Niger joins first line of uranium producers

Tom Bell makes two startling predictions for Niger’s vast uranium resources.

The State College, Pa.-based consulting geologist, who heads his own firm, Stratamodel, went to the West African country for the first time in 1987 to explore for gold. More recently, since 2007, he has been a consultant to uranium explorers, and conducting radiometric soil surveys to detect radioactive radon gas, which can indicate uranium targets in the prospective Tim Mersoi basin, west of the Air massif.

Bell’s first prediction is that Niger will move to the first line among uranium producers, perhaps even becoming the world’s number one producer.

In a presentation to the U2009 global uranium symposium held in Keystone, Co., in May, Bell said that Niger is currently the fourth largest uranium producer, behind Canada, Australia and Kazakhstan. Since 1971, the country has produced a total of 104,000 tonnes uranium oxide. And from 3,150 tonnes in production in 2006, annual production is projected to exceed 10,000 tonnes in 2012.

The decisive addition to the country’s production profile is anticipated to come from Areva‘s (ARVCF-O) Imouraren mine, scheduled for commissioning in 2010. At full production, expected in 2012, Imouraren would produce 5,000 tonnes uranium oxide per year, on par with the anticipated combined production from the Khorasan 1 and 2 projects in Kazakhstan, and ahead of BHP Billiton’s (BHP-N, BLT-L) Olympic Dam mine in Australia, which produces 4,000 tonnes per year.

(BHP is planning to expand Olympic Dam, with the first stage of the project expected to raise production to 4,500 tonnes. Olympic Dam’s resources, at 2.3 million tonnes of uranium oxide in measured, indicated and inferred resources, far exceed all of Niger’s known resources.)

Imouraren would cost 1.2 billion euro to build. The mine’s dimensions are immense: Bell says that it will be 8 km long, 2.5 km wide, and between 140-175 metres deep, making it the largest open-pit mine in Africa. It will intersect three aquifers, creating considerable dewatering challenges.

Areva describes Imouraren as the largest uranium deposit in Africa, and the world’s second largest, behind Olympic Dam. Areva would excavate no less than 3.5 billion tonnes of rock at Imouraren to mine 131 million tonnes grading 0.11% uranium oxide. Mining operations are expected to last 35 years or more.

Bell’s second prediction is that most of Niger’s uranium resources are eventually going to be owned by French and Chinese companies.

“Ultimately the Chinese and the French will own the basin,” Bell says.

While the kingpin in the country’s uranium industry has long been French nuclear giant Areva, China entered Niger only last year. Together with Niger’s government, four Chinese companies are developing the US$140 million Azelik uranium mine: SinoHydro, SinoUranium, China National Nuclear Corp. and Beijing Zxjoy Technology & Trade. Azelik, with 12,800 tonnes uranium oxide in reserves, is being developed by joint-venture company Somina.

China’s interest in energy resources is not new, and the country has recently accelerated the pace of its investments in the sector. Using its deep pockets, and taking advantage of low prices of energy assets, China has concluded a spate of oil deals with Venezuela, Brazil, Kazakhstan and Russia, and uranium mining deals with Kazakhstan.

Bell predicts that China will now pick up stakes in uranium projects in Niger from exploration companies starved of capital in the current tough markets, propelling China to a dominant position in Niger’s uranium sector.

“Chinese involvement may be more widespread than commonly thought,” Bell speculates.

The Tim Mersoi Basin is the focal point of uranium mining and exploration in the country, and Bell notes another three deposits which, together with Imouraren and Azelik, make up most of the country’s known uranium resources. The three are Arlit (or Somair), Akouta (or Cominak), and Madouela.

The Arlit mine has reserves of 23,000 tonnes plus resources of 24,000 tonnes uranium oxide. Areva owns 63% of the mine, and the government of Niger 37%.

The Akouta mine, with 24,300 tonnes uranium oxide in reserves, is 34%-owned by Areva, 31% by the government of Niger, 25% by OURD of Japan, and 10% by Enusa of Spain.

The Madouela (or Madaouela) deposit, with 6,190 tonnes in historic resources, is currently an exploration project. It is owned by GoviEx Uranium (formerly Govi High Power Exploration), headed by president and CEO Govind Friedland, son of Robert Friedland, executive chairman of Ivanhoe Mines (IVN-T, IVN-N).

Shareholders in GoviEx include Semafo (SMF-T), with 12%, Cameco (CCO-T, CCJ-N), with 11%, the government of Niger, with 10%, and Trendfield, a Hong Kong company, with 10%. Cameco bought its stake for US$28 million, and has the option to buy another 10% for US$31 million, and increase its stake further to 48% for US$145-212 million. If Madouela becomes a mine, the government can take a stake of at least 10% in the mine.

Bell reports intensive exploration activity in Madouela, with multiple drill rigs on the property. In addition to its 2,300 sq. km there, GoviEx also explores an early stage project near Agadez, which covers 2,400 sq. km.

Apart from the five leading projects, Bell reports substantial grassroots exploration focusing on the Tim Mersoi basin. The geological setting is Devonian to Cretaceous. Production at Arlit and Akouta is from Permian rocks, and the setting at Azelik and Madouela is also Permian, while at Imouraren it is Jurassic.

Bell does not rule out the possibility of a deposit being found in Cretaceous rocks, because of the presence of many radiometric anomalies.

Mineralization is in tabular sandstone deposits, with secondary mineralization in roll front deposits, a very similar setting to the Morrison deposits on the Colorado Plateau. The Imouraren project holds three ore zones on top of a very thick section of altered volcanic ash, a setting similar to the Jackpile mine in New Mexico.

Although it is possible that uranium deposits exist also outside the Tim Mersoi basin, Bell says that as exploration moves into remote areas deep in the Sahara, it is also getting further away from any infrastructure.

But exploration and mining need a secure environment, and Bell reports that security in Niger is getting better. After two rebel groups signed agreements with the government, the insurgency has stopped. The remaining question mark is the government’s ability to enforce law and order and stop the activity of robbers and cocaine smugglers. Last year, for example, Bell’s son, who works with him in radiometric surveys, lost his truck to armed robbers.

Individual exploration permits cover 500 sq. km. The government has delineated 280 permits, of which 170 are granted, 85 are pending approval and 25 are open. A permit is granted for three years, during which the explorer has to spend US$2 million. At the end of the period, the explorer can renew the permit over half the area, or 250 sq. km. Bell says that the government may extend the three-year period owing to delays caused by the insurgency.

Bell says that exploring in Niger is expensive and time-consuming. Companies have to bring all the equipment that they need into the country, including vehicles, drills and exploration equipment. But despite the difficulties, he says that there is still a lot of potential for further discoveries.

The Tim Mersoi basin is large and under-explored, especially in areas far away from the Arlit fault, which lies near the Arlit-Agadez road, Bell says. He believes that there is considerable potential for 5-10,000 tonne deposits, as well as for medium-size deposits in the 25-30,000 tonne range. And there could be another Imouraren-like elephant waiting to be discovered somewhere, with 100,000 tonnes uranium oxide or more.

However, a lot of historical exploration was done using airborne radiometric surveys, which Bell says is not very effective.

A new source of political uncertainty in Niger is last month’s dissolution of parliament by president Mamadou Tandja. Tandja would like to hold a referendum to change the constitution to allow him to serve for a third term, a move which is opposed by parliament. There are reports of clashes between protesters and security forces in the capital, Niamey.