First oil sands project in the US takes a step closer

US Oil Sands (TSX-V:USO) defied a weak market on Thursday and added almost 3% in thin trade after announcing a private placement to raise $9.1 million.

By the close the explorer and developer was trading up 2.9% at $0.18, the offer price for the 50 million new shares. The mining sector was generally weak on the day with the TSX S&P Global Mining index down 2.6%

The $45 million company is still showing losses for 2012 – it is down 5% year to date and is worth 47% less on the Toronto venture market than this time last year.

The Calgary-based company has a 100% interest in bitumen leases covering 32,005 acres of land in Utah's Uinta basin.

"These initial funds will allow us to initiate construction on our PR Spring project, the first commercial oil sands extraction project in the US," said Cameron Todd, CEO of US Oil Sands in a press release.

The PR Spring project is on-target for completion and start-up in the final quarter of next year. The company uses a modular construction method allowing for rapid construction in 2,000 barrel per day phases.

The initial 2,000 barrels per day facility is expected to cost $30 million to construct, while subsequent phases could be added at a cost of $25 million, US Oil Sands said, adding that it is looking for partners on the project.