• 4 hours WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 9 hours Norway Grants Record 75 New Offshore Exploration Leases
  • 13 hours China’s Growing Appetite For Renewables
  • 16 hours Chevron To Resume Drilling In Kurdistan
  • 19 hours India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 20 hours India’s Reliance Boosts Export Refinery Capacity By 30%
  • 21 hours Nigeria Among Worst Performers In Electricity Supply
  • 1 day ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 1 day Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 2 days Saudis To Award Nuclear Power Contracts In December
  • 2 days Shell Approves Its First North Sea Oil Project In Six Years
  • 2 days China Unlikely To Maintain Record Oil Product Exports
  • 2 days Australia Solar Power Additions Hit Record In 2017
  • 2 days Morocco Prepares $4.6B Gas Project Tender
  • 2 days Iranian Oil Tanker Sinks After Second Explosion
  • 4 days Russia To Discuss Possible Exit From OPEC Deal
  • 4 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
  • 5 days Kenya Cuts Share Of Oil Revenues To Local Communities
  • 5 days IEA: $65-70 Oil Could Cause Surge In U.S. Shale Production
  • 5 days Russia’s Lukoil May Sell 20% In Oil Trader Litasco
  • 5 days Falling Chinese Oil Imports Weigh On Prices
  • 5 days Shell Considers Buying Dutch Green Energy Supplier
  • 5 days Wind And Solar Prices Continue To Fall
  • 6 days Residents Flee After Nigeria Gas Company Pipeline Explodes
  • 6 days Venezuela To Pre-Mine Petro For Release In 6-Weeks
  • 6 days Trump Says U.S. “Could Conceivably” Rejoin Paris Climate Accord
  • 6 days Saudis Shortlist New York, London, Hong Kong For Aramco IPO
  • 6 days Rigid EU Rules Makes ICE Move 245 Oil Futures Contracts To U.S.
  • 6 days Norway Reports Record Gas Sales To Europe In 2017
  • 6 days Trump’s Plan Makes 65 Billion BOE Available For Drilling
  • 6 days PetroChina’s Biggest Refinery Doubles Russian Pipeline Oil Intake
  • 7 days NYC Sues Five Oil Majors For Contributing To Climate Change
  • 7 days Saudi Aramco Looks To Secure $6B In Cheap Loans Before IPO
  • 7 days Shell Sells Stake In Iraqi Oil Field To Japan’s Itochu
  • 7 days Iranian Oil Tanker Explodes, Could Continue To Burn For A Month
  • 7 days Florida Gets An Oil Drilling Pass
  • 8 days Oil Prices Rise After API Reports Staggering Crude Oil Draw
  • 8 days Tesla Begins Mass Production Of Solar Shingles
  • 8 days EIA Boosts World Oil Demand Forecast For 2018 By 100,000 Bpd
  • 8 days Businessman Seeks Sale Of $5.2B Stake In Kazakhstan Oil Field
Alt Text

Is $70 The Ceiling For Oil Prices?

Oil has rallied far higher…

Alt Text

T. Boone Pickens Shuts Down Oil Hedge Fund

Oilman and investment manager T.…

Alt Text

4 Factors That Could Derail The OPEC Deal

OPEC and its Russia-led non-OPEC…

Vanishing Uranium Resources

Vanishing Uranium Resources

There was a mysterious disappearance of uranium in South Australia last week.

Uranium mining hopeful PepinNini Minerals reported a new resource estimate on its Crocker Well project. And something was missing.

In 2005, a resource estimate on the Crocker Well project identified 12.65 million tons of uranium oxide, using a 300 ppm cutoff.

Last week's updated resource however, showed just 4.75 million tons using the 300 ppm cutoff.

Based on the findings, PepinNini and partner Sinosteel have decided to put the project on hold. This after the resource consultants said that the deposit is "small, with the currently definable resource not likely to support a mining operation at the current time."

What caused the resource downgrade? Management attributed the drop to new deposit modeling, taking into account only the part of the deposit that could be feasibly incorporated into the a mine plan.

This kind of disappointment on uranium projects is becoming more common. This week Aussie developer Toro Energy announced it will abandon a deal to acquire the 13.2 million-pound Napperby uranium project in the Northern Territory.

Toro's management said the numbers on Napperby just don't pass muster. The company will instead focus on exploration for higher-grade uranium deposits with more robust economics.

Grade is indeed the challenge with both Crocker Well and Napperby. These deposits run 283 and 359 ppm uranium oxide, respectively.

A little perspective. 300 ppm is 0.03%. Now consider the world's largest uranium mine, McArthur River in Saskatchewan. McArthur's proven reserves run 13%. Over 400 times higher-grade. Other projects in Saskatchewan like Cigar Lake are similar.

This is one of the major challenges in uranium. Global deposits have a "bi-modal" grade distribution.

As the cost curve below (from a BHP presentation on the Olympic Dam uranium mine) shows, there is a good deal of uranium production that can be had at relatively low production cost. At lot around $15/lb.

Uranium Supply

But look what happens when you push the curve to its limits. If the world needs supply greater than about 75,000 tonnes (165 million pounds) uranium oxide yearly, the cost goes up quickly.

That's because supply above 75,000 tonnes per year has to come from lower-quality, lower-grade deposits like those mentioned above. We only have so many high-grade deposits on Earth.

(It should be noted that some of the "low-cost" uranium producing mines are so by virtue of by-product metals. Olympic Dam is very low-grade. But it produces a lot of copper, silver and gold along with the uranium. After selling these other metals, the effective cash cost for uranium production is less.)

Four years ago when uranium prices topped $100/lb, the mining community assumed we needed the high end of the cost curve. Projects like Crocker Well and Napperby were brought into the mix.

Now with uranium languishing in the $40/lb range, we're not so sure. In 2009, the world produced 59,640 tonnes of uranium oxide. We're not yet at that "tipping point" where high-cost deposits are needed.

But we're close. If significant new demand does emerge, the low-grade deposits may once again be called into service.

In the meantime, there's a pretty good niche for anyone who can discover higher-grade uranium deposits. 0.1% is not bad. 1% would be terrific.

Unfortunately, there aren't many districts known on the planet with this kind of potential. Niger isn't bad. Northern Australia might do. Northern Canada also has some deposits that might get there.

But the uranium market is ripe for new ideas. Otherwise, a very imbalanced cost curve is going to persist. Potentially making for volatile prices if demand ramps up.

By. Dave Forest of Notela Resources




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News