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    uranium investing

    Ur-Energy Updates Resource for Lost Creek, Adds to Mine Life

    Written by Vivien Diniz
    |
    Dec. 08, 2015 04:20PM PST

    Ur-Energy announced an increase to the mineral resource estimate for its Lost Creek property, the second increase announced for the project in 2015.

    Big news came Tuesday for Wyoming uranium miner Ur-Energy (TSX:URE,NYSEMKT:URG), which announced an increase in the mineral resource estimate for its Lost Creek property. The increase is the second announced for the project this year.
    On the back of the news, Ur-Energy saw its share price increase 10 percent on the TSX, rounding off the day at $0.77. It saw a similar jump on the NYSE MKT, rising 9.62 percent to reach $0.57.
    Overall, analysts are pleased with the announcement. Compared to the company’s June resource estimate, this latest estimate increases the measured resource for Lost Creek by 30 percent, bringing the total to 8.028 million pounds. The indicated resource also saw a boost this second round, climbing by 33 percent, to 5.223 million pounds, while the inferred resource rose by 28 percent, to 6.439 million pounds. The new estimate includes recent drilling done at Lost Creek and a lower grade-thickness (GT) cut off of 0.2.


    Taking into account both 2015 mineral resource updates, the company has demonstrated a sizeable resource increase at a low cost, elevating its global resource to 19.7 million pounds grading 0.046 percent U3O8e.
    Why is the cut off important? 
    Ur-Energy first introduced the lower GT cut off in its June 2015 resource estimate for Lost Creek. The lower GT cut off was the result of better-than-expected uranium recoveries from the mining operation since production started in the second half of 2013. According to Ur-Energy, company geologists have now completed the re-estimation of the mineral resource using the lower figure. The result was a net increase of 2.446 million pounds U3O8e in the measured and indicated categories, and a rise of 1.015 million pounds U3O8e in the inferred category.
    In a research note, David Sadowski, equity research analyst with Raymond James, highlights that similar to the previous revision, the current revised cut off focuses on Mine Unit 2 (MU2), which is slated to enter production in 2016. “While grades are now lower because of a lower cut-off grade, this methodology is justified by operational experience and the continued strong wellfield recovery being seen at the project, with average head grades into the plant averaging 130 mg/L (weighted by captured pounds; 3Q15 average was 86 mg/L) – far outstripping 47 mg/L design,” Sadowski states.
    Likewise, Cantor Fitzgerald’s Rob Chang said in a note, “[w]hile lowering cut-off grades is a classic way to artificially increase resource sizes, we do not view Ur-Energy’s decision to lower its cut-off grade at MU2 with the same skepticism. This is because the Lost Creek asset has consistently outperformed estimates and has proven that the prior cut-off was too conservative. Together with the resource update reflected earlier this year in the June 17, 2015 Technical Report, the Lost Creek Property resources have seen combined 2015 net increases of 4.596M lbs in the Measured and Indicated resource categories, and 1.699M lbs in the Inferred resource category. These figures represent combined, net increases of 53% for Measured and Indicated categories of resource and 36% of Inferred resources.”
    Overall, the increased resource estimate for Lost Creek is a positive step for the Wyoming-based miner. The company remains a top pick for Raymond James, and the firm believes it has “solid operating margins in the weak spot price environment.” Sadowski also sees the latest results extending the mine life at Lost Creek from 13 to 15 years. The extended mine life includes concurrent mining of 7 million pounds of uranium at the satellite Shirley Basin project, expected to start in 2018.

     
    Securities Disclosure: I, Vivien Diniz, hold no direct investment interest in any of the companies mentioned in this article.
    cantor fitzgeralddavid sadowskiuranium investingmine liferob chang
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