A preliminary economic assessment on Ur-Energy‘s (URE-T) Lost Creek uranium deposit in Sweetwater County, Wyoming, found that the project would be economic at uranium prices above US$40 per lb.
The base case scenario resulted in a pre-tax internal rate of return of 43.6% using a uranium price of US$80 per lb., producing 1 million lbs. U3O8 per year and included a 20% contingency applied to capital and operating costs for the life of the mine.
Operating costs would be US$23.36 per lb. U3O8 while the capital cost to build a two-million lb. ISR plant is estimated at US$30 million.
Production would start in the fourth quarter of 2009 from six different mine units containing about 1.2 to 1.4 million lbs. U3O8 each for a total of 8.1 million lbs. U3O8.
Those numbers were based on an indicated resource though, and the report says Ur-Energy can expect to produce about 6.4 million lbs. U3O8 from the mine.
Ur-Energy president and CEO, Bill Boberg, expects much more out of the mine.
“I expect the Lost Creek project to operate beyond the six mine units used in this model,” Boberg said in a statement. “(The study) does not consider the real potential for expanding our resources at Lost Creek.”
The model also doesn’t include all of the current resources indicated resources actually stand at 8.5 million tons grading 0.058% U3O8 totaling 9.8 million lbs. U3O8 while inferred resources are 0.7 million tons grading 0.076% U3O8 containing 1.1 million lbs. U3O8.
Even though the study looked at mining only 1 million lbs. U3O8 per year, the company plans to build a mill with a capacity to produce 2 million lbs. U3O8. per year, which the study estimated would cost US$30 million.
The reason is the company hopes to operate the mill in part as a toll milling facility for nearby deposits.
Development of the project up to the initiation of production, including drilling, environmental permitting, engineering, construction, management, disposal wells and ponds, and header houses is projected to be US$32.5 million.
Of this total, US$5.5 million was already spent during 2007 and US$17 million has been budgeted for 2008.
Sustaining capital is estimated at US$4 million to US$5 million per year.
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