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Uranium Resources Aims to Secure Ore for Planned Mill

Uranium Resources Inc. (URRE), the Texas-based miner that bought a BHP Billiton Ltd. unit last month, said it's in talks with companies to secure further ore supplies for a proposed uranium mill that may be the largest in the U.S.

Pending regulatory approval, Uranium Resources will build a mill in New Mexico that can process 8,000 tons of uranium ore a day from deposits abandoned decades ago, Chief Executive Officer David Clark said. Ore deposits in the vicinity can be refined into as much as 300 million pounds of the nuclear-fuel material, Clark said in an interview yesterday.

Nu-Mex Uranium Corp., Strathmore Minerals Corp. (STM) ``and other companies operating around us all need the same thing: an operating mill,'' Clark said. ``We're in a nuclear renaissance, so uranium demand will start ramping up pretty well.''

Uranium soared to a record $138 a pound in June as suppliers strained to meet demand bolstered by global efforts to limit carbon-dioxide emissions from fossil fuels. Spot uranium have risen about 45 percent in the past year to $93 a pound on concern that supplies of the radioactive element may not be sufficient to fuel a planned expansion of the world's nuclear reactors.

Uranium Resources, based in Lewisville, agreed on Oct. 12 to buy Rio Algom Mining LLC from BHP (BHP) for about $110 million in cash, giving it New Mexico uranium deposits and a permit to own a uranium mill. The company expects to use the rights to complete a $250 million mill within four years, Clark said.

U.S. Reactors

The U.S. produces 2,000 tons of uranium a year while reactors in the U.S. are using over 20,000 tons a year, said Steve Kidd, director of strategy and research at the World Nuclear Association. ``Nearly everything is being imported from Canada and Australia. Anyone who goes into production in the U.S. is going to have buyers very keen to talk to them.''

The only operating uranium mill in the U.S. is the White Mesa facility in Utah, owned by Denison Mines Corp. (DML) The mill is undergoing an upgrade that will increase its ore-processing capacity to 2,000 tons per day by the end of 2008, Denison spokesman James Anderson said in an interview.

Uranium One Inc. (UUU) is conducting a feasibility study to upgrade and restart a 700 ton-a-day facility, the Shootaring Canyon mill in Utah, which was mothballed in 1982, Clark said.

Uranium Resources said it has 92 million pounds of uranium in its New Mexico deposits and will add 20 million pounds when the Rio Algom acquisition is completed in June.

Supply Agreements

Nu-Mex and NWT Uranium Corp. agreed last month to a merger that would pool resources to develop the area's deposits, Marek Kreczmer, who will become chief executive officer of the merged entity, said in a Nov. 23 interview. Kreczmer confirmed that Nu-Mex is in talks with Uranium Resources on a supply agreement for the proposed New Mexico mill.

Nu-Mex controls deposits adjacent to Uranium Resources properties that may contain at least 23 million pounds of the radioactive material, Kreczmer said.

Strathmore also confirmed it is in talks to supply Uranium Resources.

``We have been chatting with Uranium Resources to provide feed to their potential mill,'' Strathmore Chief Executive Officer Devinder Randhawa said today in an interview. ``We have a lot of pounds there and it would make sense economically to feed locally than to go to the White Mesa mill.''

Uranium Resources rose 38 cents, or 3.3 percent, to $11.85 at 4:30 p.m. in Nasdaq Stock Market trading. The shares have more than doubled this year.

To contact the reporter on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

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