The United States has one-fourth of the world’s nuclear reactors. Every year the nation’s 104 nuclear reactors burn though 55 million pounds of uranium to produce electricity. Yet, only 3.5 million pounds of uranium are actually mined in the United States. A Texas-based uranium mining – Uranium Energy Corporation – wants to change all of that.
In January, Uranium Energy Corporation was granted licenses to begin operating its Palangana uranium mine in Duval County, Texas. The company believes it can start production at this mine by the end of the year. Its goal is to get more permits at more locations and to reach 2.5 million to 3 million pounds of uranium production a year within the next five years.
UEC has plenty of mining opportunities in the United States. Decades ago, the search for uranium deposits turned up millions of pounds in states like Texas, New Mexico, Wyoming, Colorado and Utah. But the price of uranium and uranium mining in general collapsed following the accidents at Three Mile Island and Chernobyl and the cancellation of 100 planned reactors in the United States.
Today there are only four productive uranium mines in the United States with UEC planning to add to that total. Global demand for uranium is expected to increase in the coming years, including from the United States. The Obama Administration has proposed tripling a new nuclear plant loan guarantee program to $54 billion. That could lead to the construction of a dozen more nuclear reactors.
The geology in Texas allows for a mining procedure called “in situ” recovery, which is cheaper than traditional seam or open-pit mining. UEC plans to drill 50 or so wells and inject carbonated water. The water dissolves the uranium out of the sandstone in which it is held. This solution is then pumped to the surface. The uranium is isolated, concentrated and then refined into uranium oxide.
Unlike most uranium exploration companies, UEC has a real clear path to producing uranium profitably. The company has $25.9 million cash on hand (as of April 30, 2010) and believes it will cost about $10-$12 million to get its mine going. Its cost of production is estimated to be around $30 a pound. With uranium prices hovering in the mid-$40s, and with some electric utilities paying closer to $60 in longer-term contracts, Uranium Energy Corporation’s mines should be a profitable venture.
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