Uranerz Energy’s first resource at Arkose venture in Wyoming

The Pumpkin Buttes are a series of small buttes or steep sided hills several hundred feet high in the central portion of Wyoming’s Powder River Basin — a district well known for hosting uranium-mineralized roll fronts that are often amenable to low-cost in-situ recovery mining methods.

It is here that Uranerz Energy Corporation (URZ-T, URZ-X) plans to produce the uranium oxide it will sell directly to utilities to manufacture the fuel used in nuclear power plans.

The company is one step closer to that goal with the reporting of its first resource estimate on South Doughstick, one of the projects within its Arkose mining venture, a joint venture between the company (81%) and United Nuclear (19%).

The resource estimate demonstrates a measured and indicated mineral resource of about 2.287 million pounds of uranium oxide or U₃0₈ at an average grade of 0.121% and an inferred mineral resource of about 189,305 pounds at an average grade of 0.096%. The estimate was based on a cut-off grade of 0.20%.

During the latter half of 2008 and the first half of this year, the joint venture completed 331 exploratory drill holes on the South Doughstick property about 60 air miles northeast of Casper, Wyoming, in Campbell and Johnson counties of the Pumpkin Buttes uranium mining district

Previously Uranerz had reported that leach amenability studies performed on sample cores from the property had shown that the uranium recovery percentage was 87.8%.

The potential target mineral resources within the Arkose mining venture’s property are believed to be alteration-reduction trends hosted in the Eocene age channel sands that lie between 300 and 1100 feet below surface. Uranium mineralization within and adjacent to the Arkose property are found in the Eocene Wasatch Formation.

The Wasatch is a fluvial deposit composed of arkosic sandstones that are typically 25% or more feldspar grains and indicates a source rock where chemical weathering was not extreme and the sediments have not been transported far.

The Wasatch formation is interlayed with sandstones, claystones, siltstones, carbonaceous shale, and thin coal seams that overlies the Paleocene Fort Union Formation, another fluvial sedimentary unit.

Commercial in-situ recovery uranium mining in the Powder River Basin began in 1987, with production coming from the Smith Ranch-Highland mine currently owned and operated by Cameco Resources (CCO-T), and from the Irigaray-Christensen Ranch ISR mine. (Earlier this month Uranium One (UUU-T) signed a definitive agreement to acquire 100% of the latter mine from wholly owned subsidiaries of Areva and EDF for US$35 million in cash.)

The low capital and operating cost ISR system involves using a leaching solution to extract uranium from underground ore bodies. The leaching agent, which contains an oxidant such as oxygen with sodium bicarbonate, is added to the native groundwater and injected through wells into the ore body in a confined aquifer to dissolve the uranium. The solution is then pumped through other wells to the surface for processing.

According to the World Nuclear Association, 28% of the world’s uranium production last year was mined using ISR techniques.

At press-time in Toronto Uranerz was trading at $1.96 per share and has 55.5 million shares outstanding. Over the last year it has traded in a range of 51¢-$2.68 per share.