The Pumpkin Buttes are a series of small buttes or steep-sided hills several hundred feet high in the central portion of Wyoming’s Powder River basin — a district well known for hosting roll-front-type uranium mineralization that is often amenable to low-cost in-situ recovery (ISR) mining methods.
It is here that Uranerz Energy (URZ-T, URZ-X) plans to produce uranium oxide to sell directly to utilities to manufacture the fuel used in nuclear power plants.
The company is one step closer to that goal now that it has reported its first resource estimate on South Doughstick, one of the projects that falls within the Arkose joint venture between the company (81%) and United Nuclear (19%).
The estimate puts measured and indicated resources at about 2.29 million lbs. of uranium oxide at an average grade of 0.121% U308 and an inferred mineral resource of about 189,300 lbs. at an average grade of 0.096% U308. The estimate was based on a cutoff grade of 0.2% uranium oxide.
During the latter half of 2008 and the first half of this year, the joint venture completed 331 exploratory drill holes on South Doughstick, about 60 air miles northeast of Casper, Wyo., in Campbell and Johnson counties of the Pumpkin Buttes uranium district.
Previously, Uranerz reported that leach amenability studies performed on core samples from the property showed a uranium recovery of 87.8%.
The potential target mineral resources within the Arkose mining venture’s property are believed to be alteration-reduction trends hosted in the Eocene-age channel sands that lie between 300 and 1,100 ft. below surface. Uranium mineralization within and adjacent to the Arkose property are found in the Eocene Wasatch Formation.
The Wasatch is a fluvial deposit composed of arkosic sandstones that are typically 25% or more feldspar grains and indicates a source rock where chemical weathering was not extreme and the sediments have not been transported far.
The Wasatch Formation is interlayed with sandstones, claystones, siltstones, carbonaceous shale, and thin coal seams that overlie the Paleocene Fort Union Formation, another fluvial sedimentary unit.
Commercial in-situ recovery uranium mining in the Powder River basin began in 1987, with production coming from the Smith Ranch-Highland mine currently owned and operated by Cameco (CCO-T, CCJ-N), and from Areva’s (ARVCF-O) Irigaray-Christensen Ranch ISR mine. (Earlier this month, Uranium One [UUU-T, SXRZF-O] signed a deal to acquire the latter mine from subsidiaries of Areva and lectricit de France for US$35 million in cash.)
The low capital and operating cost ISR system involves using a leaching solution to extract uranium from underground orebodies. The leaching agent, which contains an oxidant such as oxygen with sodium bicarbonate, is added to the native groundwater and injected through wells into the orebody in a confined aquifer to dissolve the uranium. The solution is then pumped through other wells to the surface for processing.
According to the World Nuclear Association, 28% of the world’s uranium production last year was mined using ISR techniques.
At presstime in Toronto, Uranerz was trading at $1.96 per share in a 12-month range of 51¢-$2.68.
The company has 55.5 million shares outstanding.
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