Orano Canada Inc. and Denison Mines Corp.‘s (TSX: DML) have decided to restart uranium mining operations at the joint venture at McClean Lake using the patented surface access borehole resource extraction (SABRE) mining method.
The companies announced on Tuesday that they intend to start mining the McClean North deposit in 2025. The focus will be on preparing the existing SABRE mining site and equipment for continuous commercial operations in 2024. The companies are also installing eight pilot holes for the first mining cavities planned for excavation. The approved budget for this work in 2024 is USD$7 million.
The production target for 2025 at McClean North is approximately 800,000 pounds of U3O8 (triuranium octoxide). Additionally, there is potential for additional production of approximately three million pounds of U3O8 from a combination of the McClean North and Caribou deposits during the years 2026 to 2030.
“Our current ability to capitalize on the strengthening uranium and nuclear markets is the result of a long-term investment in R&D within Orano and the JV to secure continue d activities at the McClean Lake operation well into the future,” Jim Corman, Orano Canada’s president and CEO, said.
“The groundwork we do over the course of 2024 is expected to put the MLJV in position to see SABRE in action and to commence production in 2025.”
Additionally, the companies have identified the production potential for 3 million pounds of yellowcake from a combination of the McClean North and Caribou deposits during the period from 2026 to 2030.
Orano Canada owns a 77.5 per cent interest in the joint venture with Denison taking up the rest.
The McClean Lake property comprises four mineral leases
The McClean Lake property, situated in the eastern part of the Athabasca Basin region in Northern Saskatchewan, lies approximately 750 kilometers north of Saskatoon. It comprises four mineral leases covering 1,147 hectares and 13 mineral claims covering 3,111 hectares. The right to mine the McClean Lake deposits was obtained through the renewal of mineral leases over time.
The Athabasca basin is the third largest uranium deposit in the world behind Australia and Kazakhstan, but according to ATHA Energy Corp. (CSE: SASK) (FRA: X5U) (OTCQB: SASKF) CEO, Troy Boisjoli, it’s the best because of the grade quality.
It may also turn out to be a necessary distinction in the future if the present geopolitical situation doesn’t somehow improve.
Recent surges in uranium spot prices have led market participants to seek new production options to address the growing supply-demand imbalance. This has also proven complicated amid heightened geopolitical tension in the background.
Supply chain issues, increasing international political risks, and a belief that demand will consistently outstrip supply are among the factors that influenced the uranium spot market in 2023, according to Paul Goranson, CEO of US-based uranium producer enCore Energy Corp. (NYSE American: EU) (TSXV: EU).
He thinks these obstacles and the supply-demand mismatch are likely to persist.
The U3O8 spot price increased by nearly 90 percent in 2023 as industry participants voiced concerns about the growing demand. Prices have reached levels not witnessed since 2007 when they briefly surged to a historic record amid enthusiasm for a nuclear renaissance and the flooding of the world’s biggest mine.
The Ukraine invasion could mean a supply chain turn towards Canada
The company had previously said it was going to raise uranium production in 2024 to 90 per cent of the amounts specified in government subsoil usage contracts. This represents an increase from the 2023 target of 80 per cent, in response to the growing global demand. However, Kazatomprom has indicated challenges related to sulfuric acid availability and construction delays have cast doubt on achieving that goal.
In 2023, Kazatomprom had planned to produce approximately 21,500 metric tonnes of uranium. If it produced 90 per cent of the allowed levels under the contracts, it would mean roughly 23,500 metric tonnes. Since 2018, the company has consistently produced only 80 per cent annually of the permitted amount. Kazakhstan accounted for about half of global uranium production in 2022.
The spot market is influenced by other issues, including geopolitical tensions resulting from the Russian invasion of Ukraine.
The US House of Representatives passed a bipartisan bill late last year to ban the import of Russian enriched uranium. This would start in 2028. This decision stems from concerns about the United States’ dependence on Russia for 20 per cent of its reactor fuel requirements.
That could bode well for Canadian uranium producers like ATHA, Cameco Corporation (TSX: CCO) (NYSE: CCJ) or Skyharbour Resources Ltd. (TSXV: SYH) (OTCQX: SYHBF), which could easily position themselves to pick up the supply chain slack.
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