We talked to Bill Boberg, Chief Executive of UR-Energy (TSX: URE). He updated us on the progress at two advanced uranium projects in Wyoming: Lost Soldier and Lost Creek. Boberg rented to attendance in situ mining operations in late 2008, starting with per thousand 50,000 pounds of uranium oxide (U3O8). He hopes to be producing between 500,000 and 700,000 pounds by the end of 2009 with about 1 million pounds for an annual rate after that.
StockInterview: How would you sum up the status of UR-Energy at this moment?
Bill Boberg: Basically, we're in the unexciting part of what's going on right now. We've got our deposits. We're involved in the grunt work of moving them forward. It's just all of the details that it takes to make it happen: the permitting, the engineering, the pump tests, the drilling, going in and plugging old drill holes. We're making sure that everything is working the way that it needs to work. That's why I say that's really the unexciting part of it. It's just keeping our nose to the grindstone and plugging away.
StockInterview: Are you happy with your two orebodies: Lost Creek and Lost Soldier?
Bill Boberg: Yes, we feel very good about what we have. When first we spoke (February 2006), we were dealing specifically with only historical resources. In the meantime, we completed our National Instrument 43-101 conversion. We did our conversion to 43-101 resources, I think, considering differently than most people have been doing them. We felt it necessary to go in and evaluate the deposits by drilling them to confirm the historic drilling. Then, we dropped all the historical data that we have on file apart, and put it back together again to recreate the entire resource picture based on our mining method, which is in situ.
StockInterview: Why Did You Feel This Was Required?
Bill Boberg: In the late 70's, most of the operators were looking at these as either open pit or underground mines or a combination of the two. For instance, when they were looking at Lost Soldier, Kerr-McGee's initial plan was to mine the upper portion by open pit and then mine the deeper portion of it underground. Because we're looking at this as an in situ mine, that requires a different way of evaluating it, a different way of looking at our resources.
StockInterview: So, how did you look at Lost Soldier?
Bill Boberg: We looked at our resources very specifically with the idea of what we'd be able to consider from an ISL mining point. For instance, if we found a fairly high grade resource, which was tied up in very fine grain material and which we would not be able to access with an in situ fluid, we dropped it from our resource. It would not fall into any resource category which we would consider potentially economic. It's all a matter of balancing. We feel the resources we've defined as 43-101 resources are very real things that we can do our mine planning on. And, that's exactly what we're working on.
StockInterview: And what does your mine planning involve?
Bill Boberg: To know what it is we're dealing with, we'll complete our pump testing to develop additional engineering data, get our flow rates and get everything developed on the project. We plan on giving a contract for a feasibility study in November. Then, we'll try to get a feasibility study completed by the end of the first quarter so we'll have all of the material put together for making our applications for permit to mine. We'll complete the feasibility studies on both projects – we're essentially in lockstep on both of them – and then submit the application for "permit to mine" on both projects at the end of the second quarter or early part of the third quarter next year.
StockInterview: What is the average thickness and average grade of each deposit?
Bill Boberg: Lost Soldier rates 17.2 feet at 0.065 percent at an average depth of 240 feet. It occurs in two primary zones. Lost Creek rates 19.5 feet at 0.058 percent averaging 425 feet deep in essentially one zone.
StockInterview: What are you production targets from these deposits?
Bill Boberg: I would hope we would be pushing one million pounds by the end of 2009 as far as an annual rate. What we would actually be producing in 2009 would obviously be somewhat less than that. By the time we reach the end of 2009, I would hope we've got ourselves ramped up to pretty much full annual production, and that our production for 2009 would be something somewhere between half a million pounds and 700,000 pounds. We're hoping to have some production at the end of 2008. I'd feel pretty good about it, if we would be at the point of maybe 50,000 pounds by the end of 2008.
StockInterview: Would you be starting with one well field or part of one?
It would not be a whole well field, but could be a group of patterns which could be in a position to start running the groundwater through an ion exchange column. At Lost Creek, we're probably going to have a five-spot pattern. There may be a few portions of it we'd be going more to a line drive, as opposed to five spots. That is the sort of thing to be determined by feasibility studies on both projects.
StockInterview: What's the difference between a five-spot pattern and a line drive?
Bill Boberg: A five-spot pattern is four injection wells that will be shared by a single production well. Essentially, four injection wells surrounding one production well. A line drive is where you have a production well on one side of the roll front and on the other side of the front you've got an injection well. You are just driving the fluid from one to the other. You would have a series of these along the front so that you're just driving the injection fluid across the front.
StockInterview: In a nutshell, how would you describe your progress on getting these projects to the finish line?
Bill Boberg: We feel very comfortable with where we are. Lyntek, our engineers here in Denver, is doing the work on our projects. They have taken to referring to our two projects as essentially a 'horse race.' All along, we've been stating that we expect to put Lost Soldier into production first and, in maybe two years, bring in Lost Creek. As we got looking at them, we figured everything is moving on each project equally. So, we could put both into production fairly close to each other. Which one would come in first depends on the nature of the geology as we get to that point. Lyntek is saying now that in our 'horse race' Lost Creek has actually slipped into the lead. Where we end up, when we complete the feasibility studies on the two, still remains to be seen.
StockInterview: Are you going to be Wyoming's first urinary miner in this bull market?
Bill Boberg: We think so. I have not seen anyone that is near as close as us to what we've been doing. I know Glenn and his group (Uranerz Energy, AMEX: URZ), have started their discussions with the NRC and started collecting data and things like that. But, I think we've got a minimum of six to eight months on most in moving ourselves forward. I think we're going to be able to keep it going that way. (Editor's Note: We spoke with Dennis Higgs, Chairman of Uranerz Energy, about this horse race.
StockInterview: Certainly it's not all roses. Where is the bump in the road?
Bill Boberg: The way things have been shapifying up – and we have done some preliminary work while we've been getting ready for this – what we're seeing so far is that there will be nothing in the pump tests at this time that is going to be saying 'no go.' What we're seeing from the preliminary work we've done right now is that these projects are going to go ahead. I'd say my big worry is the permitting. Everything that we have control over has been falling into place very nicely. Once we turn in our applications for 'permit to mine,' it's out of our control. I'm hoping that we can look at the DEQ (Department of Environmental Quality) process as one that we'll keep fairly close to twelve months. I think we've got a reasonable shot at it. Whether we can actually do it or not is anyone's guess. At this point in time, with where we stand right now, we're not doing much else besides enhancing our two development projects towards production.
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