuclear facility in Fukui prefecture — a move Dahlman Rose analysts say will “meaningfully” change the sentiment towards nuclear power. “We anticipate a positive news cycle for the uranium space over the next twelve months,” the analysts write, “with additional restarts in Japan, China recommencing approval of new reactor construction and the looming expiration of the Russian highly enriched uranium treaty.”
The New York-based investment bank predicts spot uranium oxideprices will average US$55 per lb. this year and US$58 per lb. next year. The current price is US$51 per lb.
Uranerz discovered the new uranium trend on its Arkose Mining Venture property, part of the Monument project, after drilling began there in April. The property is a joint venture in which Uranerz holds an 81% stake and United Nuclear LLC owns the remaining 19%.
The company reported that it drilled 30 new uranium trend and delineation holes in a single section of the Monument project area to follow up on 48 widely spaced exploration holes drilled last year.
Highlights from the new uranium trend include 14 metres grading 0.074% uranium oxide (U3O8) from a depth of 857 metres in hole 31, and 11 metres of 0.108% U3O8 in hole 33 from a depth of 841 metres. Hole 53 returned 25 metres grading 0.159% U3O8 from a depth of 845 metres.
“We have numerous holes now that can at least delineate a trend,” Derek Iwanaka, the company’s manager of investor relations, says in a telephone interview. “Now all we have to do is drill it off and determine whether there’s a viable resource there.”
The Arkose property is 80 km southwest of Gillette and 160 km north of Casper in Wyoming. According to a 2008 technical report, the Arkose property is within the Wyoming basin physiographic province in the central portion of the Powder River basin, within the Pumpkin Butte mining district.
The Pumpkin Buttes rise several hundred feet above the surrounding plains, and portions of the Arkose property are east, west and south of these buttes. The Pumpkin Buttes mining district was the first commercial uranium production district in Wyoming, and uranium was first discovered there in 1951.
Uranerz has a processing agreement with Cameco (CCO-T, CCJ-N), the world’s largest public uranium company, and has entered into long-term uranium sale contracts for a portion of its planned production at Nichols Ranch with two of the largest nuclear utilities in the U.S., including Exelon.
The contracts include a mix of market-related and fixed-price contracts negotiated in late 2008 and into 2009, when the long-term price of uranium oxide was between US$65 and US$70 per lb.
At presstime Uranerz traded at $1.42 per share within a 52-week range of $1.12–$3.28. The company has 77 million shares outstanding.
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