Uranerz Energy Corp. (URZ-T, URZ-X, URZ-N) says it has discovered a new uranium trend on its Monument project, just 24 kilometres 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 & Co. penned in its daily research note. “It is likely the discovery will increase reserves as further drilling is completed and could make URZ a more attractive takeover candidate in the current depressed uranium environment.”
News of the discovery also follows Japan’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 toward nuclear power. “We anticipate a positive news cycle for the uranium space over the next 12 months,” its analysts wrote. “With additional restarts in Japan, China recommencing approval of new reactor construction, and the looming expiration of the Russian highly enriched uranium (HEU) treaty.”
The New York-based investment bank predicts spot uranium prices will average US$55 per lb. this year and US$58 per lb. next year. Currently the spot 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 Arkose Mining Venture 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 thirty 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 throughout the project area.
Highlights from the new uranium trend include 14 metres grading 0.074% U308 from a depth of 857 metres in hole 31 and 10.5 metres of 0.108% U308 in hole 33 from a depth of 841 metres. Hole 53 returned 25 metres grading 0.159% U308 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 about 80 km southwest of Gillette, Wyoming and 160 km north of Casper, 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 are a series of small buttes rising 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 Corp. (CCO-T, CCJ-N), the world’s largest public uranium company, and has entered into long-term uranium sales 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 was between $65 and $70 per pound.
In Toronto at presstime, Uranerz was trading at $1.42 per share within a 52-week range of $1.12-$3.28. the company has about 77 million shares outstanding.
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