How to Evaluate an ISL Uranium Company

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The key to in situ leach (ISL) mining is not necessarily its uranium pounds-in-the-ground. Key factors include permeability of the uranium orebody, size of the area covered by a deposit and the average grade of the ore body. We talked with leading geological and hydrology experts to help you better understand ISL mining to avoid getting misled.
uranium, uranium mining, nuclear energy, energy, Wyoming, utilities, U3O8, ISL, mining
Over the past two years, the common myth circulated among investors has been “pounds in the ground.?How many pounds of U3O8 does a company have in the ground? The more pounds a company claims, and more importantly gets institutions and investors to believe, the higher its market capitalization has run. Bigger is always better in most cases, but recovering uranium through an ISL operation, like any other mining operation, has its quirks.

During the early stage of this uranium bull market, pounds-in-the-ground was an important yardstick. But just as one can have a million-ounce gold deposit, with a complexity of metallurgical problems that prohibit a robust economic recovery or offer a paltry grade of gold in the ore, investors may discover the same problems in properly evaluating a company uranium claims. Instead of asking a company investor relations department how many pounds of uranium they have in the ground, find out how much uranium pounds they can actually recover and produce, and how much it will cost them to mine their property. Ask instead these questions:

?How permeable are the ore bodies you plan to mine?
?What is your average grade?
?Over what area does your rollfront extend?
?What is the depth of your ore body?

By the time you have finished reading this feature, you should have a better grasp on the economics of ISL mining. You should be better equipped to make a more intelligent decision about your favorite company. First, let examine the nature of a uranium mineralized rollfront. Understanding the rollfront will give you the key tools required to accurately evaluate the prospects of any ISL uranium development company.

THE OLL FRONT?IS YOUR FRIEND

In the first article, we interviewed Charles Don Show, who helped pioneer ISL uranium mining as an economic means to extract lower grade ore from underground mining operations. In Snow 1978 article entitled, “Gas Hills Uranium District, Wyoming ?A Review of History and Production,?published in the Wyoming Geological Association Guidebook, he wrote about the development of the “roll front?theory. He wrote about discussions the project geologists were having in the summer of 1955 about Utah Construction Company recently acquired option on the Lucky Mc uranium properties in Wyoming Gas Hill District:

“Offset drilling Project 4 intersected one major mineralized zone with a grade thickness product over 10 percent U3O8. An offset of this and one other mineralized hole about 2500 feet away were barren. Many discussions of why the ore was in these ‘isolated?pods were carried on late into the night?It was during the period of development of the reserves that members of the staff started referring to different layers and separated pods as areas of mineralization where chemical changes had caused deposition and soon the word ‘chemical front?was in common usage.?
Three years later, Paul A. Riddell prepared a report to document the ore occurrences at the Lucky Mc mine. He was among the first to use terminology that has since become an integral part of the oll Front?concept. In his project report, Riddell wrote:

“In conclusion, the uranium appears to be restricted to more porous beds, but is not evenly distributed within these beds. The boundaries between ore and lean material are erratic ?sometimes sharp and sometimes gradational. They do not appear to be related to changes in sedimentation within the beds. Others have suggested that the boundaries represent ‘chemical fronts,?and this theory appears reasonable in light of present information.?
Originally called chemical fronts, these “pods?contained various grades of uranium. Each pod or roll front is comprised of different mineralization. Understanding that mineralization and how to extract the uranium alone determines how viable a deposit might be.

If you imagine roll fronts in a uranium area as if they were lily pods in a pond, you are off to a good start. When a company announces it has uranium mineralization on its property, this could mean it has many pods, or fronts. Ideally, you hope to have multiple “fronts?available on your ground. “Typically, the meat of the front (multiple percent of uranium) is only a few feet to ten feet wide at the most,?Strathmore Minerals president David Miller explained. “This is the part that your ISL wells have to address correctly. If you look at all the mineralization in a single front system, above 0.03 percent, then from the tails to the front could be 100 feet or more. If you look at the multiple fronts in stacked sands, and you look at one end of the system to the other, the width can be several miles. The length of any of these can be tens of miles, but the good stuff comes and goes.?

Miller compared these multiple fronts to “pearls on a string.?There may be one, two or three roll fronts in one well field. “There may be more than three roll fronts,?Miller added. “There may be that many or more even in one pattern.?Again, they are pods and they may be stacked in layers, like lasagna. “The number of roll fronts in a pattern does not really matter, except for operational reasons,?Miller explained. “It is more complex to properly address multiple roll fronts than a single roll front, and you may not be able to optimize recovery of all of them.?
PERMEABLITY IS THE KEY

Getting down to the business of ISL mining a roll front requires that we understand the role permeability plays in this mining method. Permeability is the flow rate of the liquids through the porous sandstone. Knowing what the permeability of the orebody will let you know how much water you can get through the sandstone formation. According to Uranerz Energy Chief Executive Glenn Catchpole, who is also a hydrologist, the typical porosity of sandstone is 10 to 20 percent. Porosity is the void space between the sandstone grains. By comparison, clay has a porosity of between 45 and 55 percent. Catchpole said, “A property formation has to have sufficient permeability to make the project economic.?

In order to dissolve the uranium into solution, you have to know the “pore volumes.?That the measure of the pore space in the rock. “Youe passing fluid through the formation about 30 times to dissolve the uranium,?explained UR-Energy Chief Executive William Boberg. “Part of a successful operation is knowing how many pore volumes we feel it going to take to make it all work.?Uranium Energy Corporation Chief Operating Officer Harry Anthony, an internationally recognized ISL expert, noted, “You need higher grade ore for tight formations. With high permeability, you can space your wells further apart.?
As with any industry, it boils down to economics. How much to operate the plant? Anthony gave an example of an ISL plant operating at 5000 gallons per minute. Running 24 hours daily, the plant would process 7.2 million gallons of water. That more than 2.6 billion gallons of water processed every year. Operating costs are based upon cost per thousand gallons of water. “This includes electricity, reagents and labor,?said Anthony. On a daily basis, it would cost more than $21,000 to run an ISL plant, based upon Anthony calculations of $3.03 per thousand gallons of water. Using a 5,000 gallon per minute scenario, a plant might produce 2360 pounds of U3O8 every day or 80,000 pounds monthly. The cost to produce each pound would be $8.18. Using that math, the uranium grades would be about 44 parts per million (ppm) or 0.08. Anthony said, “I like to see 70ppm or higher.?A grade of 0.13 is 75ppm.

With low permeability in a tight formation, you may need to space more wells in a typical well field pattern. How much does each well cost? That depends upon the depth of the roll front deposit. While explaining that costs are fixed and variable, Anthony computed the cost of a production well for a 500 foot deposit at $15,000. An injection well could cost $11,000 to install. By comparison, in New Mexico, where the deposits are wider and of higher grade, a 2000-foot production well might cost $27,000 and the injection well could cost $18,000, and it would still be economic.

Why are we talking about well installation costs? Again, it comes back to permeability. If the flow rate is lower, bringing an ISL well field into production costs more. Glenn Catchpole explained, “If your plant is running at 3000 gallons per minute (gpm), and the formation is tight, each production well might only have 10gpm flowing. A more permeable formation might have 20gpm flowing.?That means twice as many production wells are required to satisfy the ISL plant 3000gpm flow level. Installation costs have doubled, and that would also impact operating costs. And a company which once might have looked like it had an economic orebody could now smell like week old fish.

PUMP TESTING FOR PERMEABILITY

“The pump tests are extremely valuable,?explained Boberg. “The pump tests are one of the go/no-go considerations for what wee doing.?Boberg told us UR-Energy expected to start drilling by the end of April or May on their Lost Soldier property in Wyoming. “We’ll be putting in the initial drill holes for the tests, and we’ll be doing the pump tests following that.?In one of series of tests, Boberg explained, “We take a core out of the hole (3 inches diameter and 6 inches tall) and test it vertically by forcing fluid through it.?Because the movement of the fluids in the substrata, from one well to another, is horizontal, the only way to really find out the permeability and porosity is by drilling a hole and putting a pump in it.

Catchpole explained the procedure, “You put the equipment down your monitor wells to measure drawdown.?Quite simply, you measure how far the water goes down. “The pump test will tell you permeability.?A good pump test takes between 24 and 72 hours to complete. Catchpole Uranerz Energy plans to run their pump tests this summer on their Excalibur property in the northeastern Wyoming Powder River Basin.

The make-break point for a formation permeability is its Darcy rating. How high is the Darcy? A typical Darcy can range from minus 1000 to plus 3. The higher the Darcy, the more permeable the formation and that would help determine how economic the orebody is. An acceptable range would be one-half to one Darcy. What is a Darcy? Catchpole said, “It is gallons per day over feet squared.?He added a pure hydrologist would calculate the feet per day or centimeters per second to get a more accurate permeability assessment. However, the Darcy is a widely accepted measuring unit in the industry.

Until a company gets its Darcy rating on its property, one can’t be completely certain the property can be mined by ISL. What guidelines does one depend upon? Catchpole said, “Historical research can give you permeability levels for a formation.?So we asked Catchpole how he felt about his Excalibur properties. He answered, “We know our properties are permeable enough.?How permeable will be answered with the pump tests.

OTHER FACTORS

Uranium grades can be a contentious point, so we asked our ad hoc panel of experts. “Grade is the driving force,?Harry Anthony shot back. We asked him about companies which said they could run an economic ISL operation with grades as low, or lower than 0.02. Anthony laughed, “They are crazy. They’d be out of business before they started.?Catchpole was more reserved in responding, “It probably wouldn’t have an economic recovery.?Strathmore David Miller offered a more technical analysis, “Frankly, that will not likely have enough recoverable pounds. The operating grade feeding the plant will be too low. What is the best grade? 0.5, 0.10, or 0.15. It depends upon the deposit.?
How much can you actually recover? Boberg explained the problems of pounds-in-the-ground. “Let say we’ve got 100 million pounds of uranium now. How much of that can we actually mine? There may be 10 million in a particular orebody that looks like we can mine it. If we build an operation around that, we might be able to develop an access to maybe 7 million pounds of that. And in a recovery process, we might only be able to recover 70 percent of that.?Every company has to also be very careful in studying their orebodies before building their plant. “We’ve got to make sure that the plant wee building isn’t built over a potential resource,?Boberg emphasized. “We’ve got to drill under that to make sure wee not accidentally putting the plant over another part of the deposit.?
Another worry with an orebody is channeling. “You don’t want channeling,?Catchpole insisted.?Channeling suggests the water is going through a very narrow path. “If your orebody has a thickness of ten feet and your channel of flow is one foot, you are missing most of the uranium formation,?said Catchpole. “You may have good flow rates, but not much U3O8 recovery.?Sometimes, a channel can be a natural occurrence, where the flow is along a fault. The channel creates a smaller, but preferred path for the fluids to flow through. . Unlike fracturing a formation to release natural, or coalbed methane, gas, a fractured channel has the opposite effect on ISL uranium mining.

How much does it cost to install a well field pattern, and is it economic to do so? “The art part of an ISL operation is interpreting the ore body and the hydrology,?Catchpole explained. “Your hydrologic test results determine where you think the solutions are going to flow best. In other words, which direction has the best or least permeability. This has to get factored into how you lay out those patterns, the width of your orebody, and how far out to the edge of the orebody you go.?

In a well field pattern, Strathmore David Miller can determine the economic viability of the ground. “The keys to what is recoverable are: (a) how many pounds are recoverable per pattern? And (b) what does it cost to install a pattern??Miller explained. “If you have 10,000 pounds in place and can recover 8000 pounds, your well field development cost can be $8/pound, if it costs you $80,000 to install that pattern. Add your operating cost, capital amortization and restoration cost, and you would have a total cost.?
Finally, the cost to install a pattern also depends over how much territory your roll front deposits run. “Ten million pounds over an area of one-half mile will cost less than those same pounds over an area of two to four miles,?remarked Terrence Osier, senior geologist for Strathmore Minerals. “That means more injection wells and more production wells.?Depth of the wells influences its installation cost, as mentioned previously, and impacts its daily operating cost. “When uranium costs were very low, a few years ago, a company needed 70,000 pounds per pattern,?Harry Anthony commented. “Now a company might only need 20,000 pounds per pattern to make it economic.?
There are many variables within the above advices provided by these experts. However, the important point to realize is the time of hyperbole and hoopla over “pounds in the ground?has passed. As more uranium development companies move closer to establishing an ISL operation, the go/no-go consideration, as William Boberg aptly described it, will come down to permeability. After that, the economics of a project will either make it viable or not.

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How Did ISL Uranium Mining Begin?

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According to the World Nuclear Association, 21 percent of the world uranium production came about from ISL mining in 2004. We conducted interviews with some of the world top ISL experts, including the father of ISL, to help you better understand how uranium is currently mined for the world nuclear power plants.
uranium mining, ISL, nuclear energy, energy, heap leach, mining, Wyoming, Texas, Australia, geology
It time to rewrite the history books. In Situ Leach Mining (ISL), or Solution Mining, was not first commercially started in Bruni, Texas in 1973 by Westinghouse, a consortium of oil companies and others. The birthplace of ISL was never South Texas, as some have claimed. It was begun in Wyoming, about 16 years before an ISL operation was started in Texas. Why there has been a whitewash over the true history of ISL is not our concern. This series is an in-depth investigation into how and why ISL mining came about, how it has been tested over a period of nearly 50 years, and why this type of uranium mining will play an important role in providing U.S. utilities with the raw fuel to power nuclear reactors for the next few decades.

In this modern era of uranium mining, extremely skilled engineers, hydrologists and geologists establish ISL mining operations. Most insiders compare an ISL operation to a water treatment plant. It really that simple to understand. However, as with every modern industrial operation, the roots of ISL mining came about in a less genteel or sophisticated manner. In 1958, Charles Don Snow, a uranium mining and exploration geologist employed by the Utah Construction Company, was investigating a Wyoming property for possible acquisition for his company. During the course of that visit, he discovered a new method of uranium mining and helped pioneer its development into the modern form of ISL.

Since 1957, R.T. Plum, president of Uranyl Research Company, had been experimenting with a leach solution on his property at the Lucky June uranium mine. “They mixed up the sulfuric acid solution and just dumped it on the ground, and soaked it through the material and collected it in a little trench at the end,?Charles Snow told StockInterview. It wasn’t very scientific. Snow added, “They were just learning how, and I observed it and thought that the application could be made through some of the ore that we had in the Lucky Mc mine.?The company was mining uranium this way because it was below the grades miners were used to, when mining. As Snow noted, “It was not worth mining.?But it was practically at the surface. He explained what they were doing at the Lucky June, “There was an area where uranium leached out to the surface in a small area, and it had a clay under-bed. These people put solutions onto the surface, collected the solution, and ran it by resin beads to absorb the uranium.?
While they only recovered about $3600 worth of uranium, roughly 600 pounds, Snow was impressed. He later wrote an inter-office memorandum in July 1959, with the subject header: ecovery of Uranium from Low Grade Mineralization using a leach in place process.? In his conclusion, Snow recommended, “From the preliminary information available, it appears that it will be possible to treat very low grade mineralization for recovery of uranium at a large net profit.?He explained the process to his bosses, encouraging them to consider this as an option:

“In brief, the process introduces a leach solution onto the surface of the ground and allows the solution to percolate down through the area to be leached. The solution is then recovered from wells and circulated through an ion exchange circuit with the barren solution being returned to the leach area. Recovery of the uranium is made by stripping from the ion exchange medium.?
He wanted the Utah Construction Company to try this method of mining where there was low grade mineralization. Snow succeeded in convincing his bosses. That began yet another innovation for Utah Construction Company, the same company which helped construct the Hoover Dam, decades earlier, before it got into the uranium mining business.

Utah Construction Becomes the
First Commercial ISL Miner

Newspaper reports, through the 1960s, illustrate that ISL mining was in full bloom more than a decade before anyone in Texas began a commercial ISL operation. On June 18, 1964, the Riverton Ranger newspaper reported, “The Shirley Basin mine is on a standby basis. The timbers are being maintained and the water pumped out. Total production comes from solution mining.?Between 1962 and 1969, ISL was the only method producing uranium at Utah Shirley Basin Wyoming. Later in that same article, under the section entitled, “Gas Hills Solution Mining,?it was reported, “The Four Corners area is ‘mined?by solution mining techniques similar to those employed at Shirley Basin.?Credit for this new mining method is also reported in that same article, “Lucky Mc introduced the heap leach process of recovering values from low grade ores in 1960.?
Charles Snow explained how his company made the transition from underground mining to solution mining, “The underground mining at Shirley Basin was very expensive, and we were having a lot of heavy ground problems.?The sandstone aquifers containing the uranium were uncemented and brittle, supported with timbers. “In some places, it was too heavy to hold with timbers,?said Snow. “We had to use steel sets underground, and it was even mashing the steel sets. So the expenses were getting very high.?
Water was flowing into the open drifts at prodigious rates. Snow recalled, “Barney Greenly said, ‘Let try solution mining over here.?They did a test, and it did operate quite well. They got some pretty good results. So the underground mine was shut down, and they went to a solution-mining program to produce the allocated pounds in the Shirley Basin area.?The procedure was tested for a few years before a full-scale commercial production began. This fulfilled 100 percent of Utah Shirley Basin uranium production allotment from the AEC.

There were problems at first. “We started out initially using sulfuric acid, and we had some reaction with carbonates in the formation.?Sulfuric acid plus calcium carbonate produces calcium sulfate, and this plugged up the formation. Calcium sulfate is gypsum, which was insoluble in the leach solution. “It tended to plug up the formation and reduce the transmissivity of the fluid from the input hole to the output recovery hole.?

To prevent interference with the porosity of the formation, Snow switched to nitric acid, but admitted, “We were reluctant to use nitric acid because it was much more expensive than sulfuric.?But they did, because the nitric acid solution did not form gypsum. Unlike present-day ISL methods used in Texas, Nebraska and Wyoming, Utah Construction did not use a carbonated leaching solution in their solution mining. Nitric solution was used during the 1960s and continued until the Lucky Mc switched over to open pit mining.

It all started as a heap leach experiment. “We had quite a bit of low grade in Lucky Mc,?Snow told us, “so we thought we would try a heap leach experiment.?Results were good on the test, and Utah pioneered ISL mining. Snow wrote in an August 2, 1960 memo, “The favorable results of the heap leach project and other research indicate that the process can be successfully applied in many of the low-grade areas to recover much of the mineralization.?Later in his report, Snow calculated reserves from random samples obtained from previous drilling at Lucky Mc, “The estimated reserve for the block is 147,000 tons @ 0.0361 percent U3O8, or 106,616 pounds of U3O8.?He estimated the program would cost $111,471. Using a value of $6/pound for U3O8, the anticipated returns were calculated as follows:

50 percent recovery: 53,318 pounds: $208,377
25 percent recovery: 26,654 pounds: $ 48,453

That was just the start. By the end of the decade, Shirley Basin solution mining operation was producing U3O8 at comparable levels to present day production at any of the major U.S. ISL facilities. In a paper presented by Ian Ritchie and John S. Anderson, entitled “Solution Mining in the Shirley Basin,?on September 11, 1967, at the American Mining Congress in Denver, Colorado, these Utah International executives explained the success of the Shirley Basin solution mining operation. In a summary explaining the company activities, we discovered the Shirley Basin operation not only filled the Atomic Energy Commission (AEC) allocation requirements from 1962 through 1969 but we learned of the sizeable commitments into the future Shirley Basin was to fill:

“In 1968 sales of uranium concentrate were made to purchases other than the AEC. One of the first sales was to Sacramento Municipal Utility District with a minimum of 950,000 pounds to a maximum of 1,100,000 pounds of uranium concentrate in 1971. Additional contracts were signed with General Electric Company and with Nordostschwerzerische Kraftwerke A.G. (Baden, Switzerland). The contracts called for delivery of 8,000,000 pounds of concentrate to GE between 1968 and 1975, and 500,000 pounds of concentrate to NOK commencing in July 1969.?

Conclusion

The single reason solution mining stopped, well before the first “commercial?ISL operation began in Bruni, Texas in 1973, was because of the improved market forecast for uranium in the 1970s. Utah Construction switched to open pit mining because they needed to produce a lot more uranium. The nuclear renaissance of the 1970s demanded massive quantities of uranium to fuel the rapidly growing nuclear power industry.

Don Snow initial field tests, begun in the late 1950s, resulted in continuous production achieved by late 1962. Subsequently, production in the underground uranium mine was shut down by May 1962. The underground mine was maintained in a standby condition until 1965, when all underground operations were written off. Millions of pounds were mined by Utah Construction through its ISL operations in Shirley Basin. It wasn’t heap leaching.

Sufficient evidence confirms that Wyoming, not Texas, first pioneered commercial ISL mining. Not only were well fields designed as early as 1960, but the entire concept of an ISL “water treatment?plant can trace its roots to Utah Construction pioneer work. Everything from injection wells to production wells were pioneered in the early 1960s. We challenged Charles Don Snow that some have claimed it was heap leaching, not ISL mining. Snow shot back, “No, we drilled holes in the ground and the material had never been mined. We got our ideas, certainly, from heap leaching, which came from the copper industry.?Snow explained that after the solution mining experiment was successful, “A recovery plant was designed and put into the hoist house, where they had had the underground mine. That was designed by Robert Carr Porter and Ian Ritchie.?Snow added, “In fact, Ian Ritchie and J.S. Anderson have a U.S. Patent on the well completion procedures that we used at Shirley Basin.?
Snow pondered if his friend Jack Bailey may have exported the ISL technology to Texas. “Jack Bailey was the Shirley Basin project manager for the underground mine when we switched over to solution mining,?Snow said. “He later went to work for Chevron, and Chevron had operations in Texas. I believe they even experimented with solution mining. Now, whether or not Jack was directly involved, I don’t know.?As it is with history, many of the old-timers are gone. We were told Jack Bailey had had a stroke a number of years back, and did not trace this further. There may have been others. “Some of the people from that area (Shirley Basin) had gone to Texas,?Snow recalled. “There is documentation, it was published information, and a lot of people who went to Texas, came from the Wyoming area. So, I’m sure there wasn’t a paucity of information being transferred.?Ironically, the Westinghouse-led consortium, which included U.S. Steel and Union Carbide, among others, was called Wyoming Minerals. Now we know exactly why they chose that name.

While there have been a number of ISL operations built and operated in Texas, there may be little future for uranium mining in that state, unless there are new discoveries. By a few, Texas has been inaccurately called the “home of ISL mining.?Perhaps that came about because ISL operations continued, during the uranium depression of the past two decades, with small amounts of production occurring in Texas. According to Energy Information Administration figures published in June 2004, uranium reserves in Texas stand at 23 million pounds of U3O8 based upon $50/pound uranium. By comparison, Wyoming and New Mexico reserves, using that same benchmark, reach as high as 363 million and 341 million pounds, respectively.

This may explain the rush by junior exploration companies, such as Strathmore Minerals (TSX: STM; Other OTC: STHJF), Energy Metals Corporation (TSX: EMC), UR-Energy (TSX: URE), Uranerz Energy (OTC BB: URNZ), Kilgore Minerals (TSX: KAU) and others, to Wyoming. The large quantities of pounds are in Wyoming, not Texas. It may also explain why Uranium Resources (OTC BB: URRE) has looked beyond Texas into New Mexico to develop its ISL operation, and Strathmore Minerals has quickly been advancing through its permitting stage on one of its properties in that state. It is fitting that the big past uranium producing states may again become tomorrow leading U.S. producers. In any event, the entire world of ISL mining owes a debt of gratitude to Charles Don Snow for his pioneering efforts in bringing a heap leach experiment into full fruition as modern-day in-situ mining.

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