TORONTO, Sept. 14, 2017 /CNW/ - U3O8 Corp.
(TSX: UWE), (OTCQB: UWEFF) ("U3O8 Corp." or the
"Company") highlights the production schedule from the Preliminary
Economic Assessment ("PEA") on its Laguna Salada Deposit, in which
almost twice as much vanadium would be produced as
uranium.
"Vanadium prices have risen strongly in response to a supply
shortfall that has been developing in the vanadium market," said
Richard Spencer, President & CEO
of U3O8 Corp. "The trigger for the recent sharp price increase was
a change in policy in China that
resulted in restricted access to vanadium slag and higher local
production costs, coming on the back of increasing vanadium
consumption, notably from the steel and battery industries.
Based on a vanadium pentoxide price of US$5.50 per pound, the 0.8mlb to 1.2mlb vanadium
production per year estimated in the PEA would contribute 12% of
the Laguna Salada Project's revenue. Vanadium pentoxide is now
trading at over US$12 per pound. In
addition, Argentina paid an
average of US$58 per pound for
imported uranium last year, only marginally below the US$60 per pound price used in the economic
analysis in the PEA".
Production Schedule
The mining schedule defined in the PEA on Laguna Salada starts
with production from the richest part of the Deposit so that
revenue would be maximized so that the capital required to develop
the Project would be paid back as quickly as possible – in two and
a half years as per the current PEA. Uranium production would
be over one million pounds ("mlbs") per year over the first four
years and then would decline gradually, averaging 0.6mlbs over the
life of the mine (Figure 1). Argentina's current uranium demand is
approximately 0.55mlbs per year to fuel its three
reactors.
Vanadium production would be relatively constant at between
0.8mlbs and 1.2mlbs per year over the life of the mine that was
planned on the basis of the initial resource (Figure 1).
Higher-grade uranium and vanadium encountered in channels at the
base of the gravel layer in recent exploration (results reported on
January 11, 2017, January 19, 2017 and February 7, 2017), and not included in the PEA,
adds upside potential to the Project.
Vanadium Supply-Demand Scenario
The vanadium market slipped into deficit this year with demand
outstripping supply for the first time in a decade (Figure 2).
Vanadium prices have responded to this structural change in
the market by strengthening – the sharp increase over the last few
months having been triggered by new Chinese regulations that
restrict the importation of vanadium slag, the processing of which
produced pollutants (Figure 3). Supply was further impacted by
production cuts from Sichuan
Province in China in
September and the importation of a larger proportion of iron ore
that does not contain significant vanadium. Demand for
vanadium in China is expected to
increase about 30% (not yet incorporated in Figure 2) in response
to new regulations implemented to make buildings more resistant to
earthquakes through the use of vanadium steel rebar; the addition
of one kilogram (approximately two pounds) of vanadium to a tonne
of steel doubles its strength.
Next Steps
The metallurgical test work on Laguna Salada indicates that a
greater proportion of the contained vanadium could be extracted
from the gravel and work is planned to support this
potential.
The Company is focused on finding ways of reducing both capital
and operating cost estimates. Examples of possible capital
cost reductions include using pre-owned "belly-scrapers" from the
road-building and construction industry instead of sophisticated
and expensive continuous miners to mine the flat-lying,
unconsolidated gravel, and installation of used equipment for
beneficiation to remove the barren pebbles from the
uranium-vanadium – bearing fine sand. In addition, the
preference of the Argentine nuclear fuel enrichment facility to use
ammonium diurinate, instead of yellowcake, as feed for its
enrichment facility, would lower the capital cost estimate for the
Laguna Salada Project by approximately 5% through the elimination
of the calcining module from the plant design. A pilot plant would
aim to refine capital and operating costs for both the production
of ammonium diurinate and yellowcake.
Technical Information
Cautionary Note: the Preliminary Economic Assessment is
preliminary in nature, and includes inferred mineral resources that
are considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves, and there is no certainty that the
results of the PEA assessment will be realized.
Dr. Richard Spencer, P.Geo.,
CGeol., President and CEO of U3O8 Corp. and a Qualified Person as
defined by National Instrument 43-101, has approved the technical
information in this news release relating to the Laguna Salada
Deposit and the related PEA.
About U3O8 Corp.
U3O8 Corp. is focused on exploration and development of deposits
of uranium and battery commodities in South America. Battery
commodities that occur with uranium resources include vanadium,
nickel, zinc and phosphate. The Company's mineral resources
estimates were made in accordance with National Instrument 43-101,
and are contained in three deposits:
- Laguna Salada Deposit, Argentina – a PEA shows this near surface,
free-digging uranium - vanadium deposit has low production-cost
potential;
- Berlin Deposit, Colombia – a PEA shows that Berlin also has low-cost uranium production
potential due to revenue that would be generated from by-products
of phosphate, vanadium, nickel, rare earths (yttrium and neodymium)
and other metals that occur within the deposit; and
- Kurupung Deposit, Guyana – a uranium resource has been
estimated in four veins within a uranium-zirconium vein system.
Resources have been estimated on four veins, while consistent
mineralization of the same type has been intersected in scout
drilling of an additional six veins, while yet other veins require
first-time exploration drilling.
Information on U3O8 Corp., its resources and technical reports
are available at www.u3o8corp.com and on SEDAR at
www.sedar.com. Follow U3O8 Corp. on Facebook:
www.facebook.com/u3o8corp, Twitter: www.twitter.com/u3o8corp
and YouTube: www.youtube.com/u3o8corp.
Forward-Looking Statements
This news release includes certain "forward looking statements"
related with the development plans, economic potential and growth
targets of U3O8 Corp's projects. Forward-looking statements consist
of statements that are not purely historical, including statements
regarding beliefs, plans, expectations or intensions for the
future, and include, but not limited to, statements with respect
to: (a) the low-cost and near-term development of Laguna Salada,
(b) the Laguna Salada and Berlin PEAs, (c) the potential of the
Kurupung district in Guyana, (d) impact of the U- pgradeTM process
on expected capital and operating expenditures, and (e) the price
and market for uranium. These statements are based on assumptions,
including that: (i) actual results of our exploration, resource
goals, metallurgical testing, economic studies and development
activities will continue to be positive and proceed as planned, and
assumptions in the Laguna Salada and Berlin PEAs prove to be
accurate, (ii) a joint venture will be formed with the provincial
petroleum and mining company on the Argentina project, (iii)
requisite regulatory and governmental approvals will be received on
a timely basis on terms acceptable to U3O8 Corp., (iv) economic,
political and industry market conditions will be favourable, and
(v) financial markets and the market for uranium will improve
for junior resource companies in the short-term. Such statements
are subject to risks and uncertainties that may cause actual
results, performance or developments to differ materially from
those contained in such statements, including, but not limited to:
(1) changes in general economic and financial market conditions,
(2) changes in demand and prices for minerals, (3) the Company's
ability to establish appropriate joint venture partnerships, (4)
litigation, regulatory, and legislative developments, dependence on
regulatory approvals, and changes in environmental compliance
requirements, community support and the political and economic
climate, (5) the inherent uncertainties and speculative nature
associated with exploration results, resource estimates, potential
resource growth, future metallurgical test results, changes in
project parameters as plans evolve, (6) competitive developments,
(7) availability of future financing, (8) exploration risks, and
other factors beyond the control of U3O8 Corp. including
those factors set out in the "Risk Factors" in our Annual
Information Form available on SEDAR at www.sedar.com. Readers are
cautioned that the assumptions used in the preparation of such
information, although considered reasonable at the time of
preparation, may prove to be imprecise and, as such, undue reliance
should not be placed on forward-looking statements. U3O8 Corp.
assumes no obligation to update such information, except as may be
required by law. For more information on the above-noted PEAs,
refer to the September 18, 2014 technical report titled
"Preliminary Economic Assessment of the Laguna Salada
Uranium-Vanadium Deposit, Chubut Province, Argentina" and the
January 18, 2013 technical report titled "U3O8 Corp. Preliminary
Economic Assessment on the Berlin Deposit, Colombia."
SOURCE U3O8 Corp.