Friday, February 15, 2008

Ther's Ore in Them Thar Hills

If gold miners of the 1880s vintage were around today they would be scratching there heads over the most recent rush to find a rare and valuable metal ore - uranium. The preparations and the process are a world apart from the pack animals laden with supplies and equipment and led into the mountains of California and Alaska by independent and tenacious fortune seekers.

Yet the excitement is no less intense. With dozens of new applications for nuclear reactors pending in the U.S., China and other countries around the world, owners of uranium deposits or at least owners of mineral rights are salivating over the prospect of a burgeoning market for the silvery gray element.

Uranium is the “new coal” or at least a new favorite to replace fossil fuels in power generation. One kilogram of uranium can produce as much as 20 trillion joules of energy or about as much electricity as 1,500 tons of coal. That is impressive.

With such impressive performance, one has to wonder why the U.S. and other countries have favored polluting coal or expensive imports of oil and gas. Three little words tell the entire story - Three Mile Island. The safeguards put into place to prevent contain the meltdown of the reactor core at Three Mile Island actually worked, but the public was sufficiently scared to discourage utilities from attempting any new nuclear power plant projects.

Time has a way of assuaging emotions and global warming has given the public a different sent of worries. Nuclear power is now seen in an entirely different light.

Not all uranium deposits are created equal. At least that is the message told by the management of Powertech Uranium Corp. (PWURF: OTC/PK). Based in Vancouver, Canada, the company has uranium interests in South Dakota, Wyoming and Colorado. Powertech is using in situ recovery technologies to bring uranium bearing particles up out of the ground from wells drilled deep into the uranium-rich geologies. Areas with soft sand or sandstones sandwiched between other layers of relatively impermeable layers are ideal.

Water is injected into one well and then extracted from another adjacent well. Extracted water along with the materials that get caught up in the stream is piped through a ion exchange process that extracts the uranium. The uranium-bearing resins are transported to a central processing site, where the uranium is stripped away. Wa La! Uranium!

This is quite a different process than the open pit mining operations that are found in Canada and Australia. Australia has the largest concentration of uranium deposits - about a quarter of the world’s reserves. The last open pit mine in the U.S. - Shirley Basin, Wyoming - was shut down in the early 1990s.

U.S. deposits like those held by Powertech are lower grade than those found in Australia and Canada. Until the most recent wave of interest in nuclear power generation, it was little economic incentive pursue the U.S. deposits. With the price of oil near $100 a barrel the story has changed. Now it is all hands to the pick axes - or rather the water hoses!

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

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