They call it the “Saudi Arabia of the uranium world” and with prices for the metal forecast to keep on rising and demand forecast to grow based on its use as a clean energy alternative – the focus is now fully on Canada’s Athabasca Basin.
Host to several of the highest-grade uranium deposits on the planet, the Athabasca Basin is located primarily in Canada’s mining friendly jurisdiction of Saskatchewan and covers an area of almost 100,000km2.
A burst of exploration in the 1970s resulted in major discoveries in the Athabasca Basin in northern Saskatchewan, in Proterozoic unconformity deposits. Mines at Rabbit Lake, Cluff Lake, and Key Lake started up in 1975, 1980 and 1983, which up until 2000 accounted for most of Canada’s uranium production (14,223 tonnes of U3O8 in 1998).
Cluff Lake, Key Lake and the original open pit at Rabbit Lake have now been mined out (underground mining continued at Rabbit Lake to 2016).
In 1988 the newly formed Cameco Corporation (TSX: CCO) discovered the massive McArthur River deposit. Mines that began operation since 1999 now contribute most of Canada’s production, notably McArthur River and Cigar Lake.
According to a recent World Nuclear Association report, Canada was the world’s largest uranium producer for many years, accounting for about 22% of world output before being overtaken in 2009 was overtaken by Kazakhstan.
With known uranium resources of 606,600 tonnes of U3O8 (514,400 tU), as well as much continuing exploration, Canada has a significant role in meeting future world demand. The majority of Canada’s uranium resources are in high-grade deposits in the Athabasca Basin, some one hundred times the world average.
Canada’s production comes mainly from the McArthur River (currently suspended) and Cigar Lake mines in northern Saskatchewan province, which are the largest and highest-grade in the world.
While the Saskatchewan government had considered phasing out uranium mining in the province in the early 1990s, the provincial government actively supports uranium mining there now.
The Athabasca Basin, already host to the world’s largest producing uranium mine at Cigar Lake, has become the focus of a number of new developments in recent months.
Cigar Lake a world leader
Mining commenced at Cigar Lake in 2014. The proven and probable ore reserves at Cigar Lake are extremely large and very high grade. A 480-metre-deep underground mine was developed in very poor ground conditions – the orebody is actually in the soft Athabasca sandstone. Hence it uses ground freezing and remotely controlled high pressure water jets at this level to excavate the ore.
Production ramped up to 8,200 t/yr U3O8 (7,000 tU/yr) in 2017 and remained at that level in 2018 and 2019.
In March 2020, Cameco decided to suspend production at Cigar Lake due to the threat of COVID-19. The decision was made in conjunction with Orano’s McClean Lake uranium mill. Both facilities were be placed into care and maintenance. Cameco restarted production at Cigar Lake in September 2020, and Orano restarted McClean Lake in the same month. However, both facilities were again suspended in December 2020 following a rise in COVID-19 cases in Saskatchewan.
Cameco re-started Cigar Lake production in the third quarter of 2021 and the company says the 2022 production outlook for the Cigar Lake mine is 15M pounds of uranium concentrate (U3O8) on a 100% basis, which would make it the largest uranium producing operation in the world this year.
The Cigar Lake reserve and resource base includes proven and probable reserves estimated at 152.4M pounds of U3O8, measured and indicated resources of approximately 103.7M pounds, and inferred resources of 22.9M pounds.
Cameco, which recently increased its ownership in Cigar Lake to 54.547%, said its present plan is to reduce annual production at Cigar Lake to 13.5M pounds of U3O8 (100% basis), 25% below licenced capacity, starting in 2024.
“Extending the mine life at Cigar Lake by aligning production with market opportunities and our contract portfolio is consistent with Cameco’s tier-one strategy and is expected to allow more time to evaluate the feasibility of extending the mine life beyond its current reserve base while continuing to supply ore to Orano’s McClean Lake mill,” the company stated recently. This will remain the company’s production plan until we see further improvement in the uranium market and contracting progress.
CanAlaska drilling success
In mid-July 2022, CanAlaska Uranium Ltd (TSXV: CVV) revealed it had intersected a wide interval of basement-hosted uranium mineralisation along a newly defined exploration trend on the West McArthur project in the Athabasca Basin.
Drill hole WMA067 was the second regional test of the current summer drilling programme. The drill hole intersected a broad, 6.3m-long interval of elevated radioactivity (> 300 counts per second (cps) on a handheld CT007-M scintillometer).
The broad interval includes several metre- to sub-metre-long intervals of moderate to strong radioactivity, one of which is 3.5m long (> 5,000 cps on the CT007-M). WMA067 is located 6km along strike to the southwest of the company’s 42 Zone mineralization.
The uranium mineralization is characterized by pitchblende and yellow uranium secondaries with associated clay and hematite alteration in faulted basement rocks approximately 100m below the unconformity.
“The CanAlaska team has delivered a new uranium intersection in a new area of the West McArthur project with its second drill hole of the summer programme,” CEO, Cory Belyk, said.
“With multiple recently announced build-outs of small modular reactors (SMRs) in the Canadian market alone, the need for more uranium discoveries that can lead to increased production has never been more apparent.
“The West McArthur project, strategically located next to critical mine and mill infrastructure in the eastern Athabasca Basin, continues to respond positively to targets generated by the geological team providing additional opportunities for discovery for our shareholders. This is an important and exciting result early in the 2022 drilling programme.”
Okapi takes to the air
Elsewhere, Okapi Resources Limited (ASX: OKR | OTCQB: OKPRF) recently started an extensive field exploration programme at the Newnham Lake and Perch Uranium Projects in the Athabasca Basin.
The exploration programme will consist of prospecting, outcrop, and boulder sampling with potential soil and vegetation sampling to help identify favourable structural scenarios suitable for hosting uranium mineralization and will utilize the results from the satellite analysis and compilation work received from Axiom Exploration Group to assist exploration efforts in specific areas of interest.
“We are excited about our maiden field exploration program in the Athabasca basin. Our properties at Newnham Lake and Perch remain our highest priority, with historical drilling showing anomalous radioactivity within multiple drillholes, favourable lithologies and untested basement hosted potential at a relatively shallow depth,” Okapi’s Managing Director, Andrew Ferrier, said.
The field programme is mainly helicopter supported and plenty of pre-planning work was required to allow us to commence our exploration programme. I thank our team and consultants in getting everything organized on time and on schedule.”
Okapi’s 100% owned Newnham Lake and Perth Projects which straddle the north-eastern margin of the Athabasca Basin. Both Projects consist of 15 mining claims totalling close to 18,500 hectares. The properties are located at the northeast margin of the Athabasca Basin approximately 75km east-southeast of the hamlet of Stony Rapids and 60km east of the community of Black Lake, Saskatchewan.
Uranium price strength
Experts see uranium prices continuing to rise for the next several years as it has done in the past. In 2021, the price of Uranium reached the highest levels since 2014, driven by numerous external factors.
As a key component of nuclear energy, investors continue to bet on increasing demand for uranium as the world looks towards alternative energies. Throughout the year, the uranium spot price rose from around US$30 to US$42.05 a pound, an increase just shy of 40%.
Demand
According to a recent report, the International Energy Agency’s has identified nuclear energy as an established large-scale energy technology and the second largest source of low emissions power.
The report concludes that nuclear energy can help the energy sector make the journey towards net-zero faster, more secure and more affordable. It also acknowledged how nuclear energy and other dispatchable power sources complement renewables by providing critical services that provide reliability and stability to electricity systems.
