Denison – A U.S. Uranium Mill Monopoly

He who possesses the uranium plant makes the standards.

In a meeting with Yellowcake Mining chief Dr. Robert Rich, he revealed to us that the organization that claims a uranium factory controls the territory.

As of late, the organization reported a metal purchasing program. Denison Mines said it works the main uranium factory inside a 500-mile sweep of Blanding, Utah. Deliberately found, the organization’s White Mesa factory is in the core of the Uravan uranium mining locale.

In truth, it is the main working customary uranium plant in the United States. As indicated by a U.S. Vitality Information Agency (EIA) update issued this past May, the other three uranium factories are on backup.

For now, Denison has an imposing business model on traditional uranium processing in the United States. Under these conditions, an organization can charge whatever it wishes.

Move back the clock. When you have zero challenge, one can purchase uranium at a similar cost others paid in 2005. For Denison’s situation, the organization’s factory can buy uranium for around one-quarter to 33% of TradeTech’s long haul uranium cost – somewhere in the range of US$24 and $US35/pound – relying on the mineral evaluation.

Two Junior Uranium Companies Respond

In spite of the fact that this could turn into a money cow for Denison Mines, two junior uranium mining organizations we met seemed like they had been smacked between the eyes with the back end of a billiard stick.

“The mineral purchasing plan demonstrates the impossibility of working with those folks,” Energy Fuels representative Gary Steele told StockInterview. “It unmistakably harms our income.”

Steele was alluding to the 1500 tons of mineral his organization would have liked to reserve among now and the year’s end. As indicated by Denison’s mineral purchasing plan posted on the organization’s site this previous week, Energy Fuels would be fortunate to get US$154.40 per ton of metal conveyed to the White Mesa uranium plant in Blanding, Utah.

Steele disclosed to us the mineral would probably review 0.2 percent U3O8 and 0.63 percent V2O5 (vanadium pentoxide) from the organization’s mining activities at Whirlwind in Colorado. Utilizing the long haul uranium value marker and an ‘authentic’ evaluating for vanadium, distributed on the Denison site, the Energy Fuels metal ought to be esteemed at US$424 per ton.

Under the Denison processing course of action, Energy Fuels would get under US$40/pound for the organization’s uranium creation.

Where is the benefit?

Steele would not give mining costs at Whirlwind, however he provided direction of $0.25 per ton/mile in transportation expenses to the Denison plant. Trucking could cost in the area of $46/ton to dispatch the mineral to Blanding, Utah. Mining costs in the Uravan locale are probably going to be in the US$60 – 80/ton extend, as per Denison’s leader Ron Hochstein. Capex could fall into the US$6/ton extend, as indicated by appraisals given by another organization. Furthermore, there are probably going to be different costs, which we’ve not determined. Increases could likewise incorporate natural allowing and recovery, and normal deals and organization costs found in any business endeavor.

Under the mineral purchasing plan, Energy Fuels may get about US$42 per ton after costs, more than US$10/pound – about 7.4 percent of the present spot cost. For the 1500-ton part, Energy Fuels may get a check of around US$230,000. In any case, subsequent to paying its bills, the organization’s 2007 generation may just yield around $60,000.

It is no big surprise that Steele let us know, “We’re battling with the processing question.” Optimistically, Steele declared, “we will probably go ahead with various plans, methodologies and ways to deal with produce yellowcake.” He wouldn’t discount building a factory.

We needed a second assessment. So we conversed with Michael Collins, CEO of Blue Rock Resources.

Blue Rock’s lead venture is the Tramp uranium mine in Montrose County, Colorado. It is around 130 miles from the White Mesa plant.

Collins concurred with Steele about the Denison mineral purchasing program. “It’s not the course we might want to take,” Collins told StockInterview. Collins is currently assembling his arrangement of activity to present to the U.S. Agency of Land Management (BLM) and is anticipating raising about C$4.5 million to help build up the undertaking.

He disclosed to us the normal evaluations at the Tramp mine are 0.3 percent U3O8 and somewhere in the range of 1.5 and 1.7 percent V2O5. The undertaking could have 300,000 pounds U3O8. “We are meaning to characterize one million pounds,” Collins said. In the event that he proceeds with the Denison program, Collins trusts his organization could store around 100 thousand tons throughout the following year and a half.

Denison’s Hochstein affirmed that his organization was chatting with Energy Fuels, Blue Rock and others about processing understandings.

Amid our phone discussion with Collins, we determined his advantage in utilizing the Denison metal purchasing program. As indicated by Collins’ figurings, he would get somewhat less than US$250 for every ton of uranium/vanadium mineral his organization transported to White Mesa for processing.

Collins assessed mining the metal would cost about $65/ton. To dispatch his metal the 130-mile separation to Blanding would cost somewhere in the range of $35 and $40/ton. His foundation and advancement expenses would indicate about $9/pound. He revealed to us it was too soon to assess his authoritative and different costs, however Collins gave us the impression he runs a lean activity.

In any case, his organization’s detriment is the eminence paid for the Tramp uranium mine. For every ton of mineral Blue Rock mines, the organization would need to pay a US$90 eminence. Collins stated, “The sovereignty is paid on the spot uranium cost.”

Including the holding nothing back expenses, as per Collins’ assessments, it would cost Blue Rock about US$200/ton, maybe more, to convey the mineral to Denison. Every ton of Blue Rock’s metal would pay out on the request of US$48 to $50/ton, after costs. Collins revealed to us he would get six pounds U3O8 per ton with his evaluations. After all is said and done, Blue Rock would get somewhere in the range of US$8 and $8.50 per pound for uranium.

With respect to building a uranium plant for the Tramp mine and his organization’s other three ventures in the territory, Collins let us know, “another uranium plant could assume control more than seven years to allow in Colorado.”

Unmistakably, he was baffled with the Denison program, saying, “It’s as terrible as I could have sought after.” But he isn’t precluding some future concurrence with Denison. Collins disclosed to us he was all the while planning to verify a toll-processing contract for 100 thousand tons. “We’ll back for a year and store the mineral,” Collins said. Luckily, Blue Rock has other empowering uranium ventures which Collins would like to create related to the Tramp mine.

Under a toll-processing understanding, an excavator would pay on the request of 20 percent over the processing costs. Rather than getting just $250/ton from Denison to buy his metal, Collins would acquire a higher payout and hold responsibility for metal.

Who Owns the Ore?

Additionally in question is responsibility for mineral, after it is conveyed to Denison. The excavator never again claims the metal. There is a hazard factor for the two gatherings on this thing. Both Energy Fuels and Blue Rock revealed to us they needed to keep the U3O8 after it was processed.

Ron Hochstein told StockInterview, “We will keep it.”

Under the Denison understanding, the organization will buy the mineral now and pay out after the examples have been tested. Be that as it may, the mineral won’t get processed until at some point in 2008. White Mesa is experiencing a $15 million restoration program now. Hochstein stated, “We will open in March 2008.”

In looking into the Denison materials on this program, it doesn’t show up traded on an open market organizations are the intended interest group for this program. On the organization’s site, we discovered this notice:

The White Mesa factory Ore Buying Program gives a chance to autonomous diggers to sell their uranium and uranium/vanadium metal to Denison Mines (USA) Corp., the administrators of the White Mesa plant, situated close Blanding, Utah.

We asked Hochstein who might supply the plant feed. “There are numerous little excavators in the Uravan locale,” he said. “They’ve developed stores, and we will get them income.” Hochstein was energized by the underlying response to his organization’s news discharge. “We got a decent number of telephone calls,” he said. “Some are requesting ‘just uranium’ processing understandings.”

Under the terms for little excavators, Denison will just purchase in loads of one thousand tons. “In the past excavators would drive up to the plant with the metal in a get truck,” he clarified. “In any case, we require they utilize authorized transportation temporary workers now.” Unlike Steele or Collins, he evaluated delivering expenses would keep running around fifteen pennies for each ton.

“They can profit,” he let us know. For organizations, for example, Energy Fuels and Blue Rock, Hochstein stated, “We will consult on arrangements in 100 thousand tons least.” He said the payout would have a slight stage. “We are as yet working with Energy Fuels, Blue Rock and others,” Hochstein let us know.

He cautioned, however, “After we purchase the metal, it’s Denison’s, not somebody else’s.”

Argumentative third party

In a past news-breaking story, when we gave an account of flooding at ERA’s Ranger tasks, we swung to specialists to give us bits of knowledge about the subject. Again we requested their sentiments.

“Denison will be in for a severe shock,” one mining master let us know. “The little diggers can make more cash by pitching their cases to junior uranium mining organizations.”

Another questioned there was much uranium mineral stored, letting us know, “It might generally be recovered.” An architect acquainted with the territory let us know, “Typically, each and every ounce of uranium metal was sent to the factory.”

Both concurred there were disadvantages to the restoration of ‘hound opening mining,’ which is the slang for the littler mother and-pop tasks. “A considerable lot of the bygone era diggers figure they will have ‘tree hugger resistance,’ which they won’t,” said one master. Another let us know, “The canine opening diggers will be living night and day w

Leave a Reply

Your email address will not be published. Required fields are marked *