ISR: A Win for Sustainable and Economic Uranium Extraction

A "supply black hole"

Due to the Three Mile Island, Chernobyl and Fukushima incidents and the subsequent media coverage about them, fear and uncertainty around nuclear power — uranium's primary use case — has become a longstanding roadblock to the growth of the US domestic uranium exploration and production market. Prior to the Three Mile Island incident, which took place in Pennsylvania in 1979, the United States produced over 40 million pounds of uranium and was completely self-reliant. After 1980, however, the US began acquiring uranium for nuclear fuel from other countries, and a deal made with Russia after the Cold War ended resulted in a significant portion coming Russia.

In 2001, uranium prices reached an all-time low of just US$7 per pound. By this point, many uranium suppliers had either curbed operations or exited the market entirely in favor of more lucrative resources. The market continued to struggle until 2007, when prices skyrocketed to US$140.

They moved down to settle in the US$50 range through 2011, when the Fukushima incident took place, and continued trending downward to a low of around US$18 in 2016. Prices remained depressed until 2020 and have been climbing since, crossing US$50 in March 2022. In November 2023, uranium broke through the US$80 per pound level and has continued climbing.

So what changed?

Increasing demand for nuclear energy, a clean energy alternative, collided with Russia's invasion of Ukraine in March 2022, which brought the need for domestic uranium production in the US to the forefront. Global sustainability efforts have driven demand for sustainable energy alternatives through the roof, helped along by ongoing supply chain instability.

On top of this, sentiment has come around on uranium due to the realization that nuclear power is a stable, carbon-free, reliable and powerful energy source perfect for baseload power and cost-effective to the consumer. As a result, western countries like the United States are now actively exploring new nuclear energy applications and seeking additional uranium sources.

More countries are also now committing to increasing their nuclear energy capacity to achieve net-zero emissions goals. At the 2023 COP28 World Action Summit, more than 20 countries from four continents launched the Declaration to Triple Nuclear Energy, with the goal of tripling global nuclear energy capacity by 2050.

All of these global developments add up to a combination of uranium price increases and major growing pains for uranium supply — much of which had been shuttered due to low price environments. It has also resulted in an opportunity for people interested in nuclear energy.

"The only (uranium) inventory that exists right now in the world is strategic — held by nuclear utilities and nation states," Uranium Insider Founder and Publisher Justin Huhn explained in an interview with the Investing News Network.

The expert said he sees a "supply black hole" emerging in the medium term. "We're at this moment in time where the supply side has gotten so squeezed that very, very low-volume demand in the spot market is moving the price significantly," he said. "It's a structurally undersupplied market, and nobody knows where that relief is going to come from."

Despite limited supply, uranium is also experiencing its most favorable supply/demand fundamentals in more than a decade. This is exciting news for uranium investors, as many believe uranium has the makings of an early bull market. It's not so exciting for the utilities now scrambling to source uranium for both new and existing projects.

In the search for new uranium resources, mining and exploration companies are also exploring innovative, sustainable and cost-effective processes to extract uranium — and ISR is proven to be the most promising.

What is ISR?

First developed in the US in the 1960s, ISR stands for in-situ recovery, meaning “in place.” ISR is an extraction technique that directly targets and extracts a resource without the need for mining, open pits, underground workings or heavy equipment traction. It operates through wellfields, similar to oil and gas production. In the case of uranium, the uranium is removed from its ore body via a fluid-based leaching compound that acts as a lixiviant and is delivered via an injection well.

In the US, most companies only use a combination of oxygen, sodium bicarbonate and native groundwater. The uranium in the ground is solubilized by the oxygen and the uranium-rich fluid is then pumped to the surface via a recovery well. At that point, it attaches itself to resin beads and is delivered to a processing plant. There, the uranium is removed from the water, which is then recycled back into the ground. Ninety-nine percent of all groundwater utilized in the extraction process is recycled.

ISR extraction typically targets uranium-bearing sandstone where the underground aquifer has been exempt from consumption due to the water's mineral content. Currently, ISR extraction accounts for over 70 percent of all uranium produced worldwide.

ISR in uranium extraction

To understand the investment value of ISR extraction in uranium projects, it’s important to understand both the economic and sustainability benefits of this process.

ISR extraction is non-invasive, leaving the surface above a resource deposit almost completely intact. This allows companies to extract resources without the tailings, open pits and waste dumps that characterize traditional mining operations. Once a uranium deposit is exhausted, the area can be easily restored to its original condition by rinsing the piping with water, returning the water to the aquifer and then removing all the piping and wellheads.

Compared to other methods of mineral extraction, ISR is also considerably more cost-effective, given the right geological conditions. Rather than the extensive infrastructure of an open-pit mine, ISR requires injection and extraction wellheads, piping and a uranium processing plant. This reduces both upfront capital costs and ongoing operational costs, while also streamlining permitting and reclamation.

Permitting for ISR can also be completed in two to three years, instead of the as much as 10 years for conventional mining. Because ISR projects are so low impact, it's typically easier to gain permits and licenses, particularly when operating in US jurisdictions with Agreement State status and established regulatory regimes. Wyoming and Texas are the two Agreement States in the US.

ISR processing is also more sustainable than other forms of processing, as it doesn't require emissions-heavy transport fleets or heavy machinery. The low cost also allows extraction of lower-grade deposits that would not be economically viable through traditional methods.

Promising projects

Nearly three-quarters of global uranium production occurs using ISR extraction. We explore some of the most notable and promising ones below.

enCore Energy (TSXV:EU,NYSE:EU)

EnCore Energy is a US-based uranium producer committed to providing clean, reliable and affordable domestic nuclear energy that solely utilizes ISR for uranium extraction. Uranium production is underway at enCore's licensed and past-producing South Texas Rosita central processing plant (CPP), and planned at its licensed and past-producing South Texas Alta Mesa CPP in 2024.

Future projects in enCore's production pipeline include the Dewey-Burdock project in South Dakota and the Gas Hills project in Wyoming, along with significant uranium resource endowments in New Mexico. The enCore team is led by industry experts with extensive knowledge and experience in all aspects of ISR uranium operations and the nuclear fuel cycle.

EnCore has its proprietary uranium database that includes technical information from many past producing companies, from its various non-core assets, and by leveraging its ISR expertise in researching opportunities that support the use of this technology as applied to other metals. EnCore is also committed to working with local communities and indigenous governments to create positive impact from corporate developments.

Nuclear Fuels (CSE:NF,OTCQX:NFUNF)

Nuclear Fuels is committed to aggressive exploration of district-scale ISR uranium projects in proven and prolific jurisdictions. The company's goal is advancing its priority Kaycee project in Wyoming’s Powder River Basin to production. With existing historic resources through a 33 mile trend, more than 110 miles of mapped roll fronts and 3,800 drill holes, Nuclear Fuels also provides a unique model for developing its other uranium projects and has established a pipeline of future opportunities in known uranium jurisdictions.

Nuclear Fuels acquired Kaycee from enCore Energy, which maintains a back-in right to 51 percent ownership of the project. In order to execute that right, enCore would need to pay Nuclear Fuels two-and-a-half times its exploration expenditures and bring the project to production, with costs recoverable from production.

Nuclear Fuels has secured the Powder River Basin under one company’s control for the first time since the early 1980s.

Ur-Energy (TSX:URE,NYSEAMERICAN:URG)

Ur-Energy owns and operates the Lost Creek ISR uranium facility in South-Central Wyoming, which has produced approximately 2.7 million pounds of U3O8. An amendment to its license enabled an expansion of mining activities at the Lost Creek project and the adjacent LC East Project, which now allows annual plant production of up to 2.2 million pounds U3O8. The company’s second uranium ISR facility, the Shirley Basin project, has received all major authorizations and is awaiting construction.

Investor takeaway

We are in the midst of a global uranium shortage with strong demand profiles, unlike the last bull market in uranium in 2006, and it's one that is much more sustainable. This is exponentially driving up the resource's market price. Until this shortage is addressed, prices could continue to rise. This means that for investors, uranium exploration companies, particularly those that leverage known resources through innovative, economically and environmentally beneficial ISR processes, are well worth their consideration.

This INNSpired article is sponsored by Nuclear Fuels (CSE:NF,OTCQX:NFUNF). This INNSpired article provides information which was sourced by the Investing News Network (INN) and approved by Nuclear Fuelsin order to help investors learn more about the company. Nuclear Fuelsis a client of INN. The company’s campaign fees pay for INN to create and update this INNSpired article.

This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

The information contained here is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities. Readers should conduct their own research for all information publicly available concerning the company. Prior to making any investment decision, it is recommended that readers consult directly with Nuclear Fuelsand seek advice from a qualified investment advisor.