The Uranium Mining Industry and The Uravan ... - Uranium Watch

The Uranium Mining Industry
and
The Uravan Mineral Belt

NOTES
1. Focus of this presentation is on the economics and geology of
uranium.
2. First is an overview of the global history of demand, supply and
price of uranium.
3. Second is an overview of the demand and supply situation in the
US.
4. Third is an overview of the Uravan Mineral belt.
5. Forth is an overview of the Energy Fuels projects in the UMB.
6. The final part of this presentation is a discussion of Energy
Fuels and it's Pinon Ridge and White Mesa Mills, with
recommendations for encouraging EF to use White Mesa and not
build Pinon Ridge.

Periodic Table of the Elements

NOTES
1. Uranium, #92, has 6 radioactive isotopes. The most common and primary one used
for nuclear weapons and energy is U235. It ultimately decays to non-radiogenic lead
(#82) through the emission of a series of alpha particles and neutrons.
2. Vanadium, #23, is a co-product of uranium in the Uravan Mineral Belt (UMB).
3. The rare earth elements, #s 57 – 71, with Scandium (#21) and Yttrium (#39),
occasionally occur with uranium, but this is not the case in the UMB.

NOTES
1. Trace amounts of U may occur with REEs, but REEs do not
usually occur with U.
2. REEs are primarily used in electronic equipment (cell phones,
TVs & computers)
3. Currenltly, 97% of global supply is from China
4. Consequently, there is intense exploration activity outside of
China
5. All major sources occur in intrusive rocks – not in
sedimentary rocks
6. Dolores River flows through sedimentary rocks
7. NO evidence that REEs are present in economic amounts in the
UMB.

Uranium-Vanadium Ore – Carnotite

NOTES
1. Uranium commonly occurs with vanadium in the UMB. The
weight ratio ranges from about 1:3 to 1:8 and averages about 1:5.
2. Ore is mined, hauled to a mill where it is crushed, slurried and
pulverized. Acids are used to leach the U and V from the slurry,
then they are chemically separated, precipitated as oxides and
dried. The remaining rock, which may contain 5-10% of the
original U in the ore, is called mill tailings and is pumped to a
tailings pond. Historically, ponds were clay lined and over time
began to leak. Currently, ponds are typically lined with two HDPE
(plastic) layers overlying clay and separated by sand. However, no
on knows how long these will last under long term bombardment
by radiation.
3. Due to the yellow color of the U precipitate it is called
“yellowcake”, with a concentration of 3-5%.
4. Further refining is required to separate U235 from the other U
isotopes to make concentrations high enough for nuclear chain
reactions to occur.

Uranium 235
Alpha particle emitter (helium nucleus)
Half life – about 700 million years
Fissile in concentrated amounts
Decays to Lead 207
Primary uses are nuclear weapons and energy
Typical grade in Uravan is 0.25% as U3 O 8

Types of Radiation
Gamma – ray
Beta – electron
Alpha – particle

NOTES
1. U also emits gamma rays, which are detected by geiger
counters. These rays are only harmful to life in high
concentrations. The same is true for beta radiation.
2. Alpha radiation is most dangerous to life and is probably a
primary cause of DNA mutations. It only travels very short
distances before loosing damaging momentum, so the primary
hazards are ingestion in food or water or inhalation in dust.

Alpha Radiation

NOTES
1. When a U atom emits an alpha particle, if another U atom is
nearby and the alpha particle collides with it, the atom splits,
releasing energy and a neutron. If there are enough nearyb U
atoms, the neutron collides with one of them, causing it to split,
producing a chain reaction that releases economic quanities of
energy and potentially destructive quantities of energy (i.e. it's
fissile).

World Uranium Production & Demand

NOTES
1. From 1945 – 1965, U production was almost entirely for nuclear
weapons.
2. From 1970s' to present, U production has been almost entirely
for nuclear energy.
3. Excess production from 1945 to late 1980s was stockpiled for
use in weapons, but due to international treaties to cease nuclear
weapon production, the stockpiles were used for energy production
and consumed by increasing demand by mid the 2000s.

Uranium Spot Price History

NOTES
1. Note price in 1980 was $40/lb. This was the price offered since the 1940's for
weapon use. Subsequent prices were based on demand for energy use. Long term
contract prices are affected by spot prices but are usually lower
2. Price spike in 2007-2008 was due to speculation of U shortage.
3. By mid 2000's, stockpiles were depleted and mine production was far less than
demand.
4. First major price spike: in 2008, China announced plans to expand nuclear energy
production by over 700% by 2020.
5. Announcement of large high grade reserves in Australia and global economic
contraction in 2008-09 resulted in price collapse.
6. Second price spike: in 2011 Globex initiated a Uranium futures market and
speculators drove up the price, but the Fukushima nuclear disasater in Japan ended the
bubble.

Global Nuclear Reactors
Currently operating 440
Under construction 60
Planning stages 150
Proposed 340

NOTES
1. Future prices will depend on whether supply can keep up with
a 125% increase in demand over the next few decades.

Global Production of Uranium

NOTES
1. Two of top three producers, Canada and Australia, are strong US
allies
2. Production as a percent of world demand is rapidly rising and is
expected to continue to meet demand at current prices of $50-$55
per lb.
3. Current deficit of 22% (bottom of 2010 column: 100% -78%) is
met with by-product of polymetalic and phosphate mines, resulting
in relative price stability.

Uranium: Domestic Demand vs Supply

NOTES
1. USA only supplies 11% of its U demand (18,376 tons).
2. Canada has an excess of supply (about 8,000 tons) that is
adequate to meet about half of US supply deficit.
3. Australia has virtually no domestic demand, so 100% of its
production (5,600 tons) is available.
4. Balance comes from domestic by-product (Florida phosphates)
and the world market.

NOTES
1. Australia and Canada, two of the USA's strongest allies, will be
major U suppliers for the forseeable future, so a strong domestic
supply is not critical.
2. There are two world markets – major western counties and
major eastern countries. Currently, Australia and Canada supply the
western countries and Kazakstan is the major supplier for eastern
countries. However, China has recently entered into contracts to
buy from Australia.

Limits to U308 Demand & Price
Growth in alternative green energy technologies
New technologies that reduce emissions of CO2 from
fossil fuel energy sources
Continued fear of nuclear meltdowns
Continued nuclear waste disposal issues
Long permit lead time and high capital cost of new
uranium mines and nuclear power plants
Fear of permanent water contamination from uranium
mines and mills

NOTES
1. Uranium is considered by the US government to be a green
energy source because supply is so high that it is essentially
renewable.
2. USGS studies indicate that US geothermal energy resources are
sufficient to replace coal as the major source of electricity in the
US. This is probably true for China as well. In the long term,
geothermal energy may replace nuclear energy and mayalso
reduce Chinese reliance on hydropower.

Global Uranium Reserves
Amount depends on price and demand
At $60/lb U308 and current rates of increase in
demand, reserves are adequate until 2175
As price increases, supply and reserves
increase, limiting price
So why explore for Uranium

NOTES
1. Contrary to popular belief, geologists are just as susceptible to the streetlight
effect as most people – i.e. they look for minerals where it's easiest to find them
(in deserts).
2. Consequently, we have just begun to explore the earth for U and other
resources.
3. There are about 40 companies with over 60 U exploration projects world wide,
many of which have higher grades and tonnages than those in the UMB.
4. At some point, supply of U will exceed demand, prices will decline, and
companies with mines which are marginally economic, such as those in the UMB,
will fail.

US Uranium Production History

NOTES
1. From 1940s – 1970s US produced as much as 50% of world
supply.
2. US built over 30 nuclear power plants during the 1960s - 1970s,
but plans to build numerous additional plants in the 1980s were
terminated after the 1979 partial meltdown at Three Mile Island,
significantly reducing pressure for new domestic supplies of U.
3. Development of large high grade deposits of U in Canada,
Australia and Kazakstan in the late 1970s resulted in rapid growth
of a global market.

Major US Uranium Reserves

NOTES
1. This map shows the general location of major primary U reserves. Byproduct
resources such as those in FL phosphates are not shown.
2. Note location of mines in the UMB and Arizona Strip.

Reserves by State (2008)

NOTES
1. Note that reserves are determined by price, and increase at higher prices
because lower grade ores become ecnomic.
2. CO, AZ and UT reserves are only 12% of total at $50/lb.

Some Major Types
of Uranium Deposits

NOTES
1. Types of U deposits by size and grade. IOCG (Olympic Dam)
is primarily iron-gold-copper (U is by product)
2. UMB deposits are a roll front type and are relatively low grade
and low tonnage, thus likely to be less competitive as supply
increases and price decreases.

Types of Mines and
Uranium Recovery Processes
Type %
In Situ (subsurface leaching) 41
Open Pit with surface heap leach 25
Underground with mill & tailings ponds 28

NOTES
1. In Situ Leach (ISL or ISR) is the least expensive and most
suitable for deep, large low grade deposits such as those in WY.
2. Open pit with surface heap leach have higher costs than ISL and
require resources near the surface. Grades can be lower than
underground due to economies of scale.
3. UMB mines have historically been underground with mill and
tailings pond recovery. They are typically smaller and require
higher grades. Reclaimed tailings ponds are visible along the
highway near Uravan. EF mines are underground with ore to be
shipped to either the White Mesa or Pinon Ridge mills. There is a
possibility of open pit mining on DOE Lease #7.

Uranium Roll-front Mineralization

NOTES
1. Typical of UMB mineralization and is usually recovered by underground
mining with mill and tailings pond

Roll-front in Outcrop

NOTES
1. Thickness of minerized zone can range from inches to tens of
feet. Areal extent can range from hundreds of square feet to tens of
thousands of square feet.
2. Typically, grade is highest in thinner zones, but mining costs are
also higher, and ISL is less likely to be feasible. Thin zones with
relatively small areal extent are typical of UMB.

NOTES
1. Note location of UMB (block with Gateway)
2. Pinenut (acquired from Denison) is near the U in Kaibab Uplift
near the western end of theArizona Strip

Jurassic Stratigraphic Section

NOTES
1. In addition of Salt Wash Member of the Morrison, other U mines on the
Colorado Plateau are either in the basal conglomate of the Chinle Formation
(located just below the Wingate on above section) and breccia pipes near the
Grand Canyon located in sedimentary rocks far below the Chinle.

Mesozoic Formations
in Dolores Basin

NOTES
1. Massive orange cliff above river is Wingate Sandstone (same
cliff viewed in Colorado National Monument south of Grand
Junction and in the Moab Valley).
2. Note waste spillage from exploration tunnels in the Salt Wash
Formation of Morrison on Tidwell Member of Morrison near
skyline in upper right.

Salt Wash Depositional Environment
~ 150 mya

NOTES
1. The Morrision is about 150 million years old and is the first
rock to be deposited by east flowing streams in this area after uplift
of the Ancestral Rockies (located in the Uncompagre Plateau area)
about 350 million years ago. This indicates the North American
continental divide had moved from Colorado to Nevada/California
in this area during Morrison time.
2. Mineralization in sandy channels deposited by Salt Wash
streams is probably derived from the overlying Brushy Basin
member of the Morrison, which is a colorful gray-purple-green-red
slope forming shale derived from clay alteration of volcanic ash.

Salt Wash Outcrop

NOTES
1. Crossbeds in Salt Wash sandstones indicate flow direction.
Mineralization was localized in the Salt Wash by impermable clays
of the underlying Tidwell Member of the Morrison.

Uravan Mineral Belt History
For this presentation UMB includes Gateway, Paradox,
Slickrock and Bull Canyon uranium deposits
1200 mines operated sporadically from 1900 to present
1900 – 1930's: radium (used for luminous watch faces)
1930s – mid 1940s: vanadium (hardened steel for WWII)
1940s – 1960s: uranium for nuclear weapons
1970s – present: uranium for nuclear power and
vanadium for tool steel

Vanadium Metal

NOTES
1. Metallic element found with U in UMB
2. Primary use: hardens tool steel
3. Other metals can be used as substitute
4. No global shortage of reserves
5. Typical grade in Uravan Mineral Belt is 1.25%
6. V2O5 prices are currently about 10% of price of U, so on
average it adds about 50% to the value of ore.

Uravan Historical Production
Worlds largest producer of Uranium until 1960s
Current production is insignificant
Totals based on
2010 prices
UMB Production
1900 – 2010
World Production
2010
Uranium $3.8 billion $7.1 billion
Vanadium $2.3 billion $8.9 billion
Totals
$ 6.1 billion $16 billion
(100 years) (1 year)

NOTES
1. Even if EF mines begin to operate, total production will not be
significant from a US or global supply perspective.

NOTES
1. A total of 41 DOE leases were first issued (about 25,000 acres),
but only 13 remain active (6585 acres) and all of these are on hold
subject to a lawsuit against DOE for failure to abide by NEPA.
Energy Fuels owns a few of these leases.
2. If the DOE is able to comply with NEPA, only a few of the
active leases are likely to be developed. Most are owned by Cotter,
which includes Lease #7, the only lease with open pit potential.
Cotter has permanently closed its uranium mill at Canon City and
will probably sell its leases to EF.
3. Nearly all historical production was from the DOE leases, where
the USGS identified U resources in the 1940's for military use.
These leases have largely been reclaimed.

NOTES
1. There are about 3800 active unpatented claims on public land managed
by BLM which cover about 80,000 acres.
2. Most are speculative and only a few percent will ever be developed.
Energy Fuels has defined reserves on some of them.

Economic Potential
of Leases & Claims
Individual underground mine production ranged
from few tons per day to a few tens of tons per
day, largely due to the thin and erratic nature of
mineralization. Up to 100 tons per day is
considered pilot scale mining by modern
standards.
Historical production from Leases indicates an
average grade of about 0.25% U and 1.25% V.
Pilot scale underground mining and using a mill
for concentration at grades this low is marginally
profitable at current prices.

NOTES
1. Although many of the leases and unpatented mining claims
shown above are in the general vicinity of WSA and NCA land in
the Dolores River Basin, none of the EF mines are in this area.
2. It is feasible to truck ore from Whirlwind, Energy Queen, Sage
Plain and San Rafael to the White Mesa Mill.
3. Though the Sheep Mountain Project is less advanced than the
projects in the UMB, it is much larger and has a greater potential
impact EF stock prices. It is also not located in an area with
extensive potential wilderness.

Whirlwind Mine Cross Section

NOTES
1. This section is typical of UMB mines – high on the edge of the
plateaus.
2. Note thin, erratic mineralization (pink)

Energy Fuels Advanced Projects
Project
Lb U
(millon) % U Lb V
(million)
% V
Ore
Tons Per
Day
Whirlwind 1.003 0.30 3.293 0.97 200
Energy
Queen 1.396 0.32 6.03 1.38 250
Sage
Plain 2.834 0.22 17.828 1.39 300
San
Rafael 3.405 0.225 4.596 0.30 -
Sheep Mtn
(WY)
Pinenut
(AZ)
18.4 0.123 - - -
0.672 0.37 - - -

NOTES
1. Lb U are from NI 43-101 technical reports. These are not
feasibility studies so lbs are not based on price and thus are
provisional.
2. Projected production from the first three mines listed is 750 tons
per day, about half of the White Mesa mill capacity.
3. Based on the size of the San Rafael resource, it could produce
500 tons per day. However, based on its grade, both it and Sage
Plain will require significantly higher prices to justify production.
4. It is probably not economically feasible to truck ore from Sheep
Mountain WY to the White Mesa Mill (i.e. Sheep Mountian will
require its own mill), but the relatively high grade of Pinenut ore
(south of Kanab) may make it feasible to truck it to White Mesa
(about 300 miles).

Energy Fuels Stock Price History

NOTES
1. EF has been a penny mining stock for at least 5 years, except
for the global bubble from 2006-2008 and the U price spike to $70
in 2011. EF stock price increases reflect U price increases and are
not due to any news specific to EF.
2. EF stock price was notsignificantly affected by the
announcement of the acquisition of Denison's White Mesa mill and
US uranium properties, so investors did not see this acquisition as
either favorable or not favorable.

2012 EF & Dension US merger
Denison produces or has produced Uranium from
mines in Canada and UT and has development
stage properties in AZ, UT, Mongolia and
Zambia. It lost $71 million in 2010, an asset
writedown primarily due to the continuing
decline in uranium prices.
Energy Fuels acquired an operating mine
(Daneros) and the White Mesa Mill in UT from
Denison, plus numerous exploration projects. It
also acquired the Pinenut Mine in northwest AZ,
which plans to begin operations this summer.
Denison shareholders will soon own over 66%
of Energy Fuels.

NOTES
1. One of the largest new EF shareholders is Korean Electric Power
Corporation, which has a contract to purchase 20% of Denison's
(and thus EF's) uranium production.

Build the Piñon Ridge Mill
or Use White Mesa Mill
The Sheep Mountain Alliance sued the Colorado
Department of Public Health and Environment in
February 2011 regarding lack of NEPA
compliance for Piñon Ridge Mill permits. It is
likely that this lawsuit and the resulting delay in
construction plus limited ore feed to Denison's
White Mesa Mill were a driving factor in EF's
acquisition of this mill .
EFR now has the option of renewing the White
Mesa Mill permits and trucking ore from its
Uravan Mineral Belt mines to it rather than
building the Piñon Ridge Mill.

Conclusion
1. There is no shortage of uranium for nuclear energy for the
forseeable future.
2. There is global market for uranium and vanadium and two
of the largest uranium producers are major US allies.
3. Production of uranium from the Uravan Mineral Belt is
based solely on potential profit for EF shareholders.
4. Average grades and reserves in the Uravan Mineral Belt
indicate marginal profitability compared to those of large
resources in US allies such as Australia and Canada.
5. Considering the large number of uranium exploration and
production companies and the likelihood that large, low
cost projects will be developed as demand increases, it is
unlikely that the Uranium price will increase at a rate that
exceeds production cost inflation rates for significant
periods of time for the forseeable future.

Recommendations
1. Follow the example set by advocates for
limiting uranium mining in the Grand Canyon
area: focus on publicizing water quality issues –
this is the same water.
2. Become shareholders of Energy Fuels and
encourage the company to put the Piñon Ridge
Mill on hold and utilize the White Mesa Mill.
2. Express concern to management and to large
shareholders such as Korean Electric Power
Corporation about plans to mine and process
uranium ore in environmentally sensitive areas
where strong environmental opposition may
cause lengthy delays and higher costs.