TORONTO (miningweekly.com) – The uranium-mining industry will likely need to see prices lift “considerably” before lower-grade, higher-cost mines can be brought into production, Jean Nortier, the CEO of Vancouver-based Uranium One, said on Monday.

Uranium One also announced earlier in the day that it had agreed to buy additional assets to speed up its production plans in the US, and that it is in negotiations to sell its shuttered Dominion mine, in South Africa, for about $38,5-million in cash, net of transaction costs.

Speaking on a conference call, Nortier refused to speculate on the short-term outlook for the price of the nuclear fuel, but said he remained “as bullish as ever” on the medium- to long-term prospects.

Uranium One produces uranium from mines in Kazakhstan, and owns 51% of the Honeymoon project, in Australia, as well as some processing facilities and deposits in the US.

“If you look at our results – and we have probably the cheapest producing uranium mines in the world from a public company perspective – and you say our cash costs are $16/lb to $17/lb, plus we sit with noncash costs of $14/lb to $16/lb. So it's $30/lb to $32/lb before you start making an operating profit,” Nortier said.

“And if the cheapest uranium mines in the world are producing at those numbers, then your marginal cost of production is a number significantly higher.”

Pricing service TradeTech reported on Monday that uranium-oxide for immediate delivery rose 1,1%, to $47,50/lb last week, the first gain in eight weeks.

The increase was linked to new demand from a non-US utility.

Nortier said lower-grade deposits, such as in Namibia, or some conventional mining projects in the US, will need much higher prices to be economically mined.

“We continue to think that the uranium price needs to lift considerably before you will  start to see  enough production come on line to fill the market.

“My view is, that we need to see $80/lb to $100/lb before we are going to see marginal mines being brought into production,” he said.

WYOMING PLANS

Uranium One has agreed to buy the Irigaray in situ recovery (ISR) central processing plant, the Christensen Ranch satellite ISR facility and associated uranium resources in the Powder River Basin from a joint venture between Areva SA and EDF, for $35-million.

Both processing facilities are permitted and licensed, which will mean the company will significantly reduce the permitting and construction risk that would be associated with developing its own central processing facility at its Moore Ranch asset.

The Moore Ranch operation will now likely become a satellite operation, with the loaded resins being transported to Irigaray for further processing into dried yellowcake.

Based on due diligence for the transaction, Uranium One expects to recover about eight-million pounds from the deposits acquired at Irigaray and Christensen Ranch, Nortier said.

The US Nuclear Regulatory Commission licence at Irigaray allows for a maximum of 2,5-million pounds of dried yellowcake production a year.

The operation currently has a capacity to produce 1,3-million pounds a year, but, by installing a dryer that Uranium One has already bought for Moore Ranch, the annual capacity at Irigaray can be bumped up to the licensed 2,5-million pounds.

The company is especially confident in its planning for the new assets, as senior vice president for ISR operations in the US, Donna Wichers, was the GM for these same operations from 1998 until 2007.

Wichers has been with Uranium One since 2007, Nortier said.

The acquisition of the Wyoming assets is expected to close in the first half of 2010.

In February this year, Uranium One announced it would sell a 19,95% stake in the company to a Japanese consortium for C$270-million, and then agreed in June to acquire a 50% in the Karatau mine, in Kazakhstan, from Russian State-owned mining company Atomredmetzoloto.

Both the private placement and the Karatau acquisition are still expected to close by year end, Nortier said.

DOMINION

Uranium One also revealed on Monday that its Dominion asset, in South Africa, is now being held for sale, prompting a big translation adjustment in the firm's second quarter financial statements.

The Dominion mine was put on care-and-maintenance in October last year, and Uranium One has since indicated it was talking to potential buyers for the asset.

The firm now expects to receive cash proceeds of around $38,5 million, net of costs on the sale of Dominion, Nortier said.

“We are a while down the line with regard to the negotiations,” he said.

Shares in Uranium One slid 4,1% on Monday, to C$2,82 apiece by 12:30 in Toronto.