Uranium

Content maintained by Aden McKay

• Uranium
• Resources
• Accessible EDR
• JORC Reserves
• World Ranking
• Exploration
• Production
• Exports
• Industry Developments
• Other Developments
• New Nuclear Safeguards Agreement With Russia
• Nuclear Safeguards Agreement With China
• Government Initiative In Support Of Uranium Exploration

Major uses for uranium are as fuel in nuclear power reactors to generate electricity, in the manufacture of radioisotopes for medical applications and in nuclear science research using neutrons from reactors. Nuclear power currently supplies 16% of the world's electricity from 435 commercial nuclear power reactors providing 372 gigawatts (electrical) of generating capacity, which is more than seven times Australia's total from all sources. The United States has the largest number of reactors with 104, followed by France with 59, Japan with 55 and the United Kingdom with 19. Thirty countries were producing electricity from nuclear reactors in 2008 (source: World Nuclear Association). As at mid 2008, a further 36 reactors were under construction in 12 countries, notably in Russia, China, India, South Korea, Japan and Slovakia.

Spot market prices for uranium rose progressively from US$20/lb U₃O₈ in January 2005 to a peak of US$138 in July 2007 and then fell to US$60 by mid-2008. Price rises up to mid-2007 were due mainly to forecasts of reduced supplies of uranium from secondary sources, particularly material supplied from the blending down of highly enriched uranium in military stockpiles. Increases in crude oil prices in recent years also have influenced uranium market prices. In addition, concerns about climate change arising from increased greenhouse gas emissions has led to a renewed interest in nuclear power by governments in many countries because it is a fuel which produces minimal greenhouse gasses. Developing countries such as China and India are planning major expansions of nuclear power capacity and could become significant importers of uranium.

Geoscience Australia prepares estimates of Australia's uranium resources within categories defined by the OECD Nuclear Energy Agency (OECD/NEA) and the International Atomic Energy Agency (IAEA). The estimates in each category are for resources of recoverable uranium after losses due to mining and milling have been deducted. In Table 1, these estimates are reported under the corresponding resource categories of the national classification scheme. The resource categories of both schemes are correlated in Table 1. Prior to 2006, resources in the less than US$40 category were considered to be economic, although resources in the less than US$80 category are considered to be economic now because of higher market prices.

Table1. Correlation of resource classification schemes for uranium.

Australia's EDR at December 2007 were estimated to be 983,000 t U which represented an increase of 38% over the estimates for December 2006 (714,000 t U). This was due mainly to a large increase in resource estimates for the Olympic Dam deposit (SA). Resources also increased at Ranger 3 deposit (NT) and in addition, Quasar Resources/Alliance Resources released the first estimates of resources for the Four Mile deposit (SA). Australia's EDR at December 2007 represents 34% of world resources in this category.

BHP Billiton continued a major drilling program to explore for extensions of the Olympic Dam deposit to the south. Up to 18 diamond drilling rigs operated concurrently in the area and discovered major extensions and additional resources to the south east portion of the deposit but it remains open to the south and at depth.

A revised estimate of reserves and resources for the Olympic Dam deposit was released during the year (source: BHP Billiton Annual report 2007). For these estimates there has been a major change in resource modelling based on the geological controls of copper sulphide minerals, hematite and structure The total mineral resources increased considerably over estimates for June 2006 - total tonnages of resources increased by 77%, copper metal increased by 38%, and U₃O₈ increased by 40%. Factors contributing to the increases in resource tonnages are:

• additional drilling (542 surface and underground drill holes),
• lower cut off grade to reflect open pit mining,
• higher long term metal price forecasts, and
• modelling changes.

In addition, following a comprehensive technical review by the company of long-term planning for Olympic Dam operations, the cut-off grade in the Reserves/Resources estimates is now based on a copper equivalent grade, rather than an in situ value as used in previous years. The copper equivalent formula was derived using a notional nett smelter return based on metallurgical recoveries and BHP Billiton forecast prices (source: BHP Billiton Annual report 2007).

Australia had an additional 600,000 t U in inferred resources recoverable at costs of less than US$80/kg U which is by far the world's largest resources in this category. These inferred resources are mainly in the south eastern part of the Olympic Dam deposit.

Approximately 95% of Australia's total uranium resources in EDR are within the following six deposits:

• Olympic Dam, which is the world's largest uranium deposit,
• Ranger, Jabiluka, Koongarra in the Alligator Rivers region (NT), and
• Kintyre and Yeelirrie (WA).

Table 2. Uranium resources in States and the NT at December 2007.

Approximately 16% of uranium EDR is inaccessible for mining. All uranium deposits in WA and Qld are classified as inaccessible resources because the respective State Governments have policies banning uranium mining and development. In SA, all resources are considered to be accessible because State Government policies permit the development of new uranium mines. Applications for new mine developments in the NT are subject to approval by the Commonwealth Government Minister for Resources, Energy and Tourism. In the NT, inaccessible resources are the Jabiluka deposit, because the traditional Aboriginal land owners have not granted approval to mine the deposit and the Koongarra deposit where Aboriginal land owner approvals and environmental issues have yet to be resolved.

JORC reserves comprise total uranium resources in Proven and Probable Reserves as defined in the JORC Code. In 2007, JORC Code reserves of 228,000 t U account for approximately 28% of accessible AEDR.

Australia has the world's largest resources of uranium in RAR recoverable at <US$80/kg U (equates to EDR), with 34% of world resources in this category at December 2007. Other countries with large resources include Kazakhstan with 12%, Canada 11%, South Africa 7% and the Russian Federation 6%.

Olympic Dam is the world's largest uranium deposit. Based on ore reserves and mineral resources reported by BHP Billiton as at June 2007, Geoscience Australia estimated that the deposit contains 26% of the world's total resources in RAR recoverable at <US$80/kg U.

Uranium exploration expenditure in Australia has increased progressively since 2003 mainly because of the significant increases in spot market uranium prices in recent years. In 2007, uranium exploration expenditure increased to a record level of $181.4 million , which is more than double the 2006 expenditure ($80.7 million). The majority of expenditure was in SA (55%), followed by the NT (23%), Qld and WA (each 11%).

During 2007 significant uranium discoveries and major extensions to existing deposits were announced at Olympic Dam (SA), Ranger 3 (NT), and Four Mile deposits (SA).

Main exploration areas (in terms of expenditure) during 2007 were:

• South Australia - the Gawler Craton-Stuart Shelf region, Palaeogene sediments of the Frome Embayment and palaeochannels overlying the Gawler Craton;
• Northern Territory - the Alligator Rivers region and Western Arnhem Land, Rum Jungle area and Ngalia Basin; and
• Queensland - the Mount Isa province.

Drilling at Four Mile outlined a broad area of mineralisation covering five square km in Eocene sands of the Eyre Formation along the flanks of Proterozoic basement rocks of the North Flinders Ranges. Four Mile deposit is 8 km north west of the Beverley uranium mine. There are two deposits within this broad area, Four Mile West and Four Mile East. Four Mile West has been defined by close-spaced drilling and has inferred resources of 3.9 Mt averaging 0.37% U₃O₈ which represents 15,000 t of contained U₃O₈. The average thickness of the mineralisation within the resource outline is 2.2 m and is hosted by fluviatile sands at 140 to 170 m depth.

Exploration drilling continued at Four Mile East with up to eight drilling rigs in operation. The main mineralised zone is in a sequence of sediments ranging from coarse sand/gravel to silt, is between 200 and 210 m below the surface and ranges from 1 to 8 m thick. Average grades of mineralised intersections are typically greater than 0.1% pU₃O₈ and are commonly around 0.3% pU₃O₈. Estimates of mineral resources are in progress. Hydrological and metallurgical studies are planned in order to determine whether permabilities and uranium recoveries are sufficient to permit the use of in situ leach mining.

Quasar Resources/Alliance Resources joint venture is investigating two processing options using the Beverley plant. They include: 1) a pipeline to transport solutions to and from Four Mile, or 2) establishing an ion exchange plant at Four Mile to capture uranium and truck the resin to the Beverley plant for elution. In 2008 Quasar Resources applied to the South Australian Government for a mining lease.

In the Mount Isa region, Paladin Resources continued drilling at Valhalla, Skal, Andersons, Mirrioola, Watta, Warwai, Bikini and Mirrioola uranium-vanadium deposits. Drilling intersected brannerite-rich mineralisation within hematite feldspar breccias at all these deposits. These deposits were drilled previously by Qld Mines Ltd during the 1960s and Paladin Resources has discovered extensions of the mineralisation, particularly at Valhalla and Skal.

Production for 2007 from Australia's three uranium mines were Ranger 5412 t U₃O₈, Olympic Dam, 3985 t U₃O₈, and Beverley in situ leach operations, 748 t U₃O₈ for a total Australian production of 10,145 t U₃O₈(8602 t U), 13.3% higher than for 2006. Australia, with approximately 21% of world uranium production in 2007, is the world's second largest producer after Canada.

Exports in 2007 were 10,232 t U₃O₈(8,677 t U) valued at $881 million. Exports of Australian uranium are controlled by stringent safeguards conditions which ensure that it is used only for peaceful purposes and does not enhance or contribute to any military applications. These conditions are given effect through bilateral safeguards agreements between Australia and the importing country. In the case of non-nuclear-weapon countries, it is a minimum requirement that IAEA safeguards apply to all existing and future nuclear activities in that country. In the case of countries with nuclear weapons, there must be a treaty-level assurance that Australian uranium will be used only for peaceful purposes and it must be subject to that country's safeguards agreement with the IAEA.

Australian mining companies supply uranium under long-term contracts to electricity utilities in United States, Japan, South Korea and Canada as well as members of the European Union including the United Kingdom, France, Germany, Spain, Sweden, Belgium, and Finland.

Olympic Dam (SA): BHP Billiton is undertaking a two year pre-feasibility study into the expansion of Olympic Dam. The proposed expansion will increase uranium production from the current capacity of 4000 t U₃O₈ per annum to approximately 19,000 t U₃O₈ per annum. This expansion is based on a very large open pit to mine the south east portion of the deposit. At full production, it is proposed that the open cut and underground operations will mine a total of 80 Mt ore per year and annual production is estimated to reach 750,000 t refined copper, 19,000 t U₃O₈, 480,000 ounces gold and 1.5 million ounces silver. Mining of ore from the open pit is scheduled to commence in 2014.

An Environmental Impact Statement is being prepared for the Australian and South Australian Governments. Water requirements for the current mining and processing operations are drawn from groundwater aquifers of the Great Artesian Basin to the north of Olympic Dam. As part of the expansion, it is planned to develop a sea water desalination plant on Spencer Gulf (SA) to supply fresh water to the mine and the town.

BHP Billiton's estimates of ore reserves and mineral resources are shown in Table 3.

Table 3. Olympic Dam Mineral Resources and Ore Reserves

1. Mineral Resources includes Ore Reserves

Source: BHP Billiton Annual report 2007

Ranger mine (NT): Production from Ranger mine in 2007 was 14% higher than for the previous year. This was achieved despite the plant shutdown as a result of extremely heavy rainfall associated with a tropical cyclone in February which flooded the pit, restricting access to higher grade ore.

During 2007, work commenced on extending the open pit, which, together with optimisation of the existing pit design, will yield an additional 4857 t U₃O₈ and increase the mine life by four years from 2008 to 2012.

During 2007, ERA Ltd increased expenditure on exploration in the Ranger Project area. Drilling outlined extensions of the Ranger 3 orebody down-dip to the east of the open cut. This area is known as Ranger 3 Deeps. Further drilling is planned to search for additional resources to the north of Ranger 3 Deeps.

The company commenced feasibility studies into further extensions of the mine (both open pit and underground), expanding the processing plant and the potential application of heap leaching technologies to low grade ores, including existing stockpiles.

Construction commenced on a new radiometric sorter facility ($17 million) and a laterite treatment plant ($34 million). These projects will increase production by treating existing ore stockpiles. The laterite treatment plant will produce up to 400 t U₃O₈ per annum from 2008 to 2013. The radiometric sorter will produce a total of 1100 t U₃O₈ to 2013 through the selective upgrading of low grade ore stockpiles.

Beverley (SA): Heathgate Resources operates the Beverley in situ leach uranium mine which is located on the arid plains between the North Flinders Ranges and Lake Frome, approximately 300 km north east of Port Augusta, SA. During recent years, exploration has identified new zones of uranium mineralisation extending to the east of the Beverley Mining Lease and additional mineralisation in an area to the south known as Deep South. The company applied for a new larger mining lease which would subsume the existing Beverley lease. The environmental impacts for the extended operation are being assessed jointly by the Australian and South Australian Governments under the Environment Protection and Biodiversity Conservation Act.

Honeymoon uranium project (SA): Uranium One announced in May 2008 that it has decided to suspend development activities at Honeymoon while it looks for a joint venture partner. Annual production from Honeymoon was expected to be 400 tonnes U₃O₈.

Oban project (SA): During 2007, drilling by Curnamona Energy outlined an area of more than two square km of potentially economic uranium mineralisation within sands of the Eyre Formation. The proposal for a field leach trial at Oban was available for public comment in April 2008 and is awaiting South Australian Government assessment.

Crocker Well deposit (SA): The deposit is being jointly developed by Sinosteel Corporation (60%) and PepinNini Minerals Ltd (40%), with a strategy to be in production by the end of 2010.

Angela-Pamela deposits (NT): The NT Government announced on 20 February 2008 that successful applicant for the Exploration Licence over the deposits was a joint application by Paladin Energy Minerals NL, and Cameco Australia Pty Ltd.

Kintyre deposit (WA): Rio Tinto is in the process of selling the deposit, which is expected to occur in the second half of 2008.

The Australian Government has committed $10.6 million over four years from 2008-09 for uranium initiatives. This includes a national radiation dose register for uranium workers, ensuring world's best practice in regulation, skills initiatives including radiation training for the uranium industry, improving outcomes for indigenous communities from uranium exploration and mining and addressing transport restrictions.

In 2007 Australia and the Russian Federation signed a new nuclear cooperation agreement which would replace the existing (1990) Australia-Russia nuclear cooperation agreement.

The new agreement will allow Australian uranium producers to supply Russia's nuclear power industry while retaining and building on the strict safeguard conditions contained in the existing agreement and including Australia's other safeguards agreements.

On 3 February 2007 the Australia-China Nuclear Transfer Agreement and Nuclear Cooperation Agreement came into force, creating the legal framework for Australian uranium producers to commence exports to China. The timing and quantities of exports will be a matter for commercial negotiation.

Geoscience Australia completed the second year of the five years Onshore Energy Security Initiative. The program involves acquisition of new seismic, radiometric, airborne electromagnetic and geochemical data to provide pre-competitive information to attract investment in exploration for onshore petroleum, geothermal, uranium and thorium energy sources. The data acquisitions will provide information which will significantly lower the risk for evaluating the potential for energy resources and other mineralisation.

As part of the program, all available and new data is being considered in a uranium mineral systems framework to provide new concepts for uranium exploration, particularly in greenfields areas.

ABS Mineral and Petroleum Exploration, December quarter 2007

Uranium grades in drill holes measured with a prompt fission neutron tool.