This Gold Miner Is Selling Its First Uranium

I've been writing about uranium mine closures and project delays lately. With low prices for that metal making it difficult for developers to get any new supply off the ground.

But this week we got news of one new producer in the industry. A firm that has taken a somewhat unusual tack in bringing a new deposit online.

In fact, this firm isn't a uranium company at all. But rather a precious metals producer: Sibanye Gold.

Sibanye announced that gold isn't the only thing coming from its Cooke project in South Africa. With the mine having just sold its first shipment of byproduct uranium to South Africa's Nuclear Fuels Corporation (Nufcor).

Things are starting small here. With Sibanye reportedly having shipped a modest 10 tonnes of ammonium diuranate to Nufcor--which will be further processed by the nuclear firm to create more-usual uranium oxide.

But the potential scale of byproduct uranium production from the Cooke project is significant. Alongside gold, the mine and processing facilities are expected to build to capacity of 600,000 pounds per year of uranium oxide output by 2016.

That's a very respectable production level. And would demonstrate that South Africa's unique gold-uranium deposits are indeed a viable source of modern yellowcake supply.

Of course, there's still a ways to go to reach that lofty level of output. But the developments with Sibanye signal something important: that production of uranium as byproduct may be the go-to strategy in today's yellowcake market.

Byproduct uranium has indeed been a significant source of global supply. With the biggest current producer being Australia's Olympic Dam copper mine. But uranium has historically been produced alongside other ores at mines as diverse as the Bingham Canyon porphyry in Utah and the Palabora igneous complex in South Africa.

With prices for uranium itself languishing, we may see this strategy return to prominence. There's a lot of uranium worldwide--the trick is finding enough to produce at a profit. And having other ore metals may be just the boost developers are looking for these days.

Here's to different strokes for down markets,

By Dave Forest