Uranium Energy focused on rapid production growth, new projects
Uranium Energy focused on rapid production growth
, new projects
uraniumenergy.com 604.682.9775
Amir Adnani
CEO, President & Director
Uranium Energy Corp (NYSE-AMEX: UEC) is a U.S.-based uranium production, development and exploration company operating North America's newest emerging uranium mine. The Company's near term goal is to expand production of uranium using low cost in-situ recovery (ISR) while developing a pipeline of additional significant uranium resources for ongoing major growth.
Resource Intelligence: You have numerous uranium projects at different stages of development. Which are you focused on today?
Amir Adnani: UEC controls 27 projects in the U.S. with over 35mm lbs. U308 and one of the largest databases of historic uranium exploration and development in the country.
Today we are focused on our regional strategy in the South Texas uranium belt where we own the operating Hobson ISR processing plant. The plant is central to all of our projects in South Texas, including the Palangana ISR project, which is ramping up production, the Goliad ISR project which is in the final stages of mine permitting for production, as well as two additional exploration stage projects.
RI: Why have you focused your efforts in South Texas?
AA: The South Texas uranium belt extends along an approximate 300 mile or 480 km belt from west of Houston and south of San Antonio to the Mexican border.
This region has historically been one of the most concentrated areas for uranium mining in the U.S. In the 1970's and early 1980's, the South Texas uranium belt was one of the largest uranium-producing areas in the U.S. Major companies were exploring and producing from this regional trend of uraniferous sandstones, including names like Union Carbide, Mobil Oil, Tenneco, Kerr McGee, Continental Oil and many others. UEC has gradually acquired a substantial percentage of historical exploration data based on this work, enabling UEC to target properties for lease that have already been the subject of significant exploration and development by senior energy companies.
Furthermore, this region holds substantial known resources that are amenable to in-situ recovery of uranium. ISR mining requires lower capital and operating costs than conventional mines and is the most environmentally friendly method of uranium mining.
UEC owns and operates one of only four ISR processing plants in the U.S., which is in close proximity to all of UEC's projects in South Texas.
Texas is America's energy capital, and has a unique streamlined permitting framework for uranium mining. The state has four operating nuclear power plants and six additional facilities are under consideration.
UEC's Regional Strategy in the South Texas Uranium Belt
RI: What is in-situ recovery (ISR) of uranium and what are the advantages to conventional mining methods?
AA: In-situ recovery of uranium accounts for about 30% of global uranium production. ISR-suitable uranium deposits must meet very specific geological requirements, including a permeable sandstone host, which is found in the South Texas uranium belt. ISR mining enables lower grades of uranium ore to be extracted economically. Other advantages of ISR over conventional mining methods include: lower capital and operating costs; small environmental footprint; shorter construction and permitting timelines.
In the uranium ISR process, the natural occurrences that deposited the uranium in the sandstones are reversed. On-site ground water is fortified with gaseous oxygen and is introduced to the uranium ore body through a pattern of injection wells. The solution dissolves the uranium out of the sandstone host rock. The uranium-bearing solution is recovered from production wells and then pumped to recovery ion-exchange columns. This pattern of injection and production wells, plus surrounding monitor wells that serve as a safeguard, is called a wellfield.
The subsequent ion-exchange process involves removing the uranium from the pregnant wellfield solution and loading the uranium onto millions of synthetic resin beads. When the resin in an ion-exchange column is loaded to capacity, it is transported to a processing plant for stripping, filtering, drying, and packaging into marketable yellowcake.
RI: When did you start ISR uranium production from the Palangana project?
AA: Initial production at Palangana commenced on November 17, 2010. This milestone represents the first time the Company has been in production. It is also the first ISR uranium mine to begin production in the U.S. in over five years.
Palangana is only the first step in the Company's regional strategy of greatly expanding its resources and production profile in the re-emerging South Texas uranium belt.
UEC's Fully Operational Hobson ISR Processing Plant
RI: Can you further explain your regional strategy in Texas?
AA: Uranium Energy Corp's regional strategy in South Texas is focused on consolidating assets along the extensive South Texas uranium belt.
Currently, UEC controls four uranium projects with combined 43-101 resources in all categories of about 12 mm lbs. U308. All four ISR projects are located in close proximity to the Company's Hobson processing plant. Hobson forms the basis of UEC's regional operating strategy as it is designed to process uranium-loaded resins from satellite projects to a final product, and eliminates the need to construct a new processing plant on site at each project.
Through our regional approach we have the platform to increase our lease area and expand our resource while continuing to grow production.
RI: Briefly, what are your plans for your South Texas projects in the next year?
AA: On the production front, Phase 1 is under way and represents only the initial stage of production at Palangana. We will continue to ramp up production later this year with the startup of Phases 2 and 3.
In terms of development, the Company's Goliad in-situ recovery project has been granted its Mine Permit and is in the final stages of permitting for production. Once all the permits are received we will start construction of our second ISR uranium mine in South Texas.
On the exploration front, we are aiming to advance our strategy of consolidating assets along the South Texas uranium belt by expanding our leases in this area and have budgeted for an aggressive exploration drilling program on our existing projects.
RI: What is your exploration budget for 2011 and do you need financing to take you there?
AA: This year, we plan to drill over 300,000 feet or 100,000 meters in South Texas for
$3 million. Because the uranium deposits we are targeting are shallow and hosted in sandstone, we are able to execute an aggressive drill campaign on a small budget, which is fully financed.
RI: What are your debt obligations and what is the plan for paying it off?
AA: We have a very strong balance sheet with $35 million cash, no debt, and 100% unhedged production.
RI: What would you like to leave investors with today?
AA: The Company's South Texas regional strategy is being realized. This year's three-fold objective in South Texas is: 1) to ramp up production at Palangana, 2) to complete permitting at Goliad and to initiate construction and 3) to expand resources with intensive drilling programs.
UEC is well positioned to act on these objectives with no debt, $35 million in cash, one of North America's strongest technical teams, 27 projects in the U.S. with over 35mm lbs. U308, and an upbeat outlook for the uranium market.
Investor Highlights:
Market cap: $409 million
Share price: $5.76
as of February 24, 2011
Stage: Production, Development, Exploration
Commodity: Uranium
Share price percent growth (last 12 months): 55% increase
Highlights:
Operating the first new U.S. in-situ recovery (ISR) uranium mine in the last five years
Strong balance sheet: $35 million cash, no debt, and 100% unhedged production
Controls 27 projects in the U.S. with over 35mm lbs. U308
Controls 4 ISR projects in uranium friendly South Texas
Owns a fully licensed, operating, and centrally located processing plant in South Texas
ISR projects = lower capital and operating costs than conventional uranium mining
Last two major ISR projects put into production in Texas, constructed by UEC team
Aggressive exploration program underway total of ~320,000 feet of drilling
Analysts see the upward trend in uranium prices as the start of a multi-year bull run
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