One major advantage of acquisition of these lease tracts is the fact that most of these tracts have had significant historical production which greatly mitigates the risk associated with many mining projects. Items such as economic viability and grade, ground control, costs associated with mining, metallurgical issues and milling costs are well understood due to the past extensive production history which provides a vast amount of data about the operations of the projects. This data is generally available to the Company from various repositories including that of the DOE.
As an example, the production history of one lease tract, the C-JD-5, is tabulated below
Future production from these leases is dependent primarily on the prices of the saleable products which are uranium and vanadium. Both metals have a bright outlook in that both of these are classified as “green energy metals.”
Electrical production from nuclear reactors using uranium is carbon emission free. Vanadium is sought for use in vanadium redox flow batteries which are being developed with very large storage capacities. Installations of these large storage batteries would be at solar and wind facilities for storage of the produced energy.
Future production will be dependent not only on favorable pricing but also on the availability for the raw ore. The only available mill currently is owned by Energy Fuels, Inc. and located about 180 miles from the lease tracts in Blanding, Utah. The Company has had no discussions with Energy Fuels about a milling contract at this point and will not likely undertake such discussions until uranium and vanadium advance further from existing levels.
The Company believes that the pricing trajectory of both uranium and vanadium, in light of green energy applications, is highly favorable. Recent prices of uranium and vanadium of approximately $50 and $12 per pound respectively give confidence that prices may rise further in the coming years which could trigger a production decision with respect to these leases.
The existing lease terms of the optioned property have a 10-year term which is generally renewable by the existing Lessee, provided the lease is in good standing at the time of the renewal. The current leases were renewed in January 2020 and run through January 2030.
The Company’s future plans include:
- Paying the balance due on the Option Agreement and the annual advanced royalty payment;
- Performing minor reclamation and weed control as needed;
- Verifying existing resources, data scanning and organization; and,
- Preparation of an independent NI 43-101 technical report.