Uranalarm ! Uranmine überflutet !

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March 9, 2007
By James Finch

Ranger Uranium Mine Pit 3 Flooded
World’s Third Largest Uranium Producer Underwater

A Loss of Up to 4 Million Pounds U3O8 in 2007?


Copyright© 2007 by StockInterview, Inc. ALL RIGHTS RESERVED. Unauthorized duplication of all or any part of this article is not permitted without written permission from the editor of StockInterview.com.

(Editor’s Note: The photos of the damage, which occurred as a result of a recent cyclone in early March, were obtained through at least two intermediaries. We received these photographs Wednesday morning, and spent two days authenticating the source of these photographs and their legitimacy. On Friday afternoon, we received independent confirmation that these photos were reportedly taken by ERA and supplied to their utility clients as evidence of the force majeure the company declared on March 7th.)


Water entering Pit 3 from Retention Pond 2 spillway, Ranger Mine Pit 3, Ranger Mine on March 2nd showing evidence of flooding

U.S. and other utilities dependent upon newly mined uranium to power their nuclear reactors can add yet another supply headache to their plate. Energy Resources of Australia declared ‘force majeure’ on its uranium sales contracts to utilities the company supplies in North America, Europe and Asia. No specifics were provided on the company’s website. Information coming from ERA has been on the quiet side.

However, TradeTech chief executive Gene Clark told StockInterview, “ERA or their customers or both will have to be in the market either buying or borrowing.” Dr. Clark calculated ERA’s contract sales in 2006 averaged about US$20.55/pound and were probably expecting $22/pound this year. TradeTech’s Nuclear Market Review reports weekly changes in the spot uranium price in the Friday edition of their trade magazine, and post the update price indicator on the consulting service’s website at http://www.uranium.info

How bad can it get? TradeTech roughly estimates that 2007 production – relying only on stockpiled ore at historically low, but acceptable head grades – could reach as low as 7.5 million pounds U3O8. According to Clark, “This could represent a loss in production of up to 4 million pounds U3O8, compared to an average year for Ranger.” This amount represents about four percent of worldwide uranium production in 2006. At the recent spot price, the production loss could be valued at US$340 million.

“They are not going to be buying $85/pound uranium,” Clark said, while we discussed the options ERA faces in the months ahead. The uranium spot market is currently showing an active supply of only two million pounds U3O8, according to Clark. “Increased market demand is bound to keep an upward pressure on prices.”

The potential loss of Ranger’s 2007 uranium mining supply overwhelmingly outpaces any new production created by this year’s new uranium miners, Paladin Resources and SXR Uranium One. In an email we received from SXR chief executive Neal Froneman, responding to our question if his company would be accelerating production during 2007, he wrote, “Unfortunately, we will only produce about 500,000 pounds (this year) as we are in start up at Dominion. Akdala, which we acquired through the UrAsia acquisition, will produce 1.8 million pounds, but this has already been sold.”

This is the second major uranium mine flooding announcement over the past five months, further tightening the noose around utilities who previously expected ample uranium mining supply to power their nuclear reactors. Utilities had anticipated Cameco’s Cigar Lake uranium mine to provide them with about 10 percent or more of the newly mined uranium in 2008, before catastrophic flooding indefinitely delayed the mine opening.


Are The Water Levels ‘Manageable’?


Problems with uranium mining, according to Dr. Clark, “Either too much water or not enough of it.”
Flooding on eastern side of Ranger property 5 March photo, Collapsed South Alligator Bridge, Arnhem Highway

On Friday, Haywood Securities issued these photos as part of a desk note to their brokers, with the comment that “water levels are now ‘manageable’.” After reviewing these photos and discussing the potential damage at the Ranger mining operations with those in the industry, we consulted with others who have actually been faced with mine de-watering, mine reclamation and retention ponds, this past Wednesday evening and Thursday.

We showed the photos of the Ranger open pit mine flooding to several mining experts, who asked to remain anonymous for this article, but who have all been involved in open pit and/or underground uranium mining. Feedback ranged from “This is a nightmare!” to “They have big problems: It will take lots of time and lots of money to fix this.”

The Australian mining company announced, “… production will be impacted in 2007.” ERA is the world’s third largest uranium producer, so how much impact will there be? Dr. Clark calculated, “The Ranger site has about 60 million pounds U3O8 in stockpiled ore, but this is at an average ore grade of 0.11 percent according to ERA. Since their mill head grade averages at least 0.20 percent and as high as 0.34 percent (fourth quarter of 2006), the ore stockpile – much of it from previous mining of Ranger I – is supplemented with ongoing production from the higher grade Ranger III pit.”

Based on the lower-grade feed to the mill, second half of 2007 uranium production could drop by as much as two-thirds of the amount ‘put in the can’ last year. This calculation was reached because the mill will be fed ore at approximately one-half to one-third of the grade fed during 2006. “We don’t know the distribution of grades on their ore pads,” Clark cautioned about our conclusion. Because of this potential drop in production, estimates of new supply from Ranger could mean up to four million pounds U3O8 less than the company hoped to produce in 2007. Another source, from someone familiar with Ranger, believed initial estimates could run up to two million pounds of lost production.

Wednesday’s news release stated ERA has restarted operations. “Given the pictures of the site, it’s not clear what ‘restarted operations’ really means,” Clark said. The Northern Territory (NT) Government website reported more than 800mm (2.62 feet) of rain over a four day period across the ‘Top End,’ referring to the northernmost part of Australia’s land mass. According to the website, two of the main highways, Arnhem Highway and Kakadu Highway, respectively remain closed with repairs necessary or reopened with restrictions on vehicle weight.

In a recent visit to the ‘road report website’ for the NT’s Department of Planning and Infrastructure, the roads were mostly closed, impassable or passable only with 4WD vehicles due to flooding, road damage or changing surface conditions. Based upon the information provided our impromptu panel of experts, they believed ‘restarting operations’ probably meant cleaning up the mess Mother Nature handed ERA with the damaging impact of Cyclone George.

An expert, with twelve years experience in U.S. mining reclamation told us, “They might have to re-apply for permitting and overcome regulatory hurdles. The water in the pits may have to be pumped, tested and treated before it can be allowed downstream.” He explained the company may have to use barium chloride to precipitate out the radionuclides. All of the experts agreed ERA would probably have to re-build the retention pond in order to treat the radioactive water in the pit. Perhaps a new retention pond might need to be constructed.

If there are dissolved solids, such as muddy water or silt, this could pose a number of de-watering problems. A mining engineer with more than 30 years of mining experience – including open pit uranium mining, some of which included de-watering – warned, “ERA will need multiple pumps on a large barge with high pressure pumps.” He added, “Any solids in the water could destroy the pumps so they will have to change the pumps frequently, possibly as often as every 24 hours.” He believed it would take at least two to three months to dewater the open pit. Others speculated the entire cleanup could take six months or longer.

One major concern of the various experts was that valuable equipment may have been destroyed. “I would be surprised if the ‘sumpage’ wasn’t destroyed,” one mining engineer observed. Sumpage is the lowest part of a mining pit where the mining operation’s undesirable elements are collected and drained by way of pipelines. “They will probably need new pipelines in the bottom of the pit,” said the mining engineer.

There remain a number of questions which ERA may be forced to answer in their next news release. For example, were electric shovels lost and do they have pipeline readily available for sumpage repair? Our experts pointed out it can take several years to order an electric shovel with 15- to 50-yard capacity. “One can purchase a used one or a smaller one,” said one expert, “but they won’t find one for less than $4 or 5 million.” An electric shovel can be costly to repair, especially if it is at the bottom of Ranger Pit III. We were informed there is a one- to two-year waiting list for a new electric shovel. One miner speculated, “I bet they lost all of their electrical equipment in this flooding.”

Much of this is speculative as Energy Resources of Australia has yet to issue guidance on the impact of the recent flooding. Unlike Cameco, which brought Cigar Lake into the spotlight and was upfront about the problems the world’s largest uranium producer faced, ERA has remained silent. We waited until well after North American markets were closed on Friday before publishing this story to provide ERA with an opportunity to respond before Australian markets opened in Sydney on Monday morning.
Diversifying Supply and Operations Risks


Photos from the surrounding area of the Ranger mine emphasize why uranium mining companies and utilities must diversify their risk.

“Running single asset operations is inherently dangerous as all your eggs are in one basket,” Neal Froneman told StockInterview. “A fundamental part of our strategy has been to establish Uranium One in the top five most prolific uranium jurisdictions so we can diversify supply risk even within our own company.” SXR currently has a presence in Australia, Kazakhstan, Canada, South Africa and the United States. The company recently started production at its Dominion uranium mine in South Africa.

In a December 2006 article, we warned investors should be looking at the smaller uranium producers, and especially those advanced stage companies with uranium projects on the way to becoming producers. We repeated this commentary in January and warned of the high-risk nature of uranium mining. Many novice investors, and even many stock analysts, have not fully comprehended the numerous risks entailed in bringing uranium mining projects into operation.

Most of the advanced stage junior uranium companies and the then-imminent producers, SXR and Paladin, soared after the Cigar Lake mine flooding. After the Cigar Lake news was fully digested, it took several days for many investors to sort out which uranium companies would soon become producers. Companies, which were then approaching uranium production, such as SXR and Paladin, quickly benefited. And so did Energy Metals because of the company’s production in late 2007 or early 2008. Existing uranium producers, such as Uranium Resources and Denison Mines, enjoyed strong share price appreciation. Later, others identified as potential producers in our article, witnessed their company’s share price rapidly appreciate.

We preferred writing about those companies, which had gotten into the current uranium bull market in the early days and locked up the more prospective properties. And especially those with sufficient prescience to have diversified their property portfolio mix, just in case there were bumps in the road, as Cameco has experienced, and now ERA. These also included Forsys Metals, Strathmore Minerals, Uranerz Energy and UR-Energy. Many of the better uranium mining analysts in Canada have also recommended several of these companies.

“The potential for uranium from new sources is significant,” James Malone told Bloomberg News in November. Malone is the vice president and nuclear fuel at Chicago-based Exelon Corp. which operates 11 percent of U.S. nuclear reactors. Diversifying supply may also become mandatory for U.S. utilities hoping to continue powering their nuclear power plants in light of the ERA’s announcement of force majeure. We wonder whose uranium mine will next suffer a production deficiency and which utilities will take it on the chin.
Abrupt Climate Change


Australia’s wet season: October 1, 2006 to March 7, 2007. Unusually heavy seasonal rainfall in northern Australia further jeopardizes the existing tight uranium mining supply picture. Courtesy of Australian Bureau of Meteorology, National Climate Centre, Commonwealth of Australia.

Cyclone George caught uranium mining operations at Energy Resources of Australia off guard. The length of time to clean up the mess and again fully commence mining operations remains unknown. What also remains unknown is whether or not there will be more bad weather arriving in Australia’s Northern Territories. Weather has been volatile and extremely unpredictable over the past several months in North America and now in Australia. Ironically, the same culprit, which nuclear energy hopes to tame by lessening carbon dioxide emissions, abrupt climate change, may be at the root of this misery.

On February 22nd, the Australian Government’s Bureau of Meteorology issued a “Neutral” three-month outlook for the country’s Northern Territories, writing, “The Northern Territory outlook for total March to May rainfall shows no strong swings in the odds toward wetter or drier conditions.” A few days later, one of the world’s largest producing uranium mines shut down because of heavy rainfall and flooding, courtesy of Cyclone George. This goes to show that weathermen in ‘Down Under’ may be just as helpless in forecasting ‘abrupt climate change’ as those in the United States.

The Australian wet season officially ends on the final day of April. Will there be more cyclones or heavy rainfall before May arrives?

As Gene Clark told us, “In this industry, there is either too much water or not enough.” Our question to the major uranium miners is: Who will be the next to suffer production problems and further tighten the uranium supply picture? In our soon-to-be published Uranium Guide update, we warned of the betafite problems at Rossing (Namibia) and the challenge this miner has in developing a new acid leach process to strip away the refractory mineral. Production at most of the top uranium mines was down about 10 percent in 2006, on average, according to one analyst.

Our question to the world’s utilities is: When will you start joint ventures with the new breed of uranium mining companies to help move those projects forward? We have determined the last hurdle for several is the time delay of the environmental process. A utility can now decide whether to later pay exorbitant prices for uranium or match up now with a near-term producer and take a stake in one or more of their properties. Dragging heels and waiting for a price downturn may take too long and become a costly proposition.

Our memorable floor discussion at the September Platts conference with a Florida Power nuclear utility executive in late 2006 comes to mind. The U.S. utility vice president of nuclear engineering argued the uranium price was way too high at US$50/pound. Furiously, he argued during his lecture – complete with charts, comparisons with palladium’s rocket rise and collapse, and ready-made solutions – that the uranium price would soon collapse to below $30/pound. Guess again?
WEBSITES and Trading Symbols of companies mentioned in this feature:
Cameco Corp NYSE: CCJ www.cameco.com
Denison Mines TSX:DML www.denisonmines.com
Energy Metals Corp TSX: EMC www.energymetalscorp.com
Energy Resources of Australia ASX: ERA, Pinks: EGRAF www.energyres.com.au
Forsys Metals TSX: FSY www.forsysmetals.com
Paladin Resources Limited TSX: PDN www.paladinresources.com
Strathmore Minerals TSX: STM www.strathmoreminerals.com
SXR Uranium One TSX: SXR www.uranium1.com
UR-Energy TSX: URE www.ur-energy.com
Uranerz Energy AMEX: URZ www.uranerz.com
Uranium Resources OTC BB: URRE www.uraniumresources.com

 

Das ist den meisten schon seit Freitag dem 09.03.07 bekannt.  

mit evtl. gigantischer Auswirkung auf den Uranpreis.  

aus dem FSY Thread von Oligator:

Weekly Spot Uranium Price Indicator Raised to US$90/Pound

http://www.stockinterview.com/News/03112007/...um-Spot-Price-ERA.html

es bleibt spannend ;-)

 

auf aktuellen 140 USD !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!  

mal alle die hier nicht Posten dürfen! :)