Two old Wyoming uranium mines, mothballed after prices collapsed in the 1990s, could soon be up and running again.
Ur-Energy announced this week a $6.6 million deal finalizing the purchase of the Shirley Basin and Lucky Mc mines from the Pathfinder Mining Corp.
Production at the mines could begin in three years, Ur-Energy CEO Wayne Heili said. Each must successfully navigate the permitting process before production can begin again. Together, the two facilities are expected to produce 1 million pounds of yellowcake uranium annually.
“We’re very excited about the prospect of bringing Shirley Basin back on line as a uranium production center,” Heili said in an interview.
Ur-Energy opened its first facility, Lost Creek, an in situ mine, last summer. The Casper-based company made its first shipment of yellowcake to a conversion center in Illinois earlier this month and announced its first sale on Monday.
The company said it sold 90,000 pounds of yellowcake for $5.7 million to two utilities. The average sale: $62.92 per pound. That figure was far above spot prices — currently around $36 per pound — and a result of previously existing contracts negotiated by Ur-Energy and its buyers.
The low price of uranium played a role in the acquisition of the Shirley Basin and Lucky Mc mines, making the facilities more affordable and putting Ur-Energy in a position to benefit when uranium prices rebound, Heili said.
Analysts predict the price of yellowcake should increase in 2016 when Japan restarts its nuclear reactors, increasing demand and taxing the world’s already limited supply.
“I’m hoping to bring this one online when prices are up,” Heili said.
The Ur-Energy CEO said he did not anticipate major permitting challenges given the two mines’ status as brownfield developments.
Lost Creek is currently capable of producing up to 1 million pounds of uranium annually. Shirley Basin and Lucky Mc would double the company’s total production. The two mines were longtime staples of the Wyoming uranium industry, producing around 71 million pounds of yellowcake from the 1960s until the 1990s, when the price of the radioactive substance plummeted and the mines were shuttered.
Shirley Basin’s reserves are estimated to hold more than 10 million pounds of low-grade uranium. Lucky Mc, in the Gas Hills mining district, has estimated reserves of 4.7 million pounds.
Ur-Energy will pay mineral royalties to AREVA — the London-based mining company and the sole shareholder in Pathfinder Mining Corp. prior to the latter’s sale to Ur-Energy. Under the terms of their agreement, the Casper company is obligated to pay AREVA up to $6.6 million in royalties if prices exceed $55 per pound prior to June 2016, or up to $3.7 million if prices are greater than $45 per pound by then. No royalty payments will be made if prices do not exceed $45 per pound by that time.