TORONTO (miningweekly.com) – Canadian uranium explorer U3O8 Corp has signed an exploration agreement with the provincial petroleum and mining company of Chubut province, in Argentina, which will allow it to explore properties located next to its Laguna Salada uranium deposit.
Should it succeed to define resources on the concessions, the agreement provided that the companies would form a joint venture (JV) on a larger Laguna Salada deposit.
"The depth of the current resource cycle provides a stark reminder that only deposits with the lowest production costs continue to be profitable at cyclical bottoms. With a cash cost of production of about $22/lb of uranium defined in the recently completed preliminary economic assessment, the Laguna Salada deposit would be among the uranium industry's lowest-cost producers.
“The economic model also shows that a larger resource would significantly enhance the project's economics. For example, doubling the deposit's size and plant throughput would increase the project's net present value by about 230% to $184-million,” U3O8 Corp president and CEO Dr Richard Spencer said on Thursday.
He stressed that the company’s focus was now on resource expansion at the project.
Laguna Salada and adjoining new concessions under the option agreement were believed to hold the potential for a cumulative conceptual uranium target of 150-million tonnes to 225-million tonnes, grading 50 parts per million (ppm) to 60 ppm uranium oxide, for about 20-million pounds to 25-million pounds of yellowcake, based on the current compliant resource estimate and exploration results.
Under the agreement, U3O8 Corp had the option to invest $3-million over three years to explore and define resources on the provincial company's three properties next to Laguna Salada. If the option to form a JV was exercised, the percentage participation in that entity would be based on the proportion of the total resource that lay on each partner's properties.
Spencer argued that Argentina's commitment to grow its nuclear energy capabilities domestically and abroad presented an immediate local market for uranium from the company’s project.