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Denison, Areva delay new Saskatchewan uranium mine.
By: Liezel Hill Published on 25th November 2008
TORONTO (miningweekly.com) – The Midwest uranium project, in Canada's Saskatchewan province, has been delayed indefinitely - or at least until economic conditions improve - making it the latest casualty of slumping commodity prices and turbulent financail markets.
Areva Resources Canada owns 69,16% of the project, Ourd Canada holds 5,67% and Toronto-based Denison Mines, which also announced plans on Tuesday to shut a mine in the US, owns the balance.
Denison said regulatory delays, lower uranium prices and a 50% increase in the Midwest project's cost had prompted the postponement.
According to a February 2008 estimate, the 8-million-pound-a-year mine was expected to cost C$435-million, which was up from a previous forecast of C$400-million.
The Midwest deposit has about 41,7-million pounds of uranium, about 33-million pounds of nickel and 2,5-million pounds of cobalt associated with the uranium.
The status of the project will be reviewed every six months, Denison said.
However, the companies do plan to finish the environmental assessment and engineering for the Midwest mine, which will allow them to move quickly on development when economic conditions improve.
UTAH CLOSURE
Denison, which mines uranium in Canada and the US, also plans to temporarily close its Tony M mine, in Utah, “due to the current economic situation”, and will reduce exploration and capital spending in 2009.
As a result, Denison expects to produce between 1,2-million and 1,6-million pounds of uranium – 200 000 lb lower than the last output guidance.
Vanadium production in the US is unchanged and is expected to be between 2,6-million and 3,2-million pounds.
Dension's shares had plunged 25,9% on Tuesday afternoon, to C$1,00 a share by 12:54 in Toronto.
Uranium, like other commodities, has fallen sharply from highs reached earlier this year as global recessionary fears raise concerns over future demand.
The uranium spot price has fallen from $90/lb in January to around $55/lb this week. The price fell as low as $46/lb in October, it's lowest level since 2006.
Denison joins an increasing number of firms that have announced plans to curtail production or delay projects in response to slumping prices and frozen credit markets.
Uranium One is “re-evaluating” its portfolio and said last month it would put its South African Dominion mine on care and maintenance. The world's biggest producer of the nuclear fuel, Cameco Corporation, has also indicated that it could defer projects. . . Cheers to all the U-Bulls . .
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