Racing to become the first uranium company to commence mining operations in Wyoming in more than 25 years, Uranerz Energy Corporation recently announced that the NRC accepted for detailed review the company’s application to build and operate an in situ recovery (ISR) uranium mining facility on the company’s Nichols Ranch and Hank ISR properties, located in the central Powder River Basin of Wyoming.
Albeit a significant milestone for Uranerz Energy, more hurdles must be overcome before uranium mining can begin, for the company still must receive a “source material license” from the NRC at the federal level and a mining permit from the Land Quality Division of the Wyoming Department of Environmental Quality at the state level.
Worse, Uranerz does not have sufficient funds to pay for potential spills and the required post closure bonding. How much will be needed? Its neighbor, Cameco, currently the only operator in Wyoming, is bonded for $38.4 million to cover the cost of restoration at its mines — which is inadequate, according to WDEQ.
State and federal mining laws developed 20 to 30 years ago require mine operators to reclaim lands disturbed by mining. As such, mine operators are required to post a bond to guarantee reclamation of all affected lands, including the restoration of groundwater impacted by the operation.
As of December 31, 2007, Uranerz had an accumulated operating deficit of $25.89 million and working capital of only $11.1 million. Management will need to tap — again — the equity markets to raise sufficient funds to cover any necessary bonding needs. The company did raise $22.6 million on April 15. Net proceeds, however, are allocated for environmental impact and feasibility studies needed to obtain the requisite permits for the Nichols and Hank ISR properties, drilling projects on the aforementioned and other mining claims, and general working capital needs.
Estimated costs for mine development and labor costs to operate an ISR uranium mining (under 1,000 tons/yr) are between $30 and $50 million.
Again — a trip to the markets will be required before Uranerz could begin mining activity on any scale. Shares outstanding have multiplied seven-fold in three years to 39.2 million, as of December 31, 2007.
Even if Uranerz were able to procure additional capital funds, the discovery of uranium deposits do not sufficiently guarantee substantial financial rewards, for few properties, which are explored, are ultimately developed into producing mines.
The Atomic Energy Act, Uranium Mill Tailings Radiation Control Act of 1978 (UMTRCA), Clean Air Act, Clean Water Act, Safe Drinking Water Act, Federal Land Policy Management Act, National Park System Mining Regulations Act, and the State Mined Land Reclamation Acts or State Department of Environmental Quality Acts — any and all of these regulations are hurdles to be jumped before Uranerz can begin commercial mining activities at the two properties in the Powder River Basin area of Wyoming.
In March, the Wyoming Department of Environmental Quality issued a notice of violation to Cameco, detailing “long-standing” environmental concerns at its mines-including the restoration of groundwater violations, “routine” disposal and related well spills (eighty!), and an insufficient bond to cover restoration costs. Ergo, potentially more vigorous enforcement policies or stricter interpretation of existing laws may necessitate significant capital outlays and additional delays at Uranerz, adversely impacting its own intended lode-mining activities.
The slow pace of regulatory approval means Uranerz–or any ecompetitor–is years away from mining its radioactive riches.
