Denison - A U.S. Uranium Mill Monopoly

Denison - A U.S. Uranium Mill Monopoly

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He who owns the uranium mill makes the rules. What I said. It isn't the conclusion that the true about Around. You read this article for information about that want to know is Around. Around In an interview with Yellowcake Mining director Dr. Robert Rich, he told us that the firm that owns a uranium mill controls the area. Recently, the firm announced an ore buying program. Denison Mines said it operates the only uranium mill within a 500-mile radius of Blanding, Utah. Strategically located, the company's White Mesa mill is in the heart of the Uravan uranium mining district. In truth, it is the only operating conventional uranium mill in the United States. According to a U.S. Energy facts group (Eia) update issued this past May, the other three uranium mills are on standby. For the time being, Denison has a monopoly on conventional uranium grist in the United States. Under these circumstances, a firm can fee anyone it wishes. Roll back the clock. When you have zero competition, one can buy uranium for the same price others paid in 2005. In Denison's case, the company's mill can purchase uranium for about one-quarter to one-third of TradeTech's long-term uranium price - in the middle of Us and $Us35/pound - depending upon the ore grade. Two Junior Uranium associates Respond Although this could become a cash cow for Denison Mines, two junior uranium mining associates we interviewed sounded like they had been smacked in the middle of the eyes with the back end of a billiard stick. "The ore buying agenda shows the improbability of working with those guys," Energy Fuels spokesman Gary Steele told StockInterview. "It clearly hurts our cash flow." Steele was referring to the 1500 tons of ore his firm hoped to stockpile in the middle of now and the end of the year. According to Denison's ore buying agenda posted on the company's website this past week, Energy Fuels would be lucky to get Us4.40 per ton of ore brought to the White Mesa uranium mill in Blanding, Utah. Steele told us the ore would likely grade 0.2 percent U3O8 and 0.63 percent V2O5 (vanadium pentoxide) from the company's mining operations at Whirlwind in Colorado. Using the long-term uranium price indicator and an 'historical' pricing for vanadium, published on the Denison website, the Energy Fuels ore should be valued at Us4 per ton. Under the Denison grist arrangement, Energy Fuels would receive less than Us/pound for the company's uranium production. Where is the profit? Steele would not provide mining costs at Whirlwind, but he did provide advice of .25 per ton/mile in communication costs to the Denison mill. Trucking could cost in the neighborhood of /ton to ship the ore to Blanding, Utah. Mining costs in the Uravan district are likely to be in the Us - 80/ton range, According to Denison's president Ron Hochstein. Capex could fall into the Us/ton range, According to estimates in case,granted by an additional one company. And there are likely to be other costs, which we've not calculated. Additions could also contain environmental permitting and reclamation, and typical sales and administration expenses found in any firm enterprise. Under the ore buying schedule, Energy Fuels might receive about Us per ton after expenses, a bit more than Us/pound - about 7.4 percent of the current spot price. For the 1500-ton lot, Energy Fuels might receive a check of practically Us0,000. But, after paying its bills, the company's 2007 output may only yield around ,000. It is no wonder that Steele told us, "We're struggling with the grist question." Optimistically, Steele announced, "Our plan is to press on with multiple plans, strategies and approaches to produce yellowcake." He wouldn't rule out constructing a mill. We wanted a second opinion. So we talked to Michael Collins, chief administrative of Blue Rock Resources. Blue Rock's lead scheme is the Tramp uranium mine in Montrose County, Colorado. It is about 130 miles from the White Mesa mill. Collins agreed with Steele about the Denison ore buying program. "It's not the route we would like to take," Collins told StockInterview. Collins is now putting together his plan of carrying out to gift to the U.S. Bureau of Land administration (Blm) and is planning on raising about C.5 million to help build the project. He told us the median grades at the Tramp mine are 0.3 percent U3O8 and in the middle of 1.5 and 1.7 percent V2O5. The scheme could host 300,000 pounds U3O8. "We are aiming to define one million pounds," Collins said. If he does proceed with the Denison program, Collins believes his firm could stockpile about 100 thousand tons over the next 18 months. Denison's Hochstein confirmed that his firm was talking with Energy Fuels, Blue Rock and others about grist agreements. During our telephone conversation with Collins, we calculated his advantage in using the Denison ore buying program. According to Collins' calculations, he would receive a microscopic less than Us0 for each ton of uranium/vanadium ore his firm shipped to White Mesa for milling. Collins estimated mining the ore would cost about /ton. To ship his ore the 130-mile length to Blanding would cost in the middle of and /ton. His infrastructure and improvement costs would add up to about /pound. He told us it was too early to evaluation his administrative and other expenses, but Collins gave us the impression he runs a lean operation. However, his company's disadvantage is the royalty paid for the Tramp uranium mine. For each ton of ore Blue Rock mines, the firm would have to pay a Us royalty. Collins said, "The royalty is paid on the spot uranium price." Adding up the all-in costs, According to Collins' estimates, it would cost Blue Rock about Us0/ton, possibly more, to bring the ore to Denison. Each ton of Blue Rock's ore would pay out on the order of Us to /ton, after expenses. Collins told us he would get six pounds U3O8 per ton with his grades. After all is said and done, Blue Rock would be getting in the middle of Us and .50 per pound for uranium. As for building a uranium mill for the Tramp mine and his company's other three projects in the area, Collins told us, "A new uranium mill could take over seven years to permit in Colorado." Clearly, he was disappointed with the Denison program, saying, "It's as bad as I could have hoped for." But he is not ruling out some hereafter agreement with Denison. Collins told us he was still hoping to procure a toll-milling ageement for 100 thousand tons. "We'll finance for a year and stockpile the ore," Collins said. Fortunately, Blue Rock has other encouraging uranium projects which Collins hopes to build in conjunction with the Tramp mine. Under a toll-milling agreement, a miner would pay on the order of 20 percent above the grist costs. Instead of getting only 0/ton from Denison to purchase his ore, Collins would procure a higher payout and sustain possession of the ore. Who Owns the Ore? Also at stake is possession of the ore, after it is brought to Denison. The miner no longer owns the ore. There is a risk factor for both parties on this item. Both Energy Fuels and Blue Rock told us they wanted to keep the U3O8 after it was milled. Ron Hochstein told StockInterview, "We will keep it." Under the Denison agreement, the firm will purchase the ore now and pay out after the samples have been assayed. But, the ore won't get milled until sometime in 2008. White Mesa is going through a million refurbishment agenda now. Hochstein said, "We will open in March 2008." In reviewing the Denison materials on this program, it doesn't appear publicly traded associates are the target audience for this program. On the company's website, we found this notice: The White Mesa mill Ore Buying agenda provides an occasion for independent miners to sell their uranium and uranium/vanadium ore to Denison Mines (Usa) Corp., the operators of the White Mesa mill, located near Blanding, Utah. We asked Hochstein who would provide the mill feed. "There are many small miners in the Uravan district," he said. "They've built up stockpiles, and we will get them cash flow." Hochstein was excited by the preliminary reaction to his company's news release. "We got a good number of phone calls," he said. "Some are asking for 'just uranium' grist agreements." Under the terms for small miners, Denison will only buy in lots of one thousand tons. "In the past miners would drive up to the mill with the ore in a pick up truck," he explained. "But we require they use licensed communication contractors now." Unlike Steele or Collins, he estimated shipping costs would run about fifteen cents per ton. "They can make some pretty good money," he told us. For associates such as Energy Fuels and Blue Rock, Hochstein said, "We will negotiate on deals in 100 thousand tons minimum." He said the payout would have a microscopic permutation. "We are still working with Energy Fuels, Blue Rock and others," Hochstein told us. He did caution, though, "After we buy the ore, it's Denison's, not man else's." Devil's Advocate In a previous news-breaking story, when we reported on flooding at Era's Ranger operations, we turned to experts to provide us insights about the subject. Again we asked for their opinions. "Denison is going to be in for a rude awakening," one mining specialist told us. "The small miners can make more money by selling their claims to junior uranium mining companies." Another doubted there was much uranium ore stockpiled, telling us, "It may mostly be reclaimed." An engineer well-known with the area told us, "Usually, every last ounce of uranium ore was shipped to the mill." Both agreed there were drawbacks to the revival of 'dog-hole mining,' which is the slang for the smaller mom-and-pop operations. "Many of the old-time miners think they will have 'environmentalist immunity,' which they won't," said one expert. an additional one told us, "The dog-hole miners are going to be living night and day with Msha inspectors." Msha is the acronym for the federal Mining protection and health Administration. "In the last cycle, one could take an Msha inspector out for supper and drinks and he would be lenient, or look the other way," said the engineer. "But in today's environment, they are sticklers for the regulations." As for the incoming phone calls to Denison about selling stockpiled ore, one specialist concept most of the callers would not be legitimate. "There were 500 different operations at one time in the Uravan," he said. "Maybe ten percent are still around, and most of the miners will be in their 60s now." Technical expertise is a must, and the manufactures already has a labor shortage. In dog hole mining, at least three population are required to mine. Two would work in pairs down the hole and Msha regulations required one to be on the surface. "The minimum three-man crew would cost about 0/day for labor costs," said one expert. Then, there are the tool costs. Radon levels must be tested. "Each piece of tool would cost at least /day just to operate," he told us. For those hoping to charge it rich by mining uranium in the Uravan, brand-new tool costing more than 0,000 is a deterrent. Skilled labor is another, as many uranium juniors have discovered or are discovering. As for Denison's ore buying program, time will tell. For those expecting the uranium store to be flooded with 'tales of stockpiled uranium ore,' it is unlikely to materialize. Denison expects 40,000 tons of uranium ore while the first year, which amounts to about 40 lots of stockpiled ore. After that, it is no ifs ands or buts anyone's guess as to either Denison turns to Energy Fuels, Blue Rock and others they've talked to, or relies on the mom-and-pop projects to feed White Mesa. Within the next three years, Uranium One's Shootaring Canyon in Ticaboo (Utah) could open and offer alternative pricing for mill feed for the area. Ticaboo and Blanding are a microscopic more than two hours driving length apart. Energy Fuels' president George Glasier told a reporter in June, "We believe there is plenty of room for two mills." He reportedly is establishment to submit applications by the end of this year for a uranium mill in Montrose County, Colorado. In June 2006, Strathmore Minerals began the process to build its proposed uranium mill near Grants, New Mexico, less than 300 miles from Blanding. This past November, the firm announced the purchase of land for the mill site and initiated the first step required by the U.S. Nuclear Regulatory Commission as part of the license application package. To the north, Rio Tinto's Sweetwater uranium mill in Wyoming has a capacity of 3,000 tons/day. It is presently the largest uranium mill in the United States. Nearly 400 miles to the east, the uranium mill at Canon City (Colorado) has been beset by environmental problems, along with air quality violations and contamination issues. It remains on standby indefinitely. For the next few years, Denison has a monopoly on hard rock uranium mining in the United States. conventional uranium mining will revolve around the company's White Mesa mill. Until the rocks go in the box and get milled, the ore has no value - no matter what the spot or long-term uranium price is. But, the ore buying agenda the firm published this past week no ifs ands or buts provides a vital financial incentive for others to ensue in Denison's footsteps. Now, any uranium miners have the motivation to build their own uranium fiefdoms by building uranium mills. Copyright © 2007 by StockInterview.com I hope you get new knowledge about Around. Where you may put to utilization in your daily life. And most significantly, your reaction is passed about Around. Read more.. Denison - A U.S. Uranium Mill Monopoly.