There’s something very special about Australia’s Olympic Dam uranium mine.
Olympic Dam is the largest uranium ore body in the world, with a towing 57-year reserve life.
Production here is also world-leading. Owner BHP Billiton (ASX: BHP) mined and processed nearly 8.6 million pounds of uranium oxide from the mine in fiscal 2012.
To put that figure in perspective, consider the output from some of Australia’s other significant uranium mines. The famous Rum Jungle operation produced about 7.8 million pounds of uranium oxide over 17 years. Considerably less than Olympic Dam puts out in 12 months.
The incredible thing is that Olympic Dam’s big production numbers come at very low ore grades. In fact, the mine is one of the lowest-grade yellowcake producers on the planet—at only 0.054% U3O8.
By comparison, the world’s largest uranium mining company Cameco (TSX: CCO) holds reserves at its McArthur River and Cigar Lake deposits in Canada that grade over 20% U3O8. That’s more than 350 times richer than Olympic Dam. Even Cameco’s most low-grade project—Inkai in Kazakhstan—is nearly 50% higher in grade than Olympic Dam, at 0.08% U308.
But here’s the amazing secret of Olympic Dam—despite being one of the lowest-grade mines in production globally, it is one of the lowest-cost uranium producers found anywhere. Just look at the cost curve below for the worldwide uranium industry.