Uranium is mined on every continent, with the possible exception of South America. Except for the tiny production of 500,000 pounds per year coming from the government-owned Caetite mine in Brazil, there is no meaningful production to speak of. Is this because South America does not possess uranium reserves? Not at all. According to the Nuclear Energy Agency 2009 report on uranium reserves, South American countries had an estimated 660 million pounds of reserves – over 5.5% of the world total. The report did not include recent discoveries in Peru or Paraguay.
Recent exploration activities in the latin continent by Canadian companies have been getting some attention. Blue Sky Uranium ( TSXV: BSK) has hooked nuclear giant Areva as their joint venture partner in Argentina. Uranium Energy Corp (NYSE: UEC) has been active in Paraguay, with a large exploration target of 50+ million pounds. Macusani Yellowcake has established 40 million pounds of resource in the Andes of Peru. Perhaps the most interesting player on the continent has been U3O8 Corp. (TSXV: UWE | OTCQX: UWEFF).
U3O8 Corp. has three projects, in three different South American countries, all of which show tremendous promise, and each of which are quite unique from one another. Their projects are in Colombia, Guyana and Argentina. None of these countries are strangers to mining.
In Argentina, U3O8 Corp. is exploring the low-grade at-surface Laguna Salida project in Chubut province. So far, the NI-43-101-compliant resource stands at 6.3 million pounds indicated and 3.8 million pounds inferred. They have also established resources of vanadium at 57 million pounds indicated and 27 million pounds inferred. The beauty of this deposit is that it is fine material, so that it can be mined without blasting or crushing – typically two expensive parts of the process. The material has responded very well in initial metallurgical testing, and may become a very low-cost deposit.
Up in Guyana, the company is developing the Kurupung complex, with the ambitious thesis that the Roraima Basin in which it lies is geophysically and mineralogically similar to the Athabasca Basin in northern Saskatchewan. So far, a resource has been developed of 8.4 million pounds indicated and 7.7 million pounds inferred. If U3O8 Corp.’s thesis proves correct, this resource could expand exponentially. Drilling continues on their significant land position.
Finally, U3O8 Corp.’s most advanced project is the Berlin polymetallic project in Colombia. Uranium resource estimates so far total 1.5 million pounds indicated and 19.9 million pounds inferred. However, the project also contains significant economic quantities of phosphate, vanadium and rare earth elements. The latest preliminary economic assessment suggests that the value of the by-products would have the effect of making the uranium “free of charge” when all mined together. The difficulty in by-products can often be in the separation. So far, the deposit seems to be amenable to not only highly effective, but also environmentally-friendly metallurgical separation. As with the other two projects, the company continues to pursue the property’s exceptionally large exploration upside.
Total resources estimated across all projects to date add up to nearly 48 million pounds. The company’s market cap is currently $29 million. With an estimated $6 million in cash, the company is receiving $0.48 per pound premium for their resources – and no value at all for their considerable by-products. This is historically low for the sector, though the entire sector is facing dramatically discounted premiums. Rest assured, when the sector returns to favour, U3O8 Corp. promises to be one of its bright points.