Canyon uranium mine may hold vast amounts of copper — report

Canyon uranium mine may soon be a vast copper operation — report


Energy Fuels Resources resumed shaft sinking operations at Canyon Mine in November last year. (Image courtesy of US Forest Service)

Canada’s Energy Fuels (NYSE MKT: UUUU; TSX: EFR), the largest conventional uranium producer in the US, has discovered high-grade copper at its Canyon project in northern Arizona, which is already the highest grade uranium mine being developed in the country.

With this discovery, says Rob Chang, analyst at investment bank Cantor Fitzgerald, the potential uranium production cost profile for this operation may go down significantly.

Based on uranium recovery alone, Energy Fuels expects production costs from the Canyon Mine to be competitive with the best underground mines of the commodity, including those in Canada, based on industry-published cost estimates, the firm said.

Highlights from Cantor Fitzgerald’s report:

BOTTOM LINE: Positive – The discovery of high-grade copper may lead to valuable by-product credits that will further reduce the uranium cost production profile of this mine.  We reiterate our Buy recommendation and a C$7.05 per share target price.

  • Exploration results to date average 8.75% Cu with one intercept hitting 31.69% Cu over five feet.
  • The Canyon mine is the highest grade uranium mine in the U.S. at a grade of 0.98% U3O8.
    • Energy Fuels is currently evaluating the mine to upgrade and expand the uranium resource.
    • A production shaft to a depth of 1,470 feet is being completed and underground drilling program is underway.
      • The shaft is currently at a depth of 1,250 feet and underground drilling is occurring at the second of three planned levels.
      • Drilling at level 1 intercepted previously announced mineralization of 6.88% U3O8 over 8.5 ft., 1.02% U3O8 over 48 ft., and 1.39% over 35 ft.
  • Of the three uranium bearing zones at Canyon (upper, middle, and lower), the high grade copper mineralization appears to be located in the middle zone at this point but management believes that there is potential in the upper and lower zones as well
  • The copper occurs inside and outside the mineralized uranium envelope, which suggests that there may be larger copper tonnage at Canyon. Generally the copper occurs within the physical boundaries of the uranium deposit, which indicates that the potential recovery of copper may not add significant additional costs to the company.
  • Upcoming drill programs will be expanded to identify copper, uranium, silver, and other mineral resources. The Company plans to complete percussion and core drilling programs on the 2nd level at the Canyon deposit during Q4/16. The cost of the additional drilling is not expected to be significant.
  • A 43-101 technical report for Canyon is expected in Q1/17 that will update the uranium resource as well as add any other mineral resources if applicable.

The Canyon uranium project is slated to begin production next year, with ore to be shipped to Energy Fuels’s White Mesa mill for processing. It holds inferred resources equivalent to 1.6 million pounds of uranium, at an average grade of .98 % U3O8.

The Toronto-based company is an uranium and vanadium exploration and mine development firm with projects located in the states of Colorado, Utah, Arizona, Wyoming and New Mexico.