Though 2023 has been called on more than one occasion “the year for uranium”, it nevertheless remains in public consciousness a commodity of some controversy.
History is dotted with nuclear-related incidents — Chernobyl, Fukushima, the Kyshtym disaster — and it’s these moments that spring to mind when we think of uranium. But that is perhaps a testament more to the rigidity of human memory than anything else.
The reality, in fact, is that technological advancements in recent years have made nuclear energy a viable weapon in the fight for reliable green energy.
Give me the elevator pitch
The primary force behind uranium’s surge in recent years is climate change. The ability to produce huge quantities of carbon-free power is something entire countries, like South Korea and Japan, are building into their respective energy mixes.
Another factor is the influence of supply and demand. Roughly 200 million pounds of uranium was consumed last year, compared to production of 135 million pounds and secondary supplies totalling 15 million pounds. Analysts at Citi have taken note of the 50-million-pound shortfall, upgrading their uranium price outlook to reflect “overwhelming optimism” in the mid- to long-term.
“The outlook for higher demand in the coming years is supported by climate legislation in North America (the Inflation Reduction Act), nuclear capacity expansion in Asia, reactor lifetime extensions in Western Europe, and adoption of nuclear energy in the green taxonomies,” Citi said in December last year.
Uranium prices are soaring, but will they soar high enough?
But despite the projected surge in demand, the market price for uranium remains below the average cost of production.
The spot price for uranium currently hovers around US$50 (A$75) per pound. By comparison, the all-in sustaining cost of uranium production among the world’s largest players sits somewhere between US$60 and US$70 (between A$90 and $105) per pound.
So while uranium is practically viable as a source of green energy, there is some ground to be made up if it’s to become financially viable as well.
In the spotlight: ASX uranium stocks
Aura Energy
For Aura Energy Ltd (ASX:AEE, AIM:AURA), the March 2023 quarter was characterised by several major developments at its Tiris uranium project in Mauritania.
In February, the company unveiled a 52% increase to the measured and indicated resource at Tiris, which now stands at 29.6 million pounds of triuranium octoxide based on a cut-off grade of 100 parts per million (ppm).
This, along with an earlier study in 2021, formed the basis of an enhanced definitive feasibility study (EFS), announced at the end of March. The EFS confirmed a strong economic case for the project, including a 150% increase in steady-state production to 2 million pounds of triuranium octoxide.
Since then, front-end engineering design has sought improvements to the recovery of triuranium octoxide within leaching, ion exchange and precipitation processes, the results and projected costs of which will inform a final investment decision expected to occur in the fourth quarter of 2023.
Alligator Energy
Alligator Energy Ltd (ASX:AGE) had a similarly productive quarter.
Drilling at the company’s Samphire uranium project in South Australia during the fourth quarter of 2022 resulted in the release of an upgraded mineral resource estimate in early March.
Based on an in-situ recovery (ISR) method at the project’s Blackbush deposit, uranium metal content was lifted by 23% to 18.1 million pounds of triuranium octoxide from an earlier estimate of 14.8 million pounds.
That resource upgrade was followed by a scoping study. Using a production target of 10 million pounds of triuranium octoxide over 12 years, the study projects a low initial capital expenditure of $129.3 million and an all-in sustaining cost of $43.19 per pound of triuranium octoxide.
Eclipse Metals
In an effort to broaden its investor base and engage with European stakeholders, Eclipse Metals Ltd (ASX:EPM) announced its admission to both the Frankfurt Stock Exchange and Germany’s Tradegate Exchange in January.
At the same time, Eclipse appointed DGWA, the German Institute for Asset and Equity Allocation and Valuation, as its investor relations and corporate advisor in Europe. DGWA will assist in engaging with retail and institutional investors throughout Germany, Austria and Switzerland with the aim of lifting the Ivigtût project’s regional profile.
To capitalise on this effort, Eclipse was also accepted into the European Raw Materials Alliance (ERMA), which has previously provided support to other mining projects in Greenland.
GTI Energy
Chief among GTI Energy Ltd (ASX:GTR)’s March quarter updates was the acquisition of unpatented mineral lode claims covering 8,000 acres in the Powder River Basin Uranium (CSE:NCLR, OTC:BURCF) district in Wyoming, USA.
Known as the Lo Herma project, it sits roughly 15 miles north of Glenrock and within 50 miles of five permitted ISR production facilities.
In mid-March, GTI acquired a package of historical drilling data carried out at Lo Herma, including drill logs for 1,445 holes. With a replacement value of around $15 million, the data package represents seven times the number of holes drilled by GTI at Lo Herma to date.
Now, GTI is taking steps to have a drilling program at Lo Herma permitted, which will include verification drilling of the historical data and targeted drilling of extensions to the existing areas of mineralisation.
Lotus Resources
For Lotus Resources Limited, the dominant focus during the March quarter was advancing the Mine Development Agreement (MDA) with the Government of Malawi. The agreement will set the “fiscal regime” under which the Kayelekera uranium project will operate and is required before a final investment decision can be made.
At the same time, discussions with several electricity utilities are continuing regarding potential offtake deals, just as power supply agreements have been negotiated with ESCOM, Malawi’s national electricity supplier.
ESCOM has agreed to facilitate the connection of Kayelekera to the Malawi national grid, allowing Lotus access to cheap, largely hydro-produced green energy.
Parallel to Kayelekera-related activities, Lotus has been exploring strategies to grow a pipeline of other assets that complement the Kayelekera project. A number of opportunities have been assessed in Malawi and other jurisdictions, and four priority areas were identified as having potential for uranium, rare earths and lithium prospectivity.
Peninsula Energy
Much of the work carried out by Peninsula Energy Limited (Peninsula Energy Ltd (ASX:PEN, OTCQB:PENMF)) related to the restart of commercial operations at the Lance uranium project in Wyoming, USA.
With the project area fully-approved for a transition to low-pH in-situ recovery (ISR) operations, construction has progressing ahead of a targeted restart in mid-2023.
Mine Unit One (MU-1) is now ready, and has been operated and preconditioned using the chemical delivery systems previously installed for field demonstrations. This pre-production work has met Peninsula’s operational expectations, and once the new chemical storage and delivery systems are available, MU-1 will move into full production.
Elsewhere, wellfield transformation activities have advanced to MU-2, while three drilling rigs are turning at MU-3 in preparation for construction.
Financially, capital expenditures related to the low-pH transition have been closely monitored, and are tracking in line with the total budget of US$8.4 million (A$12.54 million) that was given as part of an August 2022 definitive feasibility study.
Terra Uranium
Terra Uranium Ltd (ASX:T92) was heavily exploration-focused during the March quarter.
The company drilled at total of 29 reverse circulation (RC) holes at its wholly owned Parker and Pasfield uranium projects in Canada’s Athabasca Basin. At an average depth of 41 metres, the holes were designed to test for alteration and geochemical signatures in subsurface sandstones where previous surveys have hinted at potential mineralisation.
The RC drill samples were then sent to the SRC Geoanalytical Laboratory, the analysis of which has confirmed uranium mineralisation at depth across several locations at both Parker and Pasfield.
With the RC drilling complete, the results will be combined with previous surveys and airborne geophysics to inform a deeper diamond drilling campaign in the North American Spring.
A diamond drill rig has already been mobilised and the program will begin once the final targets have been identified.
Written by Oliver Gray.
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