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Black Range Minerals made a strategic move this month with the fully-funded acquisition of the Shootaring Canyon uranium mill from Uranium One for $10 million
The Australian-based company said it considers the acquisition “to be transformational, as it will enable Black Range to become a vertically-integrated uranium company . . . allowing it to create a pre-eminent USA uranium exploration and development company.”
Black Range expects the costs for acquiring and recommissioning the Shootaring Canyon mill will be “significantly less” than building a new processing facility at the company’s Hansen/Taylor Ranch uranium project located in Colorado. The acquisition will allow Black Range to “fast-track production” and bypass toll-milling costs from a third-party mill.
The acquisition is also a strategic play on the domestic supply shortage in the United States, which is keen on developing more domestic sources of energy production. While the country has 100 commercial reactors that annually consume 55 million pounds of U3O8, its annual production of yellowcake totals a mere 4 million pounds. Uranium market analysts expect significant market growth for US uranium producers and near-term producers in the coming years.
Shootaring acquisition advances Hansen/Taylor Ranch uranium project
The Shootaring Canyon mill is a conventional acid-leach facility permitted to process up to 750 tonnes of uranium ore per day (tpd), but with a capacity to process 1,000 tpd. Built in 1980, the mill operated between April and August 1982 during which time it processed 28,000 tonnes of ore containing 30,000 pounds of U3O8 with metallurgical recoveries of +90%. Operations were suspended due to low uranium prices and the mill has been on care and maintenance ever since. Surface stockpiles at Shootaring have an historical mineral resource estimate of approximately 250,000 pounds of U3O8 at a grade of 0.13% U3O8.
Black Range’s management says the mill is in good condition and can be refurbished quickly at low cost. The company plans to customize the mill to receive high-grade concentrates from multiple projects across the United States, including the Hansen/Taylor Ranch project. Black Range estimates it could have the necessary permits to get the mill back up and running within a period of 18 months.
Black Range’s Hansen/Taylor Ranch project has a JORC-compliant mineral resource estimate of 90.9 million pounds of U3O8 at a grade of 0.06%, delineated across five deposits. A scoping study on the largest of these deposits, the Hansen Deposit, was completed in 2012. The study indicated that an initial mining operation can be developed at the Hansen Deposit at an estimated CAPEX of less than $80 million to produce 2 million pounds of uranium ore per year with an estimated operating cost of about $30 per pound U3O8.
With the acquisition of the Shootaring Canyon mill, Black Range is now advancing the Hansen/Taylor Ranch project to production and expects to receive all the necessary mining permits by 2016 with production to commence shortly thereafter.
JV portfolio of exploration and development projects
The $10 million acquisition also includes a joint venture agreement with the right to earn up to a 100% interest in Uranium One’s other “conventional mining” uranium assets in the US. These assets encompass about 77,000 acres and contain an NI 43-101 estimated mineral resource of 8.9 million pounds of U3O8 at a grade of 0.19% U3O8 as well as surface stockpiles of uranium ore with a historic mineral resource estimate of about 165,000 pounds U3O8 at a grade of 0.09% U3O8.
The most advanced of these assets is the previously operating Velvet-Wood Mine. The mine has a remaining NI 43-101 compliant estimate of 5.3 million pounds U3O8 at a grade of 0.26% U3O8 and potential exists to delineate additional mineral resources. Black Range estimates it could take as little as 12 months to obtain the permits needed to re-commission Velvet-Wood.
Next steps for Black Range include commencing detailed studies aimed at understanding the economics of re-commissioning the Shootaring Canyon mill as well as recommencing mining at the Velvet-Wood Deposit.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
