Nunatsiavut government lifts moratorium on uranium

A measure of certainty mixed with relief has flooded back into the market about uranium exploration in Labrador after the Nunatsiavut Government lifted its three-year moratorium on the working, production, mining and development of uranium on lands belonging to the Labrador Inuit.

The moratorium was imposed in April 2008 to give the government more time to create a lands administration system and write an Environmental Assessment Act and legislation governing the protection of the environment.

“We knew it was coming down the pipeline but with governments you never know,” Stewart Wallis, president and chief executive of Crosshair Energy (CXX-T) says. “It’s good to get back to work.”

Ninety-two percent of Crosshair’s Labrador property falls outside the Labrador Inuit lands, but the moratorium had a significant impact nevertheless on the company’s market capitalization. In 2007-2008 Crosshair’s stock price was trading in the $4 range but the moratorium cut that by 50%. “Part of that could have been attributed to the general malaise of 2008,” Wallis concedes, “but compared with our peers in the uranium industry, pounds in the ground in the Labrador district were valued at a lower price in situ than pounds in the ground elsewhere because of the moratorium.”

The moratorium sent the message that Labrador was not open for business, says Peter Dimmell, president of Silver Spruce Resources (SSE-V), which is a major landholder in Labrador’s Central Mineral Belt. “At the time the moratorium went into effect they said ‘you can still explore for uranium,’ but we said ‘how can we explore if we can’t develop what we find?’ That scared people not only on the uranium side but on everything, including base metals.”

Dimmel also points out that it was a narrow victory for Nunatsiavat officials, who voted 8-7 in favour of the moratorium but voted 15-0 to rescind it.  Says Dimmell: “The Nunatsiavat government got the message that this was important to people.”

Mega Uranium (MGA-T), which as a result of the moratorium cut its 2008 exploration budget in Labrador from about $9 million to $4.5 million—principally by postponing drilling on its Aillik East project—says it resumed limited exploration there last year when it felt sure that the government would lift the ban because it wanted to hit the ground running. This year the company is planning a 500-metre, eight hole drill program at Aillik East, where it found a new mineralized zone last year that returned a near-surface intercept of 10 metres grading 0.048% U308. It also plans to restart drilling at its Bruce River property.

“We are very comfortable with the aboriginal groups there now and we’ve spent quite a lot of time in consultation with them since the moratorium was brought about,” says Philip Williams, vice president of Mega Uranium’s business development. “Now that they’ve had time to study it and feel the impact economically of a lot of companies pulling out of the area, we feel that we are on pretty solid footing there.”

As for Paladin Energy (PDN-T), five of its six deposits fall within the Labrador Inuit Lands administered by the Nunatsiavat government and the company says it will start drilling again in the third quarter of the year and will focus on infill and extension drilling at its Michelin uranium deposit.

The Australian company holds title to significant uranium resources through its wholly owned Aurora Energy, including 15.1 million pounds of U308 at a grade of 0.08% in the measured resource category; 68.7 million pounds of U308 grading 0.10% U308 in the indicated resource category; and 53 million pounds of U308 at a grade of 0.08% inferred, using a cut-off grade of 0.02% U308 for open-pit resources and 0.05% U308 for underground, across all six deposits: Michelin, Jacques Lake, Rainbow, Nash, Inda and Gear.