Uranium

Content maintained by Aden McKay

• Uranium
• Resources
• Accessible EDR
• JORC Reserves
• World Ranking
• Exploration
• Production
• Exports
• Industry Developments
• Other Developments

Major uses for uranium (U) are as fuel in nuclear power reactors for electricity generation, in the manufacture of radioisotopes for medical applications and in nuclear science research using neutron fluxes.

On March 11, 2011 Japan suffered a major earthquake and tsunami which caused widespread devastation along the eastern coastal areas. The tsunami damaged and disrupted the emergency cooling systems at the Fukushima Daiichi nuclear power plant and this resulted in major damage to four of the six nuclear reactors at the site. Subsequently this resulted in a substantial radiological release to the atmosphere (WNA¹, 2011).

In the wake of the incident, there have been a range of political responses issued by governments in many countries around the world. These political responses are summarised in Australia's Identifed Mineral Resources (AIMR) 2011 (page 98).

Japan's nuclear power plants were shut down progressively for mandated periodic inspections when routine maintenance was due for each reactor. Local authorities refused to grant approvals to restart these plants and by early 2012 almost all of the 50 nuclear power plants (30% of Japan's total electricity generating capacity) were shut down. By mid-2012 two of the plants had resumed operations. The Japanese government is reviewing national energy policies and decisions will be made about the contribution of nuclear power to the country's electricity generation into the future (WNA, 2012²).

The number of operating nuclear power plants worldwide declined from 442 at December 2010 (in 30 countries) to 434 by December 2011. Their share of world electricity generation also fell over the same period from 14% to 13.8% and the number of plants under construction worldwide fell from 63 to 61. By November 2012, the number of operating plants had increased slightly to 436 with a total capacity of 374 135 megawatts. The total uranium required to fuel these reactors is 68 000 tonnes a year (Source: World Nuclear Association).

Although the Fukushima accident has affected nuclear power projects and policies in some countries, nuclear power remains a key part of the global electricity mix. The Organisation for Economic Co-operation and Development Nuclear Energy Agency (OECD/NEA) and International Atomic Energy Agency (IAEA) in the latest edition of the Red Book³ stated, "By the year 2035, world nuclear capacity, taking into account the current understanding of policies announced by some countries (e.g. Belgium, Germany, Italy and Switzerland) following the Fukushima accident is projected to grow to between about 540 GWe nett in the low demand case and 746 GWe nett in the high demand case, increases of 43% and 103% respectively. Accordingly, world annual reactor related uranium requirements are projected to rise to between 97 600 and 136 000 tonnes a year by 2035".

Uranium market prices

For the first two months of 2011 the spot market price continued to recover from the effects of the global financial crisis during late 2008 and early-to-mid 2009. Prices were bolstered by China's plans to expand its reactor fleet. In January, prices peaked for the year at US$72 per pound (lb) U₃O₈. In March, the impacts of the Fukushima incident caused spot market prices to fall. Uncertainty continued in uranium markets and the spot price fell to its lowest value for the year of US$49/lb in August. However it recovered to US$52/lb by September and remained at this level through to May 2012. Prices subsequently fell to US$44/lb by the end of December 2012⁴.

The spot market has been adversely impacted by the uranium stocks held by Japanese nuclear power companies. This has been exacerbated by an increase in the release of uranium inventory by the United States Department of Energy which currently is selling approximately 3800 tonnes of natural uranium a year⁵. This represents more than 15% of annual reactor requirements in the US.

Geoscience Australia prepares estimates of Australia's uranium resources within categories defined by the OECD/NEA and the International Atomic Energy Agency (IAEA). The resource categories within this NEA/IAEA scheme reflect total costs of mining and milling ore.

In recent years, the cost of mining and milling uranium ores has increased in Australia as a result of the mining boom. Capital costs have risen and labour costs have increased more quickly than the national average⁶. Prior to 2010, economic uranium resources were confined to the cost category of less than US$80 per kilogram (kg) of uranium. However, because of increasing costs of uranium mining and milling, most deposits/projects are now assigned to the higher cost category of less than US$130/kg of uranium.

The estimates in each category are for resources of recoverable uranium after losses resulting from mining and milling have been deducted (Tables 1 & 2).

Table 1. Australia's uranium resources at December 2011 (reported under corresponding categories of NEA/IAEA and Australian national schemes).

National Scheme	NEA/IAEA Scheme	Tonnes U recoverable (December 2010)
Economic Demonstrated Resources (EDR)	Reasonably Assured Resources (RAR) recoverable at less than US$130/kilogram (kg) U	1 196 000
Paramarginal Demonstrated Resources	RAR recoverable at US$130–260/kg U	33 000
Submarginal Demonstrated Resources	RAR recoverable at greater than US$260/kg U	0
Economic Inferred Resources	Inferred Resources recoverable at less than US$130/kg U	539 000
Paramarginal Inferred Resources	Inferred Resources recoverable at US$130–260/kg U	50 000
Submarginal Inferred Resources	Inferred Resources recoverable at greater than US$260/kg U	0

Australia's RAR of uranium which can be produced at costs of less than US$130/kg at December 2011 were estimated to be 1196 kilotonnes (kt), which was an increase of 3% on the estimates for December 2010.

Australia had an additional 539 000 tonnes of uranium in Inferred Resources recoverable at costs of less than US$130/kg. These Inferred Resources are mainly in the southeast area of the Olympic Dam deposit in South Australia (SA).

Although there are more than 35 deposits with RAR of uranium recoverable at costs of less than US$130/kg, the vast majority of these resources are within the following four deposits:

• Olympic Dam, which is the world's largest uranium deposit
• Ranger and Jabiluka, in the Alligator Rivers region of the Northern Territory (NT)
• Yeelirrie in Western Australia (WA).

Table 2. Uranium resources in States and the Northern Territory at December 2011.

	RAR recoverable at <US$130/kg U Tonnes U	Inferred Resources recoverable at <US$130/kg U Tonnes U	Total Resources Tonnes U	Percentage of Australia's Total Resources
South Australia	940 200	421 100	1 361 300	78%
Northern Territory	164 700	59 000	223 700	13%
Western Australia	55 300	39 000	94 300	6%
Queensland	36 200	20 300	56 500	3%
New South Wales	0	0	0	-
Victoria	0	0	0	-
Tasmania	0	0	0	-
Australia Total (rounded)	1 196 400 (1 196 000)	539 400 (539 000)	1 735 800 (1 736 000)	100%

Approximately 10% of uranium in RAR at less than US$130/kg (equates with Economic Demonstrated Resources) is inaccessible for mining. At December 2011, all uranium deposits in Queensland (Qld) were inaccessible because State Government policy at the time prohibited uranium mining. (Note: In October 2012, the Qld Government lifted its ban on uranium mining so that Qld deposits have become accessible since that date).

In the NT, inaccessible resources include the Jabiluka deposit, where the traditional Aboriginal land owners have not granted approval to mine the deposit, and the Koongarra deposit, which was added to the Kakadu World Heritage Area by the World Heritage Committee on 27 June 2011. In South Australia (SA), the Mount Gee deposit is within the Arkaroola Protection Area, which was established by the SA Government in July 2011. Exploration and mining titles will not be granted in this area.

Joint Ore Reserve Committee (JORC) Code reserves comprise total uranium in Proved and Probable Ore Reserves as defined in the JORC Code. At December 2011, JORC Code reserves of 349 000 tonnes recoverable uranium accounted for approximately 32% of accessible Reasonably Assured Resource.

Australia has the world's largest resources of uranium with an estimated 1196kt in RAR recoverable at costs of less than US$130/kg. Based on the latest estimates⁷ for other countries, this represents approximately 34% of world resources in this category. Other countries with large resources in this cost category include Niger with 10%, Canada and Kazakhstan with 9%, Namibia with 7% and the United States with 6%.

Australia's Inferred Resources of uranium recoverable at costs of less than US$130/kg are the world's largest resources in this category.

Uranium exploration expenditure in 2011 was $189.6 million⁸ which was virtually unchanged from expenditure in 2010 ($190 million). The majority of this expenditure was in WA (47%), followed by SA (24%), the NT (21%) and Qld (8%).

Uranium exploration expenditures in Australia have decreased progressively from a peak level of $220 million in 2008 as spot market prices decreased from highs in July 2007.

Quasar Resources continued exploration for sandstone-hosted deposits in the Frome Embayment to north of the Beverley Mine. Additional zones of mineralisation were intersected in Eyre Formation sands at Pepegoona and Pannikin deposits, which are 10 and 8 kilometres (km) north of Beverley mine respectively.

In 2011, Geoscience Australia released the results of a regional airborne electromagnetic (AEM) survey over the Frome Embayment. The results of this survey outlined the extent of paleochannel sands within the Eyre Formation. There has been increased activity in uranium exploration over the Frome Embayment. Cauldron Energy discovered uranium mineralisation in paleochannel sands to the north of Mount Babbage Inlier at its MacDonnell Creek prospect.

Exploration drilling continued at Carrapateena deposit, 100km southeast of Olympic Dam. It is a hematite breccia complex deposit hosted by brecciated granites, similar to Olympic Dam. For details of resource estimates and results of metallurgical test work refer to Australia's Identifed Mineral Resources (AIMR) 2011 (page 98).

In 2011, Cameco Australia discovered high grade uranium mineralisation at the Angularli prospect in western Arnhem Land. Exploration drilling targeted AEM survey anomalies where they coincided with major north-northwest trending faults. Unconformity related uranium mineralisation was intersected in both the basement rocks and the overlying Kombolgie Sandstone. The mineralisation is within a major breccia zones which post-dates the Kombolgie Sandstones⁹. Basement rocks comprise meta-sediments and felsic to intermediate magmatic rocks of the Nimbuwah Domain. Uraninite and pitchblende form veins, stringers and breccia matrix infill.

The best intersections at the Angularli prospect to date have been 12.2 metres (m) averaging 1.1% U₃O₈ followed by 20.2m averaging 5.2% U₃O₈ within drill hole WRD0084.

In the Athabasca Basin in Canada, unconformity-related uranium deposits occur in breccia zones in two geological settings:

• in basement rocks below the unconformity (e.g. Key Lake, McArthur River, Rabbit Lake, Midwest deposits), and
• in overlying sandstones (e.g. Cigar Lake deposit).

The deposits above the unconformity are usually very high grade. To date, the known uranium deposits in the Alligator Rivers region (Ranger, Nabarlek, Jabiluka and Koongarra) are all within breccia zones in basement rocks below the unconformity. Deposits have not been found above the unconformity despite considerable exploration over the past decade by a number of companies. Angularli appears to be the first discovery of high grade uranium mineralisation above the unconformity in the Kombolgie Sandstone.

Exploration drilling by Energy Resources of Australia in the Georgetown area, east of the Ranger 3 open cut, intersected 14m averaging 0.35% U₃O₈ from a depth of 403m. The company plans to conduct a major exploration drilling program in the Ranger 3 Deeps and Georgetown area over the period 2012 to 2014 for a total expenditure of $40 million.

During 2011, Alligator Exploration Ltd carried out exploration drilling in the Caramal-South Horn area within the Myra Inlier in western Arnhem Land. High grade uranium mineralisation was intersected at Caramal deposit and a number of other locations.

At Thunderball deposit, near Hayes Creek, 140km southeast of Darwin, unconformity related mineralisation occurs in sheared carbonaceous shales, cherts and tuffaceous siltstones of the Pine Creek Orogen. In February 2011, Thundelarra Exploration Ltd released initial resource estimate of 829 000 tonnes Inferred Resources averaging 924 part per million (ppm) U₃O₈, which represents 766 tonnes of contained U₃O₈.

In 2011, exploration drilling was directed at possible mineralisation along the contact between the Gerowie Tuff and the Zamu Dolerite approximately 70m below the known mineralisation and along strike extensions of the Lower Zone mineralisation. In addition, drilling was carried out at the Bella Rose, Lady Josephine, Corkscrew and Moonraker uranium prospects, with six holes returning intercepts above 100ppm U₃O₈.

Several companies explored the northern margins of the Ngalia Basin (Mount Eclipse Sandstone) including Energy Metals, which, in a joint venture with Paladin Energy, continued regional exploration in the northern portion of the Basin between 180km and 350km northwest of Alice Springs. Bigrlyi is the main deposit in this area and other zones of mineralisation include Walbiri, and Malawiri. Drilling during 2011 intersected continuations of the mineralised zones at Anomaly 15 and Anomaly 4 within the Bigrlyi deposit. High grade mineralisation was intersected at the Camel Flat prospect, in Mount Eclipse Sandstone 35km southeast of Bigrlyi.

Exploration drilling continued at Cappers deposit where mineralisation is associated with calcareous alluvium. Toro Energy continued exploration at the Napperby deposit which is in calcrete on the northeast part of the Ngalia Basin.

In late 2010, Thundellara Exploration completed a regional AEM survey over the company's 3300 square kilometres of exploration tenements within the Ngalia Basin. Interpretation of the data identified more than 400km of paleochannel systems within the Lower Tertiary sequence. At the Afghan Swan prospect, conductivity data from the AEM survey defined the Lower Tertiary paleochannel system that hosts uranium mineralisation. Drilling identified significant uranium mineralisation (greater than 100ppm eU₃O₈) over 15km within the Afghan Swan paleochannel.

Toro Energy completed an AEM survey in the Wiso Basin to explore for sandstone-hosted uranium mineralisation.

Paladin Energy Ltd continued exploration drilling in an area extending from 10km to 110km north of Mount Isa in northwest Qld. Exploration tenements are held in a joint venture with Summit Resources Ltd (82% owned by Paladin Energy) and Fusion Mineral Resources. There are more than 14 uranium deposits within these tenements, eight of which have significant resources. They are Valhalla, Skal, Odin, Bikini, Andersons, Watta, Duke-Batman and Honey Pot deposits. The total uranium resources in the Mount Isa region which are managed by Paladin and its subsidiary Summit Resources were reported to be¹⁰:

• Measured+Indicated Resources 48 164 tonnes of U₃O₈ average grade 743ppm U₃O₈, and
• Inferred Resources 18 466 tonnes of U₃O₈ average grade 574ppm U₃O₈.

The largest of these is Valhalla deposit, which has total Measured+Indicated+Inferred Resources of 34 600 tonnes U₃O₈ with average grade 800ppm U₃O₈.

During 2011 and 2012, drilling was directed mainly at upgrading the resources at Skal and Odin, while work on Valhalla included mineralogical and metallurgical testing. Drilling at Odin 1km north of Valhalla and Skal intersected extensions to the deposit in a down-dip direction resulting in a significant increase in resources. At June 2012, estimated Indicated+Inferred Resources for Odin deposit were 7964 tonnes U₃O₈ at an average grade of 570ppm U₃O₈ and the Indicated+Inferred Resources at Skal were 9885 tonnes U₃O₈ at an average grade of 630ppm U₃O₈.

Recent metallurgical test work showed that Valhalla ore is amenable to high temperature and pressure alkaline leaching. Previous tests showed that the ore is very fine grained and sometimes refractory in nature. Alkaline leaching of the ore at high temperatures and pressures showed recoveries of 80 to 90%.

Several companies explored for sandstone-hosted uranium deposits in Cenozoic (Eocene) sands and lignite of the Gunbarrel Basin overlying the eastern margins of the Yilgarn Craton. Energy and Minerals Australia Ltd (EMA) continued exploration in areas adjacent to its Mulga Rock deposit, 250km east-northeast of Kalgoorlie. In mid-2012, EMA reported the discovery of a new uranium deposit, the Princess deposit, within the Mulga Rock project area. Princess deposit is a tabular body 1.4km long and ranges from 100m to 500m wide. It contains mineralised intervals up to 8.22m thick with the top of the mineralisation 40m below the surface. The best intersection to date is 8.33m averaging 1360ppm U₃O₈ at a depth of 38.4m. The mineralisation is hosted by carbonaceous sandstone, siltstone and minor peat layers, and is immediately below the boundary between oxidised and reduced sediments. This boundary corresponds approximately with the water table. The Mulga Rock project comprises four separate uranium deposits, including the Princess deposit, which have total Inferred Resources of 27 100 tonnes of contained U₃O₈ with an average grade of 490ppm U₃O₈.

Manhattan Corporation continued drilling into paleochannel sands at its Ponton project 180km northeast of Kalgoorlie and 40km southwest of Mulga Rock. The Double 8 deposit and the Stallion South, Highway South and Ponton prospects are within the Queen Victoria Spring Nature Reserve (QVSNR). In addition, there are other uranium prospects within tenements to the north of the QVNR. Manhattan's four Exploration Licences that are within the QVSNR were granted in August 2011 and the company is seeking approval to drill the deposits within these tenements. The paleochannel drilling undertaken by Manhattan Corporation in 2011 was north of the QVSNR.

Toro Energy continued exploration at the Theseus prospect, in the Lake Mackay region in northeast WA adjacent to the NT border. Drilling intersected significant mineralisation in Cainozoic paleochannel sands adjacent to uranium rich rocks of the Amadeus Basin. Drilling results have defined mineralised sands extending over an area 700m wide, 2km long, and open to the south. Age dating of these sands confirmed that they are the same age as sediments of the Namba and Eyre Formation in the Callabonna Sub-basin which host the Beverley and Honeymoon deposits in SA.

Cameco Australia continued exploration at the Turee Creek and Ashburton prospects in the Bresnahan Basin about 150km southwest of Newman. Low-grade uranium mineralisation occurs in the Kunderong sandstone. Current exploration is focused on the unconformity at the base of the sandstone.

Energy Metals continued exploration at the Anketell and Lake Mason calcrete-hosted deposits southwest of Wiluna.

Australia's mine production for 2011 was 5967 tonnes U (7036 tonnes U₃O₈), which was 1% greater than for 2010. Australia had four operating uranium mines in 2011, Ranger in the NT and Olympic Dam, Beverley and Honeymoon in SA. At Ranger, very high rainfall during the wet season resulted in operations at the processing plant being suspended and total production for 2011 was restricted to 2240 tonnes U (2641 tonnes U₃O₈), compared with 3216 tonnes U in 2010.

Olympic Dam production for 2011 rose by 4% to 3353 tonnes U (3954 tonnes U₃O₈). Damage to the haulage system of the Clarke Shaft in 2009 reduced the mine's ore hoisting capacity in 2010. However the damage was repaired and full year haulage was achieved during 2011. Production from Beverley in situ recovery (ISR) operation was 352 tonnes U (415 tonnes U₃O₈), which was unchanged from 2010. Production commenced at Honeymoon ISR operation in the latter part of 2011 and 22 tonnes U (26 tonnes U₃O₈) was produced for the year.

Total world production in 2011 was 54 610 tonnes U (64 399 tonnes U₃O₈), an increase of 2% on 2010. Most of the increase in production in 2011 is attributable to growth in Kazakhstan's output, which rose 9% to 19 451 tonnes U in 2011, Uzbekistan which rose 25% to 3000 tonnes U, and China which rose 80% to 1500 tonnes U in 2011. World uranium requirements for nuclear electricity generation in 2011 were 62 552 tonnes U¹¹. Uranium requirements in 2011 exceeded production by more than 7940 tonnes U.

Exports in 2011 were 5621 tonnes U (6628 tonnes U₃O₈) valued at $586 million¹².

Exports of Australian uranium are controlled by stringent nuclear safeguards which ensure that it is used for peaceful purposes only and will not be diverted to military or explosive purposes. Australian mining companies supply uranium under long-term contracts to electricity utilities in the USA, Japan, China, South Korea and Canada as well as members of the European Union, including the United Kingdom, France, Germany, Spain, Sweden, Belgium and Finland. In 2011, major markets for Australian uranium were Asia (48.5 per cent), Europe (25.7 per cent) and the US (25.8 per cent).

Olympic Dam (SA): BHP Billiton continued investigations into the Olympic Dam Expansion project based on a large open pit to mine the south-eastern portion of the deposit. The company released the Supplement to the Environmental Impact Statement (EIS) for the Olympic Dam Expansion on 13 May 2011. The company received environmental approvals for the project from the Australian and South Australia Governments in October 2011 following assessment of the draft and supplementary Environmental Impact Statements.

On 29 November 2011, the South Australian Parliament ratified the Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill. BHP Billiton stated¹³: "The passage of this Bill provides the Company with greater certainty for what would be a significant investment and demonstrates South Australia's support for the project… We need to complete further studies on the project before seeking Board approval …".

In August 2012, the company announced¹⁴ that it would investigate an alternative, less capital-intensive design of the Olympic Dam open-pit expansion, involving new technologies, which would substantially improve the economics of the project. As a result the company stated it would not be ready to approve the expansion before the Indenture agreement deadline of 15 December 2012. Heap leach and other technological solutions are being studied¹⁵ and these studies will require extensive analysis. BHP Billiton stated that current market conditions, including subdued commodity prices and higher capital costs, led to the decision to delay the project.

Ranger mine (NT): During 2011, operations at the Ranger metallurgical processing plant were temporarily suspended because of the impact of very high rainfall during the wet season. In January 2011, Energy Resources of Australia (ERA) Ltd commenced an orderly suspension of plant processing operations as a proactive measure to manage water levels in the tailings storage facility during the wet season. Processing operations recommenced in June. Suspension of plant processing operations restricted total production for 2011 to 2240 tonnes U (2641 tonnes U₃O₈) compared with 3216 tonnes U in 2010.

The high water levels in Pit 3 restricted access to high grade ore located at the bottom of the pit. Pit 3 is approaching the end of its operational life with the remaining ore in increasingly narrow, geologically complex zones within barren rock at the margin of the ore body.

Ranger 3 Deeps: This is one of the most significant uranium deposits recently discovered in Australia. It is estimated at 10 million tonnes of mineralised material with an average grade of 0.34% U₃O₈ for 34 000 tonnes of contained U₃O₈. ERA propose to mine the deposit by underground methods.

In July 2012, excavation of the boxcut for the Ranger 3 Deeps exploration decline was completed and work commenced on the decline in November 2012. Close-spaced underground exploration drilling will be carried out from the decline to further define the Ranger 3 Deeps ore body and to explore adjacent areas. In parallel to construction of the decline, work is proceeding to prepare a feasibility study and to detail the approvals process associated with a potential Ranger 3 Deeps underground mine.

In addition to the underground drilling of the Ranger 3 Deeps deposit, an expanded $40 million surface drilling program in under-explored areas of the Ranger Project Area is planned for 2012 to 2014.

ERA completed the feasibility study for a proposed heap leach facility for extraction of U₃O₈ contained in low grade mineralised material, mainly in stockpiles. In August 2011, the company announced that the study demonstrated that this facility was technically feasible, but the high capital costs and present economic assumptions limit its value. There was uncertainty also surrounding stakeholder support so the ERA Board decided not to proceed with the proposed heap leach facility.

Beverley and Beverley North in situ recovery (ISR) mines (SA): Heathgate Resources operates the Beverley and Beverley North ISR mines between the North Flinders Ranges and Lake Frome, approximately 300km northeast of Port Augusta. By 2010 most of the resources at Beverley deposit had been mined out, and, in recent years, the company has mined remnants of the resources within the Beverley mining lease. During 2011, production was mainly from old, re-activated wellfields, some of which closed several years ago. The company re-activated these old wellfields from where additional uranium was produced. The company continued exploration drilling within the Beverley leases during 2011.

Beverley North comprises the Pepegoona deposit, 12km north of the Beverley mine and the Pannikin deposit, 10km northwest of Beverley. Following assessment of the environmental impacts under the Environment Protection and Biodiversity Conservation Act (EPBC Act), formal approval by the Australian and South Australian Governments was granted in February 2011. Production commenced at Pepegoona in March and by November, both Pepegoona and Pannikin plants were in operation.

Beverley North is mined using a satellite ISR operation. The satellite operation comprises wellfields, pumps, pipelines and facilities for circulation of the mining (leach) solutions, and ion exchange columns. Uranium is captured on resins within the ion exchange columns. When the resin is loaded with uranium it is transferred into a road tanker and transported to the Beverley plant for metallurgical processing to recover the uranium. After the uranium has been removed, the clean resin is transported back to Beverley North for reuse in the ion exchange columns.

During the latter part of 2011, combined production at Beverley plant was approximately 80% from Beverley North and 20% from the re-activated wellfields at Beverley deposit.

Four Mile ISR project (SA): Four Mile comprises two large sandstone-hosted uranium deposits, Four Mile West and Four Mile East, and is 75% owned by Quasar Resources (affiliate of Heathgate Resources) and 25% owned by Alliance Resources.

The granting of a mineral lease over Four Mile project had been delayed for several years as a result of legal proceedings between the joint venture partners on matters involving the registration of a Native Title Mining Agreement (NTMA). In early 2012, these matters were resolved and the NTMA was registered on 8 February 2012. On 26 April 2012, the joint venture was granted a 10 year mineral lease over the Four Mile project area by the South Australian Minister for Mineral Resources and Energy.

In October 2012, Alliance announced the decision to recommence development of the Four Mile Project. The Start-Up Plan comprises:

• uranium capture at Heathgate's Pannikin satellite plant with elution, precipitation, drying and packing at Beverley processing plant, and
• ISR mining operations commencing at Four Mile East in the December quarter, 2012 and at Four Mile West in the June quarter, 2013.

Quasar Resources has described the Start-Up Plan as a staged commencement of mining operations to allow actual production rates to be considered before full-scale production facilities are constructed.

Table 3. Four Mile Uranium Project - Mineral Resources at July 2012

	Resources	% U3O8	U3O8 tonnes	JORC Classification
Four Mile West	5.7Mt	0.34	19 000	Total Indicated plus Inferred
Four Mile East	4.1Mt	0.31	13 000	Inferred
Total	9.8Mt	0.33	32 000

All mineral resource estimates at Four Mile have been calculated using parameters for an ISR mining method. However, in the western area of Four Mile West, additional mineralisation has been identified above or within about 20m of the water table. This has the potential to add to mineral resources, if proved recoverable by ISR or mineable by other methods.

Honeymoon ISR mine (SA): Honeymoon ISR uranium mine is approximately 75km northwest of Broken Hill. Uranium bearing solutions are processed using solvent extraction technology at the processing facility. Pilot production (commissioning) at Honeymoon commenced in September 2011 and production for 2011 was 22 tonnes U (26 tonnes of U₃O₈). The first shipment of uranium concentrates from Honeymoon to the United States occurred in February 2012 and by mid 2012, 32 production wells were in operation.

The project has a design capacity of 880 000lbs U₃O₈ per year (340 tonnes U per year). The ground water treatment plant and the calcium sulphate removal circuit commenced operating in the late 2010 and early 2011.

Oban ISR project (SA): Field leach trials were carried out at the Oban deposit, about 100km northwest of Broken Hill. Acid leach solutions and an oxidant were used in the trials. A five well-pattern, comprising four injection and one central extraction well was used, which is similar to wellfield patterns at Beverley and Honeymoon.

Curnamona Energy reported that only low levels of uranium were recorded in leach solutions. It appears that the bulk of the uranium minerals are contained in thin (5 to 20 centimetre) bands of clay that occur in the sand units which were leached in the trials¹⁶. Experiments with alternative lixiviants have dissolved some uranium in solution, but the rates of dissolution are low, and are not acceptable. Curnamona stated that this is because of the impervious nature of the clay bands. In early 2012, the company ended the trials and began rehabilitation work at the site. Exploration drilling continued in other areas of the tenements.

Samphire project (SA): UraniumSA Limited continued evaluation drilling at Blackbush and Plumbush sandstone-hosted uranium deposits 20km south of Whyalla on the eastern Eyre Peninsula. In 2011, uranium mineralisation was discovered in granite basement below the sediment-hosted uranium mineralisation and this became the focus of new exploration drilling within the tenements.

The Inferred Resources of sediment-hosted uranium mineralisation are:

• Blackbush deposit 45.5Mt averaging 280ppm U₃O₈ (12 700 tonnes contained U₃O₈), and
• Plumbush deposit 21.8Mt averaging 292ppm U₃O₈(6300 tonnes U₃O₈).

An evaluation of mining methods to optimise the recovery of uranium from the resources has commenced. This will include consideration of open cut options in addition to an ongoing evaluation of in situ recovery methods.

UraniumSA continued research and development work on the extraction of uranium from saline solutions with a number of resins tested. Test work carried out by the Australian Nuclear Science and Technology Organisation using mineralisation from the Samphire project confirmed the suitability of four of these resins for potential commercial use. UraniumSA signed a Memorandum-of-Understanding with uranium extraction specialist Clean TeQ to test the suitability of the Clean TeQ's U-HiSAL process to extract uranium from acidified saline solutions at Samphire project.

Yeelirrie project (WA):  The Yeelirrie deposit is 70km southwest of Wiluna and is Australia's second largest undeveloped uranium deposit. It occurs in calcretes within a paleochannel and is at shallow depths down to 15m below the surface. In August 2012, BHP Billiton signed an agreement to sell the Yeelirrie deposit to Cameco Corporation for US$430 million. The sale was approved by the Australian Foreign Investment Review Board in November and by the Western Australian Government in December 2012.

Table 4 provides an estimate of the mineral resources for Yeelirrie prepared by BHP Billiton in June 2012.

Table 4. Mineral Resources Yeelirrie Project

Measured Resource			Indicated Resource			Inferred Resource
Mt	Grade % U3O8	U3O8 tonnes	Mt	Grade % U3O8	U3O8 tonnes	Mt	Grade % U3O8	U3O8 tonnes
16.61	0.16	26 580	31.03	0.12	37 240	2.41	0.1	2410

Note: Cut-off grade = 0.05% U₃O₈

The estimate was based on 10 250 surface holes, of which nearly 4000 diamond drill holes had assay values and the rest had uranium grade measured by downhole radiometric probing. Cameco considers this may be an overestimate of total uranium content. In order to revise the mineral resource estimate, Cameco propose to review the gamma logs and the grade-radiometry relationship, and recalculate the resources using a lower cut off grade.

Wiluna project (WA): Operated by Toro Energy Limited, the project comprises two shallow (less than 8m deep) calcrete-hosted deposits, Lake Way and Centipede, which are located 15km south and 30km south of Wiluna respectively. At December 2011, Lake Way had Indicated+Inferred Resources of 9.95Mt averaging 530ppm U₃O₈ (5280 tonnes of contained U₃O₈) and Centipede had total Measured+Indicated+Inferred Resources of 11.31Mt averaging 493ppm U₃O₈ (5579 tonnes of contained U₃O₈). Toro also owns three other calcrete-hosted deposits in the Wiluna region, the Millipede, Dawson Hinkler Well and Nowthanna deposits. These have total Indicated+Inferred Resources estimated of 30.98Mt averaging 382ppm U₃O₈ (11 782 tonnes of contained U₃O₈).

Metallurgical test work and studies showed that alkaline agitated leaching in tanks at elevated temperatures is the preferred process option. The company proposes to produce uranium concentrates containing approximately 820 tonnes U₃O₈ a year.

In March 2011, Toro submitted a draft Environmental Review and Management Program which was the basis for environmental assessment of the project by both the Australian and Western Australian Governments. In October 2012, Toro received environmental approval for the Wiluna Project from the WA Minister for Environment, completing the State Ministerial approval process. The Australian Government's environmental decision on the project has yet to be announced.

Lake Maitland project (WA): This is a calcrete-hosted uranium deposit 100km southeast of Wiluna. It occurs as a single horizontal layer 1 to 3m thick with the top of the mineralised zone 1 to 2m below the surface. During 2011, Mega Uranium Ltd advanced its feasibility studies of the project and completed studies associated with two test pits which are each 34m long by 19m wide and 5m deep. Both were mined in late 2010 which demonstrated that:

• truck and excavator mining methods are viable and that the ore and overburden can be excavated without blasting, and
• selective mining could be achieved using high precision Global Positioning System (GPS) equipment on an excavator.

The company also completed investigations into the radiometric disequilibrium of the calcrete ores. Uranium assays from chemical analysis of drill core samples were compared with radiometric grades from corresponding intervals measured by downhole gamma ray logging of these holes. These comparisons showed that, on average, positive disequilibrium exists in the deposit and that downhole radiometric logging significantly understates the actual uranium grade. A considerable proportion of the drill hole assays used to estimate the mineral resources for the deposit were from downhole gamma ray logging.

Based on these disequilibrium data, Mega Uranium commenced a diamond drilling program at Lake Maitland in October 2011 with the aim of increasing the mineral resource tonnage and grade. This program was completed in early 2012 and analyses of the results will be reported when finalised.

Kintyre project (WA): Cameco Australia Ltd estimated the mineral resource at 31 March 2011 to be:

• Indicated Resources of 25 583 tonnes contained U₃O₈ at an average grade of 0.49% U₃O₈, and
• Inferred Resources of 2404 tonnes contained U₃O₈ at an average grade of 0.47% U₃O₈.

A prefeasibility study of Kintyre was completed and in July 2012 the company reported¹⁷ that the study "…highlighted the project's challenging economics caused by low uranium prices and escalating costs in Western Australia". The prefeasibility study was based on a seven-year open pit mine to produce around six million pounds of U₃O₈ a year (2300 tonnes U). The study found that to break even, the project would need an average realised uranium price of US$67/lb or 62 million pounds (23 850 tonnes U) of production over its seven-year life, as opposed to 40Mlb (15 380 tonnes U) in current resources.

The company stated that it would carry out further drilling aimed at discovering more resources and that the project was unlikely to start construction in 2014 as envisaged.

Bigrlyi deposit (NT): During 2011, Energy Metals completed a pre-feasibility study at the Bigrlyi project which is located 300km northwest of Alice Springs. These studies investigated mining the Bigrlyi deposit using a combination of open pit and underground mining. The studies showed that processing the ore using acid leach would generate a positive cash flow for a mine life of eight years¹⁸ and that a substantial increase in resources is critical to improve the economics of the project. Exploration drilling carried out during 2011 identified extensions of the Anomaly 4 deposit (Bigrlyi) in a down-plunge direction. Further mineralisation was intersected at the Anomaly 15 East deposit (Bigrlyi). Large diameter cored holes were drilled to obtain samples for metallurgical testing and to provide geotechnical data for both open pit and underground mining studies.

New South Wales Government lifts ban on uranium exploration

New South Wales (NSW) legislation allowing uranium exploration was proclaimed on 14 September 2012. The NSW Minister for Resources and Energy stated¹⁹ that while the 26 year ban on uranium exploration has been overturned, the ban on uranium mining remained.

By November 2012, almost 40 expressions of interest to explore for uranium in NSW had been received. The Resources and Energy Minister said an expert panel would assess the applications and make recommendations to the Government about whether exploration licences should be granted²⁰.

Queensland Government lifts ban on uranium mining

On 22nd October 2012 the Qld Government announced it would convene a three-member implementation committee to oversee the recommencement of uranium mining. The Premier said the announcement followed sustained public debate on uranium mining and strong support for the uranium industry from the Australian Government.

The Qld Minister for Natural Resources and Mines said that with Qld's known uranium deposits worth an estimated $10 billion, the industry had enormous potential to support economic growth, particularly in regional northwest Qld.

Uranium mining has not occurred in Qld since 1982 and has been effectively prohibited by the State Government since 1989. However, exploration for uranium has not been subject to the prohibition and there has been significant interest from the industry in exploring for uranium in the State.

Protection areas declared

The Koongarra area, along with the uranium deposit, was added to the Kakadu World Heritage Area by the World Heritage Committee on 27 June 2011 in recognition of the areas important natural and cultural values. The inclusion of Koongarra into the Kakadu World Heritage Area means that it will have protection under the EPBC Act.

On 22 July 2011, the Premier of SA announced establishment of the Arkaroola Protection Area, which will be reserved from operation as a result of the Mining (Reservation from Act) Proclamation 2011 under section 8 of the SA Mining Act. It is proposed to enact legislation protecting the area and follow that with an application for World Heritage Listing. As a result, future exploration and mining titles will not be granted in the designated area. This will prevent mining in the area covered by Marathon Resources' Mount Gee exploration licence (EL 4355).

1. WNA, 2011: Policy Responses to the Fukushima Accident. World Nuclear Association
2. World Nuclear Association 2012, Nuclear Power in Japan.
3. Source: Organisation for Economic Cooperation and Development Nuclear Energy Agency and International Atomic Energy Agency, 2012: Uranium 2011: Resources, Production and Demand. OECD Nuclear Energy Agency, Paris 2012.
4. Source: The Ux Consulting Company
5. OECD Nuclear Energy Agency and International Atomic Energy Agency 2011. Uranium 2011: Resources Production and Demand, p433.
6. Port Jackson Partners, September 2012: 'Opportunity at Risk. Regaining our competitive edge in minerals resources'. Report prepared for the Minerals Council of Australia.
7. Curnamona Energy Ltd, 2011. Annual report to Australian Securities Exchange, October 2011.
8. ABS Mineral and Petroleum Exploration, December quarter 2011.
9. King, M., 2012. Exploration for unconformity-style uranium deposits: Geology and Mineralisation of the Angularli Prospect, Wellington Range Project, west Arnhem Land. AGES2012 Annual Geoscience Exploration Seminar. Northern Territory Geological Survey, March 2012.
10. Paladin Energy Ltd Annual Report 2012.
11. Source: World Nuclear Association website.
12. Australian Safeguards and Non-Proliferation Office, 2012. Annual Report of the Director General Australian Safeguards and Non-Proliferation Office 2011 – 2012.
13. South Australian Parliament ratifies Roxby Downs (Indenture Ratification) (Amendment of Indenture) Amendment Bill. BHP Billiton press release 29 Nov 2011.
14. BHP Billiton Olympic Dam update. 22 August 2012. Information release to shareholders.
15. Source: Base Metals briefing and Chilean site tour Non-ferrous overview. Andrew Mackenzie BHP Billiton. 30 September 2012.
16. Curnamona Energy Ltd, 2011. Annual report to Australian Securities Exchange, October 2011.
17. Kintyre uneconomic: Cameco. Press Release 30 July 2012. Cameco Corporation.
18. Energy Metals Ltd. Annual report for 2011.
19. Media release 15 September 2012 by NSW Minister for Resources and Energy.
20. Media release. Capital City Daily 21 Nov 2010.