The Uranium Market
The only significant commercial use for uranium is as a fuel for nuclear power plants for the generation of electricity. According to the World Nuclear Association (‘‘WNA’’), as of February 2013, there were 435 nuclear power plants operable in the world with annual requirements of about 160 million pounds of uranium. In addition, the WNA lists 65 reactors under construction, 167 being planned and 317 being proposed.
The worldwide production of uranium in 2012 was approximately 152 million pounds. Ux Consulting Company, LLC reported that the gap between production and demand was filled by secondary supplies, such as inventories held by governments, utilities and others in the fuel cycle, including the highly enriched uranium, or HEU, inventories which are a result of the agreement between the US and Russia to blend down nuclear warheads. These secondary supplies are currently meeting over 25% of worldwide demand but are depleting. Spot market prices rose from $21.00 per pound in January 2005 to a high of $136.00 per pound in June 2007 in anticipation of sharply higher projected demand as a result of a resurgence in nuclear power and the depletion or unavailability of secondary supplies. The sharp price increase was driven in part by high levels of utility buying, which resulted in most utilities covering their requirements through 2009. A decrease in near-term utility demand coupled with rising levels of supplies from producers and traders led to downward pressure on uranium prices since the third quarter of 2007. In 2012, the spot price of uranium reached a high of $52.50 per pound in January and dropped to a low of $40.75 per pound in November. The year-end 2012 spot price was 43.50 per pound. As of November 4, 2013, the spot price was $34.50 per pound and the long-term contract price was $50.00 per pound.
Uranium is used as a fuel for nuclear power plants that generate electricity. Current worldwide production of uranium falls significantly short of consumption. The gap between production and consumption has been filled by secondary supplies, such as inventories held by governments, utilities and others in the fuel cycle.
These secondary supplies are currently meeting nearly a third of worldwide demand, but as they are depleted, future production will have to rise closer to demand.
The ISR Mining Process
The ISR mining process is a form of solution mining. It differs dramatically from conventional
mining techniques. The ISR technique avoids the movement and milling of significant quantities of rock and ore as well as mill tailing waste associated with more traditional mining methods. It is generally more cost effective and environmentally benign than conventional mining. Historically, the majority of United States uranium production resulted from either open pit surface mines or underground mining.
The ISR process was first tested for the production of uranium in the mid-1960s and was first applied to a commercial-scale project in 1975 in South Texas. It was well established in South Texas by the late 1970’s, where it was employed in about twenty commercial projects, including two operated by us.
In the ISR process, groundwater fortified with oxygen and other solubilizing agents is pumped into a permeable ore body causing the uranium contained in the ore to dissolve. The resulting solution is pumped to the surface. The fluid-bearing uranium is then circulated to an ion exchange column on the surface where uranium is extracted from the fluid onto resin beads. The fluid is then re-injected into the ore body. When the ion exchange column’s resin beads are loaded with uranium, they are removed and flushed with a salt-water solution, which strips the uranium from the beads. This leaves the uranium in slurry, which is then dried and packaged for shipment as uranium concentrates. For greater operating efficiency and lower capital expenditures, when developing new well fields we use a well field specific remote ion exchange methodology as opposed to a central plant as we had done historically. Instead of piping the solutions over large distances through large diameter pipelines and mixing the waters of several well fields together, each well field is being mined using a dedicated satellite ion exchange facility. This allows ion exchange to take place at the well field instead of at the central plant. A well field consists of a series of injection wells, production (extraction) wells and monitoring wells drilled in specified patterns. Well field pattern is crucial to minimizing costs and maximizing efficiencies of production. The satellite facilities allow mining of each well field using its own native groundwater.