The 100% owned White Mesa mill, a fully licensed uranium mill with a vanadium co-product recovery circuit, is located in south eastern Utah near the Colorado Plateau District, the Henry Mountains Complex and the Arizona Strip. The mill is approximately six miles south of the city of Blanding, Utah. Access is by state highway.
Ore Buying Program
Ore Buying Program
White Mesa Mill, Blanding, Utah
Construction of the White Mesa mill started in 1979, and conventionally-mined, uranium/vanadium ore was first processed in May 1980. The mill uses sulphuric acid leaching and a solvent extraction recovery process to extract and recover uranium and vanadium. The mill has been operated on a campaign basis since its construction due to variable uranium market conditions.
The mill is licensed to process an average of 2,000 tons per day of ore and produce up to 8.0 million pounds of U3O8 per year. In full operation, the mill employs approximately 130 people.
The Company began a program to refurbish the mill in late 2006. The mill capital program included the purchase of mobile equipment, restoration of the vanadium roasting, fusion and packaging circuits, replacement of major pumps and component drives, modernization of the mill’s instrumentation and process control systems, and completion of the relining of tailings Cell 4A. The total cost of the refurbishment program was approximately $31.0 million.
Processing of conventional ore at the White Mesa mill began on April 28, 2008 and production of vanadium began in July 2008, following completion of the refurbishment of the vanadium circuit. The mill is currently operating, processing ores from Denison’s Colorado Plateau.
The White Mesa mill will continue to process conventional ore in 2009, at least for the period necessary to produce the committed 2009 contract volume of 500,000 pounds, except for a planned maintenance shutdown in April lasting up to four weeks. Further mill production from conventional ore will depend upon signing new contracts. The mill operations will recommence in time to produce sufficient uranium to deliver 750,000 pounds in 2010 under its existing contract. The Company expects to be able to produce 0.6 to 0.8 million pounds of U3O8 and 0.5 million pounds of V2O5 at the White Mesa mill in 2009.
Production at the mill over the past five years is shown below.
The Company’s State of Utah Radioactive Materials Licence gives the Company the right to process other uranium-bearing materials known as “alternate feed materials” pursuant to an Alternate Feed Guidance adopted by the U.S. Nuclear Regulatory Commission (“NRC”) in 1995 and amended in 2000. Alternate feed materials are uranium-bearing materials, which usually are classified as waste products by the generators of the materials. Requiring a routine amendment to its licence for each different alternate feed, the Company can process these uranium-bearing materials and recover uranium, in some cases, at a fraction of the cost of processing conventional ore, alone or together with other valuable metals such as niobium, tantalum and zirconium. In other cases, the generators of the alternate feed materials are willing to pay a recycling fee to the Company to process these materials to recover uranium and then dispose of the remaining by-product in the mill’s licensed tailings cells, rather than directly disposing of the materials at a disposal site. By working with the Company and taking the recycling approach, the suppliers of alternate feed materials can significantly reduce their remediation costs, as there are only a limited number of disposal sites for uranium-bearing materials in the United States.
To date, the mill has received 15 licence amendments, authorizing the mill to process 18 different alternate feed materials. Of these amendments, nine involve the processing of feeds provided by nuclear fuel cycle facilities and private industry and one has involved the processing of material from the United States Department of Energy (“DOE”). These ten feed materials have been relatively high in uranium content and relatively low in volume. The remaining five amendments have been to allow the mill to process uranium-bearing soils from former defence sites, known as FUSRAP sites, which are being remediated by the U.S. Army Corps of Engineers. These materials are typically relatively low in uranium content but relatively high in volume.
The Company intends to continue to devote resources to the development of the alternate feed business as a source of feed for the White Mesa mill. The Company has announced that it is constructing a parallel alternate feed circuit to enable the mill to process conventional ore and alternate feeds simultaneously. The capital cost is estimated to be approximately $5.2 million and production is scheduled to start-up in June 2009. Production from this circuit is expected to be up to 160,000 pounds in 2009.
Tailings Disposal
Tailings Cell 4A
Synthetic lined cells are used to contain tailings and, in one case, solutions for evaporation. As each tailings cell is filled with tailings, the water is drawn off and pumped to the evaporation pond and the tailings solids are allowed to dry. As each cell reaches final capacity, reclamation will begin with the placement of interim cover over the tailings. Additional cells are excavated, and the overburden is used to reclaim previous cells. In this way, there is an ongoing reclamation process.
In June 2007, the Company began refurbishment of Cell 4A, which was originally built in 1989. The refurbishment was completed in August 2008 and Denison received the operating permit from the DRC in September 2008. The cell has been in operation since that time and provides approximately 2.0 million tons of tailings capacity.
To ensure sufficient volume for tailings and area for tailings solution evaporation, the Company has begun the licensing for tailings cell 4B. The design documents, a licence amendment application and an environmental assessment have been submitted to the DRC in support of the approval for the construction of Cell 4B adjacent to Cell 4A. Based on current estimates, this cell will be needed by 2011.
The Environmental Statement for the mill currently contemplates construction of two additional tailings cells, including Cell 4B, each of which can provide further tailings capacity of approximately 2 million tons, when necessary.
Ore Buying Program
The White Mesa mill Ore Buying Program provides an opportunity for independent miners to sell their uranium and uranium/vanadium ore to Denison Mines (USA) Corp., the operator of the White Mesa mill.
For uranium only ore, the value paid in US$ per ton is based on the average uranium (U3O8) grade and is shown in the Uranium Only Ore Buying Schedule. For uranium/vanadium ore, the value in US$ per ton is determined by the average uranium (U3O8) and vanadium (V2O5) grades as shown in the Uranium/Vanadium Ore Buying Schedule. Both of these Ore Buying Schedules will be updated regularly. The average ore grade is determined by probing of the ore and metallurgical assays which are conducted by the lab at the White Mesa mill.
In addition to the ore buying schedule, Denison also offers a transportation allowance to compensate the independent miners for their estimated transportation costs to the White Mesa mill. The transportation allowance, in US$ per ton, is as follows:
MILES ALLOWANCE
0-25 $ 5.00 per ton 26-50 $ 9.50 per ton 51-75 $13.50 per ton 76-100 $17.00 per ton 101-125 $20.00 per ton 126-150 $22.50 per ton
Transportation of the ore to the White Mesa mill should be done by a qualified contractor. Denison Mines (USA) Corp. has prepared a Transportation Policy for its own mines which should be followed when transporting uranium ore on federal highways.
An Ore Purchase Contract with Transportation Allowance will be entered into which defines the general terms and conditions for the sale of the ore. An Agreement will be entered into for each mine or for a group of mines owned by the same party.
If you have any questions regarding the White Mesa mill Ore Buying Program please contact: Harold Roberts at (303) 628–7798 or [email protected].
Last updated April, 2009.
WCU Price at posting:
39.0¢ Sentiment: Hold Disclosure: Held
