Have you ever wondered how a uranium company’s “resource calculation” can boost, from time to time even double? I did and I began creating inquiries about this. In February, in the course of a meeting, it was a topic of discussion with William Boberg, Chief Executive of UR-Energy (TSX: URE). I’ve also had talks with David Miller, President of Strathmore Minerals (TSX: STM; Other OTC: STHJF), and his senior geologist, Terrence Osier. The variations in sources reported by a organization, in at the least one of many examples observed beneath – Strathmore Minerals’ Church Rock property, is due to the mining strategies to be employed. The grade-thickness applied towards the resource may differ in between conventional mining (underground, open pit) versus in-situ resolution mining. That could boost the size of the estimated resource.
A Canadian listed mining organization can not announce its uranium resource estimate unless it files a document called a National Instrument 43-101 (NI-43-101). You may study in some news releases: These are historical estimates. The NI 43-101 came about right after the 1997 Bre-X Minerals debacle. Possibly the worst mining scam in Canadian history, it was preceded and followed by other, lesser mining scams. Canadian regulators instituted measures to stop a repeat overall performance. A National Instrument 43-101 means that an independent, qualified person has visited the property, reviewed the historical information, and reaches a conclusion on regardless of whether or not the property has merit.
Some of the oft-repeated grumblings by uranium insiders include, “This isn’t a gold property in an Indonesian jungle.” In reality, they’re correct. A lot of of the properties held by a few of the front runners for uranium mining advancement inside the Usa have had thousands of exploration drill holes, and hundreds (if not thousands) of delineation drill holes. Employing UR-Energy as an example, this company’s Lost Soldier project has had a lot more than three,700 drill holes inside a two square mile region. Historically, New Mexico and Wyoming have been two of the world’s leading uranium creating areas. It can be probably impossible to appropriately estimate the complete variety of holes which have truly been drilled in these two states. In 1 geological textbook, Boberg advised that millions of feet have been drilled in Wyoming.
Insistence by the Toronto Stock Exchange that businesses file a National Instrument 43-101 on their properties has worked out in favor of investors. One situation in point is Strathmore Minerals. On January 4th, the company issued a news release announcing an improve in its uranium resource estimate at its Church Rock, New Mexico property. The second sentence study, “The 43-101 report offers a brand new resource estimate which has elevated to 11.8 million pounds of U3O8 from the historically reported 6 million pounds U3O8.”
This begs the question, asked at the beginning of this post: “Have you ever wondered how a uranium company’s “resource calculation” can improve, at times even double?” Significantly of what follows is advanced geological mathematics and might be confusing. Behind all the geometrical calculations, there are a couple of basic explanations. When a significant mining organization, like Kerr-McGee, was establishing a uranium resource estimate, it was since its exploration team required to prove the worth of the project and get approval from its board of directors ahead of investing in capital costs.
Kerr-McGee used the “Circle Tangent” resource strategy (really don’t fall asleep now; we’ll clarify that in a moment). Uranium mining inside the 1970s and 1980s was primarily underground mining. Capital fees have been effectively above $100 million for a mine and mill complicated. They wanted to ensure they had plenty of uranium to feed that mill.
It should be noted that Kerr-McGee, and other underground operators, employed a 6-foot true thickness cutoff combined having a 0.1 percent grade cutoff. That is 0.6GT. Six feet was the height of the mining gear and operator. Phillips Uranium utilised 8ft at 0.075 percent, but nevertheless 0.6GT, because their gear was bigger.
When the price tag of uranium rose in the late 1970s, reports, maps, and resource calculation sheets started out to show 6ft at 0.05 percent (0.3GT) on them. The cost went up, the recoverable grade went down. Even so, the 6-foot height didn’t transform, just the grade they could economically mine.
With in-situ recovery, the thickness of the intercept does not matter so considerably. A lower grade cutoff might be used. When Strathmore reported an initial cutoff grade of 0.03 % (common for ISL operations), their geologists utilized a 0.3GT cutoff to directly evaluate using the 6ft of 0.05 % resource of 10.9 million pounds which Kerr-McGee utilised in 1979.
Most uranium mining inside the Usa is likely to be in-situ answer mining (ISL). Another method utilized to calculate resources in tabular deposits is referred to as the “polygonal” approach. Tabular deposits are amenable to ISL mining. Some think these are far a lot more accurate in estimating uranium resources. Others disagree.
It’s not that there exists more uranium on the property, or over the past 20-25 years, more uranium “grew” or floated onto the property. It really is that the size of the uranium mineralization has been much more accurately described. As bonus to investors, the stock costs typically run greater after such announcements are made. Within the case of Strathmore Minerals, the stock price rallied by about ten percent following the business announced the increase in its resource estimate.
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The recommendations for defining the amount of uranium mineralization need to do with geometric patterns. Kerr-McGee utilised blocks in 1985, based on the company’s guidelines. Kerr-McGee would define an ore physique, make a decision if feasible to mine, and then build the mine. When underground and mining, they would proceed with longhole drilling and locate more ore. Beneath is an excerpt from a Kerr-McGee document, which describes the way to construct blocks for a “measured resource.”
“For every single surface drill hole intercept of material equal to or above thickness and grade cutoffs, a circle shall be drawn employing a radius equal to one-half the horizontal distance to the nearest below cutoff hole which tested the complete thickness of the same sedimentary unit, or a radius of 50 feet, whichever is much less.
Although the 50-foot radius may be the standard region of influence in New Mexico, this can vary according to the area. Improvement in Wyoming, for instance, currently makes use of a 25-foot radius circle for open pit “shallow” intercepts (<250’ depth) and a 35-foot radius circle for underground “deep” intercepts (>250’ depth).
Two or far more above cutoff holes could be linked to construct a Measured block by lines tangent to the circles provided that:
The above cutoff intercepts TIE, that is certainly, they’re in the same lithologic portion of exactly the same sedimentary unit and at the least a single foot of the intercepts may be linked with each other by a horizontal line.
You can find no beneath cutoff holes which tested the same sedimentary unit falling inside the Measured block.
By comparison, Pathfinder Mines, Ranchers Exploration, the U.S. Atomic Power Commission, and other people utilized the polygonal technique. It was very first described in 1966 and is used as an acceptable method for calculating a uranium resource (reference seem at the finish of this article). Strathmore Minerals makes use of the Equi-Distance Perpendicular Bi-Sector Polygonal Resource Strategy due to the fact both David Miller (President) and John DeJoia (vice president of technical services) previously worked for Pathfinder Mines. DeJoia is overseeing the geological and permitting perform in Santa Fe for Strathmore’s properties.
This polygonal method is described below in constructing the AOI (area of influence) polygons from surface drill holes:
(1) drill holes are plotted on the map,
(two) drift direction and distance are plotted, and
(3) lines are drawn connecting neighboring drill holes (we employed the bottom-hole location of the drill holes i.e. end of drift).
(four) perpendicular lines were drawn equi-distant among the connected drill holes,
(five) these perpendicular lines were linked with other perpendicular lines, therefore
(6) producing an equi-distance AOI polygon about individual drill holes.
(7) the regions for every single AOI polygon had been determined.
The areas are then applied to an Excel file containing the drill hole information (intercept depths and thickness, grade, and so forth.) to arrive in the a variety of mineral resources calculated in the desired GT (grade x thickness of 0.1 to 1.0) cutoffs. As outlined by Strathmore Minerals senior geologist Terrence Osier, “For the various resources we reported we utilized a restricted, maximum size to the polygon’s location of influence.” With all the Church Rock resource estimates, Osier explained the parameters for limiting the sources had been as follows:
Measured: one hundred ft x 100ft (ten,000ft2)
Indicated: 200ft x 200ft minus the measured resource
Measured and Indicated: maximum sized polygon of 200ft x 200ft (40,000ft2)
Inferred: 400ft x 400ft minus the measured and indicated resource.
Utilizing the polygonal strategy, businesses are rising their resource estimates above the historically supplied information. Furthermore, because the spot price of uranium continues to rise (or at the very least remains above $40/pound), the quantity of economic uranium mineralization increases. At some point, if spot uranium stabilizes at a a lot greater level, all of the uranium development companies may need to upwardly revise their resource estimates.
(Editor’s Note: Special thanks to Terrence Osier, Strathmore Minerals senior geologist, for supplying StockInterview.com with this invaluable information.)
REFERENCES
Parker, H.M., 1990, Reserve estimation of uranium deposits, in Kennedy, B.A., ed., Surface Mining, 2nd Edition: Society for Mining and Metallurgy, and Exploration, Inc., Littleton, CO, Chapter 3.four.2, p.355-375.
Popoff, C.C., 1966, Computing reserves of mineral deposits: principles and conventional strategies: U.S. Bureau of Mines Informational Circular IC 8283, 113p.
Sandefur, R.L., and Grant, D.C., 1976, Preliminary evaluation of uranium deposits. A geostatistical study of drilling density in Wyoming resolution fronts, in Exploration for uranium ore deposits, Proceedings of a Symposium, 29 March to 2 April, 1976, by the International Atomic Power Agency, Vienna, p.695-714.
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