UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE
13a-16 or 15d-16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2015.
Commission File Number 001-36204
ENERGY FUELS INC.
(Translation of registrants name into English)
225 Union Blvd., Suite 600
Lakewood, CO 80228
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F
Form 20-F [
] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Note: Regulation S-T Rule 101(b)(1) only permits the
submission in paper of a Form 6-K if submitted solely to provide an attached
annual report to security holders.
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Note: Regulation S-T Rule 101(b)(7) only permits the
submission in paper of a Form 6-K if submitted to furnish a report or other
document that the registrant foreign private issuer must furnish and make public
under the laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrants home country), or under the
rules of the home country exchange on which the registrants securities are
traded, as long as the report or other document is not a press release, is not
required to be and has not been distributed to the registrants security
holders, and, if discussing a material event, has already been the subject of a
Form 6-K submission or other Commission filing on EDGAR.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
ENERGY FUELS INC. |
|
|
|
/S/ David C.
Frydenlund
|
Date: March 19, 2015 |
David C. Frydenlund |
|
Senior Vice President, General Counsel &
Corporate |
|
Secretary |
-2-
INDEX TO EXHIBITS
-3-
NI 43-101 Technical Report on
Resources Wate Uranium Breccia
Pipe Northern Arizona, USA.
Report Prepared for
Energy Fuels Resources (USA), Inc.
And
Uranium One Inc.
Report Prepared by
SRK Consulting (U.S.), Inc.
357600.030
March 10, 2015
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
i |
NI 43-101 Technical Report on Resources Wate
Uranium
Breccia Pipe Northern Arizona, USA
Energy Fuels Resources (USA) Inc.
225 Union Blvd.,
Suite 600
Lakewood, CO., U.S.
And
Uranium One Inc.
25 Adelaide St. E., Suite 1616
Toronto, Ontario, M5C 3A1
SRK Consulting (U.S.), Inc.
3275 West Ina Road,
Suite 240
Tucson, AZ 85741
e-mail: tucson@srk.com
website: www.srk.com
Tel: 1.520 544 3688
Fax: 1.520 544 9853
SRK Project
Number 357600.030
March 10, 2015
Authors and Qualified Persons:
Allan Moran, C.P.G.
AIPG
Associate Principal Consultant (Geology)
Frank A. Daviess, MAusIM, RM SME
Associate Principal
Consultant (Resource Geology)
Peer Reviewed by:
Corolla Hoag, C.P.G. AIPG
Principal Consultant (Geology)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
ii |
Summary (Item 1)
Energy Fuels Resources (US) Inc.
(Energy Fuels) controls the Wate Uranium Breccia Pipe (the Project), located in
northern Arizona. The Project is a mid-stage exploration property with
established Inferred uranium resources of 71,000 tons grading 0.79% eU3O8 for
1,118,000 contained pounds eU3O8 (Table 20-2). The Wate Pipe is one of several
uranium bearing breccia pipe properties held by Energy Fuels in northern
Arizona, which include properties in the exploration, development, and active
mining stage. The Wate Pipe had historical drilling and resource estimates, and
VANE Minerals (US) LLC (VANE) conducted verification drilling and gamma logging
to confirm the historical data and allow for resource estimation for the
mineralized breccia pipe during the period of 2008 through 2011. Section 16 further describes current resources
that are the subject of this report. The Wate Pipe is an attractive high-grade
uranium deposit that justifies further exploration and/or pre-development work.
In February of 2015, Energy Fuels,
through its wholly-owned subsidiary EFR Arizona Strip LLC, acquired VANEs 50%
interest in the Project. The Project is held by the Wate Mining Company LLC
joint venture (the LLC) between VANE and Uranium One Americas, Inc. (U1), and
U1 continues to own 50% of the LLC. Energy Fuels will assume VANEs role as
Manager of the LLC.
The Wate Uranium Breccia Pipe is
located in northwestern Arizona, south of the Grand Canyon National Park in
Coconino County. Prior owners advanced the Wate Pipe to the point of internal
feasibility study during the 1980s, although the depressed uranium market at
the time resulted in the abandonment of the properties and the dissolution of
the companies. The Wate Pipe, acquired through the Agreement with U1, had
previously been evaluated with sufficient drill results to be considered by the
former owner, Rocky Mountain Energy Partners, L.P. (RME), as a mineral resource
(historical term not compliant with current resource classifications) sufficient
for internal pre-development consideration. VANE acquired the readily available
historical exploration information for the Project in 2008. Uranium
mineralization is typical of past producing uranium breccia pipe deposits in
Arizona, which had grades near 1.0% U3O8 and from 1 to 6 M lbs. of contained
U3O8. Mineralization typically occurs at depths of about 600 ft. to 2,000 ft. in
a vertical, narrow, cylindrical breccia body that can have dimensions of 300 ft.
across or less.
This report is a NI 43-101 Technical
Report on resources for the Wate Uranium Breccia Pipe, for Energy Fuels,
specifically to reflect the change in ownership; mineral resources have not
changed since reported for VANE in 2011. The mineral resources are still
current. VANE confirmed high grade intercepts at Wate by re-entering and
re-logging (gamma logs) some of the historical drillholes, and by drilling
several new drillholes. VANE confirmed (through re-logging of historical
drillholes) an intercept of 34 ft. @ 1.67% eU3O8, from 1,489 to 1,523 ft. in
depth in drillhole WT-5 and 10.5 ft. @ 0.40% eU3O8 from 1,244.5 to 1,255.0 ft.
in depth in drillhole WT-7. VANE drilling/logging results from eight of eleven
new drillholes has defined mineralization of similar grades and thicknesses to
that in historical holes. The key drillhole intercepts upon which the current
resource for the Wate Pipe is estimated, are listed in Table 20-1:
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
iii |
Table 20-1:
Significant Drill intercepts for the Wate Pipe at
0.15% eU3O8 cutoff
|
WT-29A
upper |
WT- 29A
lower |
WT-33 |
WT- 34 |
WT-35 (cum) |
WT-37 upper |
WT-37
middle |
WT-37 lower |
WT-39
(un-cut) |
WT-41 |
Wt-42 (cum) |
WT-5 |
WT-7 |
Thickness (ft) |
36.0 |
28.0 |
25.5 |
15.0 |
21.5 |
20.0 |
2.5 |
12.5 |
64.5 |
27 |
35.5 |
32.5 |
9.0 |
Ave Grade (%U3O8) |
0.69 |
1.60 |
0.45 |
0.30 |
0.33 |
0.37 |
0.19 |
1.29 |
1.45** |
1.45 |
0.25 |
1.52 |
0.47 |
No 0.5 ft interval |
72 |
56 |
51 |
30 |
31 |
40 |
5 |
25 |
129 |
54 |
71 |
65 |
18 |
No. > 0.5% eU3O8 |
34 |
49 |
22 |
0 |
6 |
10 |
0 |
20 |
101 |
36 |
4 |
45 |
7 |
High value (%eU3O8) |
2.47 |
4.61 |
0.97 |
0.48 |
0.69 |
1.39 |
0.25 |
3.18 |
18.35* |
2.92 |
1.12 |
4.38 |
1.21 |
from (ft) |
1318.0 |
1498.5 |
1421.0 |
1269.5 |
1333.5 |
1299.0 |
1328.0 |
1362.5 |
1448 |
1453.5 |
1246 |
1483.5 |
1242.5 |
to (ft) |
1354.0 |
1526.5 |
1446.5 |
1284.5 |
1370.0 |
1319.0 |
1330.5 |
1375.0 |
1512.5 |
1480.5 |
1599.5 |
1516.0 |
1251.5 |
GT (Ft-%) |
24.7 |
44.7 |
11.5 |
4.5 |
7.1 |
7.3 |
0.5 |
16.1 |
93.6 |
39.1 |
8.71 |
49.3 |
4.3 |
Note: WT-35 and WT-42 represent
cumulative intercept intervals; WT-5 and WT-7 are re-logs of historical holes
WT-36 , WT-38, and WT-40 did not encounter +0.15% mineralization
* Two
0.5 ft intervals at 10.3% and 18.4%,
respectively in WT-39
** Two 0.5 ft intervals
capped at 7.0% in WT-39 - results in 1.29%
average grade
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
iv |
History
The Arizona Uranium Breccia Pipe
District was prospected for uranium in the 1950s and again in late 1970s, after
uranium was discovered in copper bearing breccias, such as those in the Orphan
Mine in the Grand Canyon. This region produced approximately 23 M lbs of
U3O8 prior to the decline of uranium prices in the late
1980s. Most deposits are small to intermediate in size, with a typical breccia
pipe having dimensions of 300 ft. in diameter and 2,000 ft. or more
vertically.
The Wate Pipe contains several drill
holes with + 0.50%, eU3O8 mineralization grades and an
exploration potential (historically estimated resources) of between 70,000 tons
grading 0.80% eU3O8 (1.1 million contained pounds
eU3O8), and 146,000 tons grading 0.83%
eU3O8 (2.4 million contained pounds
eU3O8). This exploration potential, or historically
reported non-CIM-compliant resources/reserves for the Wate Pipe, cannot be
relied upon until adequately demonstrated with sufficient drilling. Historical
drilling encountered reported ore grade mineralization in 17 of 23
drillholes.
Geology
The high-grade uranium deposits in
breccia pipes in northern Arizona were deposited in solution-collapse features
that originated in the Mississippian Redwall Limestone and propagated upward
through the overlying Pennsylvanian and Permian redbeds and sandstones during
several periods of karstification. Uranium was deposited after
karstification.
As uranium dissolved in groundwater
moved northward from southern Arizona through the sandstones during the early
Mesozoic (~200 Ma), it was channeled by the impermeable layers above and below
the sandstones. Uranium minerals precipitated in reducing environments
influenced by the pre-existing sulfides or hydrocarbon-bearing material present
in the limestones, shales, siltstones, and sandstones. This results in
concentrations of uranium mineralization in the open space of near vertical
sub-cylindrical breccia bodies, which occur in sections of the nearly flat-lying
upper Paleozoic sedimentary rocks that comprise the Colorado Plateau on both
sides of the Grand Canyon.
Resources Wate Pipe
The Wate Pipe had an internal
company-derived mineral resource completed in the late 1980s, which is not
compliant with current CIM standards for reporting mineral resources. VANE
gathered the historical information in 2008, conducted drillhole validations
through re-entering historical drillholes and re-logging (gamma-logs) in 2009
and 2010, and drilled several new drillholes in 2010. Not all the historical
information is available, yet there is sufficient drillhole information to allow
for definition of mineralized shapes for the historically defined
mineralization. SRK modeled the mineralization in four discrete zones within the
Wate Pipe, and completed resource estimation by industry standard procedures
that are compliant with CIM definitions for NI 43-101 reporting.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
v |
Table 20-2: Current Inferred
Resources for the Wate Pipe at
0.15%eU3O8cutoff
|
Wate Breccia Pipe
Inferred Resource 0.15%
eU3O8 Cutoff* |
|
Zone |
Cutoff |
U3O8% |
Tons (000) |
lb-U3O8 (000) |
|
1 |
0.15 |
0.84 |
58 |
971 |
|
2 |
0.15 |
0.61 |
11 |
130 |
|
3 |
0.15 |
0.31 |
2 |
10 |
|
4 |
0.15 |
0.58 |
1 |
7 |
|
|
|
0.79 |
71 |
1,118 |
* Note: Inferred Uranium resources
refers to global in-place CIM definitions of resources to which a mine design
has not yet been applied; although the above stated resources meet the
definition of having the potential for economic extraction at the cutoff
provided. Resources are current, effective as of March 22, 2011, the date of the
most recent drilling information.
A 0.15% eU3O8
cutoff equates to an in-place dollar value per ton, at a $38/lb
U3O8 price, of $114/ton; deemed more than sufficient to
cover the cost of mining and processing a ton of material. The natural lower
threshold of mineralization in the Wate Pipe is approximately 0.15%
eU3O8 as well. Both suggest that a 0.15% cutoff grade is
acceptable for Wate.
Property, Mining Rights, and
Location
Through acquisition of VANEs interests
in Wate Mining LLC, Energy Fuels is the current Manager of the Property. Energy
Fuels and joint venture partner U1 hold the Project property through a state
mineral exploration permit on Arizona State lands, which is in the process of
conversion to a mining lease.
Exploration/Development Potential
The SRK estimate of resources for the
Wate Uranium Breccia Pipe is conservative with respect to historical estimates
of tonnage, yet similar in grade, in large part due to the minimal amount of
historical drilling data available for the Project. VANE acquired historical
reports that state the intercepts in all historical drillholes; however, the
gamma logs and geological logs that back up the historical intercept data were
not available to VANE. Therefore, SRK used the historical intercept data, some
of which has been verified by VANE re-logging, to generate the mineralized
shapes within which resource estimation was done using only VANE generated data.
In SRKs opinion, further drilling or acquisition (if possible) of the
historical data will allow for a better estimate of the in-situ resources and
the potential of increasing the total tonnage and contained pounds of uranium
mineralization. Section 16 discusses this
further.
Mining
Underground mining methods are
typically used for uranium breccia pipes (Wenrich and others, 1995).
Historically mined breccia pipes north of the Grand Canyon were accessed by
shaft and decline, and were mined by standard open-stope methods.
The Wate Project is near the stage of
mining considerations, as resources are defined; however, drilling confirmation
of additional historical drillholes will provide greater confidence in the
current resource. SRK understands that Energy Fuels and venture partner U1 may
seek to complete additional confirmation drilling. The Wate Pipe could advance
rapidly from resource estimate to underground exploration and development
planning within a six-to-twelve month period without further confirmation
drilling.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
vi |
Metallurgy and Processing
This Project has had no mineral
processing or metallurgical testing done, however core samples have been
assembled by VANE for this purpose. Historical mining of this deposit type in
Arizona developed ores processed by conventional uranium milling technology.
Historically, ore was shipped to a mill in Tuba City, AZ, and in the 1980s,
uranium ores were shipped to the White Mesa mill in Blanding, Utah. The
Shootaring Mill, located in southeastern Utah and owned by Uranium One, was
constructed in the 1980s and operated on a test basis. The White Mesa mill,
owned and opearated by Energy Fuels is in operation. It is anticipated that
future production from the Wate Pipe would be processed at Energy Fuels White
Mesa mill in Utah; a distance by road for truck-hauling of approximately 390
miles.
Milled uranium ore is processed by
either acid or alkaline solutions, and uranium is precipitated by either
ion-exchange or solvent extraction industry standard processes. The product,
commonly ammonium diuranate, is called yellowcake because of its color
(Cooper, 1986).
Infrastructure
The portion of the Colorado Plateau
south of the Grand Canyon has excellent infrastructure (roads and power) and an
established diverse mining industry with a history of past uranium production.
Environmental/Permitting
SRK is unaware of any environmental
liabilities for the Project with respect to additional exploration drilling at
the Wate Pipe. The author is not a Qualified Person with respect to
environmental issues. However, a brief site visit indicated there was little
disturbance to the ground by previous drilling. Drillholes from the 1980s were
only discovered because the capped drill casing extended above the soil by at
least 6 inches; in other cases, there was no surface sign of drillholes other
than scattered drill cuttings. The footprint of the breccia pipe exploration
targets and historical mines are quite small, easily being located on about 25
acres. Permitting at this stage of the Project is handled as Plans of Operations
through the Arizona State Land Department.
U1 initiated, and VANE completed a
Mineral Development Report (MDR) for submission to the Arizona State Land
Department. The MDR addresses, at scoping level of study, the mining processing
and eventual closure and reclamation of the Project, for the purpose of
obtaining a mining lease with an established production royalty rate payable to
the state of Arizona. The MDR is reportedly in the final stages of approval
(pers. Comm. K. Hefton, 2015) by the Arizona State Land Department. Approval of
the MDR will allow for commercial mining, subject to obtaining requires
environmental permits.
Conclusions and Recommendations
The VANE-U1 joint ventures exploration
expenditures from November 2008 to the completion of drilling (March 2011) on
the Project is approximately US$1,364,000; primarily for drilling.
The Project represents an attractive
advanced-stage exploration property with current estimated resources established
of over 1.0 million pounds eU3O8, and the potential to
increase the total resource tons and contained pounds with additional
confirmation drilling. Energy Fuels considers the mineral resources at the Wate
Pipe to be sufficiently as a minimum threshold for a decision to proceed
underground to allow for detailed drill definition of the resources.
The Project has all the inherent
opportunity and/or risk associated with a resource stage property, including
quantity and quality of the resource database, commodity price fluctuations,
defining metallurgical characteristics, and addressing permitting and potential
mining options.
SRK recommends an additional drilling
program to advance the Project to a point of maximum resource definition, and
the potential for project development. This can best be accomplished by
additional drilling from an exploration shaft rather than by drilling from
surface.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
vii |
Prior to committing to an exploration
shaft, SRK recommends a scoping level study and preliminary economic assessment
to determine the potential economic viability of the project and the break-even
resource to justify a decision to go underground.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
viii |
Table of Contents
|
Summary
(Item 1) |
ii |
|
|
|
1 |
Introduction (Item 2) |
1 |
|
|
|
|
1.1 |
Terms of Reference
and Purpose of the Report |
1 |
|
|
1.1.1 |
Sources of Information |
1 |
|
|
1.1.2 |
Terms of Reference |
1 |
|
|
1.1.3 |
Definitions of Terms |
2 |
|
|
1.1.4 |
Purpose of Report |
2 |
|
|
1.1.5 |
Conclusions and Recommendations |
2 |
|
1.2 |
Sources of
Information |
2 |
|
1.3 |
Mineral Resources
Statements |
2 |
|
1.4 |
Qualifications of
Consultants (SRK) and Site Visit |
2 |
|
1.5 |
Effective Date |
3 |
|
|
|
|
2 |
Reliance on Other
Experts (Item 3) |
4 |
|
|
|
3 |
Property Location
and Description (Item 4) |
5 |
|
|
|
|
3.1 |
Property Location |
5 |
|
3.2 |
Mineral Titles |
5 |
|
|
3.2.1 |
Mineral Rights in Arizona |
5 |
|
|
3.2.2 |
Requirements to Maintain the
Claims in Good Standings |
5 |
|
|
3.2.3 |
Mining Venture Agreement |
6 |
|
|
3.2.4 |
Exceptions to Title Option |
6 |
|
3.3 |
Royalty Agreements
and Encumbrance |
6 |
|
|
3.3.1 |
Required Permits and Status |
7 |
|
3.4 |
Environmental
Liabilities |
7 |
|
|
|
|
4 |
Accessibility,
Climate, Local Resources, Infrastructure and Physiography (Item 5)10 |
|
|
|
4.1 |
Access to Properties |
10 |
|
4.2 |
Climate |
10 |
|
|
4.2.1 |
Vegetation |
10 |
|
4.3 |
Physiography |
10 |
|
4.4 |
Local Resources and
Infrastructure |
11 |
|
|
4.4.1 |
Access Road |
11 |
|
|
4.4.2 |
Water Supply |
11 |
|
|
4.4.3 |
Electrical Power Supply |
11 |
|
|
4.4.4 |
Buildings and Ancillary
Facilities |
11 |
|
|
4.4.5 |
Population |
11 |
|
|
4.4.6 |
Economy |
11 |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
ix |
|
|
4.4.7 |
Local Resources |
12 |
|
|
4.4.8 |
Regional Infrastructure |
12 |
|
|
|
|
|
5 |
History (Item 6) |
14 |
|
|
|
|
5.1 |
Ownership |
14 |
|
|
5.1.1 |
Wate Pipe |
14 |
|
|
5.1.2 |
Project Expenditures |
15 |
|
5.2 |
Historic Mineral
Resource Estimates |
15 |
|
|
|
|
6 |
Geologic Setting
(Item 7) |
18 |
|
|
|
|
6.1 |
Regional Geology |
18 |
|
|
6.1.1 |
Geology of Breccia Pipes |
18 |
|
|
6.1.2 |
Other Productive Uranium
Breccia Pipes in the Region |
20 |
|
6.2 |
Local Geology |
21 |
|
|
6.2.1 |
Local Lithology |
21 |
|
|
6.2.2 |
Alterations |
23 |
|
|
6.2.3 |
Structure |
23 |
|
|
6.2.4 |
Mineralization |
23 |
|
|
|
|
|
7 |
Deposit Types (Item 8) |
28 |
|
|
|
8 |
Exploration (Item 9) |
29 |
|
|
|
|
8.1 |
Wate Pipe VANE Exploration |
29 |
|
8.2 |
Geophysical Surveys |
29 |
|
8.3 |
Summary |
30 |
|
|
|
|
9 |
Drilling (Item 10) |
33 |
|
|
|
|
9.1 |
Drill Results from Wate Pipe |
34 |
|
9.2 |
Planned Drilling |
35 |
|
9.3 |
Recommendations |
35 |
|
|
|
|
10 |
Sampling Preparation, Analysis and
Security (Item 11) |
39 |
|
|
|
|
10.1 |
RC/Rotary/ Spot Core Drilling |
39 |
|
10.2 |
Wireline Diamond Core
Drilling |
39 |
|
10.3 |
Gamma Logging |
39 |
|
10.4 |
Analytical Procedures |
40 |
|
10.5 |
Sample Preparation and Assaying |
40 |
|
10.6 |
Quality Controls and
Quality Assurance |
40 |
|
10.7 |
Sample Security |
40 |
|
10.8 |
Analytical Laboratory
Certification |
41 |
|
10.9 |
Radiometric Analyses |
41 |
|
|
|
|
11 |
Data Verification (Item 12) |
44 |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
x |
12 |
Mineral
Processing and Metallurgical Testing (Item 13) |
46 |
|
|
|
13 |
Mineral
Resource Estimate (Item 14) |
47 |
|
|
|
|
13.1 |
Drillhole Database |
47 |
|
13.2 |
Assay Data Population Domain
Analysis |
52 |
|
13.3 |
Mineralization
Envelopes |
54 |
|
13.4 |
Composition |
59 |
|
13.5 |
Specific Gravity
Measurements (Bulk Density) |
59 |
|
13.6 |
Block Models |
59 |
|
13.7 |
Mineralization Zones |
59 |
|
13.8 |
Dynamic Anisotropy and Search
Orientation |
60 |
|
13.9 |
Mineralization
Indicator Assignment, Zones 2-4 |
61 |
|
13.10 |
Domain Assignment, Zone
1 |
61 |
|
13.11 |
Grade
Estimation and Resource Classification Criteria |
64 |
|
13.12 |
Block Model Validation
& Mineral Resource Sensitivity |
69 |
|
13.13 |
Resource Statement |
69 |
|
13.14 |
Sensitivity of the
Resource Model |
70 |
|
13.15 |
Conclusions and Recommendations |
70 |
|
|
|
14 |
Items 15 through
22) |
69 |
|
|
|
15 |
Adjacent
Properties (Item 23) |
70 |
|
|
|
16 |
Other Relevant
Data and Information (Item 24) |
71 |
|
|
|
17 |
Interpretation and
Conclusion (Item 25) |
73 |
|
|
|
|
17.1 |
Categories of
Opportunity and Risk |
73 |
|
|
17.1.1 |
Resources |
73 |
|
|
17.1.2 |
Commodity Price
Fluctuation |
73 |
|
|
17.1.3 |
Infrastructure |
73 |
|
|
17.1.4 |
Development
Decision |
73 |
|
|
17.1.5 |
Metallurgical
Characteristics |
74 |
|
|
17.1.6 |
Environmental/Socio-Economic Considerations |
74 |
|
|
|
|
18 |
Recommendations
(Item 26) |
75 |
|
|
|
|
18.1 |
Proposed Scoping
Study Phase I |
75 |
|
18.2 |
Phase II |
75 |
|
|
|
|
19 |
References (Item 27) |
77 |
|
|
|
20 |
Glossary (Item 27) |
79 |
|
|
|
|
List of Abbreviations |
80 |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
xi |
List of Tables
Table 1-1: |
Significant Drill intercepts for the
Wate Pipe at 0.15% eU3O8 cutoff |
iii |
Table 1-2: |
Current Inferred Resources for the Wate
Pipe at 0.15% eU3O8 cutoff |
v |
Table 4-1: |
Physiography of Wate Pipe Area |
11 |
Table 5-1: |
May 2010 Inferred Resources for the Wate Pipe
at 0.15% eU3O8 cutoff |
16 |
Table 5-2: |
May 2010 Inferred Resources for the Wate Pipe
at 0.15% eU3O8 cutoff |
16 |
Table 9-1: |
Summary of VANE Drilling Wate Breccia Pipe |
34 |
Table 9-2: |
Summary of VANE Drilling (including washouts of
historical holes) |
35 |
Table 11-1: |
Comparison of Historical and VANE re-logs for
WT-5 and WT-7 |
45 |
Table 13-1: |
Selected Historical Drillhole Intercepts Wate
Pipe |
50 |
Table 3-2: |
Drillhole Database Statistics VANE Drillholes
(SRK, April 2011) |
51 |
Table 13-3: |
Wate Pipe Zone 1 Grade Population Cutoff
Thresholds |
54 |
Table 13-4: |
Zone 1 Composite Summary Statistics |
59 |
Table 13-5: |
Wate Pipe Model Limits |
59 |
Table 13-6: |
Estimation Parameters (Domain 0) |
64 |
Table 13-7: |
Estimation Parameters (Domain 1) |
66 |
Table 13-8: |
Contiguous 0.5ft Higher-Grade intercepts WT-05
& WT-29A |
69 |
Table 13-9: |
Inferred Resource by Zone & Total |
69 |
List of Figures
Figure 3-1: |
Energy Fuels Uranium Breccia Pipe
Project Location Map |
8 |
Figure 3-2: |
Location of Wate Pipe. Section 32, T31N
R5W (SRK 2010) |
9 |
Figure 4-1: |
Regional Access Roads and Surface Land
Ownership in Vicinity of the Wate Pipe |
13 |
Figure 5-1: |
Plan Map and Drillhole traces of Historic
Drillholes at the Wate Breccia Pipe (2008) |
17 |
Figure 6-1: |
Geologic Map of Arizona |
25 |
Figure 6-2: |
Stratigraphic Position of Ore in Uranium
Breccia Pipes |
26 |
Figure 6-3: |
Characteristics of Uranium Breccia Pipes,
Northern Arizona |
27 |
Figure 8-1: |
Wate Pipe Looking Southwest (January 2009) |
31 |
Figure 8-2: |
Typical Breccia Pipe Surface Expression -
Miller Pipe Looking Southwest |
32 |
Figure 9-1: |
Locations of VANE and Historic Drillholes at
the Wate Breccia Pipe |
37 |
Figure 9-2: |
Sketch Cross Section Wate Pipe Historical
Drillholes |
38 |
Figure 10-1: |
Example Gamma Log -- Half-Amplitude Method |
43 |
Figure 13-1: |
Cross Section of Historical and
VANE drillholes (SRK 2011 |
48 |
Figure 13-2: |
Cross Section of Historical and
VANE drillholes (SRK 2011) |
49 |
Figure 13-3: |
Wate Pipe Cumulative Relative
Frequency Distribution (SRK 2011) |
52 |
Figure 13-4: |
Cross-Section of Mineralized
Drillholes and 2-D strings (SRK 2010) |
55 |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
xii |
Figure 13-5: |
Oblique View of 2010 Mineralized Shape (SRK
2010) |
56 |
Figure 13-6: |
Oblique View of 2010 Mineralized Shape (SRK
2010) |
57 |
Figure 13-7: |
Plan View delineation (SRK 2011) |
57 |
Figure 13-8: |
Zone 1 Grade shell (SRK 2011) |
58 |
Figure 13-9: |
Wate Breccia Pipe and Mineralized Zones (SRK
2011) |
60 |
Figure 13-10: |
Wate Pipe Mineralized Zone 1 and Anisotropy
Points (SRK 2011) |
61 |
Figure 13-11: |
Wate Pipe and Domains 1(Red) 0 (Green) (SRK
2011) |
63 |
Figure 13-12: |
Wate Pipe Anisotropy Points and Domain 1 (SRK
2011) |
64 |
Figure 13-13: |
Wate Pipe Estimated Blocks and Anisotropy
Points (SRK 2011) |
67 |
Figure 13-14: |
Wate Pipe Estimated Blocks and Domain 1 Shell
(SRK 2011) |
68 |
Figure 13-15: |
Wate Pipe Estimated Blocks, Drillholes WT-05
& WT-29A (SRK 2011) |
68 |
Appendices
Appendix A: Author Certificates
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
1 |
1 |
Introduction (Item 2) |
|
|
1.1 |
Terms of Reference and Purpose of the
Report |
|
|
1.1.1 |
Sources of Information |
In 2007, VANE entered into a Letter of
Intent with Uranium One Exploration U.S.A. Inc. (U1), and subsequently signed a
Mining Venture Agreement (the Agreement or the JV) with U1 effective September
01, 2008, covering approximately 30 breccia pipe targets controlled by U1. The
JV subsequently acquired 16 breccia pipe properties from Neutron Energy Inc.
through an agreement signed June 3, 2009. The collective properties are either
drill discovery stage projects with known mineralized intercepts, or are
prospects not yet evaluated by drilling that exhibit surface features similar to
known breccia pipes. One property in the portfolio, the Wate Pipe, has current
mineral resources. The Wate Pipe, upon completion of current resource estimation
in 2011, was spun off into Wate Mining LLC (the LLC), a joint operating
company for which initially U1 was Manager, and subsequently VANE became
Manager. In February 2015, VANE sold its 50% Interest in the LLC to Energy
Fuels.
The Arizona Uranium Breccia Pipe
District is located in northern Arizona on extensive, nearly flat plateaus
dissected by canyons. The breccia pipes are nearly cylindrical collapse features
up to 300 ft. in diameter or greater, and as much as 3,000 ft in vertical
extent. Past producing mines in the region contained the highest-grade uranium
deposits in the U.S. The uranium is concentrated in ring dikes, fractures, and
coatings on the pipe infill breccia material, which consists of fragments of
Mississippian through Triassic sedimentary rock formations.
This report is prepared for Energy
Fuels, and includes discussion of the change of owners, and work completed on
the project since resource were reported in a NI-43-101 technical report for
VANE and U1 in May 2011.The report includes discussion of VANEs exploration
information gathered since the formation of the JV in September 2008, including
information on the Project acquired through the Agreement with U1, and
presentation of the current mineral resource estimate for the Wate Pipe, dated
2011. This Technical Report uses currently available project information, as of
the effective date this report. This report has been prepared at the request of
Energy Fuels Resources (US) Inc., with offices at 225 Union Blvd., Suite 600,
Lakewood, CO, 80228. Energy Fuels is listed on the NYSE MKT under the symbol
UUUU, and on the Toronto Stock Exchange under the symbol EFR (web site:
www.energyfuels.com). This report is prepared for the benefit of Energy
Fuels.
VANE initially commissioned SRK
Consulting (U.S.), Inc. (SRK) in January 2010 to prepare a report compliant with
the Canadian National Instrument 43-101 (NI 43-101) requirements on the Wate
Uranium Breccia Pipe. The report titled NI 43-101 Technical Report on
Resources, Wate Uranium Breccia Pipe and dated May 19, 2010, describes the
initial resource estimate. That report was updated on November 04, 2010 with
additional drillhole information, and again in 2011 with information from the
most current drilling, VANE drillhole WT-42, as of March 22, 2011. This
technical report on mineral resources is prepared according to NI 43-101
guidelines for the benefit of Energy Fuels, based on the current mineral
resources (2011). NI 43-101 regulations, as revised in 2011, have been used as
the format for this report.
This report is prepared using the
industry accepted CIM Best Practices and Reporting Guidelines for
disclosing mineral exploration information, and the Canadian Securities
Administrators revised regulations in NI 43-101 (Standards of Disclosure For
Mineral Projects), and Companion Policy 43-101CP. This report on resources
is compliant with CIM Standards on Mineral Resources and Reserves:
Definitions and Guidelines (November 2010).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
2 |
1.1.3 |
Definitions of Terms |
This report generally uses American
units of measure, as these are the commonly used units of measure in the United
States. Analytical results are reported as parts per million (ppm) contained for
uranium (the element U, often analyzed for and expressed as
U3O8). This report will state uranium determinations by
the equivalent of chemical analyses as percent (%) U3O8.
This report will state uranium determinations by conversion of radiometric probe
measurements (gamma logs) as percent (%) eU3O8 (e for
equivalent). Uranium and some elements may be reported as percent (%), and trace
elements are commonly reported in parts per million (ppm).
Tables and Figures are numbered
consecutively and referenced in the major sections of the report.
Market prices are reported in US$ per
pound of U3O8. Tons are short tons of 2,000 lbs.
Energy Fuels Wate Uranium Breccia Pipe
(the Project) is here referring to the U1 held property contributed to the
Mining Venture Agreement dated September 01, 2008 (the Agreement or the JV
with VANE Minerals (US) LLC), and subsequently transferred to the Operating
Agreement for Wate Mining Company LLC, dated February 23, 2011.
The purpose of this report is to
provide the reader with a review of the exploration activities conducted on the
Wate Uranium Breccia Pipe, a discussion of the geology of the exploration
targets, known deposits and the deposit model, a discussion of historical and
current exploration results, and presentation of current mineral resource
estimates for the Wate Pipe.
1.1.5 |
Conclusions and
Recommendations |
SRK concurs that the geological
evidence, historical exploration, evidence of uranium mineralization, and VANEs
exploration results from 2009 through 2011 support the Project as a viable
exploration program for breccia pipe-hosted uranium mineralization, and support
the resources stated for the Wate Pipe. SRK recommends that Energy Fuels
continue confirmation drilling on the Wate Pipe with the goal of further
defining the uranium resources, preferably through underground exploration and
fan drilling from an exploration shaft.
1.2 |
Sources of Information |
The authors reviewed data provided by
VANE and from publicly available sources, and conducted field investigations to
confirm the data. Those data sources include hard copy data and files and
digital files located in the offices of VANE in Tucson, Arizona. VANEs
geologist and Chief Operating Officer, Kris Hefton, facilitated the data review
and onsite investigations, and provided historical and Project information. The
Atomic Energy Commission and the U.S. Geological Survey generated publicly
available data on the district. Private exploration data for the Project was
derived from the exploration activities of prior historical mining and
exploration companies.
1.3 |
Mineral Resources
Statements |
Mineral resources, as estimated by SRK
for the Wate Pipe, are stated in Section 16 of this report.
1.4 |
Qualifications of Consultants (SRK) and Site
Visit |
Allan V. Moran, R.G., C.P.G.
Allan Moran conducted a site review of the Project on January
07, 2009; and conducted a review of data and maps in the offices of VANE Tucson,
Arizona, on December 10, 2008 and reviewed additional information in August of
2010, in January and February of 2011, and in March of 2015. Mr. Moran is a Qualified Person as
defined by NI 43-101, is the primary author, and is the Qualified Person
responsible for all sections of this report.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
3 |
Frank A. Daviess, MAusIMM., Resource
Geologist
Frank Daviess is a Qualified Person
as defined by NI 43-101, and is the Qualified Person responsible for the
resources reported for the Wate Pipe in Section 16 of this report. He has not
visited the Wate Pipe.
The effective date of this report,
March 22, 2011, is the date SRK received the most current drillhole database
information for the Wate Uranium Breccia Pipe, through VANEs drillhole WT-42.
There has been no additional drilling since 2011. The updated resource
estimation presented in this report is based on data received as of that date.
All other information is current as of the report date of March 10, 2015.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
4 |
2 |
Reliance on Other Experts (Item
3) |
The author, as a Qualified Person, has
relied upon VANE for the basic data that supports the Project exploration
results. SRK has examined the project data and in the opinion of the authors,
that information is both credible and verifiable in the field. It is also the
opinion of the author that no material information relative to the Project has
been purposely neglected or omitted from the database. Sufficient information is
available to prepare this report, and any statements in this report related to
deficiency of information are directed at historical information that is missing
or information which, in the opinion of the authors, has not yet been gathered,
is intended to be gathered, or is recommended information to be collected as the
project moves forward.
The Authors have relied on the work of
others (VANE) to describe the land tenure and land title in Arizona (Section 3.2 Mineral Titles); and the data appear
credible. The author is not qualified with respect to environmental laws in
Arizona, as regarding issues addressed in Section 3.4 of this report Environmental Liabilities; however, the
environmental issues noted are considered minimal.
This report includes technical
information, which requires subsequent calculations to derive subtotals, totals,
and weighted averages. Such calculations inherently involve a degree of rounding
and consequently can introduce a margin of error. Where these rounding errors
occur, SRK does not consider them material.
The authors statements and conclusions
in this report are based upon the information at the time of the property
visits, and the exploration database as of the effective date of this report.
Surface exploration has ceased as of the date of this report while the next
phase of the Project is determined. It is to be expected that new data and
exploration results may change some interpretations, conclusions, and
recommendations going forward.
The author and SRK are not insiders,
associates, or affiliates of Energy Fuels, VANE or its parent company, or of U1.
The results of this Technical Report are not dependent upon any prior agreements
concerning the conclusions to be reached, nor are there any undisclosed
understandings concerning any future business dealings between Energy Fuels,
VANE, U1, and the authors or SRK. SRK will be paid a fee for its work in
accordance with normal professional consulting practice.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
5 |
3 |
Property Location and Description (Item
4) |
The Wate Project is located in the
northwestern part of Arizona in the Colorado Plateau physiographic province. The
breccia pipe uranium district of northern Arizona produced approximately 23 Mlbs
of U3O8 prior to the decline of uranium prices in the
mid-1980s. Existing resources of about 13 Mlbs of U3O8
have been reported to be contained in several breccia pipes, and the rise
in uranium prices since 2005 has spurred exploration activity and plans by some
companies to reactivate existing mines. Most breccia pipe deposits are small to
intermediate in size (1 to 6 million contained pounds
U3O8).
The Wate Pipe has uranium
mineralization verified by VANE drilling, and a historically determined
potential of 1.1 to 2.4 million contained pounds eU3O8.
Current Inferred resources for the Wate Pipe stand at 71,000 tons grading 0.79%
eU3O8, for 1,118,000 contained in-situ pounds
U3O8. The Wate Pipe is similar to breccia pipes that have
been historically mined.
The Wate Pipe is located on 160 acres
in a single square parcel, which is the subject of a Mineral Lease application,
described as the S ½ of the NE ¼ and the N ½ of the SE ¼ of Section 32, Township
31 North, Range 5 West. All of Section 32 is State of Arizona land; surface and
mineral ownership, held by Energy Fuels under Prospecting Permit until approval
of the Mineral Lease is finalized.
The Wate Uranium Breccia Pipe is shown
with respect to other uranium breccia pipe occurrences in the Colorado Plateau
of Arizona in Figure 3-1.
The Wate Pipe is located approximately
5 mi NW of Indian Route 18 (to Hualapai Hilltop), which runs NE from Route 66
approximately 5 miles west from Grand Canyon Caverns. The Wate Pipe is located
on State Land and is located approximately 9 mi south of the Grand Canyon
National Park boundary. The Wate Pipe is held by VANE under Arizona State Land
Exploration Permit No. 08-113503, renewed July 9, 2010), and is part of the
Agreement between VANE and U1, now U1 and Energy Fuels. The Wate Pipe is located
in the southeast quarter of Section 32, T31N, R5W (Figure 3-2. The former owner
(Rocky Mountain Energy) completed a minimum of 23 historical drillholes at Wate.
They encountered significant uranium mineralization from 1,300 to 1,600 feet in
depth in 17 of the 23 drillholes, with a reported average grade to the
mineralization of +0.80% eU3O8.
Information relating to the exploration
permit on State Land is on file with the Arizona State Land Department.
3.2.1 |
Mineral Rights in Arizona |
State Mineral Exploration Permits are
issued by the Arizona State Land Department, 1616 W. Adams Street, Phoenix,
Arizona, 85007, USA, and use the specified ¼ ¼ ¼ Section
designator for township/range/section system that conforms to the original
General Land Office cadastral survey in use in the western states since the late
1800s.
SRK did not verify land ownership, but
did examine evidence of the Arizona State Mineral Exploration Permit; and, SRK
did verify the project lands as Arizona State lands.
A 2012 U.S. Department of Interior
Record of Decision to withdraw approximately 1 million acres of U.S. Forest
Service lands around the Grand Canyon National Park from mineral exploration and
development activity, as further describes in Section 17 of this report, does
not affect private or Arizona State Lands, including the Wate Pipe.
3.2.2 |
Requirements to Maintain the Claims in Good
Standings |
State Mineral Exploration Permits have
a life of 5 years and require annual combined payments and expenditures of $11
per acre for years 1 and 2, $21 per acre for years 3 and 4, and require
conversion to a Mineral Lease prior to development. The Mineral Exploration
Permit is in the process of being converted to a Mineral Lease.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
6 |
3.2.3 |
Mining Venture Agreement |
A Mining Venture Agreement between VANE
Minerals (US) LLC and Uranium One Exploration U.S.A. Inc. (U1) dated September
01, 2008 (Agreement or the JV) applies to the Wate Uranium Breccia Pipe
property position. The Agreement between VANE and U1 (now Energy Fuels and U1)
has the following general provisions:
|
|
Each party to the Agreement has a vested 50% interest; |
|
|
VANE shall be the Manager of the project operations and
shall have a 51% vote on the Management Committee during Exploration
Evaluations; |
|
|
At such time as the Manager or the Management Committee
determine or recommend that a property or target undertake a
Prefeasibility Evaluation or a Production Feasibility Study, the property
shall be conveyed into a Target LLC (limited liability company) that will
function independently from the Agreement; |
|
|
U1 shall be the Manager of the Project operations and
shall have a 51% vote on the Management Committee relating to
Prefeasibility Evaluations, Productions Feasibility Studies, all mining
and milling operations, and all feasibility, development, and mining
conducted after formation of a Target LLC; |
|
|
The Term of the Agreement is until December 31, 2012
unless sooner terminated or the parties mutually agree to an extension; |
|
|
There is an Area of Interest that encompasses all the
existing properties, and allows for inclusion of additional properties at
each participants percentage interest; |
|
|
There are provisions for annual Work Plans and Budgets to
be determined by the Management Committee; |
|
|
Expenditures will be shared according to the
participants ongoing interest in the Agreement, beginning at 50% each;
with allowance for dilution; and |
|
|
The Agreement includes the form and general content of a
Target LLC agreement, including accounting principles, calculation of
royalty interest, and transfers of interest. The Wate Mining Company LLC
has been organized and registered with the Arizona Corporation Commission. |
The Agreement does not include VANE or
U1 properties on the north rim of the Grand Canyon.
On February 23, 2011, VANE
and U1 signed the Operating Agreement for Wate Mining Company LLC (the Operating
Agreement), which segregated the Wate Pipe from the exploration JV. Initially U1
was the Manager of the Operating Agreement.
On April 15, 2011, Uranium One
Exploration U.S.A. Inc. was merged into Uranium One Americas, Inc. (U1).
On May 25, 2012, VANE became Manager of
the Operating Agreement.
On February 17, 2015, Energy Fuels
announced in a press release (Energy Fuels In, Feb. 2015) the purchase of VANEs
rights and interests in the Operating Agreement, through its wholly-owned
subsidiary EFR Arizona Strip LLC, and assumed VANEs position as Manager of the
Operating Agreement.
3.2.4 |
Exceptions to Title Option |
There are no known exceptions to title
known to the authors, or identified by Energy Fuels for the Wate Uranium Breccia
Pipe.
3.3 |
Royalty Agreements and
Encumbrance |
Application for conversion to a Mineral
Lease has been completed. When converted to a state mining lease (Mineral
Lease), a royalty is assigned by the State of Arizona Energy Fuels has no
State Mineral Lease for the Project presently. The assigned royalty is based on
a valuation of the proposed mining project.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
7 |
To convert a State Mineral Prospecting
Permit to a Mineral Lease, requires the submission of a Mineral Development
Report (MDR) to the Arizona State Land Department. Work toward that end was the
only significant work conducted on the Project since the mineral resources were
estimated in 2011. Initiated by U1, and subsequently completed and filed with
the Arizona State Land Department by VANE, the MDR is a comprehensive report
that examines the potential for economic development, in order for the State to
issue a Mineral Lease and assign a royalty rate.
The MDR was filed on November 19, 2012,
and following public comment was revised on October 27, 20014. The process to
convert to a Mineral Lease is well advanced, and in the final stages of State
approval (pers. Comm., K.Hefton, 2015).
3.3.1 |
Required Permits and
Status |
The state lands are covered by Arizona
State Mineral Exploration Permits, which are administered by the Arizona State
Land Department, and allow for exploration drilling once a Plan of Operations
detailing the drilling program and including an archaeological and plant report,
is submitted and approved.
Permits to conduct drilling on all
lands in Arizona are further administered by the Arizona Department of Water
Resources (ADWR). For exploration drilling, ADWR requires a Notice of Intent to
Drill and Abandon an Exploratory/Specialty Well be filed with the ADWR. No other
permits are required for exploration drilling.
Upon approval of a Mineral Lease,
Energy Fuels will have State approval to mine, subject to receipt of operational
Air Quality and Aquafer Protection Permits.
3.4 |
Environmental Liabilities |
SRK is unaware of any environmental
liabilities for the Project, and no potential liabilities that would affect
additional exploration drilling. Existing environmental liabilities are not
described in any of the project files. The author is not a Qualified Person with
respect to environmental issues. However, a brief site visit indicates there was
little disturbance to the native ground by previous drilling. Drillholes from
the 1980s were only discovered because, in some cases, the drill collar extended
above the soil by at least 6 inches. The previous owner reclaimed all drill
sites and many of the historical drillhole collars for the Wate Pipe have not
been located.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
8 |
Figure 3-1: Energy Fuels Uranium Breccia Pipe Project
Location Map
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
9 |
Figure 3-2: Location of Wate Pipe. Section 32, T31N R5W (SRK
2010)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
10 |
4 |
Accessibility, Climate, Local Resources,
Infrastructure and Physiography (Item 5) |
The Arizona Breccia Pipe District is
located on the Colorado Plateau physiographic province. The portion of the
Arizona Breccia Pipe District south of the Grand Canyon has excellent
infrastructure including road networks, rail access, power, and proximity to
population centers such as Flagstaff and Kingman for staging, services, and
labor. An established diverse mining industry with a history of past production
for uranium has been active in the Arizona Breccia Pipe District. Several
uranium breccia pipe projects are being considered for development or
re-activation. Energy Fuels currently mines uranium ores from the Pinenut mine,
north of the Grand Canyon,; they are trucking ore to their White Mesa Mill near
Blanding, Utah, approximately 310 miles.
Access to the Wate Pipe, as shown on
Figure 3-2, is approximately 70 miles west on US Highway 40 from Flagstaff,
Arizona to Seligman, then approximately 25 miles northwest on US Highway 66 to
the community of Grand Canyon Caverns, continuing 45 miles via paved road Indian
Route 18 northeast from 5 miles west of Grand Canyon Caverns, Arizona, then
approximately 4.5 miles to the northwest on mostly unimproved dirt access roads
to the southeast quarter of Section 32, T31N, R5W. Access is available
year-round; a site visit was conducted in January 2009.
The regional climate is semiarid, with
hot, relatively dry summers and cold winters. According to the Western Regional
Climate Center (www.wrcc@dri.edu), the average annual precipitation at
Flagstaff, Arizona, for 45 years was 22.7 in, with most of the precipitation
occurring as rain during July and August with another minor maximum as snow in
December and January. The average maximum temperature at the Flagstaff station
during the winter months was between 42 and 49F and during the summer months was
between 78 and 82F. The average minimum temperature at the Flagstaff station
during the winter months was between 15 and 22F and during the summer months was
between 41 and 51F
(www.climate-zone/climate/united-states/arizona/flagstaff/). Flagstaff is
approximately 100 miles in a straight-line distance southeast of the Wate
Uranium Breccia Pipe, and at a slightly higher elevation.
Range grasses and sagebrush cover the
flat areas near the Wate Pipe. There are only limited commercial woodlands in
the Kaibab National Forest, and none near the Wate Pipe.
The physiography of the Project area is
characterized by a relatively flat plateau that is part of the Grand Canyon
subsection of the Colorado Plateau physiographic province. The topography is
determined by the resistance to erosion of the Kaibab Limestone of Permian age;
therefore, the Kaibab limestone is the dominant lithology in outcrop in the
area. When streams cut through the plateau cap rock, canyons are developed as
the ephemeral streams cut down into the less resistant underlying formations.
The area is drained through north- and northwestward-flowing creeks, such as
Cataract Creek in Cataract Canyon, which flow down the dip-slope of the strata
into the Colorado River and the Grand Canyon to the north of the Project area.
Surface water is scarce and ground
water supplies are deep and limited. Summer rainstorms cause flash flooding in
some of the areas. Few lakes or reservoirs are present. Grazing for sheep and
cattle is the major land use, and the major support to the economy is tourism to
the Grand Canyon, which is nearby. The Wate Uranium Breccia Pipe is on Arizona
State lands outside the Grand Canyon National Park.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
11 |
Total relief of the Project topographic
map quadrangle is approximately 200 ft. Altitudes range from 5,900 to 6,100 ft
amsl.
Table 4-1: Physiography of Wate Pipe
Area
Exploration Target |
1:24,000 Scale
Quadrangle Name |
Latitude of SE
Corner |
Longitude of SE
Corner |
Approximate Highest
Elevation (ft) |
Approximate Lowest
Elevation (ft) |
Approximate Amount
of Relief (ft) |
Wate Pipe |
Higgins Tank |
3600N |
11245W |
6,100 |
5,900 |
200 |
4.4 |
Local Resources and
Infrastructure |
Grand Canyon Caverns is a very small
community of several families located on U.S. Highway 66, and is a local tourist
stop en-route to the Hualapai Reservation, and is the nearest seasonal community
to the Wate Pipe. Peach Springs, the largest town of the Hualapai Tribe, is
located 6 miles west on U.S. Highway 66 from the Route 18 turn-off to the Wate
Pipe
The access from Interstate 40 and
Flagstaff gives way to two-lane paved Highway 66 and Indian Route 18 to within
five miles of the Project, and then on maintained, graded gravel roads that are
part of the public access for the region of local ranches (Figure 4-1).
There is currently no readily available
water supply for the Project. Nearby ranch wells intersect water at
approximately 2,500 to 3,000 ft below the surface in the Redwall aquifer, as the
mile-deep Grand Canyon nearby is the natural water table in the region. Surface
ponds (tanks) are used to collect surface water run-off for cattle ranching.
Ranches in the area have constructed a network of water pipelines and tanks for
a stable water supply for cattle. Water for drilling is obtained from this
network by agreement with the ranches. Potable water is currently hauled from
local ranches or from the town of Grand Canyon Caverns There are no flowing
surface waters in the immediate area of the Project, as creeks are ephemeral.
Groundwater, while likely to be present in deep drillholes, is not sufficiently
defined as to quantity or quality.
4.4.3 |
Electrical Power Supply |
There is a high-voltage regional
electrical grid in the region, extending across northern Arizona from the
various power plants in the greater region. There is local power to nearby
ranches and rail stations.
4.4.4 |
Buildings and Ancillary
Facilities |
There are no buildings or ancillary
facilities on the Project. Scattered local ranch houses and outbuildings are
present in the general region.
The sparse population in the region is
scattered between a few local ranches and the towns and communities of Peach
Springs, Grand Canyon Caverns, and Seligman.
The economy is heavily dependent on
tourism, as the nearby Grand Canyon is one of the most visited national parks in
the U.S.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
12 |
The population of Coconino County is
approximately 125,000, of which 60,000 live in Flagstaff. With an area of 18,617
mi2 for Coconino County, the population density outside of Flagstaff
is approximately 3.8 people/mi2. Flagstaff and Kingman are the
nearest towns to provide services to support exploration in the region.
4.4.8 |
Regional Infrastructure |
The Grand Canyon rail system from
Williams to Grand Canyon Village is nearby, with a crossroads at Anita Station;
however, it is primarily a tourist attraction. There is a major east-west
railroad accessible in Flagstaff that is sub-parallel to US Highways 40 and 66.
Power for the project would be tied
into the existing national power grid.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
13 |
Figure 4-1: Regional
Access Roads and Surface Land
Ownership in Vicinity of the Wate Pipe
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
14 |
Breccia pipes are the highest-grade
uranium deposit types in the United States, with average grades of 0.5 to
1.0% U3O8 and with total production from 1 million to
more than 6 Mlbs of U3O8. The breccia pipe district of
northern Arizona produced approximately 23 Mlbs of U3O8
prior to the decline of uranium prices in the mid 1980s. Individual pipes
have been known to contain more than 6 Mlbs of U3O8
at an average grade of about 1% U3O8. Ore is mined from
open stopes that are usually accessed by vertical shafts or declines. Most
of the uranium ore that was produced from the breccia pipes was trucked from the
mine sites to the White Mesa Mill located in Blanding, Utah. On March 21, 2005,
Denison Mines announced their intention to resume processing at the White Mesa
Mill, now owned by Energy Fuels. There is currently an estimated
combined resource of 13 Mlbs of U3O8 in several
breccia pipes in northern Arizona that are awaiting production decisions. On
June 14, 2006, Denison announced plans to reopen the Arizona 1 breccia pipe mine
north of the Grand Canyon. Production from the Arizona 1 mine commenced in late
2009, with ore being trucked to their White Mesa mill near Blanding, Utah;
Energy Fuels completed mining of the Arizona 1 pipe in 2014, and is currently
mining the Pinenut pipe..
Breccia pipes occupy relatively small
surface areas and in most cases can be covered by one to four 20-acre mining
claims. Thus, land acquisition costs and surface environmental disturbance
related to exploration and mining are minimal.
The most prevalent player in the 1970s
to 1990s uranium exploration and production from the Arizona breccia pipes was
Energy Fuels Nuclear, Inc. (EFNI), which ceased all activity in the region in
the early 1990s, and many of the exploration properties were dropped.
Much of the historical exploration
information generated by EFNI and other companies is not available; however,
some information has been acquired by VANE and/or was available from Arizona
State Land Department files. Rocky Mountain Energy explored the Wate Pipe during
the same period.
Rocky Mountain Energy (RME), a
subsidiary of Union Pacific Railroad, discovered the Wate Breccia Pipe in the
mid 1980s. Twenty-three drillholes to depths up to 2,000 feet were drilled. All
were mineralized, and 17 holes were mineralized with reported ore grades (SRK
notes that the term ore is a historically used term, and is not appropriate at
this stage of the project). RME Partners, L.P. and limited partnership between
RME and Overseas Resource U.S.A., a subsidiary of Taiwan Power Co., a nuclear
utility company, completed most of the work. The work on the Wate pipe
progressed to internal studies on reserve estimation and potential project
development. In 1991, an internal reserve estimate was completed. In 1992, an
internal evaluation was completed by RME Partners in support of their plan to
convert the State Land Mineral Exploration Permit to a Mineral Lease, The
conceptual evaluation examined reserves (resources by current reporting
definitions), a preliminary mine plan, and surface site facilities. In 1998, The
Arizona State Land Department conducted an independent evaluation of the Wate
breccia pipe uranium mineralization and an appraisal of Arizona State Mineral
Lease 11-52290 (lease covering the property at that time). That study was
undertaken in order to provide the State of Arizona with a break-even uranium
price for the projects possible development, a valuation of the lease, and a
market study of similar project royalty rates.
Summary reports of some of the work
programs at the Wate pipe are available, but much of the detailed project
information, including drillhole data, is not yet available to VANE. VANE has
been in contact with Taiwan Power Co., and has ascertained that copies of all
the detailed project data are in their possession; However, VANE has been unable
to secure copies of the information.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
15 |
The Wate Pipe is a nearly vertical
circular to elliptical column of brecciated rock that has a slight plunge to the
north with a diameter of 170 ft at 1,200 ft in depth, narrows to 60 ft in
diameter at 1,600 ft depth, and expands to 160 ft diameter at 1,700 ft depth and
below. The Hermit shale/Esplanade sandstone contact is at about 1,500 ft in
depth, which is approximately the location of the best thickness and grade of
mineralization. Details of the mineralized intercepts for each drillhole are not
available, merely the figures from historical reports. VANE started a program of
re-entering the historical drill holes with rotary and core rigs, cleaning out
the holes to depth, and then re-logging the drillholes for confirmation of hole
deviations indicated on maps and for confirmation of grades. The reported
average grade for uranium mineralization is +0.80%
eU3O8, and VANEs confirmation logging of historical
drillholes has confirmed high grades (see Section Section 9).
5.1.2 |
Project Expenditures |
Total project expenditures by Energy
Fuels Nuclear Inc. and Rocky Mountain Energy Partners LP (RME) for the
exploration properties are unknown. Approximately US$500,000 to $1,000,000 in
historical exploration dollars are estimated to have been spent on the various
properties by EFNI, based on the number and depth of drillholes (±1,500 ft). The
historical expenditures by RME for the U1 breccia pipe properties, in particular
the Wate Pipe, are estimated at +$2,000,000.
5.2 |
Historic Mineral Resource
Estimates |
The Wate Pipe has historically reported
resources/reserves. The details of the methodology used to define the historical
mineral resources/reserves that were estimated by RME Partners LP for the Wate
Pipe have not been reviewed by a Qualified Person or reconciled with CIM
definitions of resource classification, and are therefore not relied upon by
Energy Fuels. However, those historical resource/reserve numbers are relevant
and important to Energy Fuels, and considered material to the project and are
thus presented here as exploration potential to be verified by confirmation
drilling and gamma logging of historical drillhole intercepts.
Based on historical drillhole
intercepts, the Wate Pipe has mineral exploration potential between 70,000
and146,000 tons grading from 0.80% to 0.83% eU3O8,
for 1.1 to 2.4 million contained pounds eU3O8.
Some, but not all, of the details supporting that estimate are documented in a
historical internal document by RME Partners LP. (Anonymous)
In May 2010, SRK, completed a NI 43-101
technical report on resources for the Wate Pipe, for a portion of the
mineralization. That report entitled NI 43-101 technical Report on Resources,
Wate Uranium Breccia Pipe, Northern Arizona, USA, and dated May 19, 2010,
presented the initial resource estimate for the Wate Pipe by current CIM
compliant standards for resource classification and reporting. The Qualified
Persons responsible for that initial resource are the same as the authors of
this report. That initial resource estimate used similar procedures to that
reported in Section 16 of this report,
but with two fewer VANE drillholes and with no information on the grade of
historical intercepts; therefore, was a preliminary estimate of only part of the
historically defined mineralization as determined from VANE information. SRK
reported in May 2010 the resources, stated in Table 5-1 below, as then current
and CIM compliant Inferred mineral resources. It should be noted that the zone
designation in Table 5.1 is not the same as used for current resources stated in
Section 16.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
16 |
Table 5-1: May 2010 Inferred
Resources for the Wate Pipe at 0.15%
eU3O8 cutoff
Wate Breccia Pipe Inferred
Resource, 0.15% eU3O8* cutoff. |
Zone |
eU3O8% |
Tons |
Tons eU3O8 |
Pounds eU3O8 |
1 |
0.38 |
11,000 |
43 |
87,000 |
2 |
0.72 |
4,000 |
28 |
57,000 |
3 |
1.11 |
4,000 |
45 |
89,000 |
4 |
0.95 |
24,000 |
232 |
463,000 |
Total |
0.80 |
44,000 |
348 |
696,000 |
* Note: Inferred Uranium resources
refers to global in-place CIM definitions of resources to which a mine design
has not yet been applied; although the above stated resources meet the
definition of having the potential for economic extraction at the cutoff
provided.
In July and August 2010, VANE acquired
historical reports that provide the mineralized intercept information previously
lacking for most of the historical drillholes. While the back-up gamma and
geological logs were not in VANEs possession, that historical information has
been used by SRK for an updated resource estimate as presented in the updated
technical report dated November 04, 2010 resources stated in Table 5-2 below.
Note that the numbering of the mineralized zones changed from top down to bottom
up; such that the Table 5-2 Zone 1 corresponds to Zone 4 on the initial resource
in Table 5-1.
Table 5-2: May 2010 Inferred
Resources for the Wate Pipe at 0.15%
eU3O8 cutoff
Wate Breccia Pipe Inferred
Resource 0.15% eU3O8 Cutoff* |
Zone |
Cutoff |
U3O8% |
Tons (000) |
Pounds U3O8 |
1 |
0.15 |
0.82 |
45,000 |
739,000 |
2 |
0.15 |
0.61 |
11,000 |
130,000 |
3 |
0.15 |
0.31 |
2,000 |
10,000 |
4 |
0.15 |
0.58 |
1,000 |
7,000 |
Total |
|
0.76 |
58,000 |
886,000 |
* Note: Inferred Uranium resources
refers to global in-place CIM definitions of resources to which a mine design
has not yet been applied; although the above stated resources meet the
definition of having the potential for economic extraction at the cutoff
provided.
SRK is reporting current resources in
Section 16 of this report, which
supersedes the resources stated in Tables 5-1 and 5-2.
The above reported historical resources
for VANE, and the current mineral resources stated in Section 16, were reported
in NI 43-101 technical report format, using CIM compliant resource
classifications; however, it is important to note that VANE is not a Canadian
listed company, so the reports were not filed on SEDAR, but were made public by
VANE on their corporate website.
The current mineral resources reported in Section 16, are
effective as of March 22, 2011, the date of the most current drilling
information for the Project.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
17 |
Figure 5-1: Plan Map and Drillhole traces of Historic
Drillholes at the Wate Breccia Pipe (2008)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
18 |
6 |
Geologic Setting (Item 7) |
A breccia consists of coarse-grained
angular fragments surrounded by finer-grained silt and sand particles and
cemented by calcite or other minerals. A breccia pipe is a vertical cylindrical
shape of broken rock and is usually caused by collapse of overlying rock into a
cave, such as caves in the Redwall Limestone.
The high-grade uranium deposits in
breccia pipes in northern Arizona were deposited in solution-collapse features
that originated in the Mississippian Redwall Limestone and propagated upward
during several periods of karstification. Uranium was deposited during a later
period, with and without other minerals, but commonly with minor amounts of
copper.
The geologic formation present at the
surface across most of the Kaibab Plateau of northern Arizona is the Kaibab
Limestone of Permian age (shown in blue on the Arizona geologic map; Arizona
geology map from Arizona Geological Survey; Kaibab formation shown in Blue (Pm)
(Figure 6-1). The Kaibab is overlain by
a few outlier hills of Triassic-age Moenkopi Formation. The Kaibab plateau is
underlain by a thick sequence of Paleozoic sedimentary rocks that crops out in
the Grand Canyon (Arizona geology map from Arizona Geological Survey; Kaibab
formation shown in Blue (Pm)
(Figure 6-1), which are ultimately
underlain by Precambrian granitic and gneissic rocks in the bottom of the Grand
Canyon. The plateau-forming Kaibab limestone has gentle southerly dips of a few
degrees, other strata have only minor deformation in broad regional folds with
nearly horizontal dips. Nearly all of the breccia pipes have their bases in the
lower part of the Redwall Limestone, approximately 3,000 ft below the Kaibab
plateau. It is unlikely that any breccia pipes will be found where a thick
Redwall Limestone section is absent, since karsting in the Redwall is believed
to cause the overlying brecciation. The Redwall Limestone regionally pinches out
between Holbrook and the Four Corners area, at least 100 mi to the east of the
project area.
Many of the breccia pipes in northern
Arizona are aligned along northwest- and northeast-trending zones (N45W and
N50E) which are likely areas of increased fracture density overlying Precambrian
faults and zones of weakness (Wenrich and Sutphin, 1989). These northwest- and
northeast-trending joints, as well as the ring fracture system surrounding each
breccia pipe, were imposed on the Mississippian Redwall Limestone prior to the
deposition of the overlying Pennsylvanian and Permian Supai Group rocks, and
later propagated upward through these units. The fracture systems apparently
localized groundwater movement during Mississippian time and controlled the
development of the karst and cave systems in the Redwall Limestone. The larger
caves probably coincide with the intersection of the northwest-trending faults
with the northeast-trending fractures, as these intersections would have
localized the groundwater flow. The later north-south fabric observed in the
Permian sandstones does not appear to be related to breccia pipe distribution
(Wenrich and Sutphin, 1989).
6.1.1 |
Geology of Breccia Pipes |
Thousands of breccia pipes occur in
northern Arizona, although it has been estimated that only about 8% are
mineralized and less than 1% contain economic concentrations of uranium (Wenrich
and Sutphin, 1988) [SRK note: This estimate is apparently based solely upon
surface evaluations of mineralization, not on the results of industry drilling
of breccia pipe targets]. Many of these breccia pipes have been dissected by
canyons, such as the Grand Canyon, which provide cross-sectional views to
clarify the stratigraphic relationships (Figure 6-2).
Physical Characteristics
The breccia pipes average approximately
300 ft in diameter and range from 130 ft (40 m) to 650 ft (200 m) in diameter in
the subsurface. Some breccia pipes are as much as 0.5 mi in diameter in surface
expression. Part of the larger footprint of the breccia pipes derives from
dissolution of carbonate cement or gypsum beds in Permian-age Toroweap Formation
and Kaibab Limestone.
The breccia pipes cut vertically through more than 800 ft
of the rock column in various areas north of the Grand Canyon. The total
stratigraphic section affected by breccia pipes throughout the district consists
of the Mississippian Redwall Limestone and Surprise Canyon Formation; the
Pennsylvanian and Permian Supai Group, the Permian Esplanade Sandstone of the
Supai Group, Hermit Shale, Coconino Sandstone, Toroweap Formation, and Kaibab
Limestone; and the Triassic Moenkopi Formation and Chinle Formation (Figure 6-2
and Figure 6-3). The total section affected by the brecciation could total 3,000
vertical feet (900 m).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
19 |
The surface expression of a breccia
pipe is frequently a cone-shaped depression in the Kaibab Limestone surface that
is filled with redbeds of the Moenkopi Formation that have collapsed into the
pipe, leaving a bulls-eye target with red Moenkopi in the center and light
brown Kaibab on the periphery. Moenkopi Formation does not occur in all pipes.
Surface expressions of breccia pipes, in the field and in air-photographs, can
be subtle and easily overlooked.
Origin of Breccia Pipes
Dissolution of the Redwall Limestone
during the Late Mississippian (approximately 330 million years ago [Ma]) created
extensive karst topography and formed numerous caves in the thick Redwall
Limestone. Only two known breccia pipes extend down to the underlying Temple
Butte Formation, and these occur in the western part of the region where the
Temple Butte Formation is a thicker limestone; it thins regionally to the east.
Karstification occurred soon after formation of the Redwall Limestone, as
evidenced by the deposition of the overlying Late Mississippian-age Surprise
Canyon Formation in erosion channels and sinkholes on the upper surface of the
Redwall. When the cave roof collapsed, overlying formations were deposited or
subsided into the resulting sinkhole. After later formations were deposited,
later periods of cave formation and limestone dissolution renewed the collapse
features, such that later formations collapsed into the breccia pipe. No
fragments of formations younger than the Chinle Formation have been found in the
breccia pipes.
This gravitational collapse produced
steep-sided, pipe-like bodies that are filled with angular to rounded fragments
of overlying formations that range in size from finely ground material to large
house-sized boulders.
Origin of Uranium Mineralization
Two separate mineralizing events may be
responsible for the metallic minerals in the breccia pipes. The early metallic
mineralization deposited cobalt, copper, iron, lead, nickel, and zinc. The later
uranium-mineralizing event occurred after deposition of the Triassic Chinle
Formation at about 200 Ma, based on U-Pb analyses from the Hack, Kanab North,
EZ-1, EZ-2, and Canyon pipe deposits (Ludwig and others, 1986).
The source of the uranium is not known,
although there are several hypotheses pertaining to the source of the
mineralizing fluids. Some call for rising fluids, some for descending fluids,
some for groundwater, and some for hydrothermal fluids.
One hypothesis suggests that
mineralized fluids were derived from igneous rocks, traveled laterally along the
Coconino-Hermit contact, and encountered reducing fluids derived from the marine
units cut by the pipes. The minor, uneconomic quantities of uranium
mineralization in units above the Coconino-Hermit contact support this idea.
Another hypothesis suggests that the
uranium was derived from the Chinle Formation, and entered the pipe by either
moving down the pipes throat directly or by migrating laterally through a
permeable formation such as the Coconino Sandstone. Precipitation of the uranium
occurred when the metal-rich oxidizing solutions encountered the highly reduced
breccia pipe environment (Krewedl and Carisey, 1986). Hydrocarbons, which
probably migrated out of the Brady Canyon Member of the Toroweap Formation,
caused reduction in the EZ-2 breccia pipe.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
20 |
Another hypothesis suggests that the
uranium in these deposits was derived by leaching from volcanic ash in the
Chinle, and was mobilized by groundwater movement resulting from changing
hydrologic gradients caused by regional uplift to the southwest. Because the
lead isotope ratios of galena in mineralized pipes are more radiogenic than
those of sulfides from uranium-poor pipes or occurrences away from the pipes, it
is likely that fluids that passed through the pipes had interacted with the
Proterozoic basement (Ludwig and Simmons, 1992).
Another hypothesis relies on the
passage of three separate fluids: a sulfide-bearing (H2S) fluid,
metal-rich fluids or brines, and solutions containing uranyl complexes.
The presence of extensive bleaching in the pipes and adjacent sandstones
indicates the passage of sulfide-bearing (probably H2S-rich)
fluids early in the history of the pipes (Gornitz and others, 1988). The base
metals (Co, Cu, Ni, Pb, and Zn) may have been deposited at this time, or
possibly were transported by NaCl-rich brines, which have been observed in fluid
inclusions. The uranium would have been transported as a uranyl
([UO2]2+) complex in an oxidizing fluid and was
precipitated when it encountered the sulfide-rich reducing environment in the
pipes (Wenrich and others, 1989). The uranium mineralization probably occurred
around 200 Ma, when uranium-rich waters either moved northward from their
silicic volcanic source rock in the Mogollon highlands through the Redwall
carbonate section (or perhaps through the Surprise Canyon Formation channels) or
one of the Pennsylvanian Supai aquifers. The 260 Ma uranium ages determined by
Ludwig and Simmons (1988) suggest this mineralizing event may have begun as
early as Late Permian. The upward-circulating mineralizing fluids encountered
either reducing waters higher in the section or a reducing medium, such as
pyrite-rich sulfide deposits previously precipitated from the brines. Petroleum
compounds (such as pyrobitumen and sparse others) are abundant in a few pipes,
but are not present in all pipes. Due the higher elevations in the source area
(the Mogollon highlands to the south), regional hydraulic gradients would drive
the fluids upward when they encountered permeable zones such as the breccia
pipes. The relatively low fluid inclusion temperatures (80 to 173ºC) in
sphalerite, dolomite, quartz, and calcite suggest relatively low-temperature
mineralizing fluids, though higher than the normal geothermal gradient on the
Colorado Plateau (Wenrich, 1988).
6.1.2 |
Other Productive Uranium Breccia Pipes in the
Region |
Breccia pipe mines that produced
uranium in the 1980s were the Hack 1, Hack 2, Hack 3, Pigeon, Pinenut, Hermit,
Arizona 1, and Kanab North pipes, all located north of the Grand Canyon. Energy
Fuels is currently mining uranium from the Pinenut pipe. Examples of other
breccia pipe uranium deposits in Arizona include the Orphan Lode, Canyon, and
Ridenour. The Canyon Mine, located south of the Grand Canyon, was developed in
1991-1992; it shut down after the infrastructure was developed. The current
owner of the Canyon Mine, Energy Fuels, is evaluating re-start of development.
Outside Arizona, examples of breccia pipes include the Apex mine in southwest
Utah, the Temple Mountain Pipe in Utah, and the Pryor Mountains District in
south-central Montana.
Mining of the breccia pipes began in the Grand Canyon
region during the 1870s, although the commodities were primarily copper and
minor amounts of silver, lead and zinc. In 1951, uranium was first recognized in
the Orphan breccia pipe (Chenoweth, 1986). From 1956 to 1969, the Orphan Mine yielded 4.26 Mlbs of uranium
oxide (U3O8) with an average grade of 0.42%
U3O8. The Orphan Mine also produced 6.68 Mlbs of
copper, 107,000 oz of silver, and 3,400 lbs of vanadium oxide
(V2O5).
By the 1950s, the uranium breccia pipe
mines included the Orphan, Grandview, Riverview, Ridenour, Grand Gulch,
Savannic, Cunningham, Copper Mountain, Copper House, Old Bonnie Tunnel, Snyder,
and Hack Canyon mines.
|
|
Concentrically inward-dipping beds that
surround a shallow basin; |
|
|
Amphitheater-style topography caused by
preferential erosion along the ring fracture of a breccia pipe; |
|
|
Concentric drainage, soil, and vegetation
patterns, such as a circular gully around a central hill or a circular
patch of grass surrounded by desert vegetation; |
|
|
Breccia and possibly silicified hills of
breccia; and |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
21 |
|
|
Altered and mineralized rock, such as bleaching
of normally red rock caused by the reduction of iron, supergene copper
minerals as malachite and azurite, or secondary alteration products of
sulfides (pyrite, marcasite, chalcopyrite, galena, sphalerite, and
uraninite), such as goethite altered from pyrite. |
Surface expression of pipe
mineralization is generally located along the ring fractures of the pipe and is
characterized by supergene copper minerals, minor increases in gamma radiation,
barite, calcite, goethite, and more rarely pyrite or marcasite (Wenrich, 1985).
The highest gamma radiation commonly occurs in comminuted rock or in fracture
zones. Most economic uranium pipes contain a pyrite cap that commonly oxidizes
to goethite in pseudomorphs after pyrite cubes, concretions, botryoidal masses,
and boxwork fracture fillings.
Copper mineralization at the surface of
pipes usually occurs as supergene minerals such as malachite, brochantite,
chrysocolla, and azurite. Less oxidized zones contain nodules rich in the copper
sulfides chalcocite, covellite, chalcopyrite, enargite, tennantite, digenite,
and djurleite, with some galena and sphalerite.
Not all shallow structural basins on
the plateaus are likely to be uranium-bearing breccia pipes. Depressions in the
Kaibab Limestone may be collapse features related to development of karst in the
Kaibab and/or to dissolution of gypsum in the underlying Toroweap Formation.
These collapse features have characteristics of ordinary sinkholes, with
near-vertical walls, no tilted beds, and a flat bottom containing un-cemented
rubble.
Geophysical Characteristics
Geophysical techniques, including
CSAMT, surface and airborne magnetics, SP, resistivity, VLF, and IP, have been
tested as an exploration tool. Although these techniques are useful, and on
occasion can detect a pipe structure when directly above, none of these are cost
effective on a regional scale. However, recent application of the airborne VTEM
and MegaTEM methods resulted in detecting pipes and appear to be cost effective
on the regional scale. Geophysical techniques are useful in mapping structural
trends along which pipes occur.
Exploration geophysics are useful at
the local scale (Wenrich and others, 1995). Diagnostic differences in electrical
conductivity have been identified by scalar audiomagnetotelluric and E-field
telluric profile data for at least one ore-bearing pipe (Flanigan and others,
1986). Ground magnetometer surveys show subtle magnetic lows over several pipes,
possibly due to alteration of detrital magnetite within reduced zones associated
with the uranium deposits (Van Gosen and Wenrich, 1989). Because the uranium ore
is deeply buried (>1,000 ft), gamma-radiation is generally not detectable at
the surface (Wenrich, 1986). Scarce weak gamma radiation anomalies detected at
the surface are coincident with ring fracture zones and are less than 1 m thick
(Wenrich, 1985).
Although there are geophysical
techniques that can detect a breccia pipe, as of the date of this report, no
geophysical method capable of proving the presence of uranium at depth has been
developed aside from wireline down-hole geophysics (gamma logging) used in drill
holes. The presence of uranium must be proved by drilling and assaying/gamma
logging.
The Kaibab Limestone of late Permian
age crops out across most of the northwestern quarter of the state, except where
it is buried by Late Tertiary and Quaternary volcanic rocks. The overlying, less
resistant redbeds of the Moenkopi Formation of early Triassic age have been
almost completely removed by erosion, but are locally present as thin layers or
where protected by collapse into depressions.
The most common alteration of rock
surrounding the breccia pipes consists of bleaching of normal hematitic pigment
in redbed clastic sediments. In addition, liesegang banding in some areas indicates iron remobilization, as does the alteration of pyrite
in the cap to goethite. The presence of supergene copper minerals (such as
malachite) is also common in some breccia pipes.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
22 |
Surface Formations
The Kaibab Limestone (officially named
the Kaibab Formation of latest Leonardian to earliest Guadalupian age
[approximately 275 to 285 Ma]) is predominantly a light gray, cliff-forming
limestone and dolomite, with some interbeds of sandstone, red sandy mudstone,
bedded gypsum, and conglomerate. The lower member of cherty, massive,
cliff-forming limestones contains a normal marine fauna of brachiopods, horn
corals, bryozoans, pelecypods, and crinoids. The Kaibab Formation ranges from
300 to 600 ft (100-200 m) thick across northern Arizona, with the thickest
sections in the western part of the state (Blakey and Knepp, 1989).
The Kaibab Formation is subdivided into
two members: the lower Fossil Mountain Member and the upper Harrisburg Member.
The Fossil Mountain Member consists of medium to dark gray, cliff- or
ledge-forming, cherty, limy dolomite or dolomitic limestone with abundant
fossils, such as brachiopods, bryozoans, crinoids, and sponges. To the east of
the Grand Canyon, the formation becomes increasingly sandy with significant
chert. The Harrisburg Member consists of white to gray slope-forming gypsum with
overlying and interbedded gray or light brown carbonate and red siltstone beds
that are 1 to 5ft thick (Cheevers and Rawson, 1979). The Harrisburg Member is
commonly found on the North Rim. The Fossil Mountain Member records a marine
transgression from the east and the sea at its maximum westward extent, while
the Harrisburg Member records a regression and is usually absent due to
pre-Triassic erosion south of the Grand Canyon.
The Moenkopi Formation unconformably
overlies the Kaibab Formation and consists of a westward-thickening wedge of
fine-grained red sandstone and mudstone to siltstone in the east and
progressively increasing amounts of carbonate to the west of the Colorado
Plateau (Blakey, 1989). In the area of Energy Fuelss breccia pipes, the basal
part of the Moenkopi Formation consists of thin-bedded, maroon to red-brown
siltstones and fine-grained sandstones that weather easily. The Kaibab-Moenkopi
contact is identified as the last occurrence of light brown cherty carbonates
and the first occurrence of red siltstones or basal conglomerate (Cheevers and
Rawson, 1979).
Underlying Formations
The Toroweap Formation conformably (and
locally unconformably) underlies the Kaibab Formation. The Toroweap consists of
massive limestone in the western Grand Canyon, but is progressively thinner and
more magnesian eastward and is relatively inconspicuous at the east end of the
canyon (McKee, 1969). As with the Kaibab Formation, the Toroweap Formation
records a marine transgression and regression; the lower portion consists of
relatively thin, weak, slope-forming units, the middle portion is a massive
limestone to dolomite, and the upper portion consists of slope-forming redbeds,
thin residual limestones, and local beds of gypsum.
The Coconino Sandstone underlies the
Toroweap Formation. The Coconino Sandstone consists of clean well-sorted quartz
sand in southerly-dipping cross-bedded white sandstones of eolian origin. The
formation thins progressively northward and westward from a maximum thickness of
500 ft along the Mogollon Rim in central Arizona to a narrow tongue that wedges
out near the Arizona-Utah border (McKee, 1969). It is approximately 100 ft thick
in the central Grand Canyon. The large-scale, wedge planar cross-stratification
dips as much as 34° south and resulted from large, transverse-type sand dunes
that indicate wind transportation of sand from the north.
The Hermit Formation underlies the
Coconino Sandstone. The Hermit Formation consists of approximately 300 ft of
brick red shaly siltstone, sandy shale, and fine-grained sandstone. In the
eastern Grand Canyon, it erodes easily into a slope or bench; in the western
canyon, it contains a higher percentage of resistant rock and forms cliffs and
narrow ledges. The Hermit Formation increases in thickness to 1,000 ft in the
western Grand Canyon (McKee, 1969). The Hermit Formation has been assigned an
Early Permian age based on seed ferns and plants in the eastern Grand Canyon
(McKee, 1969).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
23 |
The Supai Formation underlies the
Hermit Formation. The Supai Formation consists of approximately 700 ft of red
sandstone and shale and purplish limestone to the west (McKee, 1969). The Supai
Formation is assigned an Early Pennsylvanian (Morrow) age for the basal strata
and Early Permian (Wolfcamp) age for the upper units, based on marine fossils in
limestone tongues and lenses interbedded with Supai redbeds in the western Grand
Canyon (McKee, 1969).
The Redwall Limestone unconformably
underlies the Supai Formation. The Redwall Limestone forms massive cliffs of
light gray cherty limestone and dolomite stained red from the overlying Supai
and Hermit formations. It is 500-700 ft thick and consists of four members (in
descending order): the Horseshoe Mesa, Mooney Falls, Thunder Springs, and
Whitmore Wash Members (Beus, 1989). The Horseshoe Mesa Member is a
microcrystalline limestone that is 35 to 125 ft thick in the Grand Canyon, is
thin bedded, and weathers into a series of receding ledges. The Mooney Falls
Member is a massive, pure limestone, microcrystalline to coarse grained, and is
200 to 350 ft thick. The Thunder Springs member typically consists of thin
limestone beds in the west and dolomites in the east that are interbedded with
thin beds or lenses of opaque white chert, forming banded cliffs. It is thickest
under the Kaibab Plateau, where it reaches 235 ft in thickness (Beus, 1989;
McKee, 1969). None of the productive breccia pipes extend below the Thunder
Spring Member of the Redwall Limestone (Wenrich, 1985). The underlying Whitmore
Wash Member is a thick-bedded carbonate unit that forms a resistant cliff about
100 ft thick. It is a uniformly fine-grained dolomite in the eastern Grand
Canyon and is an even, fine-grained limestone in the western part of the canyon.
The most common alteration of rock
surrounding the breccia pipes consists of bleaching of normal hematitic pigment
in redbed clastic sediments. In addition, liesegang banding in some areas
indicates iron remobilization, as does the alteration of pyrite in the cap to
goethite. The presence of supergene copper minerals (such as malachite) is also
common in some breccia pipes.
Ring fractures surround the breccia
pipe and mark the zones of down-dropping and potential areas of richest
mineralization. These ring fractures can show two or more times background
radiation at surface. Background radiation is generally approximately 100 counts
per second (CPS) on a scintillometer. Other zones of weakness, faulting, or
collapse can also measure 200 to 1,400 CPS.
Uranium Breccia Pipe Mineralogy
The uranium mineralization occurs in
the breccia zone within the core of the pipe, as well as in the annular ring
fractures surrounding the breccia pipe. The economic uranium mineralization
occurs typically as uraninite (UO2), and locally as hexavalent
(oxidation) products of uraninite such as carnotite
[K2(UO2)2(VO4)2·3H2O].
The supergene copper minerals,
uranium-bearing minerals, vanadium-bearing minerals, and the more common
minerals such as pyrite, galena, barite, and sphalerite are usually megascopic
in size. The obvious presence of these minerals (or their alteration products)
at the surface or in drill core indicates the presence of an underlying
mineralized breccia pipe. The rarer primary metallic minerals, such as the
nickel-cobalt-iron sulfides (siegenite, vaesite, gersdorffite, etc.), are
microscopic and distinguishable only in thin sections.
Mineralization observed at the surface
of the breccia pipes commonly consists of nodules and concretions located along
fractures and associated with pyrite and goethite. The primary mineralization of
the unoxidized zones is typically within a comminuted sandstone matrix
surrounding breccia fragments of various overlying formations. The primary
uranium mineral is uraninite, with associated sphalerite, galena, chalcopyrite,
tennantite, millerite, siegenite, and molybdenite. The mineralized rock can be
enriched in Ag, As, Ba, Cd, Co, Cr, Cs, Cu, Hg, Mo, Ni, Pb, Sb, Se, Sr, U, V, Zn, and the rare earth elements; the best
indicators of mineralized pipes are Cu, Pb, Zn, Ag, and particularly As.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
24 |
Energy Fuels Breccia Pipe
Mineralization
All of the breccia pipe properties
controlled by Energy Fuels, including the Wate Pipe, show typical signs of
mineralized breccia pipes. These signs commonly include one or more of the
following criteria:
|
|
Inwardly dipping Kaibab Limestone strata that
is frequently overlain by maroon-red Moenkopi Formation suggesting
depressions or collapse breccia; |
|
|
Elevated radiation that is two or more times
background; |
|
|
Evidence of mineralization such as secondary
iron or copper minerals; and |
|
|
Less commonly alteration in the form of
bleaching of normally iron-bearing rocks. |
In addition, several of the pipes have
uranium mineralization defined in drilling.
The Wate pipe is typical of uranium
breccia pipes, and has sufficient drilling to define current resources.
Geochemistry
Numerous metals are enriched in uranium
breccia pipes, but the best pathfinder elements are As, Pb, and Zn. There is a
strong depletion in Ca, Mg, and Na in the uranium-mineralized zones, with a
strong enrichment in Sr, Ba, K, and Cs (Wenrich, 1985). Elevated abundances of
some elements in the mineralized breccia pipes are: <2 to 2,400 ppm Ag, 0.5
to 111,000 ppm As, 4 to 100,000 ppm Ba, <2 to 2,900 ppm Cd, 0.66 to 26,000
ppm Co, <1 to 290,000 ppm Cu, <0.01 to 140 ppm Hg, <2 to 24,000 ppm Mo,
<2 to 62,000 ppm Ni, <4 to 84,000 ppm Pb, 0.13 to 2,900 ppm Sb, <0.1 to
3,000 ppm Se, 4 to 5,800 ppm Sr, 0.63 to >210,000 ppm U, <4 to 50,000 ppm
V, and <4 to 260,000 ppm Zn (Wenrich and others, 1995).
The only zoning recognized in primary
uranium mineralization involves concentration of nickel-cobalt-iron-copper
arsenide and sulfide minerals in sulfide caps above uranium mineralization.
Secondary and supergene minerals are present wherever mineralized rock has been
exposed to oxidation, such as canyon dissection or fracture-controlled oxidation
(Verbeek and others, 1988; Wenrich and others, 1990).
Wall-rock alteration associated with
the uranium breccia pipe deposits consists of bleaching (reduction) of iron
oxide minerals in red sandstone by oxygen-poor fluids. Alteration can extend
100-350 ft (30 to 100m) outward into wall rock (Wenrich and others, 1992). These
deposits oxidize rapidly (within six months) after exposure to oxygen, either in
surface weathering or in open underground drifts (Wenrich and others, 1995)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
25 |
Arizona geology map, from Arizona
Geological Survey; Kaibab formation shown in Blue (Pm)
Figure 6-1: Geologic Map of Arizona
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
26 |
Near the Grand Canyon, Northern Arizona
Source: VANE, 2007
Figure 6-2: Stratigraphic Position
of Ore in Uranium Breccia Pipes
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
27 |
Source: Finch, 1992
Figure 6-3: Characteristics of
Uranium Breccia Pipes, Northern Arizona
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
28 |
The uranium breccia pipes in northern
Arizona are called Solution-Collapse Breccia Pipe U Deposits, which is U.S.
Geological Survey Model 32e (Finch, 1992). The deposit description is summarized
and updated by Wenrich and others (1995). The description indicates that these
deposits consist of pipe-shaped breccia bodies formed by solution collapse and
contain uraninite and associated sulfide and oxide minerals of Cu, Fe, V, Zn,
Pb, Ag, As, Mo, Ni, Co, and Se.
Characteristics of uranium bearing
breccia pipes, including the Wate Pipe, are described in Section 6.3. See Figure
6-2 and Figure 6-3 for schematic cross sections of a typical mineralized breccia
pipe.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
29 |
The discussion in this section is
related to historical exploration; Energy Fuels has not conducted exploration on
the Project.
Exploration for breccia pipes is
directed at recognition of the subtle surface expression of breccia pipe
targets, followed by land acquisition and cursory surface examination to include
limited mapping, sampling, and radiometric surveys of surface outcrops. Targets
with sufficient evidence of a breccia pipe target are identified and prioritized
for drilling to confirm that the target is a collapse breccia and not a
sinkhole-type depression, and to target potentially mineralized stratigraphic
contacts at depth, such as the Coconino sandstone/Hermit shale contact. This is
a reasonable approach, since the substantive evidence of breccia pipes and
uranium mineralization comes from drilling to 600 to 1,500 ft in depth.
Historical exploration concepts and approach were appropriate for the targets,
as was initial drilling to define pipes and uranium mineralization.
The following is a description of the
work completed to date on the Wate Pipe by VANE, the most current exploration on
the property for which full documentation is available.. Historical exploration
results are described in Section 5 (History).
8.1 |
Wate Pipe VANE
Exploration |
VANE pursued three avenues of advancing
this highly prospective breccia pipe:
|
|
VANE determined that Taiwan Power, a former owner through
RME Partners LP, has a hard copy of all project data generated during
exploration, including internal resource estimation and proposed
exploration/mine development. VANE unsuccessfully conducted negotiations
with Taiwan Power to acquire a copy of the entire dataset. This data will
allow, upon data verification, resource estimation for the entire extent
of the pipe; whereas, current drillhole information, as described in
Section 13, used only VANE drillhole data to estimate grade for the Wate
Pipe resources. |
|
|
|
|
|
VANE conducted a limited program to clean out and
re-enter historical drillholes located in the field. As of this report,
three drillholes have been cleaned out with rotary and core drill rigs,
re- surveyed down-hole for verification of hole deviation, and re-logged
with gamma probes for verification of the thickness and grade of
historical uranium intercepts. Two independent logging companies performed
gamma logging: Geophysical Logging Services and Century Wireline Services.
Results are confirmatory and are presented in Section 10 of this report. |
|
|
|
|
|
VANE drilled several new holes at the Wate
Pipe, confirming historically reported grades and thicknesses of
mineralization, as described in Section 13 of this report |
Figure 8-1 shows a photograph of
drilling at the Wate Pipe in January 2009. The topographic relief is minimal, as
are outcrop exposures for mapping/sampling. A similar size breccia pipe, the
Miller Pipe is shown in Figure 8-2 for comparison and for visualization of
subtle surface features.
In the spring of 2007, Geotech Ltd. of
Canada conducted a helicopter electromagnetic (EM) survey (VTEM) over a portion
of the South Rim of the Grand Canyon, at 150 m line spacings (this work was
performed for other companies). The survey was conducted over known breccia
pipes, including VANEs Miller and Red Dike pipes. In November/December of 2008,
PetRos EiKon Inc., a geophysical data processing company in Canada, provided
VANE some summary interpretive work that evaluated the magnetic and VTEM data
over the Miller, Miller SW, and Red Dike pipes. The objective of PetRos EiKon
was to determine what geophysical parameters might define breccia pipes, and
utilize that information as a basis for future exploration. PetRos EiKon
concluded that VTEM survey data can indeed define EM anomalies related to
breccia pipes (as it clearly does for the Miller Pipe), and in conjunction with
larger-scale magnetic anomalies and topographic features, can be a useful tool.
Not all of the known breccia pipes in the area of study could be resolved by
this approach. SRK concludes that the use of geophysical surveys may
be problematic, given the high cost and the need for very tight line spacing
(50-75m) to avoid missing small pipe surface expressions.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
30 |
Typically, there is little to no
surface expression of uranium mineralization on breccia pipe targets. The VANE
program of identification of prospective pipe targets, followed by shallow
drilling to define pipe geometry, and deep drilling to test favorable
stratigraphy in the pipes for uranium mineralization was a well-planned and
focused exploration program, appropriate for the deposit type.
VANE has pursued drilling verification
to confirm historical drilling results for the Wate Pipe. VANE exploration
expenditures from September 2008 through March 2011 on the Wate Breccia Pipe are
approximately US$1,364,000, of which drilling accounts for approximately
$1,110,000.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
31 |
Figure 8-1: Wate Pipe
Looking Southwest (January 2009)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
32 |
Figure 8-2:
Typical Breccia Pipe Surface
Expression - Miller Pipe Looking
Southwest
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
33 |
The discussion of drilling in this
section is specific to VANEs drilling, for which full documentation is
available. Previous historical drilling is not fully documented. Energy Fuels
has not conducted drilling on the Project.
The evaluation of breccia pipes
requires moderately deep to deep drilling, typically to depths of 1,200 to 2,000
ft. The major difficulty results from the small diameter (typically 100 to 300
ft) of the pipe. Any deviation from vertical in the drilling, and the drillholes
will soon exit the sides of the pipe. A particular challenge in drilling breccia
pipes is the tendency for sometimes extreme deviation in the drillholes due to
the brecciated nature of the strata internal to the pipe.
The drilling program for the Wate Pipe
was designed to confirm historical drillhole intercept grades with re-logs of
historical drillholes (if the holes could be re-entered), and new drillholes to
confirm historical grades in the areas of known mineralization. Drilling can be
conducted essentially year-round.
VANE was successful in finding and
re-entering four historical drillholes: WT-2, WT-5, WT-7, and WT-29. Attempts to
unearth and re-enter other historical holes proved difficult. WT-29A drifted out
of the original drillhole (WT-29) to create a new nearby hole at the level of
mineralization.
Including WT-29A, VANE drilled eleven
new holes, some form surface and others as wedge core holes; WT-32 through
WT-42, not including wedge-hole WT-40 which was lost.
Del Rio Drilling & Pump Inc., a
Chino Valley, Arizona-based drilling company, conducted the rotary drilling for
VANE. Del Rio used down-hole hammer and tri-cone rotary drilling methods, with
injection of foam to lift drill cuttings. Brown Drilling, a Kingman,
Arizona-based drilling company, conducted the diamond core drilling. The primary
purpose of the drilling was to create a drillhole for gamma probing, and to
gather lithological information. In the case of rotary drilling, where
mineralization is noted or suspected, spot-core is collected for lithological
verification and for a sample to be used for chemical analysis. Diamond core
drilling was done late in the project to better control hole deviation and to
obtain core for metallurgical testing. A summary of VANEs drill program to date
for the Wate Pipe is listed in Table 9-1.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
34 |
Table 9-1: Summary of VANE Drilling
Wate Breccia Pipe
Drillhole Name |
Total Depth (ft) |
Comments |
WT-2 |
1,600 |
Clean-out historical hole and re-log barren |
WT-5 |
1,540 |
Clean-out historical hole and re-log 34 ft @
1.61% eU3O8 |
WT-7 |
1,645 |
Clean-out historical hole and re-log 10.5 ft
@ 0.40% eU3O8 |
WT-29A |
1,600 |
New VANE hole, drilled out of Historical WT-29.
36 ft @ 0.69% and 28 ft @ 1.60% eU3O8 |
WT-33 |
1,500 |
New VANE hole. 25.5 ft @ 0.45% eU3O8 |
WT-34 |
1,580 |
New VANE hole. 15 ft @ 0.30% eU3O8 |
WT-35 |
1,530 |
New VANE hole. 21.5 cumulative ft @ 0.33% eU3O8 |
WT-36 |
1,570 |
New VANE hole. Weakly mineralized (0.02% eU3O8
over 80 cumulative ft) |
WT-37 |
1,490 |
New VANE hole. Several intercepts including 20
ft @ 0.37% and 12.5 ft @ 1.29% eU3O8 |
WT-38 |
1,558 |
New VANE hole. Weakly mineralized from 0.01 to
0.10% eU3O8 |
WT-39 |
1,658 |
New VANE hole. Highest grade encountered to
date (18.3%); 64.5 ft @ 1.45% eU3O8 un-cut, or 1.29% if 3 assays >6.0%
are cut to 4.6% |
WT-40 |
Hole lost |
Wedge hole from WT-39, lost prior to reaching
depth of mineralization |
WT-41 |
1,603 |
New VANE hole, 27.0 ft @ 1.45% eU3O8 |
WT-42 |
1,690 |
New VANE hole. Close offset to WT-42, with
cumulative of 35.5 ft @ 0.25% eU3O8 (across peripheral ring fracture (?)). |
Drillhole collar locations were
surveyed by Northland Exploration Surveys, Inc. SRK considers the drilling
methods, equipment used, drill orientations, and nominal drill spacing to be
adequate to support the exploration goals of VANE and preliminary resource
estimations.
A summary of available historic
information on the previous drill programs for the Wate Pipe is listed in
Section 5. This information was
available because the Wate Pipe is on State land and some historic records
(reports) were available from the Arizona State Land Department. Complete
information on historical drilling such as drill logs and gamma logs is lacking.
In July and August 2010, VANE acquired
historical reports for drilling at the Wate Pipe, which provided from/to summary
drill intercept radiometric composites for each historical drillhole;
information that VANE did not previously have. However, that information is
lacking the 0.5 ft interval data that is commonly derived from gamma logs, and
typical of the data from VANE holes. The historical drillhole gamma logs and
geological logs are also not in Energy Fuels possession. Nevertheless, the
historical drillhole composite interval data is useful in establishing the
mineralized envelopes used for resource estimation (See Section 13).
9.1 |
Drill Results from Wate
Pipe |
Upon the formation of the Mining
Venture Agreement with U1, VANE appropriately concentrated exploration
activities to the confirmation of historically reported high grades in the Wate
Pipe. The work in 2008 consisted of locating the historical drillhole collars in
the field and successfully reentering three drillholes to clean out the holes
and allow confirmation of grades through gamma logging. This was completed for
drillholes WT-2, WT-5, and WT-7. The results are very encouraging, with WT-5 and
WT-7 encountering high grades (Table 9-2); WT-2 encountered weak mineralization
but no resource grade material. As VANE does not currently have access to the
historical drillhole logs or drillhole intercepts for the Wate drilling, VANEs
re-logging of the holes cannot be directly compared with the historical data at
this time, with respect to grade and thickness of mineralization. The re-logging
generated down-hole surveys that have replicated the drift of the historical
holes as shown on plan maps.
VANE re-logged three historical holes
and part of WT-29, and drilled eleven new holes. Two of the re-logged historical
holes, WT-5 and WT-7, confirmed historical high grades. Eight of the eleven new
VANE holes encountered significant mineralized intercepts as
listed in Table 9-2, also encountering high-grade mineralization.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
35 |
Table 9-2: Summary of VANE Drilling
(including washouts of historical holes)
Drillhole Name |
From (ft) |
To (ft) |
Intercept Grade |
WT-2 |
0 |
1600 |
Barren, maximum of 5 ft @ 0.01% eU3O8 at 1238
to 1238 ft |
WT-5 |
1124.0 |
1126.5 |
2.5 ft @ 0.03% eU3O8 |
WT-5 |
1385.5 |
1387.5 |
2.0 ft @ 0.04% eU3O8 |
WT-5 |
1457.0 |
1458.5 |
1.5 ft @ 0.04% eU3O8 |
WT-5 |
1486.0 |
1488.5 |
2.5 ft @ 1.08%
eU3O8 |
WT-5 |
1489.0 |
1523.0 |
34.0 ft @ 1.67%
eU3O8; including 9.0 ft @ 4.22%* |
WT-7 |
1215.5 |
1219.5 |
4.0 ft @ 0.04% eU3O8 |
WT-7 |
1227.5 |
1232.5 |
5.0 ft @ 0.03% eU3O8 |
WT-7 |
1234.0 |
1236.5 |
2.5 ft @ 0.03% eU3O8 |
WT-7 |
1244.5 |
1255.0 |
10.5 ft @ 0.40%
eU3O*8 |
WT-7 |
1262.0 |
1263.0 |
1.0 ft @ 0.03% eU3O8 |
WT-7 |
1264.5 |
1266.0 |
1.5 ft @ 0.03% eU3O8 |
WT-29A |
1318.0 |
1354.0 |
36.0 ft @ 0.69%
eU3O8 |
WT-29A |
1498.5 |
1526.5 |
28.0 ft @ 1.60%
eU3O8 |
WT-33 |
1421.0 |
1446.5 |
25.5 ft @ 0.45%
eU3O8 |
WT-34 |
1269.5 |
1284.5 |
15.0 ft @ 0.30%
eU3O8 |
WT-35 |
1333.5 |
1370.0 |
21.5 ft (cumulative) @ 0.33%
eU3O8 |
WT-36 |
1188.5 |
1519.5 |
80 ft (cumulative) @ 0.02% eU3O8 over 331 ft;
high value of 0.12% |
WT-37 |
1299.0 |
1319.0 |
20 ft @ 0.37% eU3O8 |
WT-37 |
1328.0 |
1330.5 |
2.5 ft @ 0.19% eU3O8 |
WT-37 |
1362.5 |
1375.0 |
12.5 ft @ 1.29%
eU3O8 |
WT-38 |
983.5 |
1196 |
212.5 ft @ 0.02% eU3O8, including 8.0 ft @
0.09% and 9.5 ft @ 0.08% |
WT-38 |
1213.5 |
1377.5 |
164 ft @ 0.01% eU3O8, including 6.5 ft @ 0.05%
eU3O8 |
WT-39 |
1448.0 |
1512.5 |
64.5 ft @ 1.45% eU3O8,
including 1.5 ft @ 11.6% with a high assay of 18.3%;
confirmed by chemical assay from core as well. |
WT-41 |
1453.5 |
1480.5 |
27.0 ft @ 1.45%
eU3O8 |
WT-42 |
1246.0 |
1599.5 |
Cumulative of several intervals; 35.5 st @
0.025% |
* As reported on the Century Wireline
Services gamma logs. VANE may have reported a slightly different intercept
thickness and grade.
All confirmation re-logging of Wate
historical drillholes, and new VANE drillholes was done with both Century
Wireline Services and Geophysical Logging Service.
WT-42 was a core hole wedged off of
WT-39 that deflected from the original target, and resulted in an very close
offset to WT-41, as further described in Section 16.1 and shown in Figure 16-2
Drilling to date has demonstrated
Inferred resources in excess of 1.0 million pounds
eU3O8, a perceived threshold to advance the project
further through underground exploration and development. Energy Fuels plans are
to further drill define the mineralization at the Wate Pipe, but likely as fan
drilling from stations at different levels from an exploration shaft, as
vertical drilling can only define a portion of the mineralization; vertically
oriented mineralization, as in peripheral ring fractures, is not well defined
currently, and continued drilling from surface will not help much in defining
this mineralization.
The drilling methods used in the
historical drilling at the uranium breccia pipes were typical of the industry
standard methods at the time, and are considered valid. The drilling methods
employed by VANE are also appropriate for initial exploration and definition of
mineralization
It is recommended that Energy Fuels
consider two avenues for further drilling:
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
36 |
|
|
Core-hole wedge drilling offsets to target one
or more historical drill intercepts at the Wate Pipe. Targeting specific
areas of the breccia pipe may require directional-drilling equipment as
well. |
|
|
|
|
|
Fan drilling from different stations in an exploration
shaft. The decision to proceed to underground exploration will allow for
detailed fan drilling form various vertical positions that will cross the
vertically oriented mineralization and allow for more detailed definition
of mineralized shapes. |
Additional confirmation drilling
information, whether from surface or underground, in conjunction with the
acquired historical database gamma-logs, if achievable, will provide more data
and enhance the confidence level in the resource estimate for the Wate Pipe
presented in Section 16 of this report.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
37 |
Figure 9-1: Locations of VANE and
Historic Drillholes at the Wate Breccia Pipe
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
38 |
Note: New VANE drillholes are not shown
on this figure see Section 16 for
sectional depiction of holes used in current resource estimation
Figure 9-2: Sketch Cross Section
Wate Pipe Historical Drillholes
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
39 |
10 |
Sampling Preparation, Analysis and Security (Item
11) |
This section refers to sampling the
method, analysis and security of VANE, for the most current exploration drilling
on the Project. Energy Fuels has not conducted any sampling on the Project.
10.1 |
RC/Rotary/ Spot Core
Drilling |
RC and/or rotary drilling in the
Arizona breccia pipes is done using the injection of foam to lift cuttings from
the hole. Since the targeted depths (up to 1,500 ft) are above the water table,
this is the best drilling method to use for early stage exploration. Drilling by
RC and/or conventional rotary with mud from surface is impractical due to the
karst nature of the formations.
VANE contracted Del Rio Drilling for
rotary drilling, which uses a Portadrill TLS 532 drill rig capable of drilling
to 3,500 ft depths if conditions are favorable. Drillholes can be 8 inches or 6
inches in diameter; typically with 8-inch drillholes used to set surface casing
in broken ground. Drilling is by conventional rotary methods using a down-hole
hammer drill, with foam injection to lift drill cuttings. Rotary drill cuttings
suspended in foam are collected and washed to generate a small amount of rock
chips for geological logging, on 10 ft intervals. Rotary cuttings are retained
in chip trays as a permanent record to compliment the wireline down-hole logs.
Rotary cuttings were not collected by VANE for assay purposes.
The rotary drilling method employed
does not necessarily produce a good sample for analysis; however, the primary
purpose of the drillhole is to provide geological information and an open hole
within which to run the gamma-logging tool.
Core drilling is done as spot core
collected from the rotary drill rig. This is done to verify lithologies, confirm
presence of breccia, and for short intervals of whole core to confirm uranium
mineralization with sufficient sample for analysis. Spot core is done where
needed, at the discretion of the geologist sitting the drill rig. Spot core is
typical HQ size (2.5 inch diameter), and from a few inches to a foot or more in
length. A typical core run in 20 ft. Uranium mineralization as uraninite is
commonly associated with other sulfide minerals, and would look dark gray or
black in color in drill cuttings. Spot core allows the opportunity to verify
mineralization in solid rock and provide ½ core samples for chemical analysis to
compare with the gamma log.
10.2 |
Wireline Diamond Core
Drilling |
Wireline diamond core drilling,
although more expensive, provides the best sample and better control of
deviation and therefore is suited for post-early stage exploration.
VANE contracted Brown Drilling for
wireline diamond drilling. Brown Drilling used both a Discovery 3 rig and
Longyear 44 rig. Holes were drilled from surface using HQ core and reduced to NQ
core as needed. Wedges were set down hole to deflect new holes to areas where
additional evaluation was required.
The drilling and sampling methods are
therefore appropriate and acceptable for the Arizona breccia pipe targets.
Down-hole gamma logging tools have been
an industry standard method of collecting drillhole information for uranium
exploration since the 1960s. The drillhole is probed (gamma logged) and surveyed
for deviation by independent logging contractor Geophysical Logging Services,
from Prescott, Arizona, using industry standard gamma logging equipment and
procedures. Century Geophysics (Century Wireline Services) of Tulsa, Oklahoma
(field office: Meeker, Colorado) is used for QA/QC gamma logging as a check on
Geophysical Logging Services, if needed. This is an acceptable industry practice
to determine in-situ uranium grade (further described in Section 10.6 Radiometric Analyses) and
provide replicate logs as an additional QA/QC check.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
40 |
SRK is of the opinion that the sampling
method and approach used are appropriate for the mineralization, and are
standard industry practice.
10.4 |
Analytical Procedures |
Industry-standard analyses for
chemical uranium (expressed as either ppm or percentage U or
U3O8) are typically done by two methods; induction
coupled plasma-mass spectrography (ICP-MS), and X-ray fluorescence spectrometry
(XRF). The ICP method, which involves an acid digestion of the sample, can also
be used for analysis of many other elements. ICP analyses for uranium comprise
the primary method of the analyses performed on spot core samples by VANE.
10.5 |
Sample Preparation and
Assaying |
Sample preparation relates to drill
samples. VANEs exploration was conducted by rotary drilling and wireline
diamond drilling; samples are currently not regularly used for analyses.
However, core from Hole WT-39 was assayed to verify gamma probe grade. Digital
down-hole gamma log data are converted to equivalent assays; therefore, the
process is described in this section as an analytical procedure. Spot core
samples are used to verify lithologies and to obtain samples for chemical
analysis, in order to correlate with the gamma log. Spot core samples could also
be used for bulk density measurements, for mineralogical work, and for
radiometric analyses to compare with gamma log determined
eU3O8.
The preparation of samples for analyses
involves one of two methods. Samples for ICP analyses typically are prepared by
sample digestion with four acids to achieve maximum dissolution of elements;
analysis is performed on the solution. Samples for XRF analyses are prepared by
fusion of the sample material with another compound to form a glass-like disk.
The fusion technique of sample preparation minimizes particle size effects that
could otherwise cause problems with the measurement process. Numerous trace
elements can also be determined from the same fused disk. The disks themselves
can be stored indefinitely. Standard ICP analyses sample preparation was used
for VANE samples of core.
10.6 |
Quality Controls and Quality
Assurance |
The system of QA/QC protocols for
VANEs exploration projects is limited to the gamma logging analytical
technique. VANE uses Geophysical Logging Services for independent gamma logging
services. If there was a need, due to spurious data or obvious errors in the
data, VANE would do check logging with another independent gamma logging company
Century Geophysical. For clean-out and re-logging of historically mineralized
drillholes at the Wate Pipe, VANE used both Geophysical Logging Services and
Century Geophysical to provide replicate gamma logs and down-hole surveys.
At this stage in the drilling project,
insufficient samples have been collected for ICP chemical analysis to warrant a
rigorous sample QA/QC program. A QA/QC program will be important and is
recommended upon further drilling. That program should include chemical analysis
from spot core samples, the insertion of standards, blanks, and duplicates, and
duplicate independent gamma logging.
Rotary chip samples collected at the
drill site and spot core samples were kept under the supervision of VANE staff
geologists. Gamma logs were generated and presented in digital and graphical
format from the contractor to VANE.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
41 |
10.8 |
Analytical Laboratory
Certification |
Actlabs was the analytical lab used for
the Project. This Canadian headquartered lab is an internationally known lab
that has provided analytical services to the mining industry for some time.
Actlabs Quality System is accredited to international quality standards through
International Organization for Standardization/International Electro-technical
Commission (ISO/IEC) 17025 (ISO/IEC 17025 includes ISO 9001 and ISO 9002
specifications) and CAN-P-1579 (Mineral Analysis) for specific registered tests
by the Standards Council of Canada.
10.9 |
Radiometric Analyses |
The basic analysis that supports the
uranium grade reported in the uranium bearing breccia pipes is the down-hole
gamma log created by the down-hole radiometric probe. That data is gathered as
digital data on approximately 1.0 in intervals as the radiometric probe is
inserted or extracted from a drillhole.
The down-hole radiometric probe
measures total gamma radiation from all natural sources, including potassium (K)
and thorium (Th) in addition to uranium-bearing minerals. In most uranium
deposits, K and Th provide a minimal component to the total radioactivity,
measured by the instrument as CPS. At the Project, the uranium content is high
enough that the component of natural radiation that is contributed by K from
feldspars in sandstone and minor Th minerals is expected to be negligible. The
conversion of CPS to equivalent uranium concentrations is therefore considered a
reasonable representation of the in-situ uranium grade. Thus, determined
equivalent uranium analyses are typically expressed as ppm
eU3O8 (e for equivalent) and should not be confused with
U3O8 determination by standard XRF or ICP analytical
procedures. Radiometric probing (gamma logs) and the conversion to
eU3O8 data have been industry-standard practices used for
in-situ uranium determinations since the 1960s. The conversion process can
involve one or more data corrections; therefore, the process used for the
Uranium Breccia Pipe Project is described here.
The typical gamma probe is about 2
inches in diameter and about 3 ft in length. The probe has a standard sodium
iodide (NaI) crystal that is common to both hand-held and down-hole gamma
scintillation counters. The logging system consists of the winch mechanism
(which controls the movement of the probe in and out of the hole) and the
digital data collection device (which interfaces with a portable computer and
collects the radiometric data as CPS at defined intervals in the hole).
Raw data is typically plotted by
WellCAD software to provide a graphic down-hole plot of CPS. The CPS
radiometric data may need corrections prior to conversion to
eU3O8 data. Those corrections account for water in
the hole (water factor) which depresses the gamma response, the instrumentation
lag time in counting (dead time factor), and corrections for reduced signatures
when the readings are taken inside casing (casing factor). The water factor and
casing factor account for the reduction in CPS that the probe reads while in
water or inside casing, as the probes are typically calibrated for use in
air-filled drillholes without casing. Water factor and casing factor corrections
are made where necessary, but VANE drillholes are typically open dry holes.
Conversion of CPS to %
eU3O8 is done by calibration of the probe against a source
of known uranium (and thorium) concentration. This was done for the gamma
probe at the former U.S. Atomic Energy facility in Grand Junction, Colorado. The
Grand Junction calibration facility in Colorado was used by Geophysical Logging
Services. The calibration calculation results in a K-factor for the probe; the
K-factor is 6.12331-6 for gamma probe 2PGA2337. The following can be
stated for thick (+60 cm) radiometric sources detected by the gamma probe:
10,000CPS x K = 0.612%eU3O8
As the total CPS at the Wate Breccia
Pipe Project is dominantly from the uraninite uranium mineralization, the
conversion K factor is used to estimate uranium grade, as potassium and thorium
are not relevant in this geological environment. The calibration constants are
only applicable to source widths in excess of 2.0 ft. When the calibration
constant is applied to source widths of less than 2.0 ft, widths of
mineralization will be over-stated and radiometric determined grades will be
understated.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
42 |
The industry standard approach to
estimating grade for a graphical plot is shown in Figure 10-1, and is referred
to as the half-amplitude method.
The half-amplitude method follows the
formula:
GT = K x A;
where GT is the grade-thickness
product,
K is the probe calibration constant,
and
A is the area under the curve (cm-CPS
units).
The area under the curve is estimated
by the summation of the 1.0 cm (grade-thickness) intervals between E1 and E2
plus the tail factor adjustment to the CPS reading of E1 and E2, according to
the following formula:
A = [ N + (1.38 x (E1 + E2)];
where A is the area under the curve,
N is the CPS per unit of thickness,
here 1.0 cm, and
E1 and E2 are the half-amplitude picks
on the curve.
This process is used in reverse for
known grade to determine the K factor constant.
The procedure used at VANEs Uranium
Breccia Pipe Project is to convert CPS per anomalous interval by means of
the half-amplitude method; this results in an intercept thickness and
eU3O8 grade.
In conclusion, VANEs sample
preparation, methods of analysis, and sample and data security are being
implemented with acceptable industry standard procedures, and are applicable to
the uranium deposits at the Project.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
43 |
Source: SRK, 2006
Figure 10-1: Example Gamma Log --
Half-Amplitude Method
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
44 |
11 |
Data Verification (Item
12) |
SRK Data verification has been
accomplished by the following:
|
|
Visual inspection of alteration, rock types,
and structure in outcrop and at prospects on VANEs breccia pipe
properties; |
|
|
|
|
|
Location in the field of historical drill sites
that are marked with drillhole identification and correspond to location
on maps; |
|
|
|
|
|
Observation in the field of more than two times
background radiation, as shown by a hand-held scintillometer; |
|
|
|
|
|
Copies of external lab test results
(geochemical) that also confirm uranium mineralization in select samples; |
|
|
|
|
|
Examination of gamma logs to verify mineralized
intercepts; |
|
|
|
|
|
Examination of replicate gamma logs from a
second contract logging company; and |
|
|
|
|
|
Comparison of VANE gamma-log data composite
intervals with historically reported composite intervals for the
re-logging of WT-5 and WT-7 |
Visual inspection in the field confirms
the geology as typical of uranium breccia pipes. Malachite and boxwork iron
oxides (limonite and hematite) and casts after former pyrite are visible in some
outcrops. Elsewhere, gently inward-dipping stratigraphy toward a depression or
semi-circular topographic low area suggests stratigraphic collapse indicative of
a breccia pipe. The authors did not directly confirm, visually or through
sampling, the uranium mineralization, as identification is often difficult in
oxidized and weathered outcrops. However, the analytical results of VANEs
sampling verify uranium mineralization where identified in some prospects. The
inward dipping stratigraphy is notable in outcrop at the Wate Pipe.
Also visible in the field are
historical drill roads and drill sites. A number of RMEs former drillholes have
been located in the field. At the Wate pipe, the drillhole collars were covered
with a few inches of dirt and were located by carefully scraping away the top
layers of soil cover to define the drillholes.
Historical drill core prior to VANEs
drilling is not available for inspection. Visual inspection confirms the geology
as described by VANE. Inward dipping Kaibab Limestone, semi-circular areas of
Moenkopi red mudstone internal to Kaibab limestone, brecciated beds, higher than
background CPS on the scintillometer, locally copper oxide mineralization,
alteration, and iron-oxides along fractures and after former sulfides are
visible in outcrop; and all are indicators of breccia pipes, although often
subtle or difficult to identify. At this early stage of exploration, there are
no data verification issues for the Project. The geological concepts and
exploration targets are verifiable in the field.
VANE drilling in 2008 and 2009 has
verified the mineralization historically reported and has confirmed high grades
for which historical information is not yet available at the Wate pipe.
Reentering of historical drillholes at the Wate Pipe and new down-hole surveys
have verified the historical drillhole deviations and the traces portrayed on
plan maps.
Comparison of historically reported
versus VANE re-logged mineralized intervals in WT-5 and WT-7 are shown below in
Table 11-1. The 0.5 ft interval data from VANE re-logs using both Century
Wireline Services and Geophysical Logging Services were selected to match
composite intervals listed in RME reports for the historical holes.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
45 |
Table 11-1: Comparison of Historical
and VANE re-logs for WT-5 and WT-7
|
From(ft) |
To (ft) |
Interval |
Grade
(%U3O8) |
WT-5 |
|
|
|
|
VANE-Century Wireline Services |
1486.0 |
1519.5 |
33.5 |
1.69 |
VANE-Geophysical Logging Services |
1483.5 |
1517.0 |
33.5 |
1.46 |
RME-Historical Intercepts reported |
1491.0 |
1524.5 |
33.5 |
1.17 |
|
|
|
|
|
VANE-Century Wireline Services |
1489.5 |
1495.5 |
6.0 |
4.99 |
VANE-Geophysical Logging Services |
1489.5 |
1495.5 |
6.0 |
3.87 |
RME-Historical Intercepts reported |
1493.0 |
1499.0 |
6.0 |
4.44 |
WT-7 |
|
|
|
|
VANE-Century Wireline Services |
1243.5 |
1254.5 |
11.0 |
0.38 |
VANE-Geophysical Logging Services |
1241.0 |
1252.0 |
11.0 |
0.38 |
RME-Historical Intercepts reported |
1245.0 |
1256.0 |
11.0 |
0.34 |
Source: SRK, 2010
Note: Selected
intervals in Table 14-1 may not exactly match mineralized intervals listed
elsewhere in this report
The comparison shows that VANE re-logs
of historical drillhole verify the drillhole survey trace as well as the
thickness and grade of mineralization for WT-5 and WT-7.
SRKs conclusion is that the historical
data has been verified for some drillholes at the Wate Pipe, and that VANEs
drilling of new holes provides sufficient new information to validate
mineralization where historical information is currently not available. At the
Wate Pipe, VANE has verified a portion of the historical drillhole database by
re-entering and re-logging the old holes, and has confirmed similar grades in
nearby new drillholes, as demonstrated in a comparison of WT-5 with WT-29A in
Section 13.11 ( Table 13-8 ). This database
provides confidence that the historical data are valid and can be sufficiently
replicated with additional confirmation drilling.
SRK is of the opinion that there is
sufficient verifiable information to adequately define Inferred mineral
resources as stated in section 16 of this report.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
46 |
12 |
Mineral Processing and Metallurgical Testing (Item
13) |
SRK recommends that the core from
drillholes WT-29A, WT-39, and WT-41 be evaluated with preliminary mineralogical,
geochemical, and metallurgical testing, to verify the uranium mineralization is
amenable to standard processing methods. No mineral processing or metallurgical
testing has been completed for this project as of the date of this report.
However, core from mineralized intervals has been collected for this purpose.
Historical mined uranium-bearing
breccia pipe ores in Arizona were transported by truck to the White Mesa mill in
Blanding, Utah, currently owned by Energy Fuels. The processing for Arizona
breccia pipe uranium ores was done at the White Mesa mill in Blanding, using
conventional uranium milling circuits. The Blanding Mill has continued to
process alternative feed sources during the period of low uranium prices, and is
now accepting mined uranium ores as feed. Currently, there are no uranium
processing options in Arizona, and none are known to be in the planning
stages.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
47 |
13 |
Mineral Resource Estimate (Item
14) |
This section on Mineral Resources
relates to historical drilling and more recent drilling conducted by VANE in the
period on 2009 to 2011. No drilling has been conducted since 2011. The mineral
resources stated in this Section are as of March 22, 2011, the date of the most
current drill information, and the mineral resources are still current as of the
date of this report.
During 2010 SRK completed an updated
resource estimate for the Wate Pipe, using information available at that time.
Subsequent to the completion of that resource Vane successfully targeted two new
drillholes, WT-39 and WT-41, that intersected higher grade mineralization as
predicted by the model; providing at least a conceptual validation of the
delineation of the mineralization. During the 2011 update, only the primary
resource zone, constituting more than 80% of the resource (Zone 1), was
remodeled as discussed below. The resources for Zones 2-4 are those calculated
from the 2010 model (previously reported in a NI 43-101 technical report dated
November 04, 2010), as the most recent drilling since 2010 did not intersect
those Zones..
The mineral resources stated in this
section for the Wate Pipe have been classified according to the CIM Standards
on Mineral Resources and Reserves: Definitions and Guidelines (November 2010).
Accordingly, the Resources have been classified as Inferred. There are no
Measured or Indicated resources and no mineral reserves are currently
established for the Project.
Historically, 21 drillholes defined the
mineralization for the Wate Pipe. VANE has cleaned and re-logged two historical
holes that verify mineralization, and drilled 13 new holes in the Wate Pipe. In
addition, a number of historical holes, located on a cross-section and on a plan
map, were digitized for down-hole location and form part of the drillhole
geological database; composite assay data for mineralized intercepts in these
historical holes was made available to VANE in July/August 2010. As there are no
backup geological or gamma logs to verify the reported intercepts, the
historical drillholes were used solely for the definition of mineralized
shapes; only VANE drillhole eU3O8 grade
determinations were used for grade estimation.
The drillhole database is composed of
21 historical drillholes and 15 drillholes completed or re-logged by VANE since
2008. The 36 drillholes total 63,303.5 ft. of drilling. VANEs 15 new and
re-logged drillholes total 23,985.5 ft. of drilling. VANE re-opened/re-logged
two mineralized holes, WT-5 and WT-7. Selected drillhole information is
summarized in Table 16.1. As stated in Section 13 and Table 13-1, VANE drill hole gamma
logging has verified the historical drillhole intercepts for WT-5 and WT-7 with
very good correlation. It should also be noted that in the re-logs of WT-5 and
WT-7 by VANE, the downhole survey data compared favorably with the historic RME
survey data which provides confirmation as to the accuracy of the RME downhole
survey data.
There was sufficient information from
new logs, the historical drillhole cross-section, and a plan map showing the
interpreted map of the pipe perimeter at various elevations, to construct a 3D
depiction of the pipe shape for the area of mineralization.
Historical drillhole intercepts are
available to VANE in the form of drill depth, composite interval (intercepts
picks) and interval composite grades. That information became available to VANE
in July/August 2010 in RME historical progress reports for the drilling at Wate.
Historical gamma-logs from which the interval eU3O8
data were derived are not available to VANE; therefore, for all historical
holes except WT-5 and WT-7, the historical drillhole intercepts cannot be
verified. SRK considers the historical intercept data partially verified by VANE
and thus reasonable to assume that the entire database of historical holes is
sufficiently accurate to be used for delineation of the mineralized shapes
within which block model construction and grade assignment was accomplished
using VANE-only 0.5 ft. eU3O8 data.
The limitation in using all the
historical drillhole intercepts for grade assignment comes from the disparity in
sample data intervals; 0.5 ft. from VANE data and large composite intervals from
historical holes. All VANE holes have 0.5 ft. interval
eU3O8 data, and all of the historical holes are
composited (intercept) intervals. Some of the holes, such as WT-09A, and
WT-13, as highlighted in Table 16-1 have over 50
ft. @ +1.0% eU3O8. These large composite
intervals, for which the compositing criteria are not known, offer no
insight to the actual grade distribution internal to the composite interval, and
they cannot be satisfactorily compared to nearby VANE holes that have 0.5 ft.
grades. The side-by-side comparison of historical versus VANE holes is
demonstrated in Figure 16.1. It shows the
mineralized shape created from all data and the comparison of WT-29 and VANEs
WT-29A. WT-29 has two composite intercepts internal to the mineralized shape,
whereas WT-29A has 56 0.5 ft. intervals that range in grade from 0.14% to
4.60% eU3O8. The two holes are about 12 ft. apart,
and the compositing in WT-29 to 30.5 ft. @ 0.83% is difficult to relate
directly to the variable grade in WT-29A; yet overall, all holes show good
continuity of mineralization.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
48 |
Figure 13-1: Cross Section of
Historical and VANE drillholes (SRK 2011
In contrast to Figure 13-1, Figure 13-2
shows that locally significant variation can occur in two immediately adjacent
drillholes, such as WT-39 with historical hole WT-9A, and even WT-41 and WT-42;
in both cases the hole pairs are less than 10 feet apart. This results in
difficulty to accurately define the mineralized boundaries, and the interpolated
block grades internal to a mineralized shape become a blended grade; a
combination of the higher and lower grades. The likely explanation for these
close-hole differences in grade is stepping across a mineralization-controlling
pipe-boundary fault structure. Such a structure cannot be accurately defined by
vertical drilling alone.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
49 |
Figure 13-2: Cross Section of
Historical and VANE drillholes (SRK 2011)
Table 13-1 is a list of selected reported historical mineralized intervals to
demonstrate the quality of the data. It is not a complete list of historical
drillhole intercepts.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
50 |
Table 13-1: Selected Historical
Drillhole Intercepts Wate Pipe
Hole_ID |
From (ft) |
To (ft) |
Interval |
% U3O8 |
WT-08 |
1292.5 |
1326.5 |
34 |
0.074 |
WT-08 |
1455 |
1459.5 |
4.5 |
0.149 |
WT-08 |
1502 |
1503 |
1 |
0.258 |
WT-09A |
1294 |
1300.5 |
6.5 |
0.211 |
WT-09A |
1307 |
1310.5 |
3.5 |
0.11 |
WT-09A |
1491 |
1498.5 |
7.5 |
0.125 |
WT-09A |
1510 |
1570.5 |
60.5 |
1.431 |
WT-10 |
1437.5 |
1441 |
3.5 |
0.141 |
WT-10 |
1462 |
1489.5 |
27.5 |
0.214 |
WT-10 |
1490 |
1509 |
19 |
0.297 |
WT-11 |
1490 |
1497 |
7 |
0.418 |
WT-11 |
1497.5 |
1520.5 |
23 |
0.53 |
WT-11 |
1545.5 |
1587.5 |
42 |
0.149 |
WT-13 |
1428 |
1482 |
54 |
1.172 |
WT-14 |
1468 |
1490 |
22 |
0.515 |
WT-15 |
1454 |
1487.5 |
33.5 |
0.772 |
WT-25 |
1484 |
1507 |
23 |
0.558 |
WT-25 |
1508.5 |
1536.5 |
28 |
0.576 |
WT-25 |
1538 |
1573.5 |
35.5 |
0.169 |
WT-26 |
1460 |
1466 |
6 |
0.494 |
WT-26 |
1495.5 |
1500.5 |
5 |
0.156 |
WT-26 |
1503 |
1504.5 |
1.5 |
0.185 |
WT-28 |
1460 |
1466 |
6 |
0.488 |
WT-28 |
1495 |
1503 |
8 |
0.111 |
WT-28 |
1503.5 |
1510 |
6.5 |
0.16 |
WT-29 |
1310 |
1340.5 |
30.5 |
0.827 |
WT-29 |
1501 |
1504.5 |
3.5 |
0.047 |
WT-29 |
1506.5 |
1509 |
2.5 |
0.075 |
WT-29 |
1509 |
1533.5 |
24.5 |
0.58 |
WT-30 |
1347 |
1382.5 |
35.5 |
1.94 |
WT-30 |
1457.5 |
1458.5 |
1 |
0.172 |
WT-30 |
1496.5 |
1499 |
2.5 |
0.041 |
WT-30 |
1499 |
1525.5 |
26.5 |
1.343 |
WT-31 |
1320 |
1343 |
23 |
1.204 |
WT-31 |
1373.5 |
1379.5 |
6 |
0.029 |
WT-31 |
1453.5 |
1458 |
4.5 |
0.202 |
Table 13-2 is a tabulation of the VANE drillhole data for which 0.5 ft.
eU3O8 data are available, and which was the only data
used for grade interpolation and block model grade assignment.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
51 |
Table 3-2: Drillhole
Database Statistics VANE Drillholes
(SRK, April 2011)
|
WT-29A upper |
WT-29A lower |
WT-33 |
WT-34 |
WT-35 (cum) |
WT-37 upper |
WT-37 middle |
WT-37 lower |
WT-39 (un-cut) |
WT-41 |
Wt-42 (cum) |
WT-5 |
WT-7 |
Thickness (ft) |
36.0 |
28.0 |
25.5 |
15.0 |
21.5 |
20.0 |
2.5 |
12.5 |
64.5 |
27 |
35.5 |
32.5 |
9.0 |
Ave Grade (%U3O8) |
0.69 |
1.60 |
0.45 |
0.30 |
0.33 |
0.37 |
0.19 |
1.29 |
1.45** |
1.45 |
0.25 |
1.52 |
0.47 |
No 0.5 ft interval |
72 |
56 |
51 |
30 |
31 |
40 |
5 |
25 |
129 |
54 |
71 |
65 |
18 |
No. > 0.5% eU3O8 |
34 |
49 |
22 |
0 |
6 |
10 |
0 |
20 |
101 |
36 |
4 |
45 |
7 |
High value (% eU3O8) |
2.47 |
4.61 |
0.97 |
0.48 |
0.69 |
1.39 |
0.25 |
3.18 |
18.35* |
2.92 |
1.12 |
4.38 |
1.21 |
from (ft) |
1318.0 |
1498.5 |
1421.0 |
1269.5 |
1333.5 |
1299.0 |
1328.0 |
1362.5 |
1448 |
1453.5 |
1246 |
1483.5 |
1242.5 |
to (ft) |
1354.0 |
1526.5 |
1446.5 |
1284.5 |
1370.0 |
1319.0 |
1330.5 |
1375.0 |
1512.5 |
1480.5 |
1599.5 |
1516.0 |
1251.5 |
GT (Ft-%) |
24.7 |
44.7 |
11.5 |
4.5 |
7.1 |
7.3 |
0.5 |
16.1 |
93.6 |
39.1 |
8.71 |
49.3 |
4.3 |
Note: WT-35 and WT-42 represent
cummulative intercept intervals; WT-5 and WT-7 are re-logs of historical holes
WT-36 , WT-38, and WT-40 did not encounter +0.15% mineralization
* Two 0.5 ft interval at 10.3% and
18.4% in WT-39
** Two 0.5 ft
interval capped at 7.0% in WT-39 -
results in 1.29% average
grade
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
52 |
13.2 |
Assay Data Population Domain
Analysis |
Figure 13-3 below is the cumulative relative frequency distribution diagram
for the Wate Pipe raw eU3O8 data. In 2010 using the
cumulative frequency distribution diagram (CF plot) as a guide, in
conjunction with an examination of the distribution of drillhole data, three
thresholds were selected. First, a minimum threshold was selected
distinguishing lower grade mineralized versus non-mineralized material based,
subjectively, by choosing an inflection point on the lower grade tail of the CF
plot. Second, a threshold was selected above which grades would be considered
part of a higher grade population, which might require separate grade
estimation constraints. Third, an inflection point was selected to identify
assays that are to be considered outliers to the general distribution and
capped or set back to a defined threshold. The thresholds identified are
tabulated below on Table 13-3 and shown in bold
font on the CF plot. An additional intermediate inflection at approximately 0.9,
or 1.0% eU3O8, was initially examined in 2010
as well but with the paucity of data, the analysis of this as a separate
population was abandoned.
The 2011 SRK interpretation is that the
mineralization within the Wate pipe Zone 1 is not uniform; a higher grade area
or domain (Domain 1) is bounded by lower grade material; this is visually
apparent as well as reflected on the distribution diagrams. Alternative
thresholds for the capping of higher grade values were examined; the selected
process was to apply a cap of 3.2% to all data in all domains prior to
compositing for the estimation of grade. The higher grade domain was
subsequently re-estimated using a database capped at 4.6% using a soft
boundary constraint whereby values external to the delineated domain along with
values internal to it were applied.
Figure 13-3: Wate Pipe Cumulative
Relative Frequency Distribution (SRK 2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
53 |
Table 13-3: Wate Pipe Zone 1 Grade
Population Cutoff Thresholds
Population |
Threshold
(eU3O8%) |
Mineralized |
≥0.17 |
Domain 0 Cap |
≥3.2 |
Domain 1 Cap |
≥4.6 |
13.3 |
Mineralization Envelopes |
For the purpose of identifying
mineralized versus non-mineralized material within the overall pipe structure,
drillholes were digitized by VANE personnel from a plan map in a historical RME
report with down-hole survey ticks, allowing for a 3D depiction of all the
historical drillholes essentially generating a down-hole survey for each hole.
VANE provided SRK with an Excel spread sheet database of combined historical
drillhole intercepts and VANE drillhole 0.5 ft. eU3O8
data.
In 2010 SRK created wireframe shapes of
mineralization in Leapfrog® software using all drillhole data. The process
involved creating 2-D strings around mineralized drillholes on sections. Figure
16-3 demonstrated how 2-D strings were created around mineralized drillholes. A
set of 2-D strings were created in space on parallel sections and linked to
create a 3-D solid shape, as shown in Figure 13-4 and Figure 13-5.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
54 |
Figure 13-4: Cross-Section of
Mineralized Drillholes and 2-D strings (SRK 2010)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
55 |
Figure 13-5: Oblique View of 2010
Mineralized Shape (SRK 2010)
The mineralized shapes created in
Leapfrog were then exported to Datamine® Studio 3 software. In Datamine, the
initial Leapfrog 3-D shapes were modified on orthogonal sections to result in a
better fit (tighter) to the drillhole data, with extensions to the interpreted
pipe boundary where possible. The shape shown in Figure 13-5 was modified to that shown in Figure 13-6, which is the shape (grade shell) used to constrain the 2010 block
models and as can be noted from the displays envelopes both mineralized and
non-mineralized intercepts. For the 2010 model indicators of local potential
mineralization were assigned to blocks within the global mineralization
wireframes as described in Section 13.9.
For the 2011 update enough intercepts
were available to interpret hard mineralization boundaries for the primary
zone, Zone 1, (which represents over 80% of the resource estimated in 2010.) To
accomplish this the grade shell used in 2010 was sliced to form plan view
strings (Figure 13-7) which were modified and re-linked to form a much tighter
representation where all assay values inside the shape are used for grade
assignment (Figure 13-8). Zones 2 through 4 remain unchanged since the 2010
update.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
56 |
Figure 13-6: Oblique View of 2010
Mineralized Shape (SRK 2010)
Figure 13-7: Plan View delineation
(SRK 2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
57 |
Figure 13-8: Zone 1 Grade shell (SRK
2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
58 |
Subsequent to capping raw assays were down-hole composited into two foot lengths. While the selection of the two foot composite length was somewhat arbitrary, it was intended to reflect the selectivity that might be obtained on the margins of potentially mineable units during underground mining or subsequent radiometric sorting. For Zones 2-4 “Discriminator”, or “indicator”, codes were assigned to composites values based on the grade populations of Table 13‑3 and were used for the modeling of these zones in 2010. For the primary mineralized zone (Zone 1) indicators or discriminators were not used as a “hard boundary” (with 607 internal composites) was constructed for the mineralization; obviating the requirement for mineralized versus non-mineralized discriminators. The Zone 1 mineralization was also spatially differentiated with the delineation of higher and lower grade Domains (as soft boundaries) which eliminated the requirement for a “higher grade” threshold. Table 13-4 summarizes the composite statistics. The Domain databases are identical except for capping thresholds.
Table 13-4: Zone 1 Composite Summary
Statistics
eU3O8% for
2-Foot Composites |
Population |
All |
Domain 0 |
Domain 1 |
Number Of Values |
28310 |
607 |
607 |
Maximum Value |
9.7150 |
3.2 |
4.435 |
Minimum Value |
0.00 |
0.00 |
0.00 |
Mean |
0.0149 |
0.614 |
0.622 |
Variance |
0.021 |
0.427 |
0.474 |
Standard Deviation |
0.1452 |
0.654 |
0.689 |
Coefficient Of variation |
9.7 |
1.07 |
1.11 |
13.5 |
Specific Gravity Measurements (Bulk
Density) |
A tonnage factor of 13
ft3/ton was assigned to all material.
SRK constructed a block model using the
Datamine Studio3® mining software package for the Wate Breccia Pipe. Block sizes
are initially 1ft by 1ft in plan and 2ft vertically. The model has the following
spatial limits (Table 13-5):
Table 13-5: Wate Pipe Model
Limits
Breccia Pipe Direction |
Model Limits
Minimum(ft) |
Maximum(ft) |
Easting |
427,400 |
427,700 |
Northing |
1,830,000 |
1,830,200 |
Elevation |
4,300 |
4,800 |
13.7 |
Mineralization Zones |
Within the Wate Pipe, four more or less vertically separated zones of mineralization have been identified (with additional drilling one or more of these may be combined); for convenience, these were enumerated as zones one through four from bottom to top (note that for previous estimations the zone designations were different). For each of the zones, global mineralized envelopes were constructed to represent the maximum overall global limits of potential mineralization as discussed in 13.3. Figure 13‑9 displays the zones superimposed on the overall breccia pipe wireframe (which was provided to SRK and created from RME plan interpretations by VANE). In some cases, the mineralized shapes extend beyond the pipe wireframe, but significant mineralized drillhole intercepts do as well. SRK is of the opinion that the accuracy of the mineralized zone wireframes is at least that of the overall pipe wireframe; therefore honored wireframes derived from drillholes over the interpreted pipe boundary. Zone codes one through four were assigned to model block positions.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
59 |
Figure 13-9: Wate Breccia Pipe and
Mineralized Zones (SRK 2011)
13.8 |
Dynamic Anisotropy and Search
Orientation |
With the extremely limited data set
available, variograms and indicator variograms yielded very scattered and
generally non-interpretable results. Given the variation of lower and higher
grade values, and the lack of closely spaced values, very erratic results were
obtained with very high nugget values relative to sills. In particular, no
preferential orientations (anisotropies) of the continuity of mineralization
could be observed.
The dynamic anisotropy option in
Datamine Studio3® allows the anisotropy rotation angles for defining the search
volume and variogram models to be defined individually for each cell in the
model. The search volume is oriented precisely and follows the trend of the
mineralization. The rotation angles are assigned to each cell in the model; it
is assumed that the dimensions of the ellipsoid, the lengths of the three axes,
remain constant. A point file, where each point has a value for dip and dip
direction, was created for each zone wireframe and are intended to represent the
preferential down dip direction, which varies locally, over the vertical and
horizontal extent of the wireframes. Since the three axes of the search volume
are orthogonal and only two rotations are used (dip and dip direction) the
orientation of all three axes are explicitly defined. The point values are taken
from the orientation of the triangular facets that comprise the surface of a
wireframes or digital terrain model.
For zones one through four, planes were constructed to represent the overall trend or orientation of mineralization. These are subjective geological interpretations based on the overall geometries of the mineralized shapes, the location of significant mineralized drillhole intercepts within them and presumed behavior such as a “draping” of the mineralization at the contact with the breccia pipe boundaries. These are converted to points each with a unique orientation and can be seen as the “arrows” on Figures13‑10, 13‑12 and 13‑13. Values for dip and dip direction were assigned to model block positions.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
60 |
Figure 13-10: Wate Pipe Mineralized
Zone 1 and Anisotropy Points (SRK 2011)
13.9 |
Mineralization Indicator Assignment, Zones
2-4 |
For the 2010 model (Zones 2-4 were unchanged in 2011) the mineralization envelopes define the maximum overall “broad global limits” of potential mineralization, clearly a pattern of mineralized versus non-mineralized can be observed in the drillholes with significant mineralized intercepts varying from a few to tens of feet in extent. For the purpose of assigning indicators of “local potential” mineralization to blocks within the global mineralization wireframes described in Section 16.7 above, the composite file, described in Section 16.4, was used with indicators of 1 if its composited value exceeded the lower grade population threshold (identified on 3) or 0 otherwise. These 1 and 0 values were then assigned (nearest neighbor) into the deposit model block positions using the dynamic anisotropy orientations described in Section 16.8 above. Large search distances with 2 to 1 anisotropies (search along the orientation is twice that of across) were employed.
13.10 |
Domain Assignment, Zone 1 |
Within the overall mineralization a
higher grade domain has been identified, possibly the result of remobilization
or higher porosity, and a wireframe delineation of the area was constructed as
shown in red below on figure 13-11 and 13-12 below.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
61 |
Figure 13-11: Wate Pipe and Domains
1(Red) 0 (Green) (SRK 2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
62 |
Figure 13-12: Wate Pipe Anisotropy
Points and Domain 1 (SRK 2011)
13.11 |
Grade Estimation and Resource Classification
Criteria |
As noted above the 2011 model update
was restricted to the primary resource zone, constituting more than 80% of the
resource (Zone 1). The resources for Zones 2-4 are those calculated from the
2010 model and the grade estimation methodology remains that used in 2010.
With the limited sample set available (and erratic variography) an inverse to the distance power of two was chosen to weight grades selected in the search ellipse. The orientation of the search ellipse was controlled by the dynamic anisotropies as discussed in Section 16.8. Table 16‑6 and Table 16‑7 below summarize the interpolation parameters for the Zone 1 Domains.
Table 13-6: Estimation Parameters
(Domain 0)
SVOL |
Search Distance
(feet) |
Minimum Number
Of Composites
|
Maximum From
One Drillhole
|
CLASS |
X |
Y |
Z |
1 |
Inferred |
100 |
50 |
25 |
3 |
2 |
2 |
Inferred |
200 |
100 |
50 |
3 |
2 |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
63 |
Table 13-7: Estimation Parameters
(Domain 1)
SVOL |
Search Distance
(feet) |
Minimum Number
Of Composites
|
Maximum From
One Drillhole
|
CLASS |
X |
Y |
Z |
1 |
Inferred |
25 |
12.5 |
6 |
3 |
2 |
2 |
Inferred |
50 |
25 |
12 |
3 |
2 |
For both Domains, to preserve local
grade variation, a search neighborhood strategy with two search ellipse (SVOL)
volumes was employed. Only blocks not estimated with the first set of parameters
were estimated with a subsequent expanded search. A minimum of three two-foot
composites was required, with a maximum of two from any given hole, for
estimation with either of the search volumes.
Initially both Domains were assigned
grades using a database capped at 3.2 %eU3O8 with the
Domain 0 parameters above. Subsequently model blocks, inside of the area
delineated as Domain 1, were re-interpolated using a database capped at 4.6
%eU3O8 with the constrained Domain 1 parameters
tabulated above. A soft boundary has been formed where the influence on values
in excess of 3.2 were confined to blocks internal to the Domain while values
external to the Domain were also used. This can be seen on Figure 13.13 where
the grade transition across the Domains is not abrupt and on Figure 13.14 where
all blocks estimated with grades in excess of 3.2 are constrained to Domain 1.
Figure 13.15 displays a cross section through the higher grade Domain 1 and
Table 13-8 summarizes the intercepts.
Estimation parameters used in 2010 for
Zones 2-4 are similar to those tabulated above. For the 0.15%
eU3O8 threshold (Indicator 1) a minimum of three two-foot
composites was required, with a maximum of two from any given hole, for
estimation with either of the search volumes. For the 2.9%
eU3O8 threshold (Indicator 3) a minimum of one
two-foot composites was required, with a constrained search distance. Hard
boundary zonal controls were employed in that blocks coded with an indicator of
3 were assigned grades using only indicator 3 composites to form the higher
grade zone. Indicator 3 blocks not assigned grades during this process and
blocks coded indicator 1 were subsequently interpolated using only composites
coded as indicator 1.
For future models, alternative methods
could be adopted. With considerably more data, multiple indicator kriging
or conditional simulation methodologies could be examined. The grades of
eU3O8% were estimated using the dynamic search
orientation as described above, with a two-to-one anisotropy (search along
primary orientations was twice that across).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
64 |
Figure 13-13: Wate Pipe Estimated
Blocks and Anisotropy Points (SRK 2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
65 |
Figure 13-14: Wate Pipe Estimated
Blocks and Domain 1 Shell (SRK 2011)
Note: WT-29A on left and WT-05 on right
in Figure 16.15 above; holes are approximately 54ft apart; cross-sectional view
looking North.
Figure 13-15: Wate Pipe Estimated
Blocks, Drillholes WT-05 & WT-29A (SRK 2011)
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
66 |
Table 13-8: Contiguous 0.5ft
Higher-Grade intercepts WT-05 & WT-29A
WT-05 13.5'
eU3O8% (0.5 ft intervals) |
3.13 top |
2.32 |
3.13 |
3.13 |
3.50 |
3.98 |
4.00 |
4.00 |
4.00 |
4.00 |
4.00 |
4.00 |
3.78 |
3.47 |
3.03 |
2.67 |
2.47 |
2.43 |
2.02 |
1.74 |
1.91 |
2.20 |
2.21 |
1.97 |
1.98 |
1.66 |
1.07 btm |
|
WT-29A 12'
eU3O8% (0.5 ft intervals) |
0.91 top |
1.47 |
0.91 |
0.99 |
1.94 |
2.62 |
2.99 |
2.93 |
2.89 |
2.87 |
2.98 |
3.66 |
3.57 |
3.67 |
4.00 |
4.00 |
3.88 |
3.10 |
2.69 |
2.47 |
2.10 |
1.85 |
1.44 |
1.14 btm |
|
|
|
|
13.12 |
Block Model Validation & Mineral Resource
Sensitivity |
The block model was validated visually
through a comparison of estimated block grades and those of the original
composite file. The comparison is favorable as is a comparison against basic
average statistics. As noted, only limited intercepts are available for any
comparative analysis on a zone-by-zone basis.
Table 13-9 lists the resources estimated for each zone and the total for all
zones at a cutoff of 0.15% eU3O8. All resources are classified by CIM definitions. The cutoff
grade of 0.15% eU3O8 is based on a statistical
break (Figure 13-3) from
essentially non-mineralized to the major population of mineralization
(> 0.15%); and the simple estimate that 0.15% equates to 3 pounds
U3O8 per ton, and at a $38/pound uranium price, 0.15%
eU3O8 would have an in-place value of $114 per ton.
That value has a reasonable potential for economic extraction by underground
mining methods; no further work was done to determine a true mining cutoff grade
at this early stage of the project.
Table 13-9: Inferred Resource by
Zone & Total
|
Wate Breccia Pipe Inferred Resource |
|
0.15% eU3O8 |
|
Cutoff* |
|
Zone |
Cutoff |
U3O8% |
Tons (000) |
lb-U3O8 (000) |
|
1 |
0.15 |
0.84 |
58 |
971 |
|
2 |
0.15 |
0.61 |
11 |
130 |
|
3 |
0.15 |
0.31 |
2 |
10 |
|
4 |
0.15 |
0.58 |
1 |
7 |
|
|
|
0.79 |
71 |
1,118 |
* Note: Inferred Uranium resources
refers to global in-place CIM definitions of resources to which a mine design
has not yet been applied; although the above stated resources meet the
definition of having the potential for economic extraction at the cutoff
provided.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
67 |
13.14 |
Sensitivity of the Resource
Model |
As a check on the model, the following
analysis was performed:
|
|
VANE drillhole data were composited to single
intercepts within the wireframe shapes; |
|
|
|
|
|
All drillhole data assay intervals
(including historical intercepts) were then used in the block model grade
estimation; and |
|
|
|
|
|
The result is a block model that
replicates a polygonal or nearest-neighbor resource with one composite
for each mineralized horizon in each hole |
|
The tonnage and grade generated are not
considered a reportable resource estimate for two reasons:
|
|
There is very minimal discrimination of grade because of
the long intercept intervals, particularly in Zone 1 and this is not
acceptable to SRK as industry standard procedure; and |
|
|
|
|
|
There is no back-up information for the historical
drillholes to allow verification of that data; therefore the data are not
sufficient for reporting of resources. |
While the numbers generated by this
method are not reportable as a resource, it allows for use of all the drillhole
data on the same basis to determine an approximation of the tons and grade that
might result if all the data were used; and thus, a check on the method used for
reporting resources. The result presents a check that a resource approximating
1.0 million pounds U3O8 is achievable, as shown
in Table 13-10.
Table 13-10: Mineralization
Inventory Analysis Using all Drillhole Data as Long-interval composites
|
Wate Breccia Pipe Mineralization Check
Analysis |
|
0.15% eU3O8 Cutoff All drillholes used as
composite data* |
|
Zone |
Cutoff |
U3O8% |
Tons (000) |
lb-U3O8 (000) |
|
1 |
0.15 |
0.64 |
75 |
972 |
|
2 |
0.15 |
1.10 |
11 |
239 |
|
3 |
0.15 |
0.19 |
6 |
22 |
|
4 |
0.15 |
0.31 |
1 |
7 |
|
|
|
0.66 |
93 |
1,241 |
*Note: SRK does not consider the values
stated as a reportable resource by CIM or any other standard for reporting
mineral resources.
13.15 |
Conclusions and
Recommendations |
In SRKs opinion, to upgrade any
portion of the resource from Inferred to Indicated classification, will
require additional eU3O8% assay
information, either as new drilling or by securing and verifying the
historical drilling information, or a combination of both. There is
currently insufficient density of drilling information with assay data to
determine the optimal spacing of drillhole intercepts that will support an
Indicated classification.
The average resource grades of the
current resource and the historically reported numbers are similar. This
provides a level of confidence, that upon Energy Fuels obtaining additional
drilling information, it is reasonable to expect that the historical resource of
1.1 million pounds or more is achievable.
SRK notes that there are current
resources located outside the interpreted breccia pipe boundary. SRK considers
the pipe boundary to be approximate, and so has honored the drill data rather
than truncate the resource model wireframe shapes to the pipe boundary, as SRK
considers the accuracy of the wireframes to be at least as good as the pipe
boundary. There are also isolated drillhole intercepts internal to the pipe that have not been included in
the block model. Therefore, SRK considers the resource model to be neither
conservative nor optimistic with respect to modeled data.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
68 |
SRK notes that the mineralization
modeled are largely bodies located internal to the pipe boundary. Historical
mine production experience indicates that these breccia pipe deposits typically
have mineralization located on the perimeter of the pipes as well, an annular
ring mineralization. The RME historical reports and resources modeled the
mineralization in this manner. The vertically oriented perimeter mineralization
is very difficult to define with vertical drillholes and is best defined by fan
drilling off an access shaft developed outside the breccia pipe. SRK has not
modeled perimeter mineralization extending vertically on the walls of the
breccia pipe, as RME did, as there is insufficient drilling information there to
do so. If this mineralization can be sufficiently defined for the Wate Pipe, it
offers an upside resource potential. That potential can be defined from drilling
off an exploration shaft.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
69 |
Item 15 (Mineral Reserve Estimate)
is not applicable to this technical report on mineral resources. There are no
mineral reserve estimated for the Wate Pipe.
Item 16 (Mining Methods) and Item 17
(Recovery Methods) are not applicable to this technical report on mineral
resources.
Item 18 (Project Infrastructure) is
not applicable to this technical report on mineral resources other; basic
information is provided in Section 3.5
Item 19 (Market Studies and
Contracts) is not applicable to this technical report on mineral resources
Item 20 (Environmental Studies,
Permitting and Social and Community Impact) is not applicable to this technical
report on mineral resources). See Section 16 (Other Relevant Data and
Information) for basic information.
Item 21 (Capital and Operating
Costs), and Item 22 (Economic Analysis) are not applicable to this technical
report on mineral resources
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
70 |
15 |
Adjacent Properties (Item
23) |
There are no immediately adjacent
mineral properties that have bearing upon the Wate Project. However, there is
another uranium-bearing breccia pipe located less than 10 miles to the southeast
of the Wate Pipe. While this Pipe, named Tank 4 ½, has mineralized intercepts, a
resource is not yet defined. The Tank 4 ½ Pipe may provide some infrastructure
synergies with Wate, should this project advance to resource status with further
drilling.
In addition, there are other uranium
mineralized breccia pipes in the immediate area, less than 20 miles distant from
the Wate Pipe, including the SBF Pipe, Rose Pipe, and the Sage Pipe; any of
which might have possible future bearing on project development scenarios for
the Wate Pipe.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
71 |
16 |
Other Relevant Data and Information (Item
24) |
During 2008, exploration activities in
the National Forest south of the Grand Canyon National Park came under scrutiny
by various anti-nuclear and anti-mining environmental activist groups. Their
efforts were against the U.S. Forest Service (USFS) with regard to Plans of
Operation for exploration drilling; suggesting the USFS did not take into
account potential environmental damage that could occur as a result of
exploration drilling for uranium on National Forest lands near the Grand Canyon
National Park. The environmental special interest groups, and some local
politicians, were annoyed with the Finding of No Significant Impact (FONSI), as
determined by the USFS relating to planned drilling programs. A court case
ensued, and the result is that the USFS is now requiring an Environmental Impact
Statement (EIS) be done prior to drilling rather than an Environmental
Assessment (EA). Some local politicians had taken up the cause and had proposed
a ban on uranium exploration and mining within federal lands adjacent to Grand
Canyon National Park. On July 21, 2009, the Secretary of Interior issued a
2-year Segregation Order and proposed a 20-year withdrawal of approximately 1 M
acres of federal lands from mineral entry under the Mining Act of 1872,
consisting of BLM lands north of the Grand Canyon and USFS lands south of the
Grand Canyon. A regional EIS was initiated to study the potential impacts of
mining and the Draft EIS was released in February 2011, with the public comment
period ending on May 4, 2011. The decision to withdraw the lands from mineral
entry for 20 years was issued by a Us Department of Interior Record of Decision
(ROD) on January 9, 2012.. The ROD forced a halt to the drilling of exploration
targets in the National Forest (U.S Department of Interior, Jan. 2012). The
20-year withdrawal of activities for uranium on Forest Service lands adjacent to
the Grand Canyon National Park is still in effect.
This withdrawal has no effect on
private or State lands in the region, and no effect on Energy Fuels ability to
continue working on the Wate Pipe, which is on Arizona State lands, well outside
of National Forest lands.
As briefly discuss in Section 3.3,
Subsequent to the cessation of drilling activities in 2011, a Mineral
Development Report was completed by VANE and submitted to the Arizona State Land
Department, to aid in the process of conversion of the Mineral Prospecting
Permit to a Mineral Lease. The MDR was filed on November 19, 2012, and following
public comment was revised on October 27, 20014. The process to convert to a
Mineral Lease is well advanced, and in the final stages of State approval (pers.
Comm., K.Hefton, 2015).
The MDR is a comprehensive report that
examines the potential for economic development, in order for the State to issue
a Mineral Lease and assign a royalty rate. The MDR is, in the authors opinion,
a document similar in scope and content to a Preliminary Economic Assessment
(PEA). While not a PEA NI 43-101 Technical Report, it addresses all the typical
Sections in this technical report on resources, and in addition incudes
discussion on the following topics (Wate Mining Company LLC, 2012):
|
|
Economic Feasibility |
|
|
- |
Market Analysis |
|
|
- |
Costs and Operational Economic Parameters |
|
|
- |
State Trust Revenues |
|
|
Environmental Assessment, which
includes: |
|
|
- |
Soils, |
|
|
- |
Drainage and Erosion |
|
|
- |
Water Resources, |
|
|
- |
Biology |
|
|
- |
Cultural Resources |
|
|
- |
Hazardous materials |
|
|
- |
Wastes |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
72 |
|
|
- |
Air Quality |
|
|
- |
Visual and Noise Impacts |
|
|
- |
Socio-Economic Impacts |
|
|
Mine Operations Plan, which includes: |
|
|
- |
Site development |
|
|
- |
Mining |
|
|
- |
Processing |
|
|
- |
Infrastructure |
|
|
- |
Safety |
|
|
Reclamation and Closure Plan |
While the intent of the MDR is to
provide a potential mining and processing scenario to the State for their
purposes of determining a Mining Lease royalty rate; many of the inputs and
discussion are applicable to a PEA. SRKs understanding is the MDR had received
comment and feedback from the Arizona State Land Department, was revised by VANE
in 2014, and has been accepted by the State as part of the Process of final
approval of the Mineral Lease (approval pending). The MDR provides additional
Project information beyond the scope of this technical report on resources.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
73 |
17 |
Interpretation and Conclusion (Item
25) |
The Wate Uranium Breccia Pipe has been
historically explored to the point of resource estimation and planned project
development. Recent drilling confirmation by VANE has confirmed historically
defined high grades in excess of 1.0% eU3O8, and has
provided sufficient drilling information to estimate current resources
compliant with the CIM classification of Inferred resources.
The Wate Pipe is an exploration target
for potentially underground-mineable high-grade uranium mineralization (greater
than 0.5% U3O8). The Wate Pipe has current estimated
Inferred resources by CIM definitions of 71,000 tons grading 0.79%
eU3O8 for 1,118,000 contained pounds
eU3O8. This resource is based on only partial
confirmatory data with respect to historical drilling and resource estimates,
and is therefore considered by SRK to be a conservative estimate of the total
uranium mineralization in the pipe. The Wate Pipe is a high-grade uranium
deposit that justifies further drilling and pre-development work. The project
will have all the inherent opportunity and risk of similar mid-stage exploration
properties, as defined in the sections below.
The Project represents an attractive
mid-stage exploration property with current estimated resources established, and
the potential to increase the total resource tons and contained pounds. Energy
Fuels has reached an interim goal of achieving a resource estimate of +1.0
million contained pounds, which Energy Fuels considers a minimum requirement to
justify an exploration shaft for fan drilling to sufficiently define the
mineralization for mine planning purposes. Having reached that goal, Energy
Fuels preference is to advance the property by underground exploration.
17.1 |
Categories of Opportunity and Risk |
|
|
17.1.1 |
Resources |
The major opportunity at the Project is
to define additional uranium grades and intersections in the Wate Pipe, to fully
explore the extent of the deposit, and thus potentially add to the current
resource. The potential for vertically oriented perimeter mineralization exists,
which represents an up-side exploration potential best defined by fan drilling
from an exploration shaft.
17.1.2 |
Commodity Price Fluctuation |
|
|
|
Uranium spot market prices have come off the record highs
near $100/lb U3O8 of several years ago, yet remain
in the $40/lb range. This represents both an opportunity and a project
risk, since prices could fluctuate significantly. However, the relatively
high grade of the exploration target suggests that a uranium-bearing
breccia pipe with grades in excess of 0.50% U3O8
would be an attractive exploration target even at $40/lb. |
|
|
17.1.3 |
Infrastructure |
|
|
|
The area has well-developed infrastructure, with easy
access by paved roads, available electricity, labor, and equipment, and
therefore offers few impediments to the opportunity for potential project
development. However, water is a precious commodity and generally occurs
at >3,000 ft depths. Well drillers in the vicinity are experienced at
completing successful water wells to this depth, and this risk is
therefore possible to mitigate. |
|
|
17.1.4 |
Development Decision |
|
|
|
The relatively small deposit size and the depth suggests
that a point will be reached where it is more attractive to sink a shaft
and explore the deposit with underground drilling, than to continue
drilling from surface. This is a purely business financial risk decision
point: whether to drill for maximum resource definition from surface, or
to continue exploration toward resource/reserve development from
underground. Having reached the 1.0 million pound resource threshold, a
next logical decision for Energy Fuels is to sink an exploration shaft and
continue to define the mineralization through drift access and fan
drilling. |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
74 |
17.1.5 |
Metallurgical Characteristics |
|
|
|
Metallurgical risk factors are cost related. The uranium
mining industry is experienced with mining and milling these types of ore
deposits, and the current price of uranium is conducive to production.
Although there is no metallurgical information yet available, there is
nothing unusual anticipated with the uranium mineralization at Wate. Any
potential development of Wate would likely require shipment of ore to the
existing White Mesa mill in Blanding, Utah, |
|
|
17.1.6 |
Environmental/Socio-Economic
Considerations |
Environmental issues are always a risk
factor in project development. The risks can usually be mitigated by proactively
defining the risks and engaging the local populace and government administrators
and regulators. The advantages to uranium breccia pipe mining in Arizona are the
recent history of uranium mining activity and the small surface area of
potential disturbance. In addition, none of the historical Arizona breccia pipe
mines have radioactive mill tailings as a reclamation issue, as all ores were
trucked to the mills in Utah. After they were reclaimed in the late 1980s, the
former Hack Canyon, Pigeon, and Hermit mines of Energy Fuels located north of
the Grand Canyon are nearly indistinguishable from the surrounding land.
The current withdrawal of 1M acres of
federal lands in the region places further uncertainty on projects on Forest
Service lands; however, this withdrawal does not affect any activity on Arizona
State Land such as the Wate Pipe.
Mine development on Arizona State lands
would be beneficial economically to Arizonas state budgetary difficulties and
has been viewed in a positive light by the Arizona governmental agencies, which
is a positive aspect of the project.
SRK considers the upside opportunities
to justify continued exploration activities at the Wate Pipe. In SRKs opinion,
the risks are operational and commodity price driven, and all but the commodity
price can be quantified and mitigated as the project moves forward.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
75 |
18 |
Recommendations (Item 26) |
To advance the Project, SRK recommends
two avenues for Energy Fuels to acquire additional drilling information for the
Wate Pipe:
|
|
If possible, secure the historical drill data
for the Project; |
|
|
Conduct additional drilling at the Wate Pipe to
increase the confidence and perhaps the classification of the current
resource. |
SRK recommends a completion of the
acquisition of all historical project data from Taiwan Power if financially
acceptable terms can be agreed. That historical database will provide sufficient
additional information to allow for updating of the 3-D geological model and
achieve an increased confidence in the resource estimate. VANE had attempted and
nearly exhausted the possibility of securing that back-up historical data.
Therefore, the primary recommendation is further confirmation drilling.
SRK recommends Energy Fuels conduct
in-fill drilling to demonstrate sufficient continuity to mineralization, and to
hopefully increase the confidence classification of the resource. At this point
in time it may be more advantageous, technically and from a cost perspective, to
conduct further resource definition drilling from an exploration shaft.
SRK does not consider it feasible to
define resources to an Indicated or Measured classification without close-spaced
underground drilling, as fan drilling from several different levels of an
exploration shaft.
A program to develop an exploration
shaft and underground resource definition drilling may be justified by the +1.0
million pound Inferred resource at the Wate Pipe; however, a scoping study will
determine that in greater detail.
As the cost to develop an exploration
shaft is substantial, SRK recommends the next step in the program should be a
scoping study to determine the economic potential of the project, as a Phase I
program. A Phase II program would include the exploration shaft, extensive
underground resource definition drilling, and a pre-feasibility study. The
recommended programs and budgets are presented below.
18.1 |
Proposed Scoping Study Phase
I |
A Phase I program will consist of a
scoping study to determine the economic viability of the current Inferred
resource, by developing a mine plan and costing the conceptual mining,
processing, and infrastructure for development of the Wate Pipe mineralization.
The objective is to verify that a 1.0M pound resource is sufficient to develop
at break-even or better economics.
The current resource model would be
used for development of a conceptual mine plan with shaft access. Mine
development capital and operating costs would be estimated. Processing options
would be conceptually reviewed and costs estimated accordingly. Surface
facilities and other infrastructure costs would be estimated as well. A
technical economic model will be produced to determine the potential economic
viability of the project.
Phase I-Scoping Study:
|
Scoping Study Report (Preliminary Economic
Assessment NI 43-101) |
$200,000 |
The estimated time to complete a
scoping study is approximately 4 to 6 months.
Contingent upon positive economics in
the Scoping Study, a Phase II program would include the cost to develop an
exploration shaft, conduct extensive underground resource definition drilling,
collect a sufficient sample volume for a comprehensive metallurgical test
program to verify the metallurgical tests currently being conducted, and conduct
a pre-feasibility level study.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
76 |
|
Construction of an exploration shaft to 1500 feet @
$10,000/ft |
$15,000,000 |
|
Development of 3 sub-levels and drill stations for fan
drilling |
$ 1,000,000 |
|
Underground Core drilling, 8,000 feet @ $100/ft |
$ 800,000 |
|
Surface infrastructure for Shaft |
$10,000.000 |
|
Pre-Feasibility
engineering study and contingency |
$
1,000,000 |
|
Sub-Total
Phase II |
$27,800,000 |
The estimated time and cost for Phase
II work is approximately at 18 to 24 months and US$27.8 million.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
77 |
Anonymous, 1991. Evaluation of RME
Partners L.P. Wate Uranium Project; unpublished inter-company report by Rocky
Mountain Energy, 8p., 10figures.
Beus, S.S., 1989, Devonian and
Mississippian geology of Arizona, in Jenney, J.P., and Reynolds, S.J., Geologic
evolution of Arizona: Tucson, Arizona Geological Society Digest 17, p. 287-311.
Blakey, R.C., 1989, Triassic and
Jurassic geology of the southern Colorado Plateau, , in Jenney, J.P., and
Reynolds, S.J., Geologic evolution of Arizona: Tucson, Arizona Geological
Society Digest 17, p.369-396.
Blakey, R.C., and Knepp, Rex, 1989,
Pennsylvanian and Permian geology of Arizona, in Jenney, J.P., and Reynolds,
S.J., Geologic evolution of Arizona: Tucson, Arizona Geological Society Digest
17, p. 313-327.
Cheevers, C.W., and Rawson, R.R., 1979,
Facies analysis of the Kaibab Formation in northern Arizona, southern Utah and
southern Nevada, in Four Corners Geological Society Guidebook, 9th field
Conference, Permianland, p. 105-113.
Chenoweth, W.L., 1986, The Orphan Lode
mine, Grand Canyon Arizona, a case history of a mineralized collapse breccia
pipe: U.S. Geological Survey Open-File Report 86-510, 126 p.
Cooper, W.C., 1986, Uranium production,
in Bever, M.B., ed., Encyclopedia of Materials Science Engineering: Oxford,
England, Pergamon Press, v. 7, p. 5215-5218.
Davis, L. and Groom, R., 2008,
Preliminary reports on VTEM geophysical data: PetRos EiKon Inc., severa
preliminary PowerPoint slide presentation print-outs of geophysical interpretive
data for the Miller, Otto, SBF, and Red Dike breccia pipes.;
Energy Fuels Inc., February 17, 2015,
Press Release, Energy Fuels Acquires 50% Interest in the High-Grade Wate Uranium
Project in Arizona, 3 pages.
Finch, W.I., 1992, Descriptive model of
solution-collapse breccia pipe uranium deposits, in Bliss, J.D., ed.,
Developments in mineral deposit modeling: U.S. Geological Survey Bulletin 2004,
p. 33-35.
Flanigan, V.J., Mohr, P.J., Tippens,
C., and Senterfit, R.M., 1986, Electrical character of collapse breccia pipes on
the Coconino Plateau, northern Arizona: U.S. Geological Survey Open-File Report
86-521, 50 p.
Gornitz, V., Wenrich, K.J., Sutphin,
H.B., and Vidale-Buden, R., 1988, Origin of the Orphan mine breccia pipe uranium
deposit, Grand Canyon, Arizona, in Vassiliou, A.H., Hausen, D.M., and Carson,
D.J., eds., Process mineralogy VII As applied to separation technology:
Warrendale, Penn., The Metallurgical Society, p. 281-301.
Halmbacher, Gerald P., May 26, 1998, An
Evaluation of the Wate Breccia Pipe Uranium Deposit (Wate Project) and An
Appraisal of Arizona State Mineral Lease 11-52290, prepared for the Arizona
State Land Department, by Headquarters West, Ltd., 26 p., 9 exhibits.
Hefton, Kris, March 2, 2015, Personal
communication regarding the status of Project activities at the Wate Pipe
Krewedl, D.A., and Carisey, JC., 1986,
Contributions to the geology of uranium mineralized breccia pipes in northern
Arizona: Arizona Geological Society Digest, volume 16, p. 179-186.
Ludwig, K.R., Rasmussen, J.D., and
Simmons, K.R., 1986, Age of uranium ores in collapse-breccia pipes in the Grand
Canyon area, northern Arizona (abstract): Geological Society of America
Abstracts with Programs, v. 18, no. 5, p. 392.
Ludwig, K.R., and Simmons, K.R., 1992,
U-Pb dating of uranium deposits in collapse breccia pipes of the Grand Canyon
region: Economic Geology, v. 87, p. 1747-1765.
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page 78 |
McKee, E.D., 1969, Paleozoic rocks of
the Grand Canyon: Four Corners Geological Society, Geology and Natural History
of the Fifth Field Conference, Powell Centennial River Expedition, p. 78-90.
U.S. Department of Interior, January 9,
2012, Record of Decision, Northern Arizona Withdrawal, Mohave and Coconino
Counties, Arizona, 24 pages
Van Gosen, B.S., and Wenrich, K.J.,
1989, Ground magnetometer surveys over known and suspected breccia pipes on the
Coconino Plateau, northwestern Arizona: U.S. Geological Survey Bulletin 1683-C,
31 p.
Vane Minerals (US) LLC, February 23,
2011, Operating Agreement for Wate Mining Company LLC between Vane Mineral (US)
LLC and Uranium One Exploration U.S.A. Inc., 53 pages; and 3 Amendments.
Vane Minerals (US) LLC, May 12, 2011,
Updated NI 42-101 Technical Report on Resources, Wate Uranium Breccia Pipe,
Northern Arizona, prepared by SRK Consulting, 105 pages.
Verbeek, E.R., Grout, M.A., and Van
Gosen, B.S., 1988, Structural evolution of a Grand Canyon breccia pipe The
Ridenour copper-vanadium-uranium mine, Hualapai Indian Reservation, Coconino
County, Arizona: U.S. Geological Survey Open-File Report 88-006, 75 p.
Wate Mining Company LLC, November 19,
2012, revised October 27, 2014; Mineral Development Report, Mineral Lease
Application 11-116806, for Minerals Section Natural Resources Division, Arizona
State Land Department, prepared by Vane Minerals (US) LLC, Uranium One
Exploration U.S.A. Inc.
Wenrich, K.J., 1985, Mineralization of
breccia pipes in northern Arizona: Economic Geology, v. 80, p. 1722-1735.
Wenrich, K.J., 1986, Geochemical
exploration for mineralized breccia pipes in northern Arizona, U.S.A.: Applied
Geochemistry, v. 1, no. 4, p. 469-485.
Wenrich, K.J., and Sutphin, H.B., 1988,
Recognition of breccia pipes in northern Arizona: Arizona Bureau of Geology and
Mineral Technology, Fieldnotes, v. 18, no. 1, p. 1-5, 11.
Wenrich, K.J., and Sutphin, H.B., 1989,
Lithotectonic setting necessary for formation of a uranium-rich,
solution-collapse breccia-pipe province, Grand Canyon region, Arizona: U.S.
Geological Survey, Open-File Report 89-0173, 33 p.
Wenrich, K.J., Chenoweth, W.L., Finch,
W.I., and Scarborough, R.B., 1989, Uranium in Arizona, in Jenney, J.P., and
Reynolds, S.J., Geologic evolution of Arizona: Tucson, Arizona Geological
Society Digest 17, p. 759-794.
Wenrich, K.J., Verbeek, E.R., Sutphin,
H.B., Modreski, P.J., Van Gosen, B.S., and Detra, D.E., 1990, Geology,
geochemistry, and mineralogy of the Ridenour mine breccia pipe, Arizona: U.S.
Geological Survey Open-File Report 90-0504, 66 p.
Wenrich, K.J., Van Gosen, B.S., and
Finch, W.I., 1995, Solution-Collapse Breccia Pipe U Deposits, Model 32e (Finch,
1992).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
79 |
Assay: |
The chemical analysis of mineral samples to
determine the metal content. |
Background Radiation |
That portion of the radiometric total count reading
(CPS or counts per second) that are |
|
attributable to non-recoverable uranium, potassium
and thorium radiation on gamma |
|
logs |
Concentrate: |
A metal-rich product resulting from a mineral
enrichment process such as gravity |
|
concentration or flotation, in which most of the
desired mineral has been separated from |
|
the waste material in the ore. |
Crushing: |
Initial process of reducing ore particle size to
render it more amenable for further |
|
processing. |
Dilution: |
Waste, which is unavoidably mined with ore. |
Dip: |
Angle of inclination of a geological feature/rock
from the horizontal. |
Fault: |
The surface of a fracture along which movement has
occurred. |
Footwall: |
The underlying side of an orebody or stope. |
Gangue: |
Non-valuable components of the ore. |
Grade: |
The measure of concentration of gold within
mineralized rock. |
Hanging wall: |
The overlying side of an orebody or slope. |
Lithological: |
Geological description pertaining to different rock
types. |
Milling: |
A general term used to describe the process in
which the ore is crushed and ground |
|
and subjected to physical or chemical treatment to
extract the valuable metals to a |
|
concentrate or finished product. |
Mineral/Mining Lease: |
A lease area for which mineral rights are held. |
Radiation |
Or radioactivity; meaning the emissions of alpha,
beta, and gamma rays from naturally |
|
occurring minerals and rocks. |
Scintillometer |
A hand-held instrument or down-hole probe that
detects radiation as counts per second |
|
(CPS) |
Sedimentary: |
Pertaining to rocks formed by the accumulation of
sediments, formed by the erosion of |
|
other rocks. |
Spectrometer |
An instrument that measures CPS radioactivity and
differentiates the total CPS spectral |
|
radiation emissions into that derived from
potassium (K), uranium (U), and thorium (Th), |
|
the most commonly occurring radioactive elements
found in rocks and minerals. |
Stratigraphy: |
The study of stratified rocks in terms of time and
space. |
Strike: |
Direction of line formed by the intersection of
strata surfaces with the horizontal plane, |
|
always perpendicular to the dip direction. |
Sulfide: |
A sulfur-bearing mineral. |
Tailings: |
Finely ground waste rock from which valuable
minerals or metals have been extracted. |
Total Count |
Total CPS from all radioactive sources, U, K, and
Th. Total Count and CPS are |
|
commonly used synonymously. |
Total Expenditure: |
All expenditures including those of an operating
and capital nature. |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
80 |
List of Abbreviations
The English system has been used
throughout this report unless otherwise stated. All currency is in U.S. dollars.
Market prices are reported in US$ per pound of U3O8.
Tons are short tons of 2,000 lbs. The following abbreviations may be used
in this report.
|
Abbreviation |
Unit or Term |
|
AA |
atomic absorption |
|
|
Counts per second; a relative measure of |
|
CPS |
radioactivity using a hand-held scintillometer or a |
|
|
down-hole radiometric probe or counts. |
|
FA |
fire assay |
|
ft |
foot (feet) |
|
ft2 |
square foot (feet) |
|
ft3 |
cubic foot (feet) |
|
gal |
gallon |
|
gpm |
gallons per minute |
|
ICP |
induced couple plasma |
|
Lb (lbs) |
pound (pounds |
|
masl |
mean above sea level |
|
NI 43-101 |
Canadian National Instrument 43-101 |
|
Mlbs |
Million pounds |
|
OSC |
Ontario Securities Commission |
|
% |
percent |
|
ppb |
parts per billion |
|
ppm |
parts per million |
|
QA/QC |
Quality Assurance/Quality Control |
|
RC |
reverse circulation drilling |
|
RQD |
Rock Quality Description |
|
SG |
specific gravity |
|
st (ton) |
short ton (2,000 pounds) |
|
U |
Element Uranium, deposited as a uranium oxide |
|
|
(U3O8) |
|
|
Formula for uranium oxide that is a common way of |
|
U3O8 |
reporting uranium determinations by chemical |
|
|
analyses |
|
|
Equivalent U3O8 determined by calibrations of |
|
eU3O8 |
scintillometer probes to a sample of known uranium |
|
|
concentration. |
|
XRF |
x-ray fluorescence |
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
81 |
Units of Measure
The following list of conversions is
provided for the convenience of readers that are more familiar with the Imperial
system or the metric system.
Linear Measure
|
1 inch (in.) = |
2.54 centimeters |
|
|
|
|
1 foot (ft) = |
0.3048 meter |
|
|
|
|
1 yard (yd) = |
0.9144 meter |
|
|
|
|
1 mile (mi) = |
1.6093 kilometers |
Area Measure
|
1 acre = |
0.4047 hectare |
|
|
|
|
|
|
1 square mile = |
640 acres |
= 259 hectares |
Weight
|
1 short ton = |
2000 pounds = 0.9072 tonne (metric ton) |
|
|
|
|
1 pound = |
16 oz = 0.454 kg |
Analytical Values
gram/tonne (g/t) = 1.0ppm
100ppm U3O8
= 84.8ppm U
Analytical results are reported as
parts per million (ppm) contained for uranium (the element U, often
analyzed for and expressed as U3O8). Uranium
determinations by the equivalent of chemical analyses will be stated in this
report as ppm U3O8. Uranium determinations by conversion
of radiometric probe measurements will be stated in this report as ppm
eU3O8 (e for equivalent). Other elements are
reported as percent (%), or are reported as parts per million (ppm).
SRK Consulting |
|
NI 43-101
Technical Report on Resources Wate Uranium Breccia Pipe Northern
Arizona, USA. |
Page
82 |
Appendix A: Author Certificates
CERTIFICATE of AUTHOR
Allan V. Moran
|
Associate Principal Geologist |
|
SRK Consulting (U.S.), Inc. |
|
3275 W. Ina Rd, Suite 240 |
|
Tucson, Arizona, U.S.A. 85741 |
|
Phone: 520-544-3688 |
|
Email: amoran@srk.com |
CERTIFICATE of AUTHOR
1. |
I, Allan V. Moran, a Registered Geologist and a Certified
Professional Geologist, do hereby certify that: |
|
|
2. |
I am currently employed as a consulting geologist to the
mining and mineral exploration industry, as Principal Geologist with SRK
Consulting (U.S.) Inc., with an office address of 3275 W. Ina Rd., Tucson,
Arizona, USA, 85741. |
|
|
3. |
I graduated with a Bachelors of Science Degree in
Geological Engineering from the Colorado School of Mines, Golden,
Colorado, USA; May 1970. |
|
|
4. |
I am a Registered Geologist in the State of Oregon, USA,
# G-313, and have been since 1978. I am a Certified Professional Geologist
through membership in the American Institute of Professional Geologists,
CPG - 09565, and have been since 1995. |
|
|
5. |
I have been employed as a geologist in the mining and
mineral exploration business, continuously, for the past 44 years, since
my graduation from university. |
|
|
6. |
I have read the definition of qualified person set out
in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a qualified person for the purposes of NI 43-101. The Technical
Report is based upon my personal review of the information provided by the
issuer. My relevant experience for the purpose of the Technical Report
is: |
|
|
Vice President and U.S. Exploration Manager for
Independence Mining Company, Reno, Nevada, 1990-1993 |
|
|
|
|
|
Manager, Exploration North America for Cameco
Gold Inc., 1988-2002 |
|
|
|
|
|
Exploration Geologist for Freeport McMoRan
Gold, 1980-1988 |
|
|
|
|
|
Uranium exploration experience from 1975 to
1980 with Kerr McGee Resources, and Freeport Exploration |
|
|
|
|
|
Experience in the above positions working with
and reviewing resource estimation methodologies, in concert with resource
estimation geologist and engineers. |
|
|
|
|
|
As a consultant, I completed several NI 43-101
Technical reports, 2003-2010. |
7. |
I am responsible for the content, compilation, and
editing of all sections of the technical report titled NI 43-101
Technical Report on Resources, Wate Uranium Breccia Pipe, Northern
Arizona, and dated March 10, 2015 (the Technical Report) relating to
Energy Fuels Resources (US) Incs interest in the Project. I have
personally visited the Project in the field on January 04, 2009. |
8. |
I have had prior involvement with the property that is
the subject of the Technical Report; specifically, a prior NI 43-101
technical report dated May 19, 2010, and updated reports dated November
04, 2010 and May 13, 2011, as referenced in Section 1.1.2 of this report. |
|
|
9. |
I am independent of the issuer applying all the tests in
Section 1.5 of National Instrument NI 43-101. |
|
|
10. |
I have read NI 43-101 and Form 43-101F1, and the
Technical Report has been prepared in compliance with that instrument and
form. |
|
|
11. |
I consent to the filing of the Technical Report with any
stock exchange and other regulatory authority and any publication by them
for regulatory purposes, including electronic publication in the public
company files on their websites accessible by the public, of the Technical
Report. |
|
|
12. |
As of March 22, 2011, the Effective Date of the Report
(effective date of current resources), to the best of my knowledge,
information and belief, the portions of the Technical Report I am
responsible for (all Sections) contains all scientific and technical
information that is required to be disclosed to make the Technical Report
not misleading. |
Dated in Tucson, Arizona, March 10, 2015. |
|
|
Allan V. Moran |
CERTIFICATE of AUTHOR
Frank A. Daviess
Principal Resource Geologist
SRK
Consulting (U.S.), Inc.
Email: fdaviess@comcast.net
I, Frank A Daviess do hereby certify that:
1. |
I am currently employed as a consulting resource
geologist to the mining and mineral exploration industry and I am
currently under contract as an associate Principle Resource Geologist with
SRK Consulting (U.S.) Inc., with an office address of 7175 W. Jefferson
Avenue, Suite 3000 Lakewood, Colorado, U.S. 80235. |
|
|
2. |
I graduated from the University Of Colorado, Boulder,
Colorado, USA with a B.A. in Geology in 1971 and a M.A. in Natural
Resource Economics and Statistics in 1975 |
|
|
3. |
I am a Member of the Australasian Institute of Mining and
Metallurgy (Registration No. 226303). |
|
|
4. |
I am a Registered Member of the Society for Mining,
Metallurgy and Exploration, Inc. (Registration No. 0742250). |
|
|
5. |
I have been employed as a geologist in the mining and
mineral exploration business, continuously, for the past 40 years, since
my graduation from university. |
|
|
6. |
I have read the definition of qualified person set out
in National Instrument 43-101 (NI 43-101) and certify that by reason of
my education, affiliation with professional associations (as defined in NI
43-101) and past relevant work experience I fulfill all the requirements
to be a qualified person for the purposes of NI 43-101. I have authored
sections of the Technical Report. The Technical Report is based upon my
personal review of the information provided by the issuer. My relevant
experience for the purpose of input to the Technical Report
is: |
|
|
Specialization in the estimation, assessment
and evaluation of mineral resources including uranium since 1975. |
|
|
|
|
|
Specialization in uranium resource estimation
experience as an Ore Reserve Analyst, US Department of Energy, Resource
Division, Grand Junction, CO, 1975-1978 |
7. |
I am responsible for the Mineral Resource Estimate
section (Section 13) of the technical report titled NI 43-101 Technical
Report on Resources, Wate Uranium Breccia Pipe, Northern Arizona, and
dated March 10, 2015 (the Technical Report) relating to Energy Fuels
Resources (US) Incs interest in the Project. I have personally not
visited the project site in the field. |
|
|
8. |
I have had prior involvement with the property that is
the subject of the Technical Report; specifically, a prior NI 43-101
technical report dated May 19, 2010, and updated reports dated November
04, 2010 and May 13, 2011, as referenced in Section 1.1.2 of this report. |
|
|
9. |
I am independent of the issuer applying all the tests in
Section 1.5 of National Instrument NI 43-101. |
|
|
10. |
I have read NI 43-101 and Form 43-101F1, and the
Technical Report has been prepared in compliance with that instrument and
form. |
|
|
11. |
I consent to the filing of the Technical Report with any
stock exchange and other regulatory authority and any publication by them
for regulatory purposes, including electronic publication in the public company files on their websites
accessible by the public, of the Technical Report. |
12. |
As of March 22, 2011, the Effective Date of the Report
(effective date of current resources), to the best of my knowledge,
information and belief, the portions of the Technical Report I am
responsible for (Section 13 Mineral Resource Estimate) contains all
scientific and technical information that is required to be disclosed to
make the Technical Report not misleading. |
Dated in Denver, Colorado, March 10, 2015
Signature of Co-Author
Frank Daviess
UPDATED
TECHNICAL
REPORT
ON
SAGE PLAIN PROJECT
(Including
the Calliham Mine)
San Juan County, Utah, U.S.A.
Prepared for Energy Fuels Inc.
In Compliance with Canadian National Instrument 43-101
Standards of Disclosure for Mineral Projects
Prepared by
Douglas C. Peters, Certified Professional Geologist
NI 43-101 Qualified Person
Peters Geosciences
Golden, Colorado
Report Date: March 18, 2015
Updated Technical Report on Sage Plain Project March 2015
|
0 |
Table of Contents
Contents
1.0 |
Summary |
4 |
|
1.1 |
Project
Description and Location |
4 |
|
1.2 |
Accessibility,
Climate, Local Resources, Infrastructure and Physiography |
5 |
|
1.3 |
History |
5 |
|
1.4 |
Geological
Setting |
6 |
|
1.5 |
Exploration |
6 |
|
1.6 |
Mineralization |
6 |
|
1.7 |
Drilling |
6 |
|
1.8 |
Sampling
and Analysis |
7 |
|
1.9 |
Security
of Samples |
7 |
|
1.10 |
Mineral
Resources |
7 |
|
1.11 |
Mining
Operations |
9 |
|
1.12 |
Exploration
and Development Recommendations |
9 |
2.0 |
Introduction |
10 |
3.0 |
Reliance
on Other Experts |
11 |
4.0 |
Property
Description and Location |
12 |
5.0 |
Accessibility,
Climate, Local Resources, Infrastructure, and Physiography |
15 |
6.0 |
History |
17 |
7.0 |
Geological
Setting and Mineralization |
20 |
|
7.1 |
Regional
Geology |
20 |
|
7.2 |
Local
Geologic Detail |
22 |
|
7.3 |
Mineralization |
27 |
8.0 |
Deposit
Types |
29 |
9.0 |
Exploration |
31 |
10.0 |
Drilling |
32 |
11.0 |
Sample
Preparation, Analyses, Security |
34 |
12.0 |
Data
Verification |
35 |
13.0 |
Mineral
Processing and Metallurgical Testing |
37 |
14.0 |
Mineral
Resource Estimates |
38 |
|
14.1 |
Exploration
Targets |
42 |
15.0 |
Mineral
Reserves Estimates |
44 |
16.0 |
Mining
Method |
45 |
17.0 |
Recovery
Methods |
47 |
18.0 |
Project
Infrastructure |
48 |
19.0 |
Market
Studies and Contracts |
50 |
|
19.1 |
Uranium
Market and Price |
51 |
|
19.2 |
Vanadium
Market and Price |
53 |
20.0 |
Environmental
Studies, Permitting and Social or Community Impact |
54 |
21.0 |
Capital
and Operating Costs |
58 |
22.0 |
Economic
Analysis |
59 |
23.0 |
Adjacent
Properties |
60 |
Updated Technical Report on Sage Plain Project March 2015 |
1 |
24.0 |
Other
Relevant Data and Information |
62 |
25.0 |
Interpretations
and Conclusions |
63 |
26.0 |
Recommendations |
64 |
27.0 |
References |
65 |
28.0 |
Certificate
of Qualifications and Signature |
67 |
List of Tables and Illustrations:
Table 1.1 Summary of Measured, Indicated,
and Inferred Mineral Resources for the Sage Plain Project |
8
|
|
|
Table 14.1 Sage Plain Leases Measured,
Indicated, and Inferred Mineral Resources |
40 |
|
|
Figure 4-1 Index Map |
Appendix |
|
|
Figure 4-2 Topographic Map |
Appendix |
|
|
Figure 4-3 Historical Mine Map |
Appendix |
|
|
Figure 4-4 Surface Ownership Map |
Appendix |
|
|
Figure 4-5 Mineral Ownership Map |
Appendix |
|
|
Figure 7-1 Principal Uranium Deposits &
Major Structures of the Colorado Plateau |
Appendix |
|
|
Figure 7-2 Generalized Stratigraphic
Section |
Appendix |
|
|
Figure 7-3 Index Map: Salt Wash
Uranium-Vanadium Deposits in and Around the Uravan Mineral Belt |
|
|
|
Figure 7-4 Geologic Map |
Appendix |
|
|
Figure 7-5 Cross Section A |
Appendix |
|
|
Figure 7-6 Major Salt Wash Stream Channels
|
Appendix
|
|
|
Figure 8-1 Measured, Indicated, and
Inferred Resources |
Appendix |
|
|
of the Sage Plain Property Map |
|
Updated Technical Report on Sage Plain Project March 2015 |
2 |
Figure 8-2 Stratigraphic Cross Section,
Calliham Mine A-A |
Appendix |
|
|
Figure 8-3 Stratigraphic Cross Section,
A-A and B-B |
Appendix
|
Updated Technical Report on Sage Plain Project March 2015 |
3 |
Updated Technical Report on
Energy Fuel Incs
Sage
Plain Project
San Juan County, Utah
1.0 Summary
1.1 Project Description and Location
The Energy Fuels Inc (EFI) Sage Plain Project is
located near the southwest end of the Uravan Mineral Belt. It consists of three
private mineral leases, three Utah State mineral leases, and one directly owned
private parcel in east-central San Juan County, Utah. The combined 3,040 acres
of the property is comprised of approximately 1,680 acres of leased fee land in
sections 21, 27, 28 and 29, T32S, R26E, SLPM, about 1,280 acres of Utah State
School and Institutional Trust Lands Administration (SITLA) land in sections 16
and 32, T32S, R26E, and 80 acres of land owned by Energy Fuels in section 33,
T32S, R26E.
Two private leases and the Utah State leases were held by
Colorado Plateau Partners LLC (CPP). CPP was a 50:50 joint venture
between EFIs former subsidiary Energy Fuels Resources Corporation
(EFRC) and Lynx-Royal JV (Lynx-Royal). EFRC bought-out the 50%
owned by Lynx-Royal in October 2012 and EFRC assigned its consequent 100%
interest in CPP to EER Colorado Plateau LLC (EFRCP), an affiliated
Colorado subsidiary of EFI in September 2014. The other private lease is held
solely by EFRCP, having been assigned from EFRC in September 2014. EFRCP has the
right to use any of the surface necessary for exploration and mining activities
by virtue of the leases or ownership.
The various parcels of the project were acquired in stages.
EFRCP was successful bidder on two SITLA mineral leases in 2007. A third lease
was awarded to EFRCP in March 2011. These were subsequently assigned to CPP. The
SITLA leases have initial terms of 10 years at a rental price of $1.00 per acre.
They have provisions allowing for renewals for a second 10-year term with
increased rental and advanced royalties. Production royalty rates on SITLA
leases are 8% on uranium and 4% on vanadium.
EFRCP purchased the lease on the private Calliham parcel in
February 2011 from NUVEMCO. The lease was effective as of March 8, 2007 and can
be held indefinitely by an annual advanced royalty payment of $10,000. It
carries a production royalty of 5% on uranium and 8% on vanadium. The Crain
lease was purchased in July 2011 from Uranium Energy Corporation. It was
effective on April 19, 2005 and was renewed by a one-time payment for a second
5-year term in April 2010. A renewal of this lease to keep it active beyond
April 2015 is in progress. A production royalty of 6.25% on uranium and 5% on vanadium is reserved to Crain. The Skidmore lease
covering land owned by J.H. Ranch, Inc., was acquired in October 2011 from a
private group when it exercised an option to lease with J.H. Ranch. The lease
has a primary term of 20 years. EFRCP has amended the lease, deferring advanced
royalty payments until after October 2016 by continuing to make annual lease
payments (the final lease payment of $62,500 will be due in November 2015).
Production royalty here will be at a rate of 12.5% of the value of crude ore.
EFRCP bought 80 acres of fee land (surface only) on which the reclaimed Calliham
mine portal is located from Umetco in May 2012.
Updated Technical Report on Sage Plain Project March 2015 |
4 |
There are no environmental liabilities on any of the properties
because reclamation associated with past exploration and production is complete.
The portal site of the Calliham mine is on the private parcel owned by EFRCP. It
was totally reclaimed and the permit terminated in 2000. A mine permit through
the State of Utah and associated air and water permits will be required before
EFRCP can reopen the Calliham mine, located on private land. EFRCP has performed
much of the required baseline data gathering work and permit applications are
nearly ready to file.
1.2 Accessibility, Climate, Local
Resources, Infrastructure and Physiography
The property lies some 15-17 air miles northeast of Monticello,
Utah. The Sage Plain Project property can be accessed from the north, south, and
east on paved, all-weather county roads connecting to State and U.S. highways.
The nearest towns with stores, restaurants, lodging, and small industrial supply
retailers are Monticello, Utah, 26 road miles to the west, and Dove Creek,
Colorado, 20 road miles to the southeast. Larger population centers with more
supplies and services are available farther away at Moab, Utah (61 road miles to
the north) and Cortez, Colorado (54 road miles to the southeast).
The region of the Sage Plain Project is characterized by a
sparsely-vegetated, relatively flat plain. It lies in an elevation range for
6,950 to 7,200 feet, is semi-arid, and accessible year-round. The region has a
long history of mining, ranching, farming, and oil and gas production.
Therefore, even though the regional towns are small, they have adequate services
and supplies to support a project the size of the proposed Calliham mine. The
regional grid of electrical transmission and distribution lines simultaneously
supported the mine in the EFRCP project area plus the large Deremo mine operated
by Umetco Minerals, 2 miles to the southeast, and the Silver Bell and Wilson
mines, 1 ½ miles to the north. The grid remains adequate for any future mine
operations by EFRCP.
1.3 History
The land and mineral rights ownership history was covered under
section 1.1 above. Exploration drilling by various companies in the 1960s and
1970s discovered uranium-vanadium deposits in the Sage Plain area. The historic
underground Calliham mine accessed the three private leases, but has been idle
for about 20 years. It and the nearby Sage mine (one mile to the southeast) were
operated in the 1970s to early 1980s by Atlas Minerals. The Calliham mine was
acquired by Umetco Minerals in 1988 and operated briefly in 1990-1991. Umetco
also operated the Silver Bell and Wilson mines, 1 ½ miles to the north. All
mines ceased production due to depressed uranium and vanadium prices, not because they were depleted. The Calliham is totally
reclaimed. Historic production from the Calliham by Atlas and Umetco, combined,
was approximately 222,000 tons at average grades of 0.15% U3O8 and 0.92% V2O5.
Updated Technical Report on Sage Plain Project March 2015 |
5 |
1.4 Geological Setting
The Sage Plain District (also referred to as the Egnar District
or Summit Point District) is a portion of the greater Slick Rock District. It is
the southwest continuation into Utah of the prolific Uravan Mineral Belt. Here,
the host sandstones of the upper part of the Salt Wash Member of the
Jurassic-aged Morrison Formation are not exposed. They are covered by
Cretaceous-aged sediments or the upper Morrison Formations Brushy Basin Member.
Due to the deeper burial of the mineralized Salt Wash Member in the Sage Plain
area, discovery of economic deposits here lagged many years behind the
production from the same host rocks elsewhere in the Slick Rock District a few
miles to the northeast in Colorado. At Slick Rock, mining and milling of
radium-uranium-vanadium ores from the Salt Wash has occurred since 1901. This
part of the Uravan Mineral Belt has a significantly higher ratio of V2O5:U3O8 in
the ore than the deposits farther north.
1.5 Exploration
The uranium-vanadium deposits at and near the project are
buried 500 to 750 feet deep. All exploration work, therefore, has been done by
drilling from the surface. Outcrop exposures of mineralized Salt Wash sandstones
2-3 miles east of the Calliham mine helped guide the initial drilling. Drilling
is discussed in more detail below in section 1.7.
1.6 Mineralization
The Morrison sediments accumulated as oxidized detritus in the
fluvial environment. However, there were isolated environments where reduced
conditions existed, such as oxbow lakes and carbon-rich point bars. During early
burial and diagenesis, the through-flowing ground water within the large,
saturated pile of Salt Wash and Brushy Basin material remained oxidized, thereby
transporting uranium in solution. When the uranium-rich waters encountered the
zones of trapped reduced waters, the uranium precipitated. Vanadium may have
been leached from the detrital iron-titanium mineral grains and subsequently
deposited along with or prior to the uranium. The thickness, the gray color, and
pyrite and carbon contents of sandstones, along with gray or green mudstone,
were recognized by early workers as significant and still serve as exploration
guides. The primary uranium mineral is uraninite (pitchblende) (UO2) with minor
amounts of coffinite (USiO4OH). Montroseite (VOOH) is the primary vanadium
mineral, along with vanadium clays and hydromica.
1.7 Drilling
Historic exploration drilling from the surface was conducted by
previous operators (including Hecla, Atlas, Truchas, Pioneer Uravan, and
Umetco). These companies are known to have used techniques of common practice
for uranium exploration appropriate for the region. EFRCP owns most of the
original historic drill logs and maps. In addition, EFRCP staff know many of the
workers of the previous operators in the Sage Plain area, as well as the
reputations of the operators themselves. This direct familiarity lends confidence to EFRCP regarding the results of the operators and
information provided by such previous workers. Longhole drilling was done within
the underground mine during its operation. Verification and fill-in exploration
drilling by EFRCP confirmed and added to the geologic interpretation and mineral
resources at the project area. There have been approximately 313 holes drilled
on the Calliham lease, 300 on the Crain lease, and 487 on the Skidmore lease by
the prior owners. Ten holes were drilled by CPP across the three Calliham area
leased properties in December, 2011 totaling 6,465 feet. Cuttings were logged
with particular attention to sandstone color, carbon content, and interbedded
mudstone characteristics. The holes were probed using a properly calibrated
natural gamma tool along with resistivity and spontaneous potential logs when
the holes contained water. An induction tool was used in the 2011 holes that
were dry. All CPP holes were also logged with a deviation tool.
Updated Technical Report on Sage Plain Project March 2015 |
6 |
1.8 Sampling and Analysis
Umetcos preferred method of exploration at the nearby Deremo
mine and other properties they worked in the Sage Plain area in the 1970s and
early 1980s was to rotary plug drill through the upper part of the hole, then
core through the uranium-bearing sandstone horizon. This allowed them to do
assays for both uranium and vanadium. Holes then usually were logged with a
natural gamma probe for radiometric uranium grades. EFRCP has most of the
original assay data from the Umetco drilling on the leases. EFRCP also has most
of the original gamma logs, which include the calibration factors for the
probing equipment used, from the Hecla, Atlas, Truchas, and Pioneer Uravan
drilling.
Material mined from the Calliham mine was successfully milled
at the Atlas mill in Moab, Utah in the 1980s. The ore mined by Umetco in 1990-91
was milled at the White Mesa Mill in Blanding, Utah, presently owned by EFI.
EFRCP is not aware of any radiological disequilibrium or unfavorable
metallurgical issues occurring during the mining and milling of the Calliham
ore.
1.9 Security of Samples
Core sampling methods used by previous operators is believed to
have followed proper protocol commonly used by uranium-vanadium producers in the
region in the 1970s and 1980s. Natural gamma logging equipment used by CPP in
its 2011 verification drilling, the Colorado Plateau Logging, LLC tools, were
calibrated at the U.S. Department of Energy (DOE) test pits in Grand Junction,
Colorado on August 24, 2011.
1.10
Mineral Resources
Review of the historic and verification drilling data show it
supports remaining Measured and Indicated Mineral Resources at the Sage Plain
Project of approximately 1,611,000 lbs U3O8 and 13,261,000 lbs V2O5. This is
contained in roughly 475,100 tons of material at an in-place diluted grade of
0.17% U3O8 and 1.40% V2O5 Additionally, Inferred Mineral Resources are estimated
at 11,800 tons with an in-place diluted grade of 0.16% U3O8 and 1.20% V2O5
(36,700 lbs U3O8 and 283,600 lbs V2O5). This resource estimate for the Sage
Plain Project is divided into the particular leases for reporting in this
Technical Report. The resources of the Calliham, Crain, and Skidmore
leases are accessible through the Calliham mine. The reported Mineral Resources
are all hosted in the upper sandstone interval of the Salt Wash Member of the
Morrison Formation. Uranium grades derive from equivalent U3O8 estimated from
gamma logs as well as data from historic core assays.
Updated Technical Report on Sage Plain Project March 2015 |
7 |
Resources were estimated using a polygon method. The area of
influence for any one drill hole was set at a maximum of 7,854 sq. ft. (radius
of 50 feet) for Measured Resources. Indicated Resources are the areas between
the Measured Resource polygons of adjacent holes that are greater than 100 feet
apart, but no more than 200 feet, and the mineralized intercepts in those holes
correlate well. Inferred Resources are where mineralized holes are from 200 to
400 feet apart. EFRCP uses a tonnage factor of 14 cu ft/ton for mineralized Salt
Wash sandstone. A cutoff grade of 0.10% U3O8 was used (with a few exceptions,
explained in Chapter 14).
The Mineral Resource totals for the entire project area are
summarized in Table 1.1.
Table 1.1 Summary of Measured, Indicated, and Inferred
Mineral Resources for the Sage Plain Project; rounded.
Leases |
Tons of Ore |
U3O8
Lbs |
Avg Grade
(U3O8) |
V2O5
Lbs |
Avg Grade
(V2O5) |
Calliham |
|
|
0.16 |
|
1.32 |
Measured |
179,300 |
595,600 |
0.17 |
4,915,000 |
1.37 |
Indicated |
10,900 |
22,700 |
0.10 |
172,900 |
0.80 |
Inferred |
8,700 |
22,000 |
0.13 |
165,900 |
0.95 |
Crain |
|
|
0.14 |
|
1.15 |
Measured |
60,900 |
176,800 |
0.15 |
1,434,700 |
1.18 |
Indicated |
2,100 |
3,700 |
0.09 |
26,100 |
0.63 |
Inferred |
1,300 |
3,000 |
0.11 |
22,400 |
0.85 |
Skidmore |
|
|
0.18 |
|
1.52 |
Measured |
203,800 |
768,000 |
0.19 |
6,364,200 |
1.56 |
Indicated |
18,100 |
44,200 |
0.12 |
348,100 |
0.96 |
Inferred |
1,800 |
11,700 |
0.33 |
95,300 |
2.67 |
Grand Total(Mea+Ind) |
475,100 |
1,611,000 |
0.17 |
13,261,000 |
1.40 |
Grand Total(Inf)) |
11,800 |
36,700 |
0.16 |
283,600 |
1.20
|
Notes: |
1) |
Grades and tonnages shown as diluted amounts. |
|
|
Dilution is discussed in Chapter 14. |
|
2) |
Vanadium grades are based on assays where known,
otherwise estimated at the average
V2O5:U3O8 ratios for the
individual properties used by previous operators based on core assay data
and past production. |
Updated Technical Report on Sage Plain Project March 2015 |
8 |
The Mineral Resources are located on private land in a region
of past mining success where nearby communities have long supported mining
enterprises. The State of Utah regulations are clearly stated and compliance
will be readily achievable. The main challenge to moving the project forward is
having a favorable market price for uranium and/or vanadium.
1.11
Mining Operations
The mining of resources in the Sage Plain Project will be by
conventional underground methods. These methods have been used very successfully
in the region for over 100 years. The nature of the Salt Wash uranium-vanadium
deposits require a random room and pillar mining configuration. The deposits
have irregular shapes and occur within several close-spaced, flat or slightly
dipping horizons. It often rolls between horizons. The use of rubber-tired
equipment allows the miners to follow the ore easily in the slight dips and to
ramp up or down to the other horizons. The deposit will be accessed from the
surface through a decline about 3,500 feet long at a gradient between 8 and 15%.
If possible, the Calliham decline will be rehabilitated; if unusable, a new
parallel decline would be driven. The Salt Wash sandstones are usually quite
competent rock and require only moderate ground support. The overlying Brushy
Basin mudstones are less competent, so the declines are often supported by
square set timber or steel arch and timber lagging. The Salt Wash deposits are
usually thinner than the mining height needed for personnel and equipment
access. Therefore, the ore is mined by a split-shooting method.
The mined material will be processed at the conventional White
Mesa Mill, 54 miles away. Ore from the Calliham mine was successfully processed
there in 1991. Salt Wash ores from other districts in the Uravan Mineral Belt
were processed at the White Mesa Mill as recently as mid-2013.
1.12
Exploration and Development Recommendations
EFRCP should continue efforts to acquire the necessary permits
to allow mining to commence quickly when the uranium and/or vanadium prices
increase to the point the project would become economic. A formal preliminary
economic assessment should be performed to determine what those prices need to
be.
Although some of the exploration of the Calliham mine areas
will be performed underground as development proceeds, it is recommended that
additional surface drilling be done for the areas to the north of the majority
of the Calliham workings, particularly on the Skidmore lease.
Prior to starting major permitting for the site, it is
recommended that an exploration permit be obtained from DOGM to reopen the
Calliham Decline and the Calliham No. 1 Vent Shaft to determine whether the
decline is in good enough shape to allow for rehabilitation. Assuming that the
decline is in reasonable shape, a summary of the three major state permits
needed to reopen the mine follows. All three state permits likely would trigger
a public comment period and associated public meetings. This area has seen
extensive uranium mining over the years and benefited from the associated
economic advantages. Minor permits for water rights, storm water, county special
use, etc. also may be required. The San Juan County Administrator stated the
only permits they need to issue are building permits to reopen the Calliham
Mine. These permits typically take 7 to 10 days to approve.
Updated Technical Report on Sage Plain Project March 2015 |
9 |
2.0
Introduction
Peters Geosciences was retained by CPP to prepare an
independent Technical Report compliant with National Instrument 43-101 (NI
43-101) on the Sage Plain uranium-vanadium project in December 2011. The report
was titled Technical Report on Colorado Plateau Partners LLC (Energy Fuel
Resources Corporation/Lynx-Royal JV) Sage Plain Project, San Juan County, Utah
and San Miguel County, Colorado, dated December 16, 2011 (the 2011 TR). That
report was prepared to meet the requirements of NI 43-101 and Form 43-101F1.
This updated report draws from the previous report, but replaces it. EFRCP now
owns 100% of previously reported Mineral Resources on the Calliham and Crain
leases through purchase of the Lynx/Royal interest. Furthermore, EFRCP sold the
claims where the Sage mine is located to Piñon Ridge Mining LLC (PRM)
in August 2014. A reverse takeover transaction occurred in November 2014 wherein
Homeland Uranium Inc. acquired all PRM shares followed by a consolidation of
both companies shares and a resultant name change to Western Uranium
Corporation (WUC) with the former PRM management remaining in control.
Therefore, the reduced land position and the revised Mineral Resource owned by
EFRCP are the topics of change since the 2011 TR for this updated report.
Peters Geosciences understands that this report will be used in
support of future public offerings by Energy Fuels Inc. (parent company of
EFRCP).
Douglas C. Peters, CPG (AIPG #8274) and RM (SME Member
#2516800), and principal in Peters Geosciences, visited the Sage Plain property
on December 6, 2011 during a tour of the property led by Dr. Kaiwen Wu and Mr.
Jess Fulbright of EFR. In addition to viewing the surface conditions at the old
Calliham mine portal area, accessible (due to then recent snow cover) drill-hole
locations and related cuttings were visited as well. Mr. Peters traversed parts
of the property and surrounding areas on accessible roadways. Only surface
conditions and recent drill sites were observed because access to the
underground mines was not possible due to the Calliham mine portal having been
reclaimed. Consequently, depositional characteristics of the uranium were not
directly seen and no in-place samples were collected. Likewise, historic drill
sites were not visited due to snow cover that made finding them impossible
within the time frame of the field visit. Field project work since 2011 has been
permit related, such as four sentry wells on the Calliham lease where the
proposed water treatment plant will be located. Based on this minimal amount of
field work on the project by EFRCP and no additional exploration drill holes or
mine-related surface disturbances having occurred, no additional site visit has
been performed.
Relevant reports, maps, and data were reviewed and discussed
with EFI staff, principally Mr. Richard White, who is serving as Chief Geologist
for the companys Colorado and Utah operations and Dr. Kaiwen Wu, Staff
Geologist. The References section of this report lists the reviewed documents of
importance as cited in this report.
Measurements are in English units (i.e., short tons, feet, or
acres), and grades are expressed as percent of U3O8
or V2O5.
Updated Technical Report on Sage Plain Project March 2015 |
10 |
3.0 Reliance on Other Experts
This report for EFI has been reviewed by Douglas C. Peters of
Peters Geosciences for completeness and technical correctness for sections
prepared by EFI and EFRCP staff. Text also has been added and modified by Peters
Geosciences as part of the report preparation process for EFI. The information,
conclusions, opinions, and estimates contained herein are based upon information
available to Peters Geosciences at the time of report preparation. This includes
certain data, maps, and other documents in the possession of EFI and EFRCP and
reviewed with Mr. Richard White, CPG, Dr. Kaiwen Wu, Mr. Bruce Norquist, P.E.
and other CPP and EFRCP staff in 2011 at the Sage Plain property and in the EFI
offices in Lakewood and Naturita, Colorado and with Mr. Ryan Weidert of Royal
USA Inc. who supervised the 2011 CPP exploration drilling program. With the
exception of results from 2011 drilling by CPP, most data used in this report
are from earlier exploration and mining efforts conducted by previous companies
in the immediate Sage Plain District. Further review of newly available maps and
data was held with Mr. White and Dr. Wu prior to completion of this report.
Dr. Wu and Mr. Jess Fulbright accompanied Mr. Peters for the
field review on December 6, 2011 of the properties covered by this report. Dr.
Wu, Mr. White, and Mr. Weidert were instrumental in assisting with the review,
discussion, and understanding of both the general and site-specific geology of
the Sage Plain mining district at that time. It is Mr. Peters opinion that
there have not been any substantial changes in field conditions or activities
since this visit in 2011 and that a follow-up site visit is not required at this
time.
Mr. Peters did not investigate the legal title of claims and
leases covering the Sage Plain and related properties. Likewise, Mr. Peters did
not review the permitting and reclamation status of the Sage Plain property
beyond basic discussions with Mr. White and Dr. Wu.
Updated Technical Report on Sage Plain Project March 2015 |
11 |
4.0
Property Description and Location
The EFRCP Sage Plain Project is located near the southwest end
of the Uravan Mineral Belt. The property lays some seven-to-nine miles west and
northwest of the town of Egnar, Colorado. This is also 15-17 miles northeast of
Monticello, Utah. It consists of three private mineral leases, three Utah State
School and Institutional Trust Lands Administration (SITLA) mineral leases, and
one parcel of fee land owned by EFRCP, all in San Juan County, Utah. The
combined 3,040 acres of the project properties is comprised of approximately
1,680 acres of fee land leased (mineral and surface access) in sections 21, 27,
28 and 29, T32S, R26E, SLPM, about 1,280 acres of SITLA land in sections 16 and
32, T32S, R26E, and 80 acres of fee surface owned by EFRCP in NE ¼ NW ¼ and NW ¼
NE ¼ section 33, T32N, R26E. See Figure 4-1 for the project location map, Figure
4-2 for a topographic map with historic mine workings shown, and Figure 4-3 for
an aerial view of the project area with historic mine workings shown.
All of the property, except one private lease, was held by CPP.
CPP was a 50:50 joint venture between EFRC and Lynx-Royal. EFRC bought out the
50% owned by Lynx-Royal in October 2012 and EFRC assigned its subsequent 100%
interest in CPP to EFRCP in September 2014. The other private lease is held
solely by EFRCP. Under the operating agreement of CPP, Lynx-Royal was the
manager during exploration phase work whereas EFRCP was the manager for projects
that progress to a development or production stage. Therefore, Lynx-Royal
managed the 2011 drilling program. The project management transitioned to EFRCP
for mine design, production planning, and data collection and preparation of the
numerous permit applications being readied for submittal to various county,
state, and federal agencies. The surface ownership of the properties discussed
below is shown in Figure 4-4 and the mineral ownership is depicted in Figure
4-5.
The various parcels of the project were acquired in stages.
EFRCP was the successful bidder on two SITLA mineral leases (ML-51145 and
ML-51146) in December 2007. A third lease (ML-51963) was awarded to EFRCP in
March 2011. These were subsequently assigned to CPP. CPP purchased the 94 claims
and another SITLA lease (ML-49301) from Uranium One Exploration USA Inc. in
November 2010. EFRC purchased the lease on the private Calliham parcel in
February 2011 from Nuvemco and the Crain lease in July 2011 from Uranium Energy
Corporation (UEC). Both of these leases were assigned to CPP. Another
acquisition was the Skidmore lease covering land owned by J.H. Ranch, Inc. It
was acquired in October 2011 from a private group, Nuclear Energy Corporation
(NUECO). NUECO had an option with J.H. Ranch to lease this and several
other parcels. The final acquisition in the project area was the purchase of 80
acres of fee land (surface only) where the reclaimed portal facilities of the
Calliham mine were located. EFRCP bought that parcel form Umetco, the last
company to operate the Calliham mine. A brief description of each parcel
follows:
Updated Technical Report on Sage Plain Project March 2015 |
12 |
-
Calliham Lease- Nuvemco LLC entered into a Mining Lease with members of the
Calliham family on March 8, 2007. EFRC purchased the lease outright from
Nuvemco in February 2011. It was assigned to CPP and subsequently re-assigned
to EFRCP. The term of the lease is perpetual, as long as the lessee is in
compliance with the terms of the lease. The lease requires an annual advanced
royalty of $10,000 be paid to the lessor. The lease is paid for until March 8,
2016. It is the intent of EFRCP to continue to hold this lease by making the
next lease payment prior to March 8, 2016. The lessor reserves a production
royalty at the rate of 5% of the value of the uranium and 8% of the value of
the vanadium based on the price received for the sale of ore. The lease covers
the mineral rights on approximately 320 acres in the NW ¼ NW ¼ section 33 and
SW ¼, S ½ NW ¼, and SW ¼ NE ¼, section 28, T32S, R26E, SLPM. Surface access
and use necessary for exploration and mining are granted by the lease.
-
Crain Lease- UEC entered into a Uranium and Mineral Lease with Nadine Crain
on April 19, 2005 for all of section 27, T32S, R26E, SLPM, being 640 acres in
area. UEC paid $25,000 for the primary term, which was for five years. The
lease was renewed at the expiration of the primary term for a second five year
term by UEC paying one-time $50/acre. It is in effect until April 19, 2015. It
is the intent of EFRCP to renew the lease for at least another 5-year term.
The lessor (Crain) reserves a production royalty of 6 ¼% of the net proceeds
received for uranium in ores and 5% for vanadium in raw, crude form before any
processing or beneficiation. EFRC purchased the lease from UEC on July 27,
2011, and it was assigned to CPP with subsequent re-assignment to EFRCP. EFRCP
will pay UEC a royalty of 4% on the gross proceeds for uranium and vanadium
produced from the property after the first 225,000 lbs of U3O8
is produced. Surface access and use necessary for exploration and mining
are granted by the lease.
-
Skidmore Lease- NUECO secured an option to lease several mineral lands in
the district from J.H. Ranch, Inc. (JHRI) in March 2011. On the
10th of October 2011, NUECO entered into a mining lease with JHRI
covering surface and mineral rights in the E ½ section 29, SE ¼ SW ¼ and SW ¼
SE ¼ section 21, NE ¼ NW ¼, N ½ NE ¼, SE ¼ NE ¼, and N ½ SE ¼ section 28,
T32S, R26E, SLPM. The lease also covers surface rights in the SW ¼ SW ¼
section 21 and NW ¼ NW ¼ section 28, T32S, R26E where the minerals are owned
by the federal government. EFRC entered into an agreement with NUECO to
purchase the lease on this portion of the JHRI property (referred to as
Skidmore) adjacent to the Calliham property on October 7, 2011 and the lease
was assigned to EFRCP on October 13, 2011. The primary term of the lease is
for 20 years and is renewable. The lease requires EFRCP to make payments
allocated as 75% advanced royalties and 25% rental that increase over time
through the fourth anniversary date. EFRCP made payments in October 2011 and
2012 in accordance with the lease. Due to the deep decline in the uranium
price, EFRCP and JHRI amended the lease for a reduced 2013 advanced royalty
payment, the balance being delayed until the fifth anniversary. Similarly, a
second amendment delays the third and fourth anniversary advanced royalty
payments until the sixth and seventh anniversaries. Payments subsequently will
fall to a rental of $10/acre/year. A production royalty will be due JHRI at
12.5% of the fair market value of crude ore. JHRI is also entitled to a small
wheeling
fee (toll) for any ore produced from any of the other leases that crosses the Skidmore property in the underground mine haulage drifts.
Updated Technical Report on Sage Plain Project March 2015 |
13 |
-
SITLA Leases ML-51145, 51146, and 51963- EFRC acquired these three mineral leases from the State of Utah through normal offerings via sealed bids, the first two in November 2007 and the third in February 2011. The leases subsequently were assigned
to EFRCP. They cover the SE ¼ section 16, all of section 32, and the N ½ and SW ¼ of section 16, respectively, in T32S, R26E, SLPM. Little data from past exploration has been located. These parcels were acquired because of their
location near the Calliham mine and the farther north Silver Bell and Wilson mines. The lack of data precludes estimating any mineral resources for these parcels, but they are good exploration targets with high potential of discovering mineral
resources with drilling. The annual cost to hold these combined leases is presently $1,640. SITLA leases have a primary term of ten years and carry a production royalty on the gross value of ore, f.o.b. at the mine at a basis of 8% on the
uranium content and 4% on the vanadium.
There are two historic uranium-vanadium mines within or near the project area, the Calliham mine which accesses the three private leases and the Sage mine which produced from unpatented claims 1 ¼ miles to the southeast. EFRCP sold the claims
for the Sage mine to WUC in August 2014. The Calliham mine has been totally reclaimed. Because the portal closure consisted of back-filling for a short distance, it is expected to be easily reopened and rehabilitated. The portal and reclaimed waste
rock pile are located on private land now owned by EFRCP, purchased from Umetco in May 2012. The Calliham mine is partially flooded, but can be dewatered once permits are obtained. Historic data indicate the mine did not encounter enough water to be
problematic when operating. See sections 6, 16, 18, and 20 of this report for more detail on the history of the Calliham mine, the future plans for rehabilitation, development, and production, and the current permitting process.
Updated Technical Report on Sage Plain Project March 2015 |
14 |
5.0 Accessibility, Climate, Local Resources, Infrastructure,
and Physiography
The Sage Plain Project property can be accessed from the north,
south, and east on paved, all-weather county roads. The nearest towns with
stores, restaurants, lodging, and small industrial supply retailers are
Monticello, Utah, 26 road miles to the west, and Dove Creek, Colorado, 20 road
miles to the southeast. Larger population centers with more supplies and
services are available farther away at Moab, Utah (61 road miles to the north)
and Cortez, Colorado (54 road miles to the southeast). EFRCPs parent, EFI, owns
the uranium-vanadium processing facility (White Mesa Mill) through an affiliate
subsidiary, EFR White Mesa LLC, located 5 miles south of Blanding, Utah. The
Calliham mine portal location is 54 paved road miles from the White Mesa Mill.
These towns and roads are shown in Figures 4-1 and 4-2.
U.S. Highway 491 connects Monticello, Utah to Dove Creek and
Cortez, Colorado. There are two routes north from this highway to the project.
At one mile west of the Colorado/Utah state line (16 miles east of Monticello or
10 miles west of Dove Creek), San Juan County Road 370 goes north for 10 miles
to the Calliham Mine portal site drive way. The mine portal is one-half mile
east of Road 370, on a private road. An alternate route is to turn north on
Colorado Highway 141(2 miles west of Dove Creek) for 9.5 miles to Egnar,
Colorado, then turn west on San Miguel County Road H1. Road H1 crosses into Utah
at 5.5 miles west of Egnar where it becomes San Juan County Road 356 for 1.2
miles before intersecting San Juan County Road 370. Road 370 would be taken
north for 4 miles to the Calliham Mine portal site driveway. Road H1 from Egnar
would also be used if one was traveling to the project on Highway 141from
farther north in Colorado, such as Naturita, Colorado (a total of 62 miles
away). EFRCP also will access the project from its shops and other facilities at
the Energy Queen, Beaver, and Pandora mines near La Sal, Utah to the north by
turning south on the Lisbon/Ucolo Road from Utah Highway 46 one mile east of the
Energy Queen mine. The Lisbon/Ucolo Road becomes San Juan County Road 370,
arriving at the Calliham mine portal site driveway 32 miles from Utah Highway
46. Moab, Utah is 26 miles north of the Energy Queen mine.
These highways and county roads are all well maintained
year-round. State Highway shops are located in both Monticello and Dove Creek
and there are county road shops in Monticello, La Sal, and Egnar.
The region has a long history of mining, ranching, farming, and
oil and gas production. Therefore, even though the regional towns are small,
they have adequate services and supplies to support a project the size of the
proposed Calliham mine. EFRCP will be able to hire much of its mine labor from
within the region. The regional grid of electrical transmission and distribution
lines simultaneously supported the mines at the EFRCP
project area plus the large Deremo mine operated by Umetco Minerals, 2 miles to the southeast, and the Silver Bell and Wilson mines, 1 ½ miles to the north.
Updated Technical Report on Sage Plain Project March 2015 |
15 |
The area is semi-arid. Meteorological data from the Northdale, Colorado station, 10 miles south of the Sage Plain Project, show a recent 30-year normal mean temperature of 46 degrees F (range 31-61 degrees F). The mean annual precipitation for the
same 30 years has been 12.26 inches. The closest station for wind data is in Big Indian Valley about 21 miles to the northwest. It shows the dominant directions for wind in the last 10 years are from the east (10.8% of the time) and from the south
(8.1%) . The average wind speed is 6.9 miles per hour. All elevations within 4 miles of the Sage Plain Project property support moderate growths of sage and rabbitbrush along with other brush, forbs, cactus, yucca, and grasses. There are localized
stands of juniper and piñon pine in the rocky soils and many patches of scrub oak where it has never been cleared. Some areas have no soil or vegetation at all, both in flat areas and in the walls of Summit and Bishop Canyons. Much of the
private land has been cleared and is used for livestock grazing. Some land has been cultivated for dry land crops, mainly beans, wheat, or sunflowers. However, most of the cropland now lays fallow or has become overgrown and is used for grazing.
The region of the Sage Plain Project is characterized by a relatively flat plain that is drained by three major regional rivers. Most of the private land is gently sloping, cut by small ephemeral streams that are tributary to Summit Canyon. Summit
Canyon flows northeastwardly to join the Dolores River at Slick Rock, Colorado. The land south of Summit Canyon drains to Coal Bed Canyon, a tributary to larger canyons that flow to the San Juan River in southeastern Utah. The western part of the
Skidmore lease is in the East Canyon drainage that flows through larger tributaries to the Colorado River to the north and west.
The flatter part of the project area is at elevations ranging from 6,950 feet near the Calliham mine portal to about 7,200 feet on the Crain lease and the SITLA leases in section 16 some three miles to the north. The terrain along Summit and Bishop
Canyons consists of much steeper relief with elevations ranging from about 6,500 feet in Bishop Canyon to 7,380 feet on Bishop Point a half mile to the east (see Figure 4-2).
Updated Technical Report on Sage Plain Project March 2015 |
16 |
6.0 History
Uranium-vanadium deposits were discovered in the Morrison
Formation 32 miles north of the Sage Plain Project property in Roc Creek canyon,
Montrose County, Colorado in1881; the first economic shipment of ore from there
was in 1898 (Chenoweth, 1981). This started prospecting and claim staking in the
region which resulted in discovery of carnotite deposits in the Salt Wash Member
of the Morrison Formation (discussed in Section 7 of this report) along the
Dolores River canyon and Summit Canyon near Slick Rock, Colorado around 1900,
some 10 miles north of the Sage Plain. In1901, a processing plant was
constructed at Slick Rock to extract uranium-vanadium concentrates from the ore
and later to extract radium (Shawe, 2011 and Minobras, 1978). Many mines were
opened on and near the outcropping deposits. The Slick Rock Mill was replaced in
1905. It and other mills in the region processed ores until about 1923 for both
vanadium and principally radium. Ore grades in the Slick Rock area during this
time probably averaged 2% U3O8 and 3-4% V2O5. During the same time period, a
similar history developed in the Dry Valley District (including East Canyon)
6-14 miles northwest of the Sage Plain Project. Uranium-vanadium deposits were
first discovered there in 1904 in section 8, T31S, R25E. Prospecting also
discovered deposits in the Salt Wash where it is exposed in the Montezuma Canyon
area (about 20 miles to the south), but they were not developed significantly
until much later because of their remoteness.
There was little activity in the region until the demand for
vanadium increased in the mid-1930s. Shattuck Chemical Company built a new mill
at Slick Rock in 1931 and International Vanadium Corporation built one in Dry
Valley. Ore here is estimated to have averaged about 0.15% U3O8 and 1.34% V2O5,
with a higher average around 0.24% U3O8 to the south in East Canyon. North
Continent Mines Company bought the Slick Rock mill and enlarged it in 1934 and
operated it until 1943. In the early 1940s, the federal government formed the
Metals Reserve Company to facilitate vanadium production. This entity created a
buying program, and as a result, many new mines opened in the Salt Wash, and
more mills were built, including one at Monticello, Utah. Total vanadium
production of the Slick Rock and Dry Valley districts prior to 1946 was in
excess of 122,000 tons of ore at an average grade of 2.28% V2O5 containing over
5.5 million pounds V2O5 (Chenoweth, 1981). Almost all of the uranium in the ore
went to the tails at the mills until after 1943 when uranium became the focus.
The mill at Monticello was altered to allow uranium recovery by the Atomic
Energy Commission (AEC) in the late 1940s as were others in the region, spurring
the start of the uranium boom. More deposits were found in the Salt Wash (as
drilling equipment improved) and mines remained open into the 1950s and early
1960s in the Slick Rock and Dry Valley/East Canyon districts near the Sage Plain
Project. Union Carbide built an up-grading mill at Slick Rock in 1956 and
operated it until 1970. Between 1948 and 1977, the Slick Rock District produced
over 4.1 million tons of ore at grades that averaged 0.25% U3O8 and 1.8% V2O5.
These production numbers were summarized from figures reported by Minobras
Mining Services Company (1978) and Chenoweth (1981).
Updated Technical Report on Sage Plain Project March 2015 |
17 |
Uranium-vanadium mineralization was found in outcrops of the Chinle Formation near the south end of Lisbon Valley in 1913, about 13 miles north of the Sage Plain Project, east of Dry Valley. Small production for vanadium occurred sporadically into
the 1920s and again in the early 1940s with production for uranium recovery from 1948-1952. Deeper drilling away from the outcrops in 1952 discovered deposits in the Big Indian District 18-23 miles northwest of the Sage Plain Project, including the
famous Mi Vida Mine. Those deposits are in the Chinle and Cutler Formations. In the late 1960s, deep drilling (2,600+ feet) on the northeast, down-dropped side of the Lisbon Valley fault found the deposit mined by Rio Algom in its Lisbon Mine. See
Section 7.1 for a summary of the geology of the area.
Throughout the 1960s and into the 1970s, drilling on the mesas away from the canyon rims increased in the region, discovering Morrison uranium-vanadium deposits under several hundred feet of cover in the Sage Plain and other areas in the region.
Exploration during this time period discovered the large uranium-vanadium deposits of the Deremo mine, 2 ½ miles southeast of EFRCP’s Calliham mine, and the Wilson and Silver Bell mines, ½-to-1 mile north of the Calliham mine
(adjacent to the Skidmore lease), which were developed by vertical shafts. The Calliham and Sage mines were begun as declines for use by rubber-tired equipment. The area boomed until 1985 when the uranium price decline triggered by the 1979 Three
Mile Island nuclear plant incident made most mining in the region unprofitable.
Since the 1940s, the vanadium price was rarely sufficiently high to make mining practical for the vanadium content alone, even though it is about 8 times more abundant than the uranium content in the Sage Plain area deposits. However, the value of
the vanadium as a byproduct has always been important to uranium mining within the district as well as in the overall Uravan Mineral Belt.
The Calliham and Sage mines were in production in the 1970s to early 1980s by Atlas Minerals. The Calliham mine property was explored in the early 1970s by Hecla Mining Company. The Crain lease to the east was explored by Truchas and later in the
1970s by Pioneer Uravan. The Calliham mine workings stop about 75 feet short of crossing into the Crain lease. The Calliham lease was acquired by Atlas Minerals and went into production in March 1976. Atlas departed the uranium business in the
region in the mid-1980s. The Calliham mine and associated leases were acquired by Umetco Minerals in 1988 and operated briefly in 1990-1991 during a spike in vanadium prices. Umetco was also operating the Silver Bell and Wilson mines. During
Umetco’s tenure, the Calliham mine produced 13,300 tons of ore averaging 0.21% U3O8 (~56,000 lbs U3O8 ) and 1.29% V2O5 (~343,000 lbs V2O5). This ore was milled at the White Mesa Mill in Blanding, Utah, 54 road miles away.
The White Mesa Mill is owned by EFR White Mesa LLC, an affiliate of EFRCP, having been acquired when EFI merged with Denison Mines USA in June 2012. It has processed ore from several EFI mines and processes alternate feed material for its uranium
content. The mill usually has an ore buying program available for other producers in the area.
Updated Technical Report on Sage Plain Project March 2015 |
18 |
Over the life of the Calliham mine, much of its ore was milled at the Atlas mill in Moab, Utah.
Atlas reported a combined production from the Sage and Calliham mines of 41,541 tons of ore and 48,142 tons of waste during the last year of operation in 1981, with the majority of this production probably coming from the larger Calliham mine. The
Calliham mine closure report by Atlas (Edgington, 1982) says production ceased January 4, 1982. It states the production for the 5-year period by Atlas to be 208,871 tons of ore at average grades of 0.145% U3O8 (604,750 lbs) and 0.90% V2O5
(3,773,000 lbs). Butt Mining reportedly mined 3,000 tons of ore from the Sage mine in 1990 when vanadium prices were relatively high, but the mine has otherwise remained inactive up to the current time. The Sage mine’s historic production,
prior to Butt’s operation, is not known. Both mines ceased production due to depressed prices, not because they were depleted.
The largest mine in the Sage Plain District (and one of the largest anywhere in the Salt Wash sandstones) is the Deremo mine, about 2½ miles southeast of the Calliham mine. It produced 1,983,000 tons of ore at grades of 0.17% U3O8 (~7,000,000
lbs U3O8 ) and 1.59% V2O5 (~63,000,000 lbs V2O5). Two other large mines, the Silver Bell and Wilson mines, (now reclaimed) are a half mile north of the Skidmore portion of the Calliham mine.
Updated Technical Report on Sage Plain Project March 2015 |
19 |
7.0 Geological
Setting and Mineralization
7.1
Regional Geology
The Colorado Plateau covers nearly 130,000 square miles in the
Four Corners region (Figure 7-1). The Sage Plain Project and other properties
currently held by EFRCP lie in the Canyon Lands Section in the central and
east-central part of the Plateau in Utah and Colorado. The Plateaus basement
rocks are mostly Proterozoic metamorphic and intrusive igneous rocks. Figure 7-2
shows the stratigraphic column for units of Pennsylvanian age through Cretaceous
age. The area was relatively stable throughout the early part of the Paleozoic,
being a shelf on which miogeosynclinal sediments were deposited. The
northwest-trending Paradox Basin formed in Pennsylvanian time, bounded by the
Uncompahgre Uplift 45 miles to the northeast. The Paradox Basin received
deposition of marine sediments, including thick evaporites (Hermosa Formation).
The Paradox Basin was filled by middle Permian time; however the Uncompahgre
continued to be a highland shedding abundant coarse clastic, arkosic debris
(Cutler Formation) as the basin slowly subsided. The region continued to receive
fluvial and lacustrine sediments (Moenkopi and Chinle Formations) during the
early Mesozoic Era with minor erosional periods locally. The region dried
considerably in late Triassic and early Jurassic and large dune fields formed at
different times resulting in deposition of predominantly sandstone of eolian and
fluvial origin (Wingate, Kayenta, Navajo, and Entrada formations). The buried
Pennsylvanian evaporites, influenced by basement faulting and sediment loading,
flowed into a series of northwest-trending diapiric anticlines. Flowage of the
salt was erratically active from Permian through late Jurassic, thereby
affecting deposition of the Triassic and early Jurassic sediments, including the
flow of the streams that deposited the Salt Wash Member of the Morrison
Formation, host of the uranium-vanadium deposits in the Sage Plain Project area.
The source of the sediments changed during the Paleozoic and Mesozoic from the
earlier eastern source to a western dominated source. Volcanic ash from a couple
of volcanic episodes to the west settled over the area, as well (upper part of
the Chinle and the Brushy Basin Member of the Morrison Formation). Early
Cretaceous deposition transitioned from terrestrial to marginal marine (Burro
Canyon and Dakota formations). In Late Cretaceous time a large seaway occupied
the region where thick marine black shales were deposited (Mancos Shale). Near
the end of the Cretaceous, alternating regressions and transgressions of the sea
led to thick littoral sandstones interbedded with marine shales (Mesa Verde
group), later covered by fluvial and lacustrine sediments in the early Tertiary.
The regional structure is dominated by the numerous salt
anticlines to the north. These are separated by synclines trending northwest, as
are the anticlines. Locally there are faults of significant displacement
bounding the anticlines. To the south, the Sage Plain slopes at a shallow dip
southwesterly toward the Blanding Basin with the western edge being interrupted
by the domal structure of the Abajo Mountains.
Updated Technical Report on Sage Plain Project March 2015 |
20 |
Some twenty miles west of the Project area are the Abajo Mountains. These consist of Tertiary laccoliths intruded about 25 million years ago into several different horizons of Paleozoic and Mesozoic sedimentary rocks. Other similar mid-to-late
Tertiary intrusions are located 30 miles to the north (La Sal Mountains), 45 miles to the east (Lone Cone), and 45 miles to the south (Ute Mountain). Diorite porphyry is the dominant rock type, with minor monzonite porphyry and syenite intruded
later.
The Cretaceous marine Mancos Shale and younger rocks have been removed from the Project area by mid-late Tertiary and later erosion. The laccolithic mountains were uplifted in the late Tertiary, concurrently with the collapse and erosion of the salt
anticlines. Deep canyon cutting occurred nearby, continuing through the Pleistocene. Sedimentary rocks exposed in the 2,000 feet deep Dolores River Canyon, 11 miles to the east, range from the Permian Cutler to the Cretaceous Dakota.
Figure 7-2 is a stratigraphic column of the rock units exposed in the Slick Rock, Colorado area and underlying the Sage Plain, Utah area. In the Project area, the top of the Precambrian basement is probably about 10,650 feet deep. The Paleozoic
erathem accounts for about 8,100 feet of this and the Triassic and lower Jurassic systems below the Morrison Formation are about 1,600 feet thick. The Morrison Formation and overlying early Cretaceous rocks are about 950 feet thick.
Major uranium deposits of the east-central Colorado Plateau occur principally in two of the fluvial sequences. The older one is located at or near the base of the upper Triassic Chinle Formation. Areas of uranium deposits occur where the basal
Chinle consists of channels filled with sandstone and conglomerate that scoured into the underlying sediments. This channel system is known as the Shinarump Member in southern Utah. Farther north in eastern Utah, the basal member of the Chinle is a
younger channel system known as the Moss Back. This is the host of the bulk of the ore mined from the nearby Big Indian District (Lisbon Valley, 13-23 miles to the north). The Chinle deposition followed a period of tilting and erosion; therefore,
the basal contact is an angular unconformity. Where the Chinle channels are in contact with sandstones of the Permian Cutler Formation (i.e., the Moenkopi has been removed), good uranium deposits locally occur in the Cutler as well.
The other significant Colorado Plateau uranium deposits occur in the late Jurassic Morrison Formation. The Morrison comprises three members in the Sage Plain area. The lowest member, the Tidwell (8-15 feet thick), is a red mudstone with a thin
sandstone bed and was formerly mapped as the upper part of the Summerville Formation. The Salt Wash (~350 feet thick) is the main uranium host. The upper part of the Morrison is the Brushy Basin Member (350-500 feet thick). The Salt Wash consists of
about equal amounts of fluvial sandstones and mudstones deposited by meandering river systems. The Brushy Basin was deposited mostly on a large mud flat probably with many lakes and streams. Much of the material deposited to form the Brushy Basin
originated from volcanic activity to the west. The majority of the uranium production has come from the upper sandstones of the Salt Wash Member known as the Top Rim (historically referred to as the “ore-bearing sandstone” or OBSS).
Updated Technical Report on Sage Plain Project March 2015 |
21 |
Uranium occurrences have been found throughout most of the
Colorado Plateau; however, there are numerous belts and districts where the
deposits are larger and more closely spaced (Figure 7-3). In addition to the
uranium, many of the deposits contain considerable amounts of vanadium. In some
districts the vanadium content is ten times or more than the uranium content. In
general, the Cutler and Shinarump ores contain very little vanadium, whereas the
Salt Wash deposits usually contain large amounts of vanadium. The V2O5:U3O8
ratio averages about 4:1, and can range up to 15:1 in parts of the Uravan
Mineral Belt. The economics of the Salt Wash deposits are obviously enhanced by
the vanadium content, especially when vanadium prices are higher than at
present. The south end of the Uravan Mineral Belt, where the Sage Plain Project
is located, contains mines where the V2O5:U3O8 is often greater than 7:1. The
average V2O5:U3O8 for ore from the life-of-mine of the nearby Umetco Deremo mine
is 9.2:1 (personal communication, Tony Bates, former Umetco mining engineer). In
the Dry Valley District to the north, the ratio of ore produced 1956-1965 was
7.5:1; in contrast, the vanadium values decrease in the Montezuma Canyon area to
the south to a low ratio of 1.3:1 (Doelling, 1969). The values used for resource
projections in this document when direct vanadium assays are absent are based on
other historic Umetco resource reports, more thoroughly described in section 14.
This ratio cannot be guaranteed and must be used only as a historical
estimator for vanadium mineralization potential.
7.2 Local Geologic Detail
The only geologic unit exposed over most of the property of the
Sage Plain Project is the Cretaceous Dakota Formation. (The lithology of this
and the underlying stratigraphy is discussed below.) The Dakota crops out as
small isolated windows through the wind-blown sandy soil and as narrow bands
along shallow gulches. In the head of Summit Canyon, the Cretaceous rocks are
better exposed, including the Burro Canyon Formation in its entirety along with
the Jurassic Brushy Basin Member of the Morrison Formation. More erosion in
Summit Canyon to the east and in Bishop Canyon has exposed the lower, Salt Wash
Member of the Morrison Formation. In the bottom of Bishop Canyon in section 30,
T43N, R19W, older sedimentary rocks are also exposed including the Summerville
Formation and Entrada Sandstone. A red shaley unit, the Carmel Formation,
underlies the Entrada, but is not always mapped separately. Summit Canyon cuts
deep enough to expose the Navajo and all Triassic rocks (Kayenta, Wingate)
through much of the Chinle, but not the Moss Back Member horizon, in less than
two miles downstream to the north (Shawe et al., 1968). To the northwest of the
Calliham mine about 6 miles, East Canyon has cut deep enough to expose the
Brushy Basin Member. As East Canyon continues getting deeper for the next 5-6
miles to the northwest, it exposes the Salt Wash, with many small historic
uranium-vanadium mines located in this area, and the underlying units down
through the Entrada.
Rocks of interest in the subsurface at the Sage Plain Project
range from the Permian Cutler Formation to the Dakota (Figure 7-2). The units
are described in more detail below. Figure 7-4 is derived from portions of the
published USGS geologic maps of this
area (Cater, 1955 and Hackman, 1952) and results of 2011 CPP drilling and field work. Figure 7-5 shows a generalized cross section of the area adapted from Shawe (1968).
Updated Technical Report on Sage Plain Project March 2015 |
22 |
The Dakota Sandstone consists of interbedded reddish- and yellowish-brown sandstone and conglomerate with beds of gray-to-black carbonaceous shale containing discontinuous thin coal seams. Brown-to-light brown/grey mudstone/siltstone intervals are
predominantly thin and are most common as splits between larger sandstone beds. It can be up to150 feet thick where all units are present. It was overlain by the thick marine Mancos Shale. On the Sage Plain, the Mancos and most of the Dakota were
eroded prior to deposition of the Quaternary soils. CPP’s geologists logged the remnant Dakota in holes drilled in 2011 in the northern part of the project area to be 0-45 feet with 5-10 feet of coal on the Skidmore lease. Drilling completed
in 2011 south of the Calliham mine on the Sage mine property found the Dakota cap to be thin, 0-10 feet, with intermittent exposure having similar features as the underlying Burro Canyon Formation, making it hard to distinguish.
The Burro Canyon Formation is composed mostly of light-brown and grey-to-off-white sandstones with interbedded cherty conglomerates, usually forming thick beds across the project area. Interbedded green and purplish and brown-to-grey mudstones and
occasional thin limestone beds separate the sandstone units. The individual sandstone/conglomerate beds vary from 5-60 feet, and the shale/mudstone layers are from 5-30 feet thick. The entire unit where overlain by Dakota is about 140-170 feet thick
at the Calliham mine properties and about 190-225 feet thick in the Sage mine area. It locally holds perched water at the base of sandstone beds, particularly the lowest one. The Burro Canyon forms cliffs along the rim of Summit and Bishop Canyons.
Erosion in these canyons exposes the complete section of the Burro Canyon.
Beneath the Burro Canyon lies the Brushy Basin Member of the Morrison Formation. The Brushy Basin (about 90%) is reddish-brown and gray-green mudstone, claystone, and siltstone composed of clays derived from detrital glassy volcanic debris
originating from volcanic activity to the southwest (Cadigan, 1967). This material settled on a large floodplain, and fine-grained clastic material is interbedded with a few channel sandstones and conglomerates. These coarser clastic beds are
usually lenticular. The Brushy Basin also contains a few thin fresh-water limestone beds, some of which have been silicified. Devitrification of the volcanic ash may have been a major source of the uranium that leached downward into the Salt Wash
Member sandstones and weakly mineralized some of the Brushy Basin sandstone lenses. The Brushy Basin is 420-460 feet thick across the Calliham properties and 350-405 feet thick near the Sage mine. The difference in thicknesses is linked to the
thickness of the Burro Canyon, where the Brushy Basin is thinner, the Burro Canyon is thicker. The sandstones can be aquifers. The Brushy Basin crops out on the claims in the upper slopes of Summit Canyon and Bishop Canyon, as far west as the NE
¼ of section 33, T32S, R26E. However, much of it is covered by large boulders of the overlying Burro Canyon and landslide debris. Good exposures can be seen locally in the walls of the Summit Canyon farther northeast.
Updated Technical Report on Sage Plain Project March 2015 |
23 |
The Salt Wash Member of the Morrison Formation consists of interbedded fluvial sandstones (about 60%) and floodplain-type mudstone units (40%). The Salt Wash sandstones are usually finer-grained than Brushy Basin sandstones. They are varieties of
orthoquartzite, arkose, and tuffs. Major detrital components are quartz, feldspars, and rock fragments. Minor components include clays, micas, zircon, tourmaline, garnet, and titanium and iron minerals. The cement is authigenic silicates, calcite,
gypsum, iron oxides, and clays. The Salt Wash sandstones usually crop out as cliffs or rims, whereas the mudstones form steep slopes in Summit and Bishop Canyons. These intervening mudstones contain considerable volcanic ash, similar to the Brushy
Basin mudstones. Generally in the upper part of the Salt Wash, the numerous channel sandstones have coalesced into a relatively thick unit referred to as the Top Rim. The upper sandstone unit is much more resistant to erosion than the overlying
Brushy Basin and often forms a bench in the canyon walls. Similarly, there is a thick sequence of channel sandstones at the base of the member called the Bottom Rim. Usually there are several thinner sequences or lenticular channel sandstones in the
central part of the member which are termed Middle Rim sands. The largest deposits in the Uravan Mineral Belt and elsewhere in region are in the Top Rim, commonly referred to as the OBSS. The Salt Wash is up to 350 feet thick in the area of the Sage
Plain Project. The upper part is exposed near the Sage mine portal in the NE ¼ section 34, T32S, R26E. It is exposed in its entirety only in Bishop Canyon in section 29, T43N, R19W. Beginning just south of here, good exposures of the upper
sandstones (OBSS) and the rest of the Salt Wash, along with numerous historic mines, can be seen for several miles to the northeast, in the walls of Summit Canyon.
The streams that deposited the Salt Wash sandstones flowed mostly in large meander belts across an aggrading, partly eroded plain with varying subsidence rates. The source area for most of the Morrison Formation was a highland about 400 miles to the
southwest. The rocks eroding in the source area included volcanic, intrusive igneous, metamorphic, and minor sedimentary strata. Salt Wash streams flowed generally northeastward (Figure 7-6); however, some of the channel systems were obviously
locally diverted by contemporaneous uplifting of the salt-cored anticlines. The Dolores Anticline five miles to the north does not have as much structural relief as most salt anticlines and appears to not have altered the direction of the Salt Wash
to the extent of most anticlines. The direction of the main channel system (meander belt) at the Project area appears to be northeast. However, the influence of the Dolores Anticline might still be significant in that it possibly slowed stream flow,
enhanced meandering, causing an increased occurrence of point bars and oxbow lakes, and the resultant abundant deposition of plant material. During burial, these carbon rich zones probably contained trapped, reduced waters which helped facilitate
uranium precipitation.
The Salt Wash sandstones exhibit several facies and sedimentary features. These features can be seen in some outcrops, sometimes in drill core, and in underground mines. However, these features are usually too thin to be identified in borehole logs,
such as neutron, induction, or resistivity logs. Large cross-bedding is common indicating stream thalwegs. Flat, thin bedding of low energy areas can be seen along with apparent levies and crevasse splays. Channel scouring is also common as are the
associated point bar
deposits of the meandering streams. The point bars are characterized by mudstone galls which are rip-up clasts from the scouring on the outside of previous meanders. The sand grains become finer upward. There are often abundant logs and other
carbonaceous plant material in the point bars, which make this facies or close proximity a prime location for uranium deposition.
Updated Technical Report on Sage Plain Project March 2015 |
24 |
The drilling in 2011 by CPP at the Sage Plain Project shows the Top Rim interval consists of sandstone beds, varying widely from multiple 10-30 feet thick beds to single massive beds 30-70 feet thick. Multiple sandstone beds within the Top Rim are
separated by thicker mudstones up to 15 feet thick, and the massive beds typically end with thick mudstones, usually signifying the bottom of the Top Rim. Sandstone grain size on average is fine to medium, which is somewhat coarser than in the
Uravan Mineral Belt farther north. The thinner multiple sandstone beds of the Top Rim within the project area tend to be very-fine to fine grained. CPP’s 2011 drilling proved strong east-west and northeast-southwest trending mineralized areas
in the Salt Wash member of the Morrison Formation. This drilling program will be discussed in detail in Section 11.
Fossils in the Morrison include petrified wood and carbonized plant material, dinosaur bone, tracks, and embryos, and sparse microfossils in the thin fresh-water limestone beds.
The Morrison overlies the Jurassic and Triassic San Rafael and Glen Canyon Groups. These consist of several hundred feet of red beds. The uppermost is the reddish-brown, thinly bedded mudstone and shale of the Summerville Formation, containing a few
thin, slabby sandstone beds. It is about 90 feet thick. Small exposures of the Summerville exist only along the lower slopes of Bishop Canyon. Underlying the Summerville is the eolian Entrada Sandstone, some 90-150 feet thick. The Entrada does not
crop out within the property boundary, but does downstream in Bishop Canyon. It overlies the red shale beds of the thin Carmel Formation. The upper unit of the Glen Canyon Group is the Navajo Sandstone. It is light-brown, massive, cross-bedded
eolian sandstone. Its thickness in the region is variable (175-200 ft), pinching out against most salt anticlines. The Navajo is above the Kayenta Formation. The Kayenta is up to 175 feet thick and composed of lenticular sandstones interbedded with
minor siltstones, shales, and conglomerates. The basal unit of the Glen Canyon Group is the Wingate Sandstone. It also is massive eolian sandstone over 270 feet thick.
The Chinle Formation of Late Triassic age consists of bright red and red-brown mudstone and siltstone containing lenticular sandstones in the middle part, as well as thin beds of limestone-pebble conglomerate. The thickness of the Chinle varies
greatly in the area, partly due to salt movement, and is about 600-650 feet at the Project. Important uranium deposits occur in the basal, calcareous, gray conglomerate (Moss Back Member) which has been mined 13-23 miles north of the Sage Plain
Project property. Minor amounts of vanadium occur with the uranium in southern Lisbon Valley (0.47% V2O5). Nearly 78 million pounds of U3O8 (averaging 0.30% U3O8 ) have been produced from the Moss Back (Chenoweth, 1990), mostly on the southwest limb
of the Lisbon Valley anticline (southwest side of Big Indian Valley), which is the upthrown side of the Lisbon Valley Fault. One large mine, the Rio Algom Lisbon Mine, produced from approximately 2,700
feet deep on the down dropped side of the Lisbon Valley Fault (Huber, 1981). The basal Chinle beds at the Sage Plain Project area are greater than 2,300 feet deep. Potential for Chinle uranium deposits has not been explored at the Project area. The
authors of the Cortez Quadrangle NURE report (Campbell et al., 1982) did not consider this area favorable for Chinle uranium deposits based on scattered oil well data. Other companies have done minor exploration for Chinle deposits a few miles to
the north. Uranium mineralization has been found there, but not in economic quantities.
Updated Technical Report on Sage Plain Project March 2015 |
25 |
Unconformably underlying the Chinle is the Triassic Moenkopi Formation. It is an evenly bedded, chocolate-brown shale and mudstone unit containing thin bedded ripple-marked sandstones, sporadic limestone lenses, and gypsum layers. Most salt
anticlines were active following Moenkopi deposition, so it was mostly removed by erosion in the Big Indian District (Huber, 1981) to the north. Scattered oil well data near the Sage Plain Project indicate about 120 feet of Moenkopi lays beneath the
Chinle (Shawe, 1968).
The Permian Cutler Formation was deposited as a thick clastic wedge derived almost entirely from the Precambrian rocks of the ancestral Uncompahgre Uplift. It contains a variety of rock types from mudstones to conglomerates lain down in different
depositional environments. Where sandstones lie subjacent to the Moss Back in the Lisbon Valley-Big Indian District, uranium deposits locally occur. One theory is the uranium migrated down dip into the Cutler sandstones from the Moss Back. Another
theory is the uranium migrated up dip and precipitation was facilitated by reducing conditions produced by hydrogen sulfide leakage from deeper sediments. In the Cortez Quadrangle NURE report (Campbell et al., 1982), the authors indicate the Sage
Plain Project area contains facies of the Cutler they think are favorable for uranium deposits. However, the possible lack of overlying favorable Chinle and the 100+ feet of Moenkopi present would preclude formation of uranium deposits if the first
theory of downward migration is correct. At the present, though, the Cutler remains an untested potential host in the project area. Drilling to examine this stratigraphic horizon would be in excess of 2,500 feet deep. The Cutler overlies the
limestones, clastics, and evaporites of the Pennsylvanian Hermosa Formation or the thin transitional Rico Formation, if present.
Structurally, the immediate area of the Sage Plain Project is very simple. The sedimentary sequence dips at a slight amount, usually less than 2 degrees to the southwest toward the Blanding Basin. The dip is the result of the northwest-trending
salt-cored Dolores Anticline, the axis of which is about 5 miles northeast of the Project area. The other limb of the anticline dips much steeper, about 9 degrees to the northeast for 7 miles to the axis of the sub-parallel Disappointment Valley
Syncline (See Figure 7-5). Nowhere along the axis of the Dolores Anticline does the salt breach the surface as it does in numerous other salt anticlines in the Paradox Basin; therefore, it has not collapsed to the extent of the others. The Dolores
zone of faults occurs on the northeast limb, mostly as small displacement, en echelon grabens, 8 miles northeast of the property. Another zone of faults defines the Glade graben about 16 miles to the southeast near and crossing the anticlinal axis,
possibly related to some dissolution of salt. This zone has been projected westerly in the subsurface a few miles south of the Project area (Shawe, 1970). The axis of the Dolores Anticline plunges to the
northwest. It re-emerges in that direction as the axis of the Lisbon Valley
Anticline, a much more complex structure.
Updated Technical Report on Sage Plain Project March 2015 |
26 |
7.3 Mineralization
Mineralization trends of the Sage Plain area are shown in
Figure 7-6. The uranium- and vanadium-bearing minerals in the Salt Wash Member
of the Morrison Formation occur as fine-grained coatings on the detrital grains,
they fill pore spaces between the sand grains, and they replace some
carbonaceous material and detrital quartz and feldspar grains.
The primary uranium mineral is uraninite (pitchblende) (UO2)
with minor amounts of coffinite (USiO4OH). Montroseite (VOOH) is the primary
vanadium mineral, along with vanadium clays and hydromica. Traces of metallic
sulfides occur. In outcrops and shallow oxidized areas of older mines in the
surrounding areas, the minerals now exposed are the calcium and potassium uranyl
vanadates, tyuyamunite, and carnotite. The remnant deposits in the ribs and pillars of the old mines
show a variety of oxidized minerals common in the Uravan Mineral Belt. These
brightly-colored minerals result from the moist-air oxidation of the primary
minerals. Minerals from several oxidation stages will be seen, including
corvusite, rauvite, and pascoite. Undoubtedly, the excess vanadium forms other
vanadium oxides depending on the availability of other cations and the pH of the
oxidizing environment (Weeks et al., 1959). The Sage and Calliham mines have
been standing full of water for at least ten years, so no direct observations
have been made of the mine workings. Fragments of ore can be found in the
un-reclaimed waste rock pile at the Sage mine. Samples of this material show
some of the vanadates mentioned above.
Some stoping areas in the Sage and Calliham mines as well as
the nearby Deremo mine to the east and the Silver Bell and Wilson mines to the
north are well over 1,400 feet long and several hundred feet wide. The Indicated
Mineral Resources of the Sage Plain Project properties identified through
drilling are of similar size. Individual mineralized beds vary in thickness from
several inches to over 10 feet.
Top Rim sandstone is quite variable because of its depositional
nature, but can usually be distinguished by it typically being the first thick
sandstone encountered after the Brushy Basin. Across the project area, the
individual beds only locally correlate from hole to hole; however, the elevation
of the horizon as a whole at which the first thick sandstone bed is intercepted
is fairly consistent. The Top Rim consists of sandstone beds, varying widely
from multiple 10-30 foot beds to single massive beds 30-70 feet thick. Multiple
sandstone beds within the Top Rim are separated by thicker mudstones up to 15
feet thick and the massive beds typically end with thick mudstones, usually
signifying the bottom of the Top Rim. Sandstone grain size on average is fine to
medium, which is somewhat coarser than in the Uravan Mineral Belt. The thinner
multiple sandstone beds of the Top Rim within the project area tend to be
very-fine to fine grained.
Updated Technical Report on Sage Plain Project March 2015 |
27 |
One exception to the fairly consistent elevation of the Top Rim
sandstone is in holes SP-11-001 and SP-11-002, where the mineralized horizon is
within a sandstone bed about 50
feet higher than expected. This interval is still considered to be in the Top Rim. The interpretation of this anomaly is that locally the upper channel sandstone of the Top Rim is thicker than similar thin sandstones at this stratigraphic horizon
and there is an abnormally thick mudstone unit separating the topmost sandstone and the underlying sandstone beds. In hole SP-11-003, a quarter mile away, the mineralized part of the Top Rim elevation is consistent with the Sage mine workings and
other resources in the project area and the uppermost sandstone is again thinner.
Kovschak and Nylund (1981) report no apparent disequilibrium problems in the mines of the La Sal area. Disequilibrium has not been reported as a significant problem in the Slick Rock District either. Therefore, EFRCP has no reason to anticipate any
disequilibrium conditions within the Sage Plain Project property. Nonetheless, EFRCP is relying partly on historic and recent drilling results from downhole gamma logging (i.e., eU3O8 ) and greater confidence will come when any issues with
disequilibrium are better established through sampling in the mine or with core drilling.
Updated Technical Report on Sage Plain Project March 2015 |
28 |
8.0 Deposit
Types
The Sage Plain Project uranium-vanadium deposits in the
Jurassic Salt Wash Member of the Morrison Formation are sandstone-type deposits
that fit into the U.S. Department of Energys (DOE) classification as defined by
Austin and DAndrea (Mickle and Mathews, 1978) Class 240-sandstone; Subclass
244-nonchannel-controlled peneconcordant. Any future deep drilling to explore
for deposits in the Permian Cutler Formation would also target this class of
deposit. Such deep drilling would penetrate the slightly shallower Triassic
basal Chinle Formation (Moss Back Member). Deposit targets in the Chinle would
fit the DOE classification as Class 240-sandstone; Subclass 243- channel
controlled peneconcordant. These classes are very similar to those of Dahlkamp
(1993) Type 4-sandstone; Subtype 4.1 - tabular/peneconcordant; Class 4.1.2 (a)
Vanadium-Uranium (Salt Wash type) and Class 4.1.3 -basal-channel (Chinle type).
The Sage Plain and nearby Slick Rock and Dry Valley/East Canyon
districts uranium-vanadium deposits are a similar type to those elsewhere in the
Uravan Mineral Belt. The Uravan Mineral Belt was defined by Fischer and Hilpert
(1952) as a curved, elongated area in southwestern Colorado where the
uranium-vanadium deposits in the Salt Wash Member of the Morrison Formation
generally have closer spacing, larger size, and higher grade than those in
adjacent areas and the region as a whole (Figure 7-3). The location and shape of
mineralized deposits are largely controlled by the permeability of the host
sandstone. Most mineralization is in trends where Top Rim sandstones are thick,
usually 40 feet or greater.
The Sage Plain District appears to be a large channel of Top
Rim sandstone which trends northeast-southwest, as one of the major trunk
channels that is fanning into distributaries in the southern portion of the
Uravan Mineral Belt. The Calliham/Crain/Skidmore (Calliham mine) and Sage mine
deposits, as well as nearby Deremo and Wilson/Silverbell mines appear to be
controlled by meandering within this main channel. Figure 7-6 is a generalized
map of the Slick Rock channel system after Ethridge et al. (1980). Figure 8-1
shows the property boundary with the subject leases and previous operators
drilling along with the CPP drilling and resource blocks. Offset drilling for
verification and fill-in exploration by CPP in the fall of 2011 shows persistent
mineralization at the horizon of the historic mine workings and other horizons
that can easily be accessed from those underground workings. Figures 8-2 and 8-3
are cross-sections showing these relationships. Note that the line of
cross-section B-B on Figure 8-3 is identified in the center of Figure 8-1 and
is longer than the line shown on the upper half of Figure 8-2. The full line of
cross-section A-A is shown on both Figures 8-1 and 8-2. A complete discussion
and details of the drilling results and conclusions are presented in Section 10
in this report.
Most of the Uravan Mineral Belt districts consist of oxidized
sediments of the Morrison Formation, exhibiting red, hematite-rich rocks.
Individual deposits are localized in areas
of reduced, gray sandstone and gray or green mudstone (Thamm et al., 1981). The Morrison sediments accumulated as oxidized detritus in the fluvial environment. However, there were isolated environments where reduced conditions existed, such as oxbow
lakes and carbon-rich point bars, referred to as carbon facies rocks by Shawe (1976). During early burial and diagenesis, the through-flowing ground water within the large, saturated pile of Salt Wash and Brushy Basin material remained oxidized,
thereby transporting uranium in solution. When the uranium-rich waters encountered the zones of trapped reduced waters, the uranium precipitated. Vanadium may have been leached from the detrital iron-titanium mineral grains and subsequently
deposited along with or prior to the uranium.
Updated Technical Report on Sage Plain Project March 2015 |
29 |
The habits of the deposits in the Sage Plain area have been reported to be typical of the Uravan Mineral Belt deposits. Where the sandstone has thin, flat beds, the mineralization is usually tabular. In the more massive sections, it
“rolls” across the bedding, reflecting the mixing interface of the two waters. This accounts for the fact that there are several horizons within the Top Rim that are mineralized. Very thin clay layers on cross beds appear to have
retarded ground water flow, which enhanced uranium precipitation. The beds immediately above mineralized horizons sometimes contain abundant carbonized plant material and green or gray clay galls. The mudstone beds adjacent to mineralized sandstones
are reduced, but can grade to oxidized within a few feet. Lithology logs by CPP geologists for the 2011 drilling on the Project property record these same characteristics. There are no significant differences between mineral depositional habits in
the Top Rim and those in lower Salt Wash sands. CPP drilling indicated mineralization occurs along with carbon “trash” zones in several drill holes, especially in hole CH-11-005.
The thickness, the gray color, and pyrite and carbon contents of sandstones, along with gray or green mudstone, were recognized by early workers as significant and still serve as exploration guides. Much of the Top Rim sandstone in the Sage Plain
Project area exhibits these favorable features; therefore, portions of the property with only widely-spaced drill holes hold potential. However, without the historic drill data, it cannot be determined where sedimentary facies are located (e.g.,
channel sandstones thin and pinch-out, or sandstone grades and interfingers into pink and red oxidized sandstone and overbank mudstones). Furthermore, locations of interface zones of the oxidized and reduced environments are hard to predict. Until
more historic data are obtained and/or more drilling occurs on the property away from the historic mines, these outlying areas remain exploration targets.
Updated Technical Report on Sage Plain Project March 2015 |
30 |
9.0 Exploration
Outcrops within a few miles of the Sage Plain Project were
explored by prospectors in the early 20th century for their radium
and vanadium content. Uranium exploration in the region began in the mid-1940s
(see Section 6 of this report for a more detailed history). Exploration by
drilling progressed to the mesa tops as drilling equipment improved in the 1950s
and 1960s. The deposits in the Sage Plain area were found and developed by other
operators in the late 1960s and early 1970s. The area around the EFRCP Calliham
mine was extensively drilled in the 1970s and early 1980s.
During the operation of the underground mines, extensive
stoping occurred. As the ore died-out in portions of the mines, longhole
drilling inside the mines was done for exploration of the continuation of the
ore, often with good success. Much of the Mineral Resource reported in this
report for the Calliham mine was identified this way.
CPPs geologic staff evaluated the historic data. Based on
this, a seventeen-hole rotary drill program (~11,300+ feet) was then designed
and permitted by CPP in the fall of 2011. Seven holes were drilled at the Sage
mine property (which EFRCP sold to WUC in August 2014) to confirm historic map
data and explore for a possible east-west channel connecting the mine to a
mineralized body to the west. Two holes testing the historically defined
mineralized body confirmed the historic map data and one exploration hole
intersected high-grade mineralization between the mine workings and the western
mineralized body. Ten holes were drilled across the Calliham mine properties
(five on the Calliham Lease, three on the Skidmore Lease, and two on the Crain
Lease) to confirm historic map data and expand known mineralization. Eight of
the ten holes had significant mineralization, indicating the historic map data
to be correct. One hole specifically targeted the Calliham mine workings and
another to test for the shallowest aquifer. The hole targeting the mine workings
intersected the mine, as expected, adding more proof that the historic map data
for the Calliham mine are accurate.
Updated Technical Report on Sage Plain Project March 2015 |
31 |
10.0
Drilling
As mentioned above, most of the drilling on the Calliham and
Sage mine properties was performed by the previous operators, namely Hecla,
Atlas, Pioneer, and Truchas. There have been approximately 313 holes drilled on
the Calliham lease, 300 on the Crain lease, 487 on the Skidmore lease, and 199
on the claims near the Sage mine. A considerable, but unknown amount of drilling
occurred historically along the benches of Summit and Bishop Canyons. It is
likely a few holes were drilled over the years on the SITLA land of the Sage
Plain project in sections 16 and 32, T32S, R26E. EFRCP has not yet acquired data
on those two sections. Several hundred more holes were drilled north and east on
land not controlled by EFRCP. Union Carbides preferred method of exploration at
the nearby Deremo mine in the 1970s and early 1980s was to rotary plug drill
through the upper part of the hole, then core through the Top Rim
uranium-bearing sandstone horizon. This allowed the company to do assays for
both uranium and vanadium. Holes then usually were logged with a natural gamma
probe for radiometric uranium grades.
EFRCP has in its possession several maps showing the location
of holes on and surrounding the Project properties. With the acquisition of
Denison Mines USA in 2012, EFRCP became owner of a significant amount of
historic data not available when the 2011 TR was written. A summary of the
review of this data is in Section 14, Mineral Resources, of this updated report.
The Atlas, Pioneer, and Umetco drill hole electric logs, drill maps and mine
maps with longhole data are deemed to be accurate. EFRCP does not possess, nor
have the companys geologists seen, any original core obtained from the past
drilling episodes.
CPP conducted two drilling projects, one on the Sage mine
claims (since sold) and one across the three Calliham mine leases to verify some
of the historic map data (drill hole intercepts), and to obtain more
stratigraphic information for mine planning. Seven holes were drilled by CPP on
the Sage mine claims in October, 2011 totaling 4,873 feet. The drilling was
successful in meeting the objectives of confirming the accuracy of the historic
data and verifying a historically defined mineralized body. One hole exploring a
possible mineralized trend connecting the mine to the western mineralized body
intercepted 2.0 feet of 0.407% eU3O8 . Another hole intercepted mineralization
greater than 1.0 foot of 0.16% eU3O8 . The remaining four holes were weakly
mineralized (0.028% eU3O8 or less) or barren.
Updated Technical Report on Sage Plain Project March 2015 |
32 |
Ten holes were drilled by CPP across the three Calliham area
leased properties in December, 2011 totaling 6,465 feet. This drilling was also
successful in meeting the objectives of confirming the accuracy of the historic
data and expanding known mineralized areas. Four holes intercepted
mineralization greater than 1.0 foot of 0.20% eU3O8 , and four other holes
intercepted mineralization greater than 1.0 foot of 0.10% eU3O8 . One hole was
intentionally drilled into the mine workings so a water sample could be
collected to aid in water treatment planning. This hole also intercepted
mineralization greater than 1.0 ft of 0.10% eU3O8 about 5 feet above the mine
back
elevation By hitting the mine workings, the accuracy of the historical mine maps was confirmed yet again.
Cuttings were logged with particular attention to sandstone color, carbon content, and interbedded mudstone characteristics. The holes were probed using a natural gamma tool along with resistivity and spontaneous potential logs when the holes
contained water. An induction tool was used in holes that were dry. All holes were also logged with a deviation tool. Even though the digitally recorded data displays estimated U3O8 content, the gamma logs were interpreted and mineralization
calculated using the proven AEC method (area under the curve times the k factor equals the grade multiplied by the thickness (Scott et al., 1960)). It is believed that previous operators also used this method, or a close variant of it. The Colorado
Plateau Logging, LLC tools were calibrated at the U.S. Department of Energy (DOE) test pits in Grand Junction, Colorado on August 24, 2011.
Updated Technical Report on Sage Plain Project March 2015 |
33 |
11.0 Sample Preparation, Analyses, Security
EFRCP has not conducted widespread and definitive sampling on
the Sage Plain project. Previous underground mining activity, which resulted in
development drifting and production at the Calliham mine, will not be available
for sampling until the mine is dewatered and the decline and drifts are
rehabilitated. The estimation of resources in this report has relied upon
documentation from earlier operators and the CPP 2011 drilling program. CPP
employed a conventional combination of rotary drilling, geologic logging, and
downhole electric and radiometric logging in its field program.
Because EFRCP has not performed bulk sampling to date in the
mine workings, the results of historical preparation techniques and analyses for
these properties have been relied upon as being reasonably accurate. These tasks
were performed by personnel of Atlas and Umetco who were experienced in uranium
exploration and mining, sampling, and analytical methods, and the summary data
appear to be in conformity with technological standards at the time.
CPP collected samples from seven holes during its 2011
drilling, amounting to thirty one 5-foot intervals of the rotary drill cuttings.
The analytical work was performed by ALS Minerals, Reno, Nevada. Although grades
obtained from rotary drill cuttings assays are not reliable due to mixing in the
annulus, a reliable V2O5:U3O8 ratio usually can be obtained. Duplicates and
standards also were submitted to be assayed with the sampled cuttings.
It is the authors opinion that the sample preparation,
analytical procedures, and sample security for CPP drilling in 2011 were
adequate to assure reliable results for analyses received. Historical
information on analyses and downhole probing also appear to be reliable within
the normally accepted conditions for historical uranium data based on the
companies involved, extent of available data, comparison with 2011 CPP drill
hole results, and familiarity of EFRCP staff with past operators and their
personnel.
Updated Technical Report on Sage Plain Project March 2015 |
34 |
12.0 Data
Verification
Other than offsetting some of the historic drill holes and use
of gamma logs where available, no verification of the historical data has been
conducted. No core is available at the present time from the earlier exploration
or production work. EFRCP does currently possess downhole gamma logs from the
previous operators of the Crain lease. This information was used to target two
verification holes drilled on that lease in 2011 by CPP. Holes CR-11-001 and 002
found the sandstones and mineralized intervals of historic holes CL-79-17,
CL-79-2, CL-79-16, and CL-79-25 to be accurately logged, calculated, and
recorded on the historic map by Pioneer Uravan.
Similarly, CPP used the historic map data to target three holes
each on the Calliham and Skidmore leases. One hole (CH-11-002) was also
deliberately drilled to intersect the mine workings in the western part of the
Calliham Mine. The mine roof was penetrated within a couple feet of the expected
depth which gives credence to the accuracy of the historic map. On the Calliham
lease, hole CH-11-004 intercepted 1.0 foot of 0.135% eU3O8 at the same depth
that corresponds to the historic grade of 1.0 foot of 0.16% eU3O8 in hole
SP-1043-78. Also on the Calliham property, hole CH-11-005 intercepted 1.0 foot
of 0.744% eU3O8 at the same depth that corresponds to the historic grade of 1.5
feet of 0.81% eU3O8 in hole SP-148 and 1.0 foot of 1.0% eU3O8 in hole C-32-72.
On the Skidmore property, hole SM-11-001 intercepted 2.0 feet of 0.164% eU3O8 at
the same depth that corresponds to the historic grade of 1.5 feet of 0.67% eU3O8
in hole SP-1495-81 and 1.3 feet of 0.29% eU3O8 in hole SP-732-91. Two other
horizons in hole SM-11-001 correspond to the nearest adjacent holes as well.
Also on the Skidmore lease, hole SM-11-002 intercepted 2 feet of 0.397% eU3O8 at
the same depth that corresponds to the historic grade of 6 feet of 0.4% eU3O8 in
hole SP-1003-78 and 5 feet of 0.39% eU3O8 in hole SP-1187-80.
Based on these results, it is believed that CPP did enough
drilling to provide reasonable confidence in the historical drilling data prior
to re-opening the mines and directly accessing the mineralization in the mine
workings. In addition, EFRCP staff know many of the workers of the previous
operators in the Sage Plain area, as well as the reputations of the operators
themselves. This direct familiarity lends confidence to EFRCP regarding the
results of the operators and information provided by such previous workers. With
the acquisition of Denison Mines USA in 2012, EFRCP became owner of a
significant amount of historic data not available when the 2011 TR was written.
EFRCP geologists have completed a thorough review of that data. Some omissions
and errors in the previously used maps were discovered and corrections have been
used to update the Mineral Resource estimates in this report. A summary of the
review of this data is in Section 14, Mineral Resources, of this updated report.
Updated Technical Report on Sage Plain Project March 2015 |
35 |
CPP collected samples from seven holes during its 2011
drilling, amounting to thirty one 5-foot intervals of the rotary drill cuttings.
These samples lack the absolute nature of core, being only chips which are
diluted by cuttings from other rock in the bore hole. The samples, when analyzed, do provide information on the U3O8 and
V2O5 content to estimate a ratio for the property economic evaluation. Four of
the sample results from the Sage mine western area found the vanadium to uranium
(V2O5:U3O8 ) ratios ranged from 8.25:1 to 12.72:1 with the average at 9.80:1.
This is somewhat higher than the historic resource values used by the previous
operators. That historic core data averages 8.6:1, which is the value used for
the resource estimates in this report in order to remain conservative.
It is the authors opinion that the uranium and vanadium data
from CPP drilling in 2011 and from historical information on analyses and
downhole probing are adequate for the purposes of this technical report and for
basic resource estimation using these data.
Updated Technical Report on Sage Plain Project March 2015 |
36 |
13.0 Mineral Processing and Metallurgical Testing
The Slick Rock and Dry Valley Districts have a long history of
uranium and vanadium production. Deposits from this district have been
successfully milled at several historic mills in the region including Union
Carbides (Umetco) mill at Uravan, Colorado, the Vanadium Corporation of America
(VCA) mill at Monticello, Utah, the Atlas mill at Moab, Utah, and EFIs White
Mesa Mill in Blanding, Utah. The historic milling of district ores suggests at
this point that the Sage Plain Project deposits will present no unforeseen
problems with either metallurgical testing or processing.
Testing of Calliham mine mineralized material should be
performed after the mine is dewatered and rehabilitated to the point that
representative bulk samples can be obtained from in-place rock.
Updated Technical Report on Sage Plain Project March 2015 |
37 |
14.0 Mineral
ResourceEstimates
Mineral resource estimates have been calculated by a modified
polygonal method (polygons used are shown overall in Figure 8-1. Tables 14.1
shows the Measured, Indicated, and Inferred Mineral Resources for all properties
controlled by EFRCP. For the well-mineralized parts of the Calliham and Skidmore
leases, the drill hole spacing is usually 75-200 feet. On the Crain lease the
drilling is usually 100-200 feet spacing in the mineralized areas. Elsewhere on
all properties drilling was done on wide-spacing initially (500-1,000 feet).
Where favorable criteria were found, the operators tightened the pattern or did
offsets at 100-200 feet resulting in several clusters of closer-spaced holes
scattered around the entire property. The 2011 drilling program on the Sage
Plain Project properties partially consisted of offset holes on spacings of
30-60 feet from historic holes. There were a few exploration holes in areas
where historic drill holes are several hundred feet apart.
Where hole spacing is closer than 100 feet, a perpendicular
bisector method was used to create the polygons. Where hole spacing is greater
than 100 feet, the holes used for mineral resource estimations are shown on the
maps as circles of 50 feet radius (7,850 square feet). However, to remain
conservative, a 50-foot influence distance centered on the hole has been used.
Therefore, all polygons that exceed an area equal to a 50-foot radius circle
have been reduced to that area for tonnage calculations in the Mineral Resource
blocks. Even though mineralization in these deposits can be highly variable over
short distances in the deposit, past mining experience has shown that there is
enough continuity over stoping distances or even a few contiguous resource
polygons that production matches resource estimates quite well.
Table 14.1 Measured, Indicated, and Inferred Mineral Resources
for the Sage Plain project.
Leases |
Tons of Ore |
U3O8 Lbs |
Avg Grade
(U3O8)
|
V2O5
Lbs |
Avg Grade
(V2O5)
|
Calliham |
|
|
0.16 |
|
1.32 |
Measured |
179,300 |
595,600 |
0.17 |
4,915,000 |
1.37 |
Indicated |
10,900 |
22,700 |
0.10 |
172,900 |
0.80 |
Inferred |
8,700 |
22,000 |
0.13 |
165,900 |
0.95 |
Crain |
|
|
0.14 |
|
1.15 |
Measured |
60,900 |
176,800 |
0.15 |
1,434,700 |
1.18 |
Indicated |
2,100 |
3,700 |
0.09 |
26,100 |
0.63 |
Inferred |
1,300 |
3,000 |
0.11 |
22,400 |
0.85 |
Skidmore |
|
|
0.18 |
|
1.52 |
Measured |
203,800 |
768,000 |
0.19 |
6,364,200 |
1.56 |
Indicated |
18,100 |
44,200 |
0.12 |
348,100 |
0.96 |
Inferred |
1,800 |
11,700 |
0.33 |
95,300 |
2.67 |
Grand Total(Mea+Ind) |
475,100 |
1,611,000 |
0.17 |
13,261,000 |
1.40 |
Grand Total(Inf)) |
11,800 |
36,700 |
0.16 |
283,600 |
1.20
|
Updated Technical Report on Sage Plain Project March 2015 |
38 |
At locations where drifting or stoping has removed portions of polygons, there have been appropriate reductions to the resources assigned those polygons. Next to mine workings, polygons based on holes drilled from the surface often overlap with
polygons drawn on the underground longholes. Where this occurs, the surface hole polygon was trimmed and the longhole data used for the smaller polygon(s) adjacent to the mine. The distance of influence used for longhole intercepts never exceeds 40
feet from the hole.
In some areas, there are two or more mineralized horizons separated by more than two feet of waste. Where this occurs, there are two or more polygons drawn for the same hole. These may be of the same shape or different overlapping shapes, depending
on the mineralization in the nearest neighboring holes used to define the polygons at each horizon.
The polygons that are adjacent to mine workings or are within a few hundred feet of the workings (so that they can be developed when the mines are reopened) and are clustered with other polygons are considered Measured Mineral Resources. For the in
situ resource estimate, the thickness and grade assigned to each polygon equals that of the intercepts recorded in the center hole of the polygon. A tonnage factor of 14 cubic feet per ton is used for Salt Wash deposits.
Indicated Mineral Resource blocks are drawn where mineralization correlates well and similar geological conditions are believed to be continuous between drill holes that are over 100 feet apart. The Indicated Mineral Resource blocks are
individual holes or groups of holes that are separated from mine workings by a few hundred feet more than the Measured Mineral Resource blocks. The grade and thickness for the indicated blocks are weighted averages of the particular drill
holes’ intercepts that define each block. The areas of Indicated Mineral Resources blocks are shown on Figure 8-1.
Inferred Mineral Resource blocks are partially drilling-confirmed, geologically favorable areas where other deposits could occur in the defined channels. Mineral trends often follow the directions of the sandstone channels. The Sage Plain
Project has one area where the mineralization found in wide-spaced holes suggests Inferred Mineral Resources may exist. The Inferred Mineral Resources are detailed in Table 14.1 and the areas are shown on Figure 8-1.
Sandstone thickness, the gray color, and pyrite and carbon contents of sandstones, along with gray or green interbedded or underlying mudstone, indicate areas of sandstones that are favorable for containing uranium-vanadium mineralization. These
conditions allow geological definition of Inferred Mineral Resources, in conjunction with some drilling data, and Exploration Targets where no drilling data are available or are too far away to be considered relevant to defining Inferred Resources.
Updated Technical Report on Sage Plain Project March 2015 |
39 |
This report used the same database as the 2011 technical report (Peters, 2011). Some modifications were made and some errors of omission were corrected based on the Atlas closing maps and reports from 1982. In the 2011 TR, resource
estimates for the Sage Plain project were calculated by using a grade cutoff
0.07% U3O8 . In this report, generalized mining, hauling,
milling, royalty and taxes, and overhead operating costs were estimated for the
purpose of determining the run-of-mine average ore grade cut-off for Mineral
Resource estimation to satisfy the CIM Standards that it has reasonable
prospects for economic extraction. The individual polygon cut-off of 0.10% U3O8
(with a few exceptions) gives an average out-the-portal diluted grade greater
than the breakeven cutoff estimate shown in the following table:
|
Calliham Mine cut off
grade analyzer |
|
|
|
|
|
|
|
|
|
|
|
|
U price |
U grade |
|
|
V price |
V grade=U* |
8.6 |
|
|
$ 63.00 |
0.160 |
|
|
$ 6.75 |
1.377 |
|
|
|
|
|
lbs/ton U |
|
lbs/ton V |
|
|
|
|
per ton cost |
|
3.041 |
|
20.650 |
combined recoverable value |
mine |
$125.00 |
value |
$191.61 |
|
$139.39 |
|
$331.00 |
|
mill |
$175.00 |
|
|
|
|
|
|
|
haul |
$ 11.00 |
|
|
|
|
|
|
|
royalty, permit, G&A |
$ 20.00 |
|
|
|
|
|
|
|
|
$331.00 |
|
|
|
|
income |
$ - |
|
|
|
|
|
|
|
|
|
|
Breakeven out-the-portal average grade of U |
0.160 |
%U3O8 |
|
|
|
|
The minimum mining thickness for this type of sandstone uranium
deposit is considered to be 3 feet. Because there is often lower-grade material
adjacent to the target mineralized zones, for ore intercept of less than 3 feet,
a grade 0.05% of waste was added in the grade and thickness recalculation to
adjust the mining thickness to minimum 3 feet. For ore intercepts of more than 3
feet, no dilution was added. Under a strict ore grade control protocol, a
prudent miner can drill and blast any ore greater than 3 feet without dilution
based on the past mining experience in the Uravan Mineral Belt. A resuing or
split-shooting mining approach will be followed to minimize dilution when
extracting thin zones. The eventual stope height will be 7 feet or greater to
allow the mine to advance. At the time of mining, the waste above or below the
mineralized horizon, or waste separating two mineralized streaks, is blasted
separately. This waste layer usually must be more than 2 feet thick to be
considered worth shooting separately. Depending on the waste-ore configuration
in the face, the mineralized zone may be blasted before the waste or vice-versa.
For the Calliham mine, 7.0 feet is the assumed minimum stope height.
This report uses a minimum mining thickness of 3 feet and a
cutoff grade of 0.10% U3O8 after dilution for the
resource estimate, resulting in the average out-the-portal grade being greater
than the breakeven out-the-portal grade. A few holes of high thickness but low
grade (>0.07%) adjacent to some high grade drill holes were also included in
the resource estimate. These low grade resources are considered to be
recoverable during actual mining. Many low grade drill holes of less than 0.10%
U3O8 after dilution, which were adopted in the
resource estimate in the 2011 TR, are no longer included in the Mineral Resource
estimates in this report.
Updated Technical Report on Sage Plain Project March 2015 |
40 |
Vanadium assays are available for some of the drill holes. In
preparing this technical report, more than 200 vanadium assay data were collected from
historic maps and reports. An average
V2O5:U3O8 ratio of 8.60:1 is
calculated for the Sage Plain property. This ratio is used for resource
estimation of vanadium where no assay data are available.This ratio cannot be
guaranteed and must be used only as a historical estimator for vanadium
mineralization potential.
A cutoff of 0.10% U3O8 , after dilution
has been applied, and is used in all resource estimates for the Sage Plain
Project properties that are based on historic or current drilling results. This
cutoff is somewhat subjective and was chosen based on experience of EFI staff
and on the basis of the lowest grade intercepts that are likely to be mined
based on a tentative mine plan and location of such intercepts in or adjacent to
development entries that will be mined regardless of the grade of involved
mineralized sandstone. Assumptions involved in use of this cutoff are as
follows:
|
1) |
Development entries will be made to access Indicated and
Measured Mineral Resources of sufficient size to warrant mining to their
locations and room-and- pillar mining of the resources. Such entries will
follow the historic random pattern of mining areas that is driven by the
localized nature of areas of mineralization. A good example can be seen on
Figure 8-1. |
|
2) |
Entries can and will intercept some lower grade material
that would not necessarily be economically mineable as standalone
resources. |
|
3) |
Vanadium grade, in combination with uranium grade, can be
high enough to warrant mining a resource area even if the uranium contents
in all holes in that area would not be sufficient to make the
mineralization mineable through uranium content alone. |
|
4) |
The thickness of the drill intercept in mineralized
material makes some areas attractive because of available volume of
mineralization even when relatively low grade for uranium. |
|
5) |
Indicated or Measured Mineral Resources may still prove
to be uneconomic to mine upon performance of a full feasibility analysis
or due to economic or mining conditions at the time mining proceeds
towards such resource areas. The inverse also could be true. A substantial
increase in the price of uranium or vanadium could result in a lower
cutoff being in effect during mining. |
|
6) |
Minimum mining thickness is 3 feet using the
split-shooting or resuing mining methods. |
Existing paper maps prepared by the previous operators were
electronically scanned to create digital data that could be evaluated. This was
used to design the CPP drill program for 2011. Field work by CPP staff found
several of the old drill holes were tagged and labeled. These locations were
recorded with hand-held GPS devices and used to rectify the scanned historic
maps to real coordinates. Many other historic hole locations are visible, even
though the tags are now missing, on the Crain and Skidmore leases. Therefore,
EFRCP believes the accuracy of the historic maps is adequate for the polygon
method of Mineral Resource estimation described above. It would be difficult to
accurately re-survey most of the old holes on the Calliham lease because most
are on cultivated or pasture land and were reclaimed more than 20 years ago.
Updated Technical Report on Sage Plain Project March 2015 |
41 |
Since the 2011 TR (Peters, 2011) was written, EFI acquired
Denison Mines USA. Denison possessed almost all of the original logs from the
historic drill holes and numerous maps and mine reports. A careful evaluation of
the historic data resulted in some corrections to grade and/or thickness in a
few holes. Original underground longhole probe data were reviewed which
confirmed the assumptions used in the 2011 TR.
The mineral resource estimates that follow are based on CPPs
2011 drilling, historic drill records, and maps of the companies mentioned above
as well as general knowledge of the area. EFRCP geologists are acquainted with
many of the project geologists, mining engineers, and miners that worked these
properties during the past and with the reputations of those companies doing the
work. Based on the different cutoff, different dilution method, and
modifications resulting from the review of more historic data, the resources for
the current property have been revised beyond a simple subtraction for the Sage
Mine related property that was sold. The following resource estimates are
believed to be reasonable for the Sage Plain Project properties. The combined
Measured and Indicated Mineral Resources for the Sage Plain Project above a
diluted cutoff of 0.10% U3O8 are 475,100 tons (diluted) at 0.17% U3O8 and 1.40%
V2O5 containing 1,611,000 lbs U3O8 and 13,261,000 lbs V2O5. The Mineral
Resources of each part of the Sage Plain property are detailed in table14-1.
All estimates of Inferred Mineral Resources must be
considered speculative and require confirmation by drilling or mining. There is
no guarantee that Inferred Mineral Resources will ever be realized as or
advanced to Indicated or Measured Resources or Proven or Probable
Reserves.
14.1
Exploration Targets
Some areas within the Sage Plain Project property remain
unexplored at this time. The mineralized trends follow the direction of the
sandstone channel meander belts from southwest to northeast. There are
sub-trends that align northwest-southeast, as can be seen in the Deremo Mine. A
few scattered surface holes within the project boundary encountered favorable
sandstone and require offset drilling. Much of the surface drilling only
penetrated the Top Rim sandstone of the Salt Wash, so there may be unknown
lenticular Middle Rim sandstones which could be mineralized. The deeper Moss
Back Member of the Chinle Formation and even deeper Cutler Formation sandstones
have not been tested to EFRCPs knowledge anywhere on the Project property. Some
specific Exploration Targets are described below.
- Skidmore lease There are identified areas where undiscovered
mineralized channels might exist. One large exploration target area has been
identified from scattered drill holes and by geological projection of the
Calliham Mine to the west into the E ½ section 29, T32S, R26E, in the Skidmore
lease. EFRCP will attempt to find any historic drill information that might be
available on this parcel. EFRCP anticipates that this mineralized channel does
continue west-southwest and will be drilled in the future to confirm its
existence.
Updated Technical Report on Sage Plain Project March 2015 |
42 |
- ML-51145 (Section 32, T32S, R26E) An area for another
exploration target is a geologically projected channel trend west into SITLA
ML-51145 from the Sage
Mine channel, This target will be drilled in the future by EFRCP to determine if definable resources are present.
-
ML-51146 and 51963 (Section 16, T32S, R26E) This area, by its proximity to known resources, presents a reasonable exploration target. EFRCP will make plans to drill this lease in the future to determine if it is within the favorable
belt of channels.
In addition to these geological and proximity exploration targets, there are several drill intercepts in the Calliham, Crain, and Skidmore lease areas that are of sufficient grade and thickness to qualify as Measured Mineral Resources, but are
isolated from the current and planned mining area. Therefore, these locations are not shown as Measured on Figure 8-1 and are not included in the Measured Resources listed in Table 14.1. However, these locations serve as excellent guides for further
exploration in order to determine if these known resources can be expanded through offset drilling of the existing drill holes or by drilling and identification of resources in between those locations and the planned mining such that these areas
become potentially economically mineable and mining then can proceed in the direction of these outlying locations.
All Exploration Targets must be considered speculative and require confirmation by drilling or mining. There is no guarantee that Exploration Targets will ever be realized as any category of Mineral Resources or advanced to Indicated or Measured
Resources or any category of reserves.
Updated Technical Report on Sage Plain Project March 2015 |
43 |
15.0 Mineral
Reserves Estimates
EFRCP is in the process of preparing a detailed evaluation of
the mining process and economics needed to mine and produce the resources in the
areas of the Calliham mine. Because this is not yet complete, the current report
will not assign any of the known Mineral Resources to a Mineral Reserve
category. However, because this work is well underway, this report will briefly
address many of the following items that are usually only applicable to Advanced
Property Technical Reports.
Updated Technical Report on Sage Plain Project March 2015 |
44 |
16.0 Mining
Method
The mining of all resources in the Sage Plain Project will be
by conventional underground methods. These methods have been used very
successfully in the region for over 100 years. The nature of the Salt Wash
uranium-vanadium deposits require a random room and pillar mining configuration.
The deposits have irregular shapes and occur within several close-spaced, flat
or slightly dipping horizons. The mineralization often rolls between horizons.
The use of rubber-tired equipment allows the miners to follow the ore easily in
the slight dips and to ramp up or down to the other horizons. The deposits are
accessed from the surface through long declines at gradients of 8-15%, depending
on depth and locations suitable for portal sites. The Salt Wash sandstones are
usually quite competent rock and require only moderate ground support. The
overlying Brushy Basin mudstones are less competent, so the declines are often
supported by square set timber or steel arches and timber lagging. The Salt Wash
deposits are usually thinner than the mining height needed for personnel and
equipment access. Therefore, the ore is mined by a split-shooting method.
The split-shooting mining method involves assessing each face
as the stopes advance by the mine geologist, engineer, mine foreman, or
experienced lead-miner. Because the grades and thickness of the typical Salt
Wash uranium-vanadium deposits are highly variable, they are usually
unpredictable from one round to the next. (A round is a complete mining cycle of
drill-blast-muck-ground support, if needed to be ready to drill again; a normal
round advances a face about 6 feet.)
Typically, the thickness of the mineralized material is less
than the height needed to advance the stope. As the stope face is being drilled,
the blast holes are probed with a Geiger Counter probe in order to estimate the
U3O8 grade. The uranium-vanadium mineralization is usually dark gray to black.
The mineralization sometimes rolls, pinches or swells, or follows cross-beds
within the sandstone. Therefore, the miner will also use drill cutting color as
a criterion to help guide blast hole direction and spacing. This irregular habit
of the deposit can result in holes collared in mineralized material ending in
waste, or, conversely, holes collared in waste can penetrate mineralized
material much of their length.
Updated Technical Report on Sage Plain Project March 2015 |
45 |
Based on the results of the assessment of the blast holes
drilled in the face, the round will be loaded and shot in two or more stages.
Depending on the location and thickness of the mineralized material in the face
(there may be multiple mineralized layers); the miner will attempt to blast
either only mineralized material or only waste rock. They will muck it out as
cleanly as possible, then shoot the remaining rock and muck it cleanly. In
resource estimates, waste is added to the mineralized material for dilution
because of this method for any mineralized zone less than 3 feet thick. The
amount of waste rock shot before or after the mineralized material results in
typical stope heights of 7 feet, which is the minimum height needed to advance
the stope.
As with the split-shooting method of mining, resuing mining involves very selective separation of the waste rock from the ore. Ore grade material is determined by probing drill holes in the face of the stope. In resuing, waste is blasted or
otherwise removed from one side of the ore zone. The ore in that zone is then extracted, thereby leaving any waste on the other side of the ore zone in place. If additional stope space is needed or a second ore zone occurs behind the remaining
waste, that waste is removed without dilution to the ore zones. The lower limit of waste volume that can be extracted without disturbing ore is a function of the precision with which waste areas of the drill pattern can be selectively blasted
without unduly increasing mining costs.
Updated Technical Report on Sage Plain Project March 2015 |
46 |
17.0 Recovery
Methods
Historically, the uranium-vanadium ores from the Sage Plain
District and others districts of the Uravan Mineral Belt have been successfully
processed in conventional mills in the region. One mill is currently operational
in the region, EFIs White Mesa Mill at Blanding, Utah, 54 miles away. The
milling operation involves grinding the ore into a fine slurry and then leaching
it with sulfuric acid to separate the metals from the remaining rock. Uranium
and vanadium are then recovered from solution in separate solvent extraction
processes. The uranium is precipitated as a U3O8 concentrate, yellow cake,
which is dried and sealed in 55-gallon steel drums for transport off-site. The
vanadium concentrate is precipitated then fused into a V2O5 product called
black flake which is also transported in 55-gallon steel drums.
Updated Technical Report on Sage Plain Project March 2015 |
47 |
18.0 Project
Infrastructure
The Calliham mine was a profitable producer in the 1970s and
early 1980s, considering the price of uranium verses the cost to mine at that
time. The mine and others in the district were serviced by sufficient
electricity supply (most of this is still in-place or can be easily
re-installed), and an adequate road system for ore shipment. The Calliham mine
has been completely reclaimed, so its surface facilities will be reconstructed.
The portal will be re-established with steel sets and timber lagging. The
decline will be rehabilitated and vent holes re-opened, if possible, or new vent
holes will be constructed with a raise-bore machine. The main new infrastructure
at the mine will be a water treatment facility and other surface facilities at
the portal such as office, shop, dry, and ore and waste stockpiles.
EFRCP completed an exploration drilling program in 2011 which
was used to gather preliminary information on groundwater in and near the mines.
A draft design of the water treatment system was prepared in August 2012. Sentry
wells were drilled at the proposed water treatment system location and eight
sampling events were conducted; the wells were dry during each event. Based on
information gathered about the potential inflows to the mine, the water
treatment facilities may be used temporarily to dewater the mines; if water
inflow is small, they may not be needed if there is no water to discharge during
operations.
EFRCP has anticipated needs for several buildings at the
Calliham mine. The production rate for the mine is estimated to be 200 to 250
tons per day.
The Calliham Mine will require:
- Office Trailer (50x10)
- Dry Facilities (locker rooms and showers)- 2 @ (60x10) each; for Men /
Women, Staff, etc.
- Shop (70x 40), note: Capable of handling 3 pieces of equipment,
ancillary machinery, room for fabrications.
- Warehouse (50x 30).
- Compressor Building (30x 20).
- Electrical Building (10x10); there will also be the need for electrical
supplies storage, room for small repairs here (large repairs in the shop);
substation(s).
- Scale and Guard Shack (20x 60 area).
- Oil Storage Shed (20x 8).
- Powder and Cap Magazines (10x10 and 8x 8, respectively).
- Fuel Storage (2,500 gallon capacity) with spill prevention vaults- 2@ 20x
15.
EFRCP presently has multiple phases of work planned. An initial
phase of rehabilitation work on the Calliham mine will consist of digging out
the backfilled portal, installing new ground support for the first few tens of
feet (possibly longer due to the shallow cover in the portal area), and
constructing security gates. The mine will then be evaluated for
the amount of rehabilitation needed in the decline. Required sentry wells have been installed. For the second phase, once rehabilitation work is scheduled, the mine will be dewatered. This will require the installation of the water treatment
facility. Electrical service will be reinstated and buildings will be constructed during this second phase.
Updated Technical Report on Sage Plain Project March 2015 |
48 |
Expenditures related to reconstruction of the waste rock dump and stockpile areas at the Calliham mine will cost about $50,000 and could begin as soon as the permit is issued from DOGM.
Once the mine is dewatered, the sumps will be rehabilitated. The next rehabilitation work underground will be to restore access to two of the existing ventilation shafts, line the shafts, and install fans and emergency escape hoists. It is estimated
this phase will cost about $2,660,000 at the Calliham. The work will include communications and other systems needed for operation and safety, along with safety materials. Rehabilitation of the existing drifts to access most of the remaining
Mineral Resources in the Calliham Mine may cost as much as $1,580,000.
Contractor and/or internal labor costs are included in each category listed above. Supervision costs for the entire rehabilitation project, including project foreman, consultant oversight, and staff salaries, are estimated at $160,000.
The total capital and labor cost for the entire rehabilitation project are estimated to be approximately $5,800,000 at the Calliham prior to commencement of new development and anticipated new production from any of the Measured Mineral
Resources.
Updated Technical Report on Sage Plain Project March 2015 |
49 |
19.0 Market
Studies and Contracts
Markets
Uranium
The uranium market is followed closely by two consulting firms:
UxC and TradeTech. Each of these reports spot and long term prices for U3O8 on a
weekly basis. Additionally, many securities and investment banking firms provide
ongoing analysis and outlook for uranium supply, demand, and prices in the
future.
Based upon the ongoing review of these several sources of
information by EFI staff, the world continues to be over-supplied with uranium,
mainly from large quantities of secondary supplies (including enricher
underfeeding), insufficient production cut-backs in primary production (so
far), premature reactor shutdowns in the U.S., delays in new reactor
construction (namely in China), and decreased demand due to Japanese reactors
remaining offline. Based on current perceptions, the market is likely to remain
oversupplied for the next several years, unless significant and currently
unexpected events occur to either increase demand or curtail supply. After
this period of oversupply, demand can only be covered by a significant increase
in primary production. The need for higher prices to generate this additional
production leads to an expectation for higher prices for U3O8 , surpassing the
current recently quoted prices of $38.25 for the spot market, and $49.50 for the
long term contract market.
Because of the very high value of the commodity, the uranium
market is a totally global market without any freight cost barriers to product
movement. Uranium produced anywhere in the world can readily find its way to a
market for nuclear fuel.
Vanadium
The primary market for vanadium is the steel manufacturers.
Well over 90% of worldwide vanadium production is used as an alloying agent for
strengthening and toughening steels. There is a newly developing market for
vanadium as an electrolyte for high capacity batteries that are envisioned to
find use in the renewable energy business. These batteries conceptually could
solve the problem of storing renewable energy when it is generated, and putting
that energy out on the grid when it is needed.
Vanadium is a broker market with several intermediaries buying
product from the primary producers and typically converting that vanadium to
ferrovanadium for direct charge into the steelmaking furnaces. Prices for
vanadium are historically quite volatile, but mid-point average has been holding
around $5.50 per pound for the last two years. The total annual V2O5 market is
about 150 million lbs.
Updated Technical Report on Sage Plain Project March 2015 |
50 |
19.1
Uranium Market and Price
Uranium does not trade on the open market and many of the
private sales contracts are not publically disclosed. Monthly long term industry
average uranium prices based on the month-end prices are published by Ux
Consulting, LLC, and Trade Tech.
The current spot price is less than the long term contract
price (Tables 19.1 and 19.2) . However, during periods when the spot price
rises, such as the peaks in 2007 and 2011 (Figure 19-1), the spot price equals
or exceeds the long term price. Spot prices apply only to marginal trading and
usually represent less than 20% of supply (UxC, 2014).
Figure 19-1. Uranium Price History (from UxC)
Updated Technical Report on Sage Plain Project March 2015 |
51 |
Table 19-1. Long Term Uranium Price
Table 19-1: Long Term Uranium Price* |
|
2010 |
2011 |
2012 |
2013 |
2014 |
Jan |
$ 60.00 |
$ 70.00 |
$ 61.00 |
$ 57.00 |
$ 50.00 |
Feb |
$ 60.00 |
$ 70.00 |
$ 60.00 |
$ 57.00 |
$ 50.00 |
Mar |
$ 60.00 |
$ 68.00 |
$ 60.00 |
$ 57.00 |
$ 47.00 |
Apr |
$ 60.00 |
$ 68.00 |
$ 61.00 |
$ 57.00 |
$ 45.00 |
May |
$ 60.00 |
$ 68.00 |
$ 61.00 |
$ 57.00 |
$ 45.00 |
Jun |
$ 60.00 |
$ 68.00 |
$ 61.00 |
$ 57.00 |
$ 45.00 |
Jul |
$ 60.00 |
$ 68.00 |
$ 61.00 |
$ 54.00 |
$ 44.00 |
Aug |
$ 60.00 |
$ 65.00 |
$ 60.00 |
$ 53.00 |
$ 44.00 |
Sep |
$ 62.00 |
$ 63.00 |
$ 61.00 |
$ 51.00 |
$ 45.00 |
Oct |
$ 62.00 |
$ 63.00 |
$ 59.00 |
$ 50.00 |
$ 45.00 |
Nov |
$ 65.00 |
$ 62.00 |
$ 59.00 |
$ 50.00 |
$ 49.00 |
Dec |
$ 67.00 |
$ 61.00 |
$ 57.00 |
$ 50.00 |
$ 49.00 |
Average |
$ 61.33 |
$ 66.17 |
$ 60.08 |
$ 54.17 |
$ 46.50 |
*Average long-term price 2010 through 2014 - $57.65 per pound
As quoted by Ux Consultants, 2014
Table 19-2. Short Term Uranium Price
Table 19-2: Spot Uranium Price* |
|
2010 |
2011 |
2012 |
2013 |
2014 |
Jan |
$ 42.25 |
$ 72.25 |
$ 52.25 |
$ 43.75 |
$ 35.50 |
Feb |
$ 40.50 |
$ 69.50 |
$ 52.00 |
$ 42.00 |
$ 35.50 |
Mar |
$ 41.75 |
$ 58.50 |
$ 51.10 |
$ 42.25 |
$ 34.00 |
Apr |
$ 41.75 |
$ 55.00 |
$ 51.50 |
$ 40.50 |
$ 30.75 |
May |
$ 40.75 |
$ 56.50 |
$ 51.25 |
$ 40.40 |
$ 28.25 |
Jun |
$ 41.75 |
$ 51.50 |
$ 50.75 |
$ 39.55 |
$ 28.25 |
Jul |
$ 45.25 |
$ 52.00 |
$ 49.50 |
$ 35.00 |
$ 28.50 |
Aug |
$ 45.50 |
$ 49.25 |
$ 48.00 |
$ 34.00 |
$ 32.00 |
Sep |
$ 46.75 |
$ 52.00 |
$ 46.50 |
$ 35.00 |
$ 35.50 |
Oct |
$ 52.00 |
$ 51.75 |
$ 41.00 |
$ 34.25 |
$ 36.50 |
Nov |
$ 60.25 |
$ 51.50 |
$ 42.50 |
$ 35.90 |
$ 39.00 |
Dec |
$ 62.00 |
$ 52.00 |
$ 43.25 |
$ 34.50 |
$ 35.50 |
Average |
$ 46.71 |
$ 55.98 |
$ 48.30 |
$ 35.22 |
$ 33.27 |
*Average spot price 2010 through 2014 - $43.90 per pound
As
quoted by Ux Consultants, 2014
Updated Technical Report on Sage Plain Project March 2015 |
52 |
Thus, in a 5-year look-back from 2010 to the present, average
uranium prices have been $43.90 per pound for spot delivery to $57.65 per pound
for long-term delivery. More recently, in February 2015, the spot price was
$39.25 and the long-term price was $49.00. Near- to mid-term uncertainty has
created recent weakness in uranium markets. The shutdown of reactors in Japan,
building inventories, material oversupply, and a general lack of demand has been
largely to blame for this near to mid-term price weakness. However, longer-term
market fundamentals in the uranium sector remain strong. Nations around the
world, led by China, are building new nuclear reactors. Yet, current weakness in
uranium prices is leading to new uranium projects being deferred or canceled.
The World Nuclear Association reports that there are now 70 nuclear reactors
under construction around the world. In addition, Japan has signaled that it
will restart many of their reactors in the coming years, with potentially as
many as four restarting in 2015 As a result, though predicting spot- and
long-term prices is speculative, many analysts expect slowly rising spot- and
long-term prices in the coming years (Ux Consulting, Q4 2014).
Ux Consulting Company, a leading source of consulting, data
services and publications on the global nuclear fuel cycle markets, has
published expected mid-range spot prices ranging from $47/lb in 2017 to $71/lb
in 2025 per the Annual Midpoint of the High Price Scenario (Ux Consulting, Q4
2014). This averages $63.22/lb during the potential life of mining at the Sage
Plain Project deposits.
As a result, the author recommends utilizing a uranium price of
$63/lb as a base case in establishing a cut-off for Mineral Resource estimation
to satisfy the CIM Standards that it has reasonable prospects for economic
extraction.
19.2 Vanadium
Market and Price
Prices for vanadium are historically quite volatile, but have
been holding in the $5.00 -to-$7.00 per pound range for most of the last 3 to 4
years; although dropping in the most recent months. While prices have been at
the low end of this range recently, a correction towards the high range is being
forecast by vanadium industry analysts. As a result, the author recommends
utilizing a vanadium price of $6.75/lb as a base case in establishing a cut-off
for Mineral Resource estimation to satisfy the CIM Standards that it has
reasonable prospects for economic extraction. The total annual V2O5 market is
about 150 million lbs. The vanadium to be produced by the Sage Plain Project
mine owned by EFRCP will represent about 2% of the total vanadium demand and
should have little or no effect on the market price.
Updated Technical Report on Sage Plain Project March 2015 |
53 |
20.0 Environmental Studies, Permitting and Social or Community Impact
Permitting History
The Sage and Calliham Mines were developed in the 1970s and a
permit application for them was submitted by Atlas Minerals to the Utah Division
of Oil, Gas and Mining (DOGM) in June 1977 when the Utah Mined Land Reclamation
Program was fully implemented. The Sage and Calliham mines are two separate
mines with the entrances to their respective declines being about 1.5 miles
apart. The two mines were ultimately permitted under Permit M/037/023 in January
1984. The Calliham permit included two water evaporation ponds covering about
8.8 acres that were added in 1981 in response to new federal and state water
quality regulations. The two mines were placed on standby by Atlas in January
1982 in response to depressed uranium prices. Atlas reported a combined
production from the two mines of 41,541 tons of ore and 48,142 tons of waste
during the last year of operation in 1981, with the majority of this production
probably coming from the larger Calliham Mine.
In the fall of 1988, Atlas transferred the Sage Mine to Butt
Mining Company (operated by Jim C. Butt) under a new Small Mine Permit
(S/037/058) and the Calliham Mine to Umetco Minerals under the existing Large
Mine Permit (M/037/023). Umetco mined the Calliham briefly in 1990-1991. They
completed reclamation of the mine to the satisfaction of DOGM in 2000 and the
bond for M/037/023 was released.
Current Mine Status
The Calliham Mine has been completely reclaimed, the
reclamation bond released, and all permits terminated. The approximately 20 to
30 acres of reclaimed area at the main portal is bisected by the upper reach of
Wildhorse Canyon. During reclamation, Umetco Minerals removed the low-grade ore
stockpiles and pads from the southwest side of the drainage and incorporated
these materials into the waste dump northeast of the drainage. The waste dump
then was regraded and covered with topsoil borrowed from the southwest end of
the site. The southwest portion of the site also was used as a topsoil borrow
area for reclamation of other nearby Umetco Minerals mines. The southwest
portion of the site, which originally included the ore stockpile pads and the
aforementioned evaporation ponds was completely recontoured and seeded after
borrow operations were completed.
The Calliham Mine had a total of five ventilation shafts. The
4-foot diameter Calliham No. 1 shaft was cased and was reclaimed by cutting off
the casing 6 feet below grade and placing a ½-inch steel plate over the casing
plus some concrete and backfilling with soil. The remaining four vent shafts
were uncased and reportedly backfilled with waste rock to 10 feet below grade. A
5-foot concrete plug and 5 feet of soil backfill completed the reclamation of
these shafts. At the land owners requests, concrete pads and power lines were
left unreclaimed at some of the vent shafts.
Updated Technical Report on Sage Plain Project March 2015 |
54 |
Mine Permitting Requirements
Prior to starting major permitting for the site, it is recommended that an exploration permit be obtained from DOGM to reopen the Calliham Decline and the Calliham No. 1 Vent Shaft to determine whether the decline is in good enough shape to allow
for rehabilitation. Assuming that the decline is in reasonable shape, a summary of the three major state permits needed to reopen the mine follows. All three state permits likely would trigger a public comment period and associated public meetings.
This area has seen extensive uranium mining over the years and benefited from the associated economic advantages. Minor permits for water rights, storm water, county special use, etc. also may be required. The San Juan County Administrator stated
the only permits they need to issue are building permits to reopen the Calliham Mine. These permits typically take 7 to 10 days to approve.
DOGM Large Mine Permit: This permit would include operation and reclamation plans, as well as comprehensive descriptions of environmental and health and safety issues. A preliminary draft of the Large Mine Notice of Intent (NOI) was prepared
in 2012 but not finalized or submitted.
Contract surveyors established control points and aerial photos were taken and 2 foot contour interval contour maps prepared. A preliminary facility layout map was developed for the mine portal area.
Atlas reported water inflow of 10 gpm in 1981 with elevated concentrations of uranium, radium, and arsenic. The operating plan would include mine dewatering and holding ponds and a water treatment plant.
A large number of ventilation shafts would be needed to operate this mine. Some of the older shafts could be reopened, especially the Calliham No. 1 Shaft, which was not backfilled. New, large diameter vent shafts would also be needed along with
associated surface facilities (i.e., emergency escapeways, power drops, air compressor stations, and water supply stations).
Topsoil sampling was completed on site and a preliminary soil map was prepared. Soil samples were sent to Colorado State University’s soil lab for analysis and recommendations for soil amendments. During communication with DOGM
representatives, they requested that a radiation survey be conducted which has not yet been done.
The DOGM large mine permit, once approved, likely would require bonding in the amount of $150,000 to $250,000.
Utah Division of Water Quality (DWQ) Mine Water Discharge Permit: The Calliham Mine would need to be dewatered during rehabilitation and then kept dewatered during mine operations. The DWQ requires that groundwater (zero) discharge permits be
obtained for all ponds and surface water discharge permits be obtained for treating and discharging water from the site. Use of evaporation ponds versus water treatment was evaluated for this project and water treatment and discharge was selected as
the
preferable method for managing excess water. Water treatment in Utah typically consists of removing uranium and radium, but arsenic and selenium also could require treatment. Treatment for uranium and radium is not difficult, but trace metals pose
greater technical challenges. Treated water also could be used for crop irrigation and livestock watering if approved by the state.
Updated Technical Report on Sage Plain Project March 2015 |
55 |
A water treatment facility design report was prepared in 2012. Groundwater monitoring wells were installed at that time around the proposed water treatment site and eight baseline sampling events were conducted. The wells were always dry. Two
groundwater samples were collected from the mine and sent to a lab for analysis. The first was collected in the northeast end of the mine via an air compressor pipe. One of the 2011 exploration drill holes purposely intersected the west end of the
mine to allow for collecting another sample of mine water. All information collected in the exploration drilling would be pertinent to the characterization of the aquifer(s) overlying the mine. A field study of area wells was initiated but not
completed. This information would be used in the discharge permit application.
Utah Air Quality Division (AQD) Minor Permit: Given the large number of vent shafts and anticipated life-of-mine production greater than 100,000 tons of ore, this project would need an air quality permit for fugitive dust and radon emissions
from ventilation shafts and disturbed surface areas. As long as exhaust shafts are placed away from residential areas, the technical issues should be minimal. It may be necessary to install an on-site meteorological station to record wind directions
and speed in the vicinity of proposed exhaust shafts.
BLM Plan of Operations and Environmental Assessment: Initial communication with the BLM indicated that the portion of the existing decline under BLM managed land would not require a Plan of Operations or a NEPA analysis. Given that no surface
disturbance of BLM land is involved, the local BLM office believed they could issue a Categorical Exemption (Cat-Ex) for the underground decline on BLM land. A Cat-Ex would exempt the project from having to file a Plan of Operations with the BLM and
prepare an Environmental Assessment. However, there is a possibility that the BLM could insist on greater involvement in the project because of political pressure from their state office and/or environmental groups. If this were to happen, it would
add considerable cost and time to the permitting effort. However, the project still would be permitted under an Environmental Assessment (EA) rather than a larger and more comprehensive Environmental Impact Statement (EIS).
Permitting Informational Needs
The following information would need to be collected by exploration and operations personnel prior to preparing the permit applications.
Groundwater Information: The amount and quality of the water flowing into the mine needs to be accurately characterized by discussions with the old miners familiar with the mine, measurements and samples from exploration drill holes, and
measurements and samples from the decline and cased vent shaft.
Updated Technical Report on Sage Plain Project March 2015 |
56 |
Surface Water Information: The frequency and quantity of
surface water flow through Wildhorse Canyon needs to be characterized by
discussions with adjacent land owners familiar with the area.
Ventilation: Mine ventilation needs to be evaluated and vent
shafts (existing and future) located based on known ore zones.
Mine Design: Surface facility layout needs to be confirmed,
then the portal and all vent shafts need to be surveyed, including power lines,
roads, water evaporation/treatment facilities, air compressor stations, and
power drops.
Permitting Approach
Subcontractors would be hired as needed to support the
permitting effort. EFI personnel have considerable experience working with
county, state, and federal agencies to permit mines in Colorado, Arizona and
Utah. Therefore, EFI can prepare a large percentage of the permit applications
in-house, but may need specialists to do any remaining ecological and cultural
resource surveys and to file water rights applications. Socioeconomic impacts
also would be studied by a specialized contractor.
Permit applications would be reviewed and finalized by EFIs
environmental staff with consultants reports included as attachments. Once the
applications have been submitted, on-site meetings with state and BLM personnel
may follow to orient the technical reviewers for these agencies.
Permitting Timeline
While much work has already been done to permit the Calliham
Mine, approximately a year of additional permitting efforts may be necessary in
order to receive final approvals. These efforts include:
-
Finalize the NOI, file it, then respond to agency comments
-
Finalize the water treatment facility design, finalize and file discharge
permit, then respond to agency comments
-
Contract with a consultant to prepare and file the air permit application
then respond to agency comments
-
Contract with a consultant to prepare and file the NESHAPs application to
construct then respond to agency comments
-
Apply for a water right for beneficial use (for drilling and dust
suppression)
Estimated Permitting Costs
Much of the remaining permitting activities would be completed
by EFI personnel in order to reduce cost. External costs for the activities
listed above are estimated to be $60,000.
Updated Technical Report on Sage Plain Project March 2015 |
57 |
21.0 Capital andOperating Costs
Although EFRCP is advancing this project toward mining, the
project is still in the early stages of mine design. A conceptual model exists
based on historic mining methods in the region, on mines recently in production
by EFRCP (La Sal area Pandora and Beaver mines), and on other projects being
developed by EFRCP (Whirlwind mine and Energy Queen mine). The specific plans
(equipment, ventilation, man-power, production rates, development scheduling,
etc.) have not been developed yet for the Calliham mine. Therefore, the capital
and operating costs cannot be discussed in this report in any meaningful
fashion. Permitting cost estimates are listed in Section 20 and rehabilitation
costs are discussed in Section 18 of this report.
Updated Technical Report on Sage Plain Project March 2015 |
58 |
22.0 Economic Analysis
EFRCP is only in the early stage of economic evaluation of the
project. Once the mining plan is finalized and cost estimates are more firm, the
economics of the project will be analyzed. This will include milling the product
at the White Mesa Mill for which EFRCP has very reliable cost information. A
projection of market prices for uranium and vanadium will be assessed and an
economic model developed. This work will lead to determination of Internal Rate
of Return and Net Present Value of the project. Sensitivity analyses will
follow.
Updated Technical Report on Sage Plain Project March 2015 |
59 |
23.0 Adjacent
Properties
There are parcels to the north, east, and south of the Sage
Plain Project properties that are reported to contain large uranium-vanadium
deposits. The surface and mineral rights of the private land are not all leased
at this time, but some may still be bound by option agreements of another
company with the owners. The nearby BLM land is also mostly claimed by other
parties. The private land with private minerals, the federal minerals under
private land, and the federal land with federal minerals are identified on
Figure 4-5. Based on the resource estimates taken from historic summaries by
Umetco Minerals Corporation (Hollingsworth, 1991), knowledge of other prior work
in the area, including that by CPP on the Sage mine property, many of these
properties are known to have uranium-vanadium deposits or enough mineralization
to make them highly prospective exploration targets. A summary of these
properties follows:
Sage Mine Property: The Sage mine property consists of
approximately 1,765 acres of BLM land covered by the unpatented claims in
sections 34 and 35, T32S, R26E, SLPM, San Juan County, Utah and sections 25 and
26, T43N, R20W, NMPM and sections 19, 29, 30, 31, and 32 T43N, R19W, NMPM, San
Miguel County, Colorado. EFRCP was the former owner of this property, but sold
it to Pinon Ridge Mining in August 2014. Atlas produced from the Sage Mine on
these claims in the 1970s through 1981. Butt Mining reportedly mined 3,000 tons
of ore from the Sage Mine in 1990 when vanadium prices were relatively high, but
the mine has otherwise remained inactive up to the current time. The Sage Mines
historic production, prior to Butts operation, is not known.
Silver Bell Mine Property: The mineral rights of the N
½, N ½ S ½, SE ¼ SE ¼ sec. 21, S ½, W ½ NW ¼ sec. 22, and S ½ SW ¼ sec. 15,
T32S, R26E are held by members of the Knuckles family. Most of this is private
land, but the SE ¼ SW ¼ sec. 15 is BLM land on which they own unpatented mining
claims. Likewise, they own unpatented claims in the fractional sections 23 and
26, T32S, R26E, along the Colorado state line. This property covers the Silver
Bell Mine workings and the reclaimed shaft that accessed it. This mine was
closed due to depressed uranium and vanadium prices in the 1980s. Umetco
Minerals operated it. At the time that the Calliham Mine closed and was
reclaimed, Umetco was driving a drift toward the Silver Bell from the Skidmore
lease with plans to connect the two in order to have access for rubber-tired
equipment through the Calliham Mine decline. The Silver Bell property is known
to hold significant remaining resources. The Silver Bell land borders the
Skidmore and Crain leases of the EFRCP project land on the north. It is
anticipated that the Silver Bell Mine is flooded similar to the Calliham Mine.
Wilson Mine Property: The mineral rights of the S ½ SE ¼
sec. 15, NE ¼, E ½ NW ¼, sec. 22 is owned by Don Wilson. This property covers
the Wilson Mine, which is connected to the Silver Bell and was accessed through
a now-reclaimed shaft. It also is known to have some remaining resources. The
Wilson parcel is separated from the EFRCP Crain lease by one-half mile width of
the Silver Bell property. It is anticipated that the Wilson Mine is flooded
similar to the Calliham Mine.
Updated Technical Report on Sage Plain Project March 2015 |
60 |
Federal Mineral-BLM and DOE: The land to the east in Colorado which lies north of the Sage et al. claims is owned by the U.S. government. Most of this for three miles to the east on the north side of Summit Canyon is controlled by the DOE.
The C-SR-11A lease tract covers parts of sections 23, 24, 25, and 26, T43N, R20W, and the W ½ section 16, T43N, R19W, NMPM. It is held by Golden Eagle Uranium LLC. Contiguous to that to the northeast is DOE tract C-SR-11, which is leased by
Cotter Corporation. Other federal land east and north of the Sage et al. claims along Summit and Bishop Canyons are covered by unpatented claims of various ownership. South of the Sage claims is a parcel of BLM land with federal minerals in the NW
¼, N ½ SW ¼, section 3, T33S, R26E.
Other acreage: The other land in sections 33, 34, and 35, T32S, R26E, and in sections 3, 4, 5, and 6, T33S, R26E, along the south side of the EFRCP property is privately owned surface and minerals of various ownership. Some of this is J.H.
Ranch Inc. land. The same is true for the private land surrounding the SITLA lease, ML-49301, which EFCRP sold to WUC.
There is one small exception: W ½ SW ¼ section 9, T33S, R26E is BLM surface, but without locatable minerals. The BLM mineral map shows this parcel as federal ownership of only oil and gas rights. It is assumed that these 80 acres were
homesteaded, then the surface rights given back to the federal government. If that is true, then the mineral ownership other than oil and gas remains in private hands and will need to be researched to determine true ownership for uranium rights.
All land south of the Sage claims in Colorado is also private of varying ownership, as is the land east of ML-49301.
Land west and north of the Skidmore lease in section 20 and 29, T32S, R26E is private. Farther north, the land surrounding EFRCP’s SITLA leases, ML-51145 and ML-51953 is also private.
Updated Technical Report on Sage Plain Project March 2015 |
61 |
24.0 Other
Relevant Data and Information
No Social or Community Impact studies have been performed yet,
but are planned as part of permitting and additional property analyses. It is
expected that reopening of the Calliham mine will have positive financial
impacts on the nearby small communities of Dove Creek, Egnar, and Ucolo as well
as the larger town of Monticello due to the need for skilled and unskilled labor
and supplies for both operations. The surrounding areas of southeastern Utah and
southwestern Colorado have been relatively depressed economically since the
decline of uranium mining and milling in the 1980s. Additional exploration and
production activity in the Sage Plain Project and other planned mines and
exploration projects in the region will bring much needed employment and
commerce to the area.
Updated Technical Report on Sage Plain Project March 2015 |
62 |
25.0 Interpretations and Conclusions
Peters Geosciences has reviewed the EFRCP resource estimates
and supporting documentation and is of the opinion that classification of the
mineralized material as Measured, Indicated or Inferred Mineral Resources meets
the definitions stated by NI 43-101, and also meets the definitions and
guidelines of the CIM Definition Standards for Mineral Resources and Mineral
Reserves (adopted by the CIM Council on November 27, 2010).
The CPP 17-hole drilling campaign in late 2011 was successful
in meeting the objectives of verifying resources and adding to the Measured,
Indicated, and Inferred Mineral Resources, with 10 holes containing
mineralization greater than 1.0 ft of 0.10% U3O8 . The Measured Mineral Resources
(above a diluted cutoff of 0.10% U3O8 with a few exceptions) are estimated to be
approximately 444,000 tons, diluted in-situ, containing 1,540,400 lbs U3O8 and
12,703,900 lbs V2O5. Indicated Mineral Resources are calculated to be
approximately 31,100 tons holding 70,600 lbs U3O8 and 547,100 lbs V2O5. A
minimum mining thickness of 3.0 feet has been employed in this estimate, and
dilution has assumed material at a grade of 0.05% U3O8 . All of this material is
within 2,000 feet of existing underground workings. Inferred Mineral Resources
based on geological analysis and available drill holes are estimated to be about
36,800 tons at a grade of 0.16% U3O8 (36,764 lbs) and 1.20% V2O5 (283,600 lbs).
During the earlier periods of exploration, not all drill holes
were assayed for vanadium. Therefore, it must be noted that the stated vanadium
content represents the district-wide production average based on a 8.6
multiplier of associated uranium grade. This ratio derives largely from historic
drill records and from the mining that occurred in the area mines prior to the
Calliham Mine closure in 1991. Vanadium:uranium ratios derived from samples
collected during the 2011 CPP drilling program have confirmed this multiplier as
a conservative value for use in resource estimation.
There is potential to expand the estimated resources with
additional surface drilling and underground development and longhole drilling.
EFRCP is planning on utilizing these techniques in the coming years to better
define uranium-bearing material suited for extraction. No documented economic
analysis has been performed to date which supports classification of any of the
Measured, Indicated, or Inferred Mineral Resources as reserves.
Updated Technical Report on Sage Plain Project March 2015 |
63 |
26.0 Recommendations
The Author recommends that EFRCP proceeds with the following
efforts as the Sage Plain Project re-opens the Calliham mine, begins
rehabilitation and development activity, and plans future production.
Permitting
|
1) |
Complete full hydrogeological investigations for surface
and ground water characterization. Revise 2012 report on mine dewatering
and water treatment options should any revisions be needed with new and
expanded characterization data. |
|
2) |
Perform radiological, biological, and archeological
surveys as required for federal and state permitting. |
|
3) |
Obtain necessary state and county permits to allow
facilities to be built and mine re- opening to
proceed. |
Mine Rehabilitation and Planning
|
1) |
Update plans for ventilation and surface facilities based
on revised mineral resources and any resulting changes to the location and
sequencing of future mining. |
|
2) |
Perform a Preliminary Economic Assessment (PEA) for the
Calliham mine to determine which known resources could be considered
reserves, once the inclines are rehabilitated and mines dewatered,
including determining current mining costs, production amounts, and so
on. |
Acquisitions
|
1) |
Investigate cost and timing of acquisition or leasing of
the mineral rights for the Silver Bell and Wilson mines and surrounding
properties, including such surface rights as may be necessary to provide
adequate ventilation and escapeways for those mines and known and
potential resource areas to the north of the Calliham
mine. |
Exploration
|
1) |
Although some of the exploration of the Calliham mine
area will be performed underground as development proceeds, it is
recommended that additional surface drilling be done for the areas to the
north of the majority of the Calliham workings and up to the Silver Bell
mine resources to aid in guiding development of connecting workings
between the mines and side entries of those connecting
workings. |
As a follow-on, a preliminary economic assessment (PEA) should
be performed internally by EFRCP an audited by a QP. If results are favorable, a
Prefeasibility Study should be undertaken to convert Measured and Indicated
Mineral Resources into Probable and/or Proven Mineral Reserves. (Estimated cost
for the PEA = $70,000).
Updated Technical Report on Sage Plain Project March 2015 |
64 |
27.0 References
Cadigan, R. A., 1967, Petrology of the Morrison Formation in
the Colorado Plateau Region, U.S.G.S. Professional Paper 556.
Campbell, John A., Franczyk, Karen J., Lupe, Robert D., and
Peterson, Fred, 1982, National Uranium Resource Evaluation, Cortez Quadrangle,
Colorado and Utah, U.S. Department of Energy, PGJ/F-051(82).
Cater, Fred W., Jr., 1955, Geology of the Egnar Quadrangle,
Colorado, U.S.G.S. Map GQ 68.
Chenoweth, W. L., 1981, The Uranium-Vanadium Deposits of the
Uravan Mineral Belt and Adjacent Areas, Colorado and Utah, in Western Slope
Colorado, New Mexico Geological Society 32nd Guide Book.
Chenoweth, W. L., 1990, Lisbon Valley, Utahs Premier Uranium
Area, A summary of Exploration and Ore Production, Utah Geological and Mineral
Survey OFR 188.
Dahlkamp, Franz J., 1993, Uranium Ore Deposits,
Springer-Verlag, Berlin.
Doelling, H. H., 1969, Mineral Resources, San Juan County,
Utah, and Adjacent Areas, Part II: Uranium and Other Metals in Sedimentary Host
Rocks, Utah Geological and Mineralogical Survey, Special Studies 24.
Edgington, W.J., 1982, Closure Report Atlas Minerals Calliham
Mine San Juan County, Utah, In-house Atlas Report.
Ethridge, F.G., Ortiz, N.V., Sunada, D.K., and Tyler, Noel,
1980, Laboratory, Field, and Computer Flow Study of the Origin of Colorado
Plateau Type Uranium Deposits, Second Interim Report, U.S.G.S. Open-File Report
80-805.
Fischer, R. P. and Hilpert, L. S., 1952, Geology of the Uravan
Mineral Belt, U.S.G.S. Bulletin 988-A.
Hackman, R.J., 1952, Photogeologic map of the Verdure-1
Quadrangle, Colorado-Utah, U.S.G.S. Trace Elements Memo, TEM-399.
Hollingsworth, J. S., January 25, 1991, Summary of Mineable
Reserves: Umetco Minerals Corporation, in-house report.
Huber, G.C., 1981, Geology of the Lisbon Valley Uranium
District, Southeastern Utah, in Western Slope Colorado, New Mexico Geological
Society 32nd Guide Book.
Updated Technical Report on Sage Plain Project March 2015 |
65 |
Kovschak, A. A., Jr. and Nylund, R. L., 1981, General Geology of Uranium-Vanadium Deposits of Salt Wash Sandstones, La Sal Area, San Juan County, Utah, in Western Slope Colorado, New Mexico Geological Society 32nd Guide Book.
Mickle, D.G. and Mathews, G.W., eds., 1978, Geologic Characteristics of Environments Favorable for Uranium Deposits, U.S. Department of Energy Open-file Report GJBX-67(78).
Minobras Mining Services Company, 1978, Uranium Guidebook for the Paradox Basin, Utah-Colorado: Bonsall, California (formerly Dana Point, California), 95p.
Peters, D.C., 2011,Technical Report on Colorado Plateau Partners LLC (Energy Fuels Resources Corporation and Lynx-Royal JV) Sage Plain Project (Including the Calliham Mine and Sage Mine) San Juan County, Utah and San Miguel County, Colorado.
Scott, J.H., Dodd, P.H., Droullard, R.F., Mudra, P.J., 1960, Quantitative Interpretation of Gamma-Ray Logs: U.S.A.E.C., RME-136.
Shawe, Daniel R., Simmons, George C., and Archbold, Norbert L., 1968, Stratigraphy of Slick Rock District and Vicinity San Miguel and Dolores Counties, Colorado, U.S.G.S. Professional Paper 576-A.
Shawe, Daniel R., 1970, Structure of the Slick Rock District and Vicinity, San Miguel and Dolores Counties, Colorado, U.S.G.S. Professional Paper 576-C.
Shawe, Daniel R., 1976, Sedimentary Rock Alteration in the Slick Rock District, San Miguel and Dolores Counties, Colorado, U.S.G.S. Professional Paper 576-D.
Shawe, Daniel R., 2011, Uranium-Vanadium Deposits of the Slick Rock District, Colorado, U.S.G.S. Professional Paper 576-F.
Thamm, J. K., Kovschak, A. A., Jr., and Adams, S. S., 1981, Geology and Recognition Criteria for Sandstone Uranium Deposits of the Salt Wash Type, Colorado Plateau Province-final report, U.S. Department of Energy Report GJBX-6(81).
Weeks, A. D., Coleman, R.G., and Thompson, M. E., 1959, Summary of the Ore Mineralogy, in Geochemistry and Mineralogy of the Colorado Plateau Uranium Ores, U.S.G.S. Professional Paper 320.
Wallis, Stewart, C., 2005, Technical Report on the Sage Plains Uranium Properties, Utah, Prepared for U.S. Energy Corp., Roscoe Postle Associates, Inc.
Updated Technical Report on Sage Plain Project March 2015 |
66 |
28.0 Certificate
of Qualifications and Signature
I, Douglas C. Peters, do hereby certify:
|
1. |
That I graduated from the University of Pittsburgh with a
Bachelor of Science degree in Earth & Planetary Sciences in
1977. |
|
|
|
|
2. |
That I graduated from the Colorado School of Mines with a
Master of Science degree in Geology in 1981 and with a Master of Science
degree in Mining Engineering in 1983. |
|
|
|
|
3. |
That I have read the definition of qualified person set
out in National Instrument 43-101 (NI-43-101) and certify that by reason
of my education, affiliation with a professional association (as defined
in NI 43-101), and past relevant work experience, I fulfill the
requirements to be a qualified person for the purposes of NI 43-101. I
hold the following certifications and memberships applicable to these
requirements: |
|
A. |
Certified Professional Geologist #8274 (American
Institute of Professional Geologists) |
|
|
|
|
B. |
Registered Member #2516800 (Society for Mining,
Metallurgy, and Exploration, Inc.) |
|
4. |
That I have practiced my profession for over 35 years,
the last 19 of which have been as an independent consulting
geologist. |
|
|
|
|
5. |
That I am responsible for this technical report titled:
Updated Technical Report on Sage Plain Project (including the Calliham
Mine), San Juan County, Utah, dated March 18, 2015, and that property was
visited by me on December 6, 2011. |
|
|
|
|
6. |
That I have had prior experience with the Sage Plain
Property that is the subject of this Technical Report and have had
previous experience with other uranium properties in Colorado, New Mexico,
Utah, Washington, and Wyoming. |
|
|
|
|
7. |
That this report dated March 18, 2015, and titled
Updated Technical Report on Sage Plain Project (including the Calliham
Mine), San Juan County, Utah is based on published and unpublished maps
and reports, on discussions with representatives of EER Colorado Plateau
LLC, Energy Fuels Inc., and discussions with other persons familiar with
this type of mineral deposit. |
Updated Technical Report on Sage Plain Project March 2015 |
67 |
|
8. |
That I am not aware of any material fact or material
change with respect to the subject matter of the Technical Report that is
not reflected in the Technical Report, the omission of which would make
the Technical Report misleading or would affect the stated
conclusions. |
|
|
|
|
9. |
That I am independent of EER Colorado Plateau LLC and its
parent, Energy Fuels Inc., applying all of the tests in section 1.4 of NI
43-101. |
|
|
|
|
10. |
That I am the owner of Peters Geosciences, whose business
address is 825 Raptor Point Road, Golden, Colorado 80403. |
|
|
|
|
11. |
That I have read NI 43-101 and NI 43-101F1, and the
Technical Report has been prepared in compliance with that instrument and
form. |
|
|
|
|
12. |
That I consent to the filing of this Technical Report
with any stock exchange and other regulatory authority and any publication
by them for regulatory purposes, including electronic publication in the
public company files or on its website accessible by the
public. |
Signed and dated this 18th day of March, 2015.
|
|
Douglas C. Peters, CPG |
|
Updated Technical Report on Sage Plain Project March 2015 |
68 |
APPENDIX
Updated Technical Report on Sage Plain Project March 2015 |
69 |
ROCA HONDA
RESOURCES, LLC |
|
TECHNICAL REPORT ON THE |
ROCA HONDA PROJECT, |
MCKINLEY COUNTY, |
STATE OF NEW MEXICO, U.S.A. |
NI 43-101 Report
Qualified Person:
Barton G. Stone,
C.P.G.
Robert Michaud, P.Eng.
Stuart Collins,
P.E.
Mark B. Mathisen, C.P.G.
Harold R. Roberts, P.E., COO
Energy Fuels
February 27,
2015 |
RPA Inc. 55 University Ave. Suite 501 I Toronto,
ON, Canada M5J 2H7 I T + 1 (416) 947 0907 www.rpacan.com
|
Report Control Form |
|
Document Title |
Technical Report on the Roca Honda
Project, McKinley County, State of New Mexico, USA |
|
|
Client Name & Address |
Roca Honda Resources, LLC
4001 Office Court, Ste. 102 Santa Fe, NM USA 87501 |
|
|
|
|
|
|
Document Reference
|
Project #2438
|
Status
& Issue No. |
Final Version |
|
|
|
|
|
Issue Date |
February 27, 2015 |
|
|
|
|
|
|
|
|
|
Lead Authors
|
Barton G. Stone, P.Geo.
Mark B. Mathisen, C.P.G. Stuart E. Collins, P.E. Robert
Michaud, P.E. |
|
(Signed) (Signed)
(Signed) (Signed) |
|
|
|
|
|
|
Peer Reviewer
|
Deborah McCombe, P.Geo.
|
|
(Signed)
|
|
|
|
|
|
|
Project Manager Approval
|
Stuart E. Collins, P.E.
|
|
(Signed)
|
|
|
|
|
|
|
Project Director Approval
|
Richard J. Lambert
|
|
(Signed)
|
|
|
|
|
|
|
Report Distribution |
Name |
No. of Copies |
|
|
|
|
|
Client
RPA Filing
|
1 (project box)
|
Roscoe Postle (USA) Ltd.
143 Union Boulevard, Suite
505
Lakewood, CO, USA 80228
T (303) 330-095
F (303) 330-0949
mining@rpacan.com
|
www.rpacan.com
|
TABLE OF CONTENTS
|
|
|
PAGE |
|
|
|
|
1 |
SUMMARY |
|
1-1
|
|
Executive
Summary |
1-1 |
|
Technical Summary |
1- 17
|
2 |
INTRODUCTION |
2-1 |
3 |
RELIANCE ON OTHER
EXPERTS |
3-1
|
4 |
PROPERTY DESCRIPTION AND LOCATION |
4-1 |
5 |
ACCESSIBILITY,
CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY |
5-1 |
6 |
HISTORY |
|
6-1 |
|
Roca Honda Ownership History |
6-1
|
|
Roca Honda
Exploration History |
6-2 |
|
Roca Honda Historic Resource
Estimates |
6-4
|
|
White Mesa Mill
Ownership History |
6-4 |
|
White Mesa Mill Operations History |
6-5
|
7 |
GEOLOGICAL SETTING AND MINERALIZATION
|
7-1 |
|
Regional Geology |
7-1
|
|
Local and
Property Geology |
7-5 |
|
Mineralization |
7- 14
|
8 |
DEPOSIT TYPES |
8-1 |
9 |
EXPLORATION |
9-1
|
|
Exploration
Potential |
9-1 |
10 |
DRILLING |
|
10-1
|
|
RHR Drilling |
|
10-3 |
|
Gamma Logging Procedures and
Verification |
10-5 |
|
Surveys |
|
10-5 |
|
Recovery |
|
10-6 |
11 |
SAMPLE PREPARATION,
ANALYSES AND SECURITY |
|
11-1 |
|
Historic Sampling Methods |
11-1 |
|
RHR
Sampling |
11-5 |
12 |
DATA
VERIFICATION |
|
12-1
|
|
Historic
Quality Assurance and Quality Control |
12-1 |
|
RHR Quality Assurance and Quality
Control |
12-1 |
|
Data
Verification 2004 to 2008 |
12-3 |
|
RPA Data Verification 2010 to 2011 |
12-4 |
13 |
MINERAL PROCESSING AND
METALLURGICAL TESTING |
|
13-1 |
|
Mineralized Sand Zones |
13-1 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page i |
|
www.rpacan.com
|
|
Historical
Metallurgical Testing |
13-2 |
|
Conclusions |
13-5 |
14 |
MINERAL RESOURCE ESTIMATE |
14-1 |
|
Summary |
14-1 |
|
Database |
14-2 |
|
Lithology Wireframe Models |
14-4 |
|
Mineralization
Wireframe Models |
14-5 |
|
Radiometric Statistics |
14-8 |
|
Grade Capping |
14-8 |
|
Sample
Composites |
14-12
|
|
Block Model
Parameters |
14-14 |
|
Density |
4-14 |
|
Grade Estimation |
14-15 |
|
Block
Grade Validation |
14-17
|
|
Resource
Classification |
14-19 |
|
Mineral Resource Estimate |
14-26
|
15 |
MINERAL RESERVE ESTIMATE |
15-1 |
16 |
MINING
METHODS |
16-1
|
|
Mining Operations |
16-2 |
|
Mining
Method |
16-2 |
|
Mine Design |
16-8 |
|
Underground Mobile Equipment |
16-20
|
|
Mine Infrastructure |
16-21 |
|
Production Schedule |
16-33
|
|
Health and Safety |
16-36 |
|
Future
Mining |
16-38
|
17 |
RECOVERY METHODS |
17-1 |
|
Ore
Receiving |
17-5 |
|
Grinding |
17-5 |
|
Leaching |
17-5 |
|
Counter Current
Decantation |
17-6 |
|
Tailings Management |
17-6 |
|
Solvent Extraction |
17-7 |
|
Precipitation, Drying and Packaging |
17-7 |
18 |
PROJECT INFRASTRUCTURE |
18-1 |
|
Roca
Honda Roads and Access |
18-1 |
|
Material Handling and
Storage |
18-2 |
|
Product Shipments |
18-2 |
|
Mine and Mill
Facilities |
18-2 |
19 |
MARKET STUDIES AND CONTRACTS
|
19-1 |
|
Markets |
19-1 |
|
Supply |
19-1 |
|
Demand |
19-2 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page ii |
|
www.rpacan.com
|
|
Price |
19-2 |
|
Contracts |
19-4 |
20 |
ENVIRONMENTAL STUDIES,
PERMITTING, AND SOCIAL OR COMMUNITY IMPACT |
20-1 |
|
Roca Honda Resources
Environmental Policy |
20-1 |
|
Roca
Honda |
20-2 |
|
Project Permitting |
20-10 |
|
Mine
Closure Requirements |
20-16
|
21 |
CAPITAL AND OPERATING COSTS |
21-1 |
|
Capital Cost Estimate |
21-1 |
|
Operating Cost
Estimate |
21-4 |
22 |
ECONOMIC ANALYSIS |
22-1
|
23 |
ADJACENT PROPERTIES |
23-1 |
24 |
OTHER RELEVANT DATA AND
INFORMATION |
24-1
|
25 |
INTERPRETATION AND CONCLUSIONS |
25-1 |
26 |
RECOMMENDATIONS |
26-1
|
27 |
REFERENCES |
27-1 |
28 |
DATE AND SIGNATURE PAGE |
28-1
|
29 |
CERTIFICATE OF QUALIFIED PERSON |
29-1
|
LIST OF TABLES
|
|
PAGE
|
Table 1-1
|
Mineral Resources – February 4,
2015 |
1-3 |
Table 1-2
|
Proposed Budget - Phase 1 |
1-7 |
Table 1-3
|
Proposed Budget - Phase
2 |
1-8
|
Table 1-4 |
RPA Cash Flow Analysis |
1- 10 |
Table 1-5
|
Sensitivity Analysis |
1- 14
|
Table 1-6
|
Major Differences between the
2012 Roca Honda PEAand the 2015 Roca Honda PEA |
1-15 |
Table 1-7 |
Financial Comparison between the 2012 Roca Honda PEA and the 2015 Roca Honda PEA |
1-15 |
Table 1-8
|
Capital Cost Estimate |
1-24 |
Table 1-9
|
Operating Cost Estimate |
1-25
|
Table 7-1
|
Typical Stratigraphic Thickness
Data for the Project Area |
7-6 |
Table 10-1
|
Summary of Drilling |
10-1 |
Table 11-1
|
RHR Gamma-ray Results |
11-6 |
Table 11-2 |
Core Sample Results |
11-8
|
Table 12-1
|
Independent Survey Check
|
12-5 |
Table 12-2
|
Independent Core Gamma-Ray Check |
12-5
|
Table 12-3 |
Gamma Log vs. Core
Lithology |
12-8 |
Table 12-4 |
Gamma Log vs. Core Sample Analyses |
12-9 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page iii
|
|
www.rpacan.com
|
Table 13-1 |
Metallurgical Recovery
by Zone |
13-1 |
Table 13-2 |
Mount Taylor Processing Data |
13-4 |
Table 14-1 |
Mineral Resources –
February 4, 2015 |
14-2
|
Table 14-2 |
Resource Database |
14-3 |
Table 14-3 |
Grade Statistics |
14-8
|
Table 14-4 |
Mineralized wireframe Composite Statistics |
14-12 |
Table 14-5 |
Block Model Extents |
14-14
|
Table 14-6 |
Density Determination of Core Samples |
14-15 |
Table 14-7 |
Vulcan Domain Search Parameters
|
14-16
|
Table 14-8 |
Grade Estimation Parameters |
14-17 |
Table 14-9 |
Mineral Resource Estimate at
FebruARy 4, 2015 |
14-26
|
Table 16-1 |
Key Life of Mine Production Statistics |
16-4 |
Table 16-2 |
Mine Equipment Summary |
16-20
|
Table 16-3 |
Mine Surface Infrastructure Space Requirements
Buildings |
16-22 |
Table 16-4 |
Estimated Electrical Load
Mine only |
16-24
|
Table 16-5 |
Annual Production Statistics from Life-of -Mine Schedule |
16-35 |
Table 18-1 |
White Mesa Mill Plant Estimated
Electrical Load |
18-4
|
Table 18-2 |
Surface Equipment Fleet |
18-7 |
Table 20-1 |
Major and Minor Roca Honda
Permits |
20-12
|
Table 21-1 |
Capital Cost Estimate |
21-1 |
Table 21-2 |
Surface Infrastructure Indirect
Cost Estimate and Total Indirect Cost Estimate |
21-3
|
Table 21-3 |
Operating Cost Estimate |
21-4 |
Table 21-4 |
Underground Mine Cost Summary
|
21-6
|
Table 21-5 |
Mill Operating Cost Details BY Area |
21-7 |
Table 21-6 |
Mill Operating Reagent Usage
Details |
21-8
|
Table 21-7 |
Surface Maintenance Costs |
21-9 |
Table 21-8 |
Administration Costs |
21-9
|
Table 21-9 |
Power Generation Costs |
21-10 |
Table 21-10 |
Mine and Mill Staff
Requirements |
21-11
|
Table 22-1 |
Project Economics Summary Base Case (No Toll
Milling) |
22-2 |
Table 22-2 |
Cash Flow Summary |
22-5
|
Table 22-3 |
Sensitivity Analysis |
22-9 |
Table
22-4 |
Major Differences between the
2012 Roca Honda PEA and the 2015 Roca Honda PEA |
22-10
|
Table 22-5 |
Financial Comparison between the 2012 Roca
Honda PEA and the 2015 Roca Honda PEA |
22-10 |
Table 23-1 |
Non-Reserve Mineralized
Material URIs Sections 13, 15, and 17 |
23-1 |
Table 25-1 |
Mineral Resources February 4, 2015 |
25-2 |
Table 26-1 |
Proposed Budget - Phase 1 |
26-3
|
Table 26-2 |
Proposed Budget - Phase
2 |
26-3
|
LIST OF FIGURES
|
|
PAGE |
Figure 1-1 |
Summary of Roca Honda Pre-tax
Sensitivity Analysis |
1- 13 |
Figure 1-2 |
Comparison of 2015 Roca Honda PEA at Different
Uranium Prices to 2012 Roca Honda PEA at US๛/lb
|
1-16 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page iv |
|
www.rpacan.com
|
Figure 4-1 |
Roca Honda Mine Location
Map |
4-5 |
Figure 4-2 |
White Mesa Mill Location and Property Map |
4-6 |
Figure 4-3
|
Roca Honda Mine, White
Mesa Mill, and Proposed Haul Route Location Map . |
4-7 |
Figure 4-4 |
Roca Honda Property Map |
4-8 |
Figure 4-5 |
Roca Honda Proposed Pipeline
Route |
4-9
|
Figure 7-1 |
Regional Geological Map of Northwestern New
Mexico |
7-3 |
Figure 7-2 |
Regional Structural Features
|
7-4
|
Figure 7-3 |
Property Geology |
7- 11 |
Figure 7-4 |
Typical Stratigraphy of the
Roca Honda Project Area |
7- 12
|
Figure 7-5 |
Typical Upper-Jurassic
Stratigraphy of the Roca Honda Project Area |
7-13 |
Figure 9-1 |
Exploration Potential |
9-3
|
Figure 10-1 |
Drill Hole Location Map |
10-2 |
Figure 10-2 |
Stratigraphy of Section 16 Shaft Core Hole |
10-4
|
Figure 11-1 |
Typical Historical Kerr-McGee Gamma-Ray Logs |
11-2 |
Figure 14-1 |
Block Model Boundaries |
14-7
|
Figure 14-2 |
Histogram Plot |
14-9 |
Figure 14-3 |
Log Normal Probability Plot |
14-10
|
Figure 14-4 |
Cumulative Frequency Plot |
14-11 |
Figure 14-5 |
Roca Honda Longitudinal Section
|
14-18
|
Figure 14-6 |
A Sand Resource
Classification |
14-21 |
Figure 14-7 |
B1 Sand Resource Classification
|
14-22
|
Figure 14-8 |
B2 Sand Resource Classification |
14-23 |
Figure 14-9 |
C Sand Resource Classification
|
14-24
|
Figure 14-10 |
D Sand Resource Classification |
14-25 |
Figure 14-11 |
Roca Honda Resource Grade vs.
Tons |
14-28
|
Figure 16-1 |
Roca Honda Mine Site Layout |
16-5 |
Figure 16-2 |
White Mesa Mill Layout |
16-6
|
Figure 16-3 |
Access Ramp Locations |
16-14 |
Figure 16-4 |
Southwest Deposit Access Ramp
Locations |
16-15
|
Figure 16-5 |
Northeast Deposit Access Ramp Locations |
16-16 |
Figure 16-6 |
Step-Room -and-Pillar Mining
Method |
16-17
|
Figure 16-7 |
Drift-and-Fill Mining
Method |
16-18 |
Figure 17-1 |
White Mesa Mill Location Map
|
17-2
|
Figure 17-2 |
White Mesa Mill - Site
Map |
17-3 |
Figure 17-3 |
White Mesa Mill Block Diagram
Flow Sheet |
17-4 |
Figure 19-1 |
Average Annual Price Spot Market 2000-2014
|
19-3 |
Figure 19-2 |
Major Bank Uranium Price
Forecast 2013 |
19-4 |
Figure 20-1 |
USFS TCP and New Mexico TCP Boundaries |
20-8 |
Figure 22-1 |
Summary of Roca Honda
Sensitivity Analysis (Pre-tax) |
22-8
|
Figure 22-2 |
Comparison of 2015 Roca Honda PEA at Different
Uranium Prices to 2012 Roca Honda PEA at US$75/lb |
22-11 |
Figure 23-1 |
Adjacent Properties |
23-3 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page v |
|
www.rpacan.com
|
1 SUMMARY
EXECUTIVE SUMMARY
Roscoe Postle Associates Inc. (RPA) was retained by Roca Honda
Resources, LLC (RHR) to prepare an Technical Report on the Roca Honda uranium
project (the Project), located in McKinley County, New Mexico. The purpose of
this report is to update the Preliminary Economic Assessment (PEA) of the
Project. This Technical Report conforms to National Instrument 43-101 Standards
of Disclosure for Mineral Projects (NI 43-101). RPA has visited the property
multiple times, with the most recent site visit on February 15-17, 2015.
In 2007, Strathmore Minerals Corp. (Strathmore) (60%) and
Sumitomo Corporation of Japan (Sumitomo) (40%) entered into a joint venture,
Roca Honda Resources, LLC, to develop the Roca Honda deposit. In 2009, RHR
submitted its Roca Honda Mine permit application to the New Mexico Mining and
Minerals Division and U.S. Forest Service. This permit was deemed
administratively complete by the regulatory agencies, and is now undergoing
technical review. In August 2013, Energy Fuels Resources (USA) Inc. (Energy
Fuels) acquired all of the assets of Strathmore, which is now a wholly-owned
subsidiary of Energy Fuels. The Project is held by RHR, as the operator.
RPA has previously prepared a PEA for the Project, and the
supporting NI 43-101 Technical Report was published in 2012. This updated PEA
includes an underground operation using both step room-and-pillar stoping in the
lower grade zones and drift-and-fill stoping in the higher grade sections. Ore
processing will take place at the White Mesa Mill operated by Energy Fuels
Resources (USA) Inc. under a toll milling agreement. The White Mesa Mill is an
existing conventional uranium mill including agitated leaching, counter current
decantation, solvent extraction, and precipitation. Based on the current Mineral
Resources, the mine life will be nine years at an average mining rate of 1,085
tons per day (stpd). The mine is located in McKinley County, New Mexico, and the
White Mesa Mill is located in San Juan County, Utah.
This report is considered by RPA to meet the requirements of a
PEA as defined in Canadian NI 43-101 regulations. The economic analysis
contained in this report is based, in part, on Inferred Resources, and is
preliminary in nature. Inferred Resources are considered too geologically
speculative to have mining and economic considerations applied to them and to be
categorized as Mineral Reserves. There is no certainty that the reserves
development, production, and economic forecasts on which this PEA is based will
be realized.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-1
|
|
www.rpacan.com
|
CONCLUSIONS
RPA offers the following conclusions regarding the Roca Honda
Project:
GEOLOGY AND MINERAL RESOURCES
|
|
The Project is a significant high grade uranium deposit.
|
|
|
|
|
|
Uranium mineralization at the Project is associated with
large amounts of organic/high carbon material in sandstones. |
|
|
|
|
|
Drilling to date has intersected localized, high-grade
mineralized zones contained within five sandstone units of the Westwater
Canyon Member of the Morrison Formation. |
|
|
|
|
|
The sampling, sample preparation, and sample analysis
programs are appropriate for the type of mineralization. |
|
|
|
|
|
Although continuity of mineralization is variable,
drilling to date confirms that local continuity exists within individual
sandstone units. |
|
|
|
|
|
No significant discrepancies were identified with the
survey location, lithology, and electric and gamma log interpretations
data in historic holes. |
|
|
|
|
|
No significant discrepancies were identified with the
lithology and electric and gamma log data interpretations in RHR holes.
|
|
|
|
|
|
Descriptions of recent drilling programs, logging, and
sampling procedures have been well documented by RHR, with no significant
discrepancies identified. |
|
|
|
|
|
There is a low risk of depletion of chemical uranium
compared to radiometrically determined uranium in the Roca Honda deposit.
|
|
|
|
|
|
RPA is of the opinion that the quality assurance and
quality control (QA/QC) procedures undertaken support the integrity of the
database used for Mineral Resourceestimation. |
|
|
|
|
|
The resource database is valid and suitable for Mineral
Resource estimation. |
|
|
|
|
|
The Mineral Resource estimate and classification are in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum
Definition Standards on Mineral Resources and Mineral Reserves dated May
10, 2014 (CIM definitions) incorporated in NI 43-101. The resource model
and underlying data have not changed since the 2012 Technical Report,
however, RPA has reported Mineral Resources at a higher cut- off grade,
consistent with the production scenario proposed in this PEA. Table 1-1
summarizes the Mineral Resources for the Roca Honda Project.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-2
|
|
www.rpacan.com
|
TABLE 1-1 MINERAL RESOURCES FEBRUARY 4, 2015
Roca Honda Resources LLC Roca Honda Project
Classification |
Tons (000) |
Grade U3O8 (%) |
Pounds U3O8
(000) |
Measured Resources |
208 |
0.477 |
1,984 |
|
|
|
|
Indicated Resources |
1,303 |
0.483 |
12,580 |
|
|
|
|
Total Measured and
Indicated Resources |
1,511 |
0.482 |
14,564
|
|
|
|
|
Inferred Resources |
1,198 |
0.468 |
11,206
|
|
Notes: |
|
1. |
CIM definitions were followed for Mineral
Resources. |
|
2. |
Mineral Resources are estimated using an
undiluted cut-off grade of 0.19% U3O8. |
|
3. |
A minimum mining thickness of six feet was
used, along with $241/ton operating cost and $65/lb U3O8
cut-off grade and 95% recovery. |
|
4. |
Mineral Resources that are not Mineral Reserves
do not have demonstrated economic viability. |
|
5. |
Numbers may not add due to rounding.
|
|
|
RPA did not update the mine design and production
schedule, which was developed using a cut-off grade of 0.13%U3O8. The
previous work was reviewed, and it was determined that stopes remain above
the updated cut-off grade of 0.19% U3O8. Some
material below 0.19% U3O8 is included within the
stope designs, and should be considered incremental material. |
|
|
|
|
|
In RPAs opinion, a stope re-design at a higher cut-off
grade would remove some incremental material, raise the average production
grade, and improve the cash flow, although the mine life would be somewhat
shorter. |
|
|
|
|
|
RPA is not aware of any known environmental, permitting,
legal, title, taxation, socioeconomic,marketing, political, or other
relevant factors that could materially affect the current resource
estimate. |
MINING
|
|
The mineralization is relatively flat-lying,
and will be mined with a combination of step room-and-pillar and
drift-and-fill stoping. |
|
|
|
|
|
In the development of the Mineral Resource
estimate for this PEA, RPA used a diluted cut-off grade of 0.110% U3O8, a
minimum mining thickness of six feet, and the historical mining recovery
of 85% for the step room-and-pillar mining method and 90% recovery for the
drift-and-fill mining method. |
|
|
|
|
|
The PEA is based on 2.033 million tons of
Measured and Indicated Resources at a diluted grade of 0.365% U3O8 and
1.400 million tons of Inferred Resources at a diluted grade of 0.355%
U3O8. RPA notes that Inferred Mineral Resources are considered too
geologically speculative to have mining and economic considerations
applied to them and to be categorized as Mineral Reserves.
|
Roca
Honda Resources, LLC Roca Honda Project, Project #2438
|
NI 43-101 Technical Report February 27, 2015
|
Page 1-3
|
|
www.rpacan.com
|
|
|
RPA considers the mining plan to be relatively simple and
the mining conditions are expected to be acceptable after the ground is
sufficiently dewatered. |
|
|
|
|
|
Mining is dependent upon the use of a suitable backfill,
assumed to be backfill with cement added as a binder. Initial test work to
demonstrate that a suitable backfill will be generated before and during
the mine development period needs to be completed.
|
PROCESSING
|
|
Mineral processing test work indicates that uranium can
be recovered in an acid leaching circuit after grinding to 80% minus 28
mesh with estimated recoveries of 95% from the mineralized material. Feed
to the semi-autogenous grinding (SAG) mill is assumed to be F80 of three
inch. The comminution circuit at White Mesa Mill can produce P80 28-mesh
sized material. |
|
|
|
|
|
White Mesa Mill uses an atmospheric hot acid leach
followed by counter current decantation (CCD). This in turn is followed by
a clarification stage, which precedes the solvent extraction (SX) circuit.
Kerosene containing iso-decanol and tertiary amines extracts the uranium
and vanadium from the aqueous solution in the SX circuit. Salt and
sulfuric acid are then used to strip the uranium from the organic phase.
|
|
|
|
|
|
After extraction of the uranium values from the aqueous
solution in SX, uranium is precipitated with anhydrous ammonia, dissolved,
and re-precipitated to improve product quality. The resulting precipitate
is then washed and dewatered using centrifuges to produce a final product
called "yellowcake." The yellowcake is dried in a multiple hearth dryer
and packaged in drums weighing approximately 800 lb to 1,000 lb for
shipping to converters. |
|
|
|
|
|
The yellowcake (U3O8 concentrate) will be stored in 55
gallon drums at the White Mesa Mill until shipped off-site. |
|
|
|
|
|
Tailings from the acid leach plant will be stored in
40-acre tailing cells located in the southwest and southern portion of the
mill site. |
|
|
|
|
|
Process solutions will be stored in the evaporation cells
for reuse and excess solutions will be allowed to evaporate.
|
INFRASTRUCTURE
|
|
The Roca Honda site is easily accessed via existing paved
highways and gravel roads that can be readily improved to accommodate haul
trucks. |
|
|
|
|
|
The initial mine site power will be provided by an
upgrade to a 25 kV power line with backup capacity supplied by a diesel,
generating station. The diesel plant design is based upon having two spare
units at any given time. |
|
|
|
|
|
The White Mesa Mill is currently fully operational.
Additional tailings storage capacity is required at White Mesa Mill for
the Roca Honda ore. Costs for construction of additional capacity are
included in the estimated milling operating cost.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-4
|
|
www.rpacan.com
|
ENVIRONMENT
|
|
Extensive baseline studies have been completed for the
Projects proposed mine location. All required permits for the White Mesa
Mill to operate are in place. |
|
|
|
|
|
The Draft Environmental Impact Statement (EIS) was
published by the United States Forest Service (USFS) in February 2013 with
an expected Record of Decision (ROD) and Final EIS in late 2016. A mine
permit is expected to be issued following the ROD and Final EIS in early
2017. |
|
|
|
|
|
|
|
|
Rock characterization studies indicate that waste rock
from the Project is not an acid producer. |
|
|
|
|
|
Environmental considerations are typical of underground
mining and processing facilities and are being addressed in a manner that
is reasonable and appropriate for the stage of the Project.
|
ECONOMICS
|
|
The uranium prices used in the PEA are higher (US$65.00
per pound) than the current uranium price (February 24, 2015) of US$37.15
per pound. The prices are based on independent, third-party and market
analysts average forecasts for 2015, and the supply and demand
projections are from 2011 to 2015. In RPAs opinion, these long- term
price forecasts are a reasonable basis for estimation of Mineral
Resources. |
|
|
|
|
|
Income taxes and New Mexico mining royalties on the
Project are dependent on the selected method of depreciation of capital,
and may also be reduced by application of credits accumulated by RHR. In
RPAs opinion, there is potential to improve the after- tax economic
results, as the Project is advanced. |
RISKS
|
|
There are potential risks associated with the fluctuating
price of uranium, socio- economic community relations, and the issue of
water, dewatering, and disposal of mine water. Based on previous mining
history in the area, risks associated with water can be managed.
|
RECOMMENDATIONS
RPA recommends that Roca Honda Resources advance the Roca Honda
Project to the Prefeasibility Study stage, and continue the New Mexico and
Federal permitting processes. Specific recommendations by area are as follows.
GEOLOGY
|
|
Although RPA is of the opinion that there is a relatively
low risk in assuming that density of mineralized zones is similar to that
reported in mining operations east and west of the Roca Honda property,
additional density determinations should be carried out, particularly in
the mineralized zones, to confirm and support future resource estimates.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-5
|
|
www.rpacan.com
|
|
|
Although there is a low risk of depletion of chemical
uranium compared to radiometrically determined uranium in the Roca Honda
mineralization, additional sampling and analyses should be completed to
supplement results of the limited disequilibrium testing to date.
|
|
|
|
|
|
In the future, implement a QA/QC protocol for sample
analysis that includes the regular submission of blanks and standards.
|
|
|
|
|
|
Review additional fault modelling once additional data
have been obtained. |
|
|
|
|
|
Complete additional confirmation drilling at the earliest
opportunity to confirm historic drill hole data on all zones.
|
RESOURCES
|
|
Complete further definition drilling in the Mineral
Resource areas to increase the quantity and quality of the resources and
improve the overall confidence, i.e., resource classification (Measured,
Indicated, and Inferred). |
|
|
|
|
|
Include one-half foot assays in the geologic database for
future grade shell analysis. |
HYDROLOGY
|
|
Continue to gather data, which will improve knowledge
about the local and regional aquifers. |
|
|
|
|
|
Continue to update the regional groundwater model as new
data becomes available to determine the impacts that the depressurization
of the Roca Honda Project will have on local and regional aquifers. The
regional groundwater model has been accepted by both the USFS and New
Mexico Office of the State Engineer. |
MINING
|
|
Geotechnical designs are based on the laboratory testing
of only a limited number of core samples. Additional sampling and testing
should be pursued in concert with the definition drilling program.
Boreholes should be located on the centerline of the various proposed
ventilation shafts. The cores from these holes will define the different
lithologies to be encountered, and provide samples for rock strength
testing and other needed geotechnical design information. The geotechnical
study on the proposed shaft core hole was completed in 2012. More detailed
designs and cost estimates should be completed. |
|
|
|
|
|
Investigate more thoroughly the applicability of using
roadheaders, and other selective mining methods that may reduce dilution
for development and stope mining, which will reduce the tonnage and
increase the grade of material shipped and processed at White Mesa Mill.
|
|
|
|
|
|
Pursue the acquisition or joint venturing of potential
extensions of the mineralized zones onto adjacent land. The Project is
sensitive to total resources tonnage and grade, i.e., total pounds of
contained uranium. Potential acquisitions could impact the preferred
locations of underground mine access, surface infrastructure, and possibly
the processing facilities. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-6
|
|
www.rpacan.com
|
PROCESSING
|
|
Obtain representative metallurgical samples for site
specific test work including disequilibrium analysis of the Roca Honda
Sand Horizons: A, B, C and D Sands. |
|
|
|
|
|
Finalize processing parameters to be used at the White
Mesa Mill . |
PROPOSED PROGRAM AND BUDGET
RPA recommends a two-phase work program and budget for the Roca
Honda property, with Phase 2 being contingent on the outcome of Phase 1. The
focus of the Phase 1 program is to continue the permitting process for the
Project with State and Federal Agencies as well as continue environmental,
engineering, and design studies to support the permitting process. The Phase 2
program includes additional drilling to increase and upgrade existing Mineral
Resources, and mine design. The work programs and budgets are summarized in
Tables 1-2 and 1-3.
TABLE 1-2 PROPOSED BUDGET - PHASE 1
Roca Honda
Resources LLC Roca Honda Project
Proposed Budget Item |
|
US$ |
|
Legal/Regulatory |
|
301,500
|
|
Project Management/Staff Cost |
|
419,260 |
|
Expense Accounts/Travel Costs
|
|
25,525 |
|
Holding Costs |
|
84,320 |
|
Access Fees |
|
300,000 |
|
Environmental Studies |
|
40,000 |
|
Engineering Studies |
|
310,000 |
|
Community Relations |
|
13,000 |
|
Permitting |
|
461,000 |
|
Communications |
|
8,820 |
|
Transportation |
|
7,200 |
|
Subtotal |
|
1,970,625 |
|
Contingency (10%) |
|
197,063 |
|
TOTAL |
|
2,167,688 |
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-7
|
|
www.rpacan.com
|
TABLE 1-3 PROPOSED BUDGET - PHASE 2
Roca Honda
Resources LLC Roca Honda Project
Proposed Budget Item |
|
US$ |
|
Legal/Regulatory |
|
100,000
|
|
Project Management/Staff Cost |
|
400,000 |
|
Expense Accounts/Travel Costs
|
|
25,000 |
|
Holding Costs |
|
90,000 |
|
Access Fees |
|
200,000 |
|
Drilling (32 holes ~60,000 ft) |
|
2,361,000 |
|
Assaying/Geophysical Logging
|
|
124,000 |
|
Environmental Studies |
|
50,000 |
|
Metallurgical Test Work |
|
200,000 |
|
Community Relations |
|
100,000 |
|
Geotechnical Analysis |
|
200,000 |
|
Reclamation Bonding |
|
400,000 |
|
Communications |
|
20,000 |
|
Transportation |
|
30,000 |
|
Subtotal |
|
4,300,000
|
|
Contingency (10%) |
|
430,000 |
|
TOTAL |
|
4,730,000
|
|
ECONOMIC ANALYSIS
The economic analysis contained in this report includes
Inferred Resources,and is preliminary in nature. Inferred Resources are
considered too geologically speculative to have mining and economic
considerations applied to them and to be categorized as Mineral Reserves. There
is no certainty that the reserves development, production, and economic
forecasts on which this PEA is based will be realized.
A pre-tax cash flow projection has been generated from the Life
of Mine (LoM) schedule and capital and operating cost estimates, and is
summarized in Table 1-4. A summary of the key criteria is provided below.
REVENUE
|
|
Average of 1,085 stpd of Roca Honda material
(base case). |
|
|
Waste mining of 0.82 Mt. |
|
|
Mill recovery averaging 95%. |
|
|
Metal price: US$65.00 per pound U3O8. |
|
|
Revenue is recognized at the time of
production. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-8
|
|
www.rpacan.com
|
COSTS
|
|
Pre-production period of 54 months. |
|
|
Mine life of nine years. |
|
|
Pre-production capital cost of US$254 million
including contingency of US$45 million. |
|
|
Toll milling charge of $35.90 per ton. |
|
|
Sustaining capital costs of US$72 million.
|
|
|
Roca Honda closure capital cost of
approximately US$3.4 million. |
|
|
Total mine life capital cost of US$326 million
including contingency. |
|
|
Total LoM operating cost of US$829 million.
|
ROYALTIES
|
|
There is a New Mexico mining royalty
payable on the value of mineral production for |
|
|
New Mexico state leases. The royalty
is based upon the operating cash flow less a |
|
|
development allowance, depreciation,
and a processing allowance. |
|
|
|
|
|
New Mexico mining and private
royalties on value of minerals extracted as shown |
|
|
below: |
|
|
|
o |
Notional Gross Royalty (1%); |
|
|
o |
Section 9 Gross Royalty (1%); and |
|
|
o |
Section 16 New Mexico State Lease Royalty (5%).
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-9
|
|
www.rpacan.com
|
TABLE 1-4 PRE-TAX CASH FLOW SUMMARY
Roca Honda Resources, LLC - Roca Honda
Project
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-10
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-11
|
|
www.rpacan.com
|
CASH FLOW ANALYSIS
Considering the Project on a stand-alone basis, the base case
undiscounted pre-tax cash flow and including contingency totals US$317 million
over the mine life, and payback occurs early in the fifth year of production.
The average uranium production is 2.7 million pounds of uranium per year (1,450
tons of uranium oxide) with a maximum annual production of 3.9 million pounds.
The pre-tax internal rate of return (IRR) is 12% and the
pre-tax net present value (NPV) is as follows:
|
|
US$317 million at a 0% discount rate; |
|
|
US$125 million at a 5% discount rate; |
|
|
US$58 million at an 8% discount rate; and
|
|
|
US$1 million at a 12% discount rate.
|
The net revenue per pound of product is US$62.60, and the
operating cost per pound of product is US$35.23/lb
SENSITIVITY ANALYSIS
Project risks can be identified in both economic and
non-economic terms. Key economic risks were examined by running cash flow
sensitivities:
|
|
Uranium Oxide Price |
|
|
Head Grade |
|
|
Recovery |
|
|
Operating Cost per ton milled |
|
|
Capital Cost |
Sensitivity has been calculated over a range of variations
based on realistic fluctuations within above listed factors.
The sensitivities are shown in Figure 1-1 and Table 1-5. The
Project is most, and equally, sensitive to head grade, uranium price, and
recovery, and least, and equally, sensitive to operating cost and capital cost.
The sensitivities to metallurgical recovery and head grade are identical to that
of price (for all constituents combined) and are therefore plotted on the same
line.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-12
|
|
www.rpacan.com
|
FIGURE 1-1 SUMMARY OF ROCA HONDA PRE-TAX SENSITIVITY ANALYSIS
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-13
|
|
www.rpacan.com
|
TABLE 1-5 SENSITIVITY ANALYSIS
Roca Honda Resources LLC Roca Honda Project
Parameter Variables |
Units |
-33% |
-13% |
Base |
20% |
30% |
U3O8 Price |
$/lb |
43 |
56 |
65 |
78 |
87 |
Pre-tax NPV @ 8% |
($ millions) |
-171 |
-34 |
58 |
196 |
287 |
IRR |
% |
-11% |
5% |
12% |
20% |
24% |
|
|
|
|
|
|
|
Parameter Variables |
|
-25% |
-10% |
Base |
10% |
25% |
Grade |
% |
0.27 |
0.3% |
0.36 |
0.40 |
0.45 |
Pre-tax NPV @ 8% |
($ millions) |
-113 |
-10 |
58 |
126 |
229 |
IRR |
% |
-3% |
7% |
12% |
16% |
22% |
|
|
|
|
|
|
|
Parameter Variables |
|
-20% |
-10% |
Base |
2% |
3% |
Recovery |
% |
76 |
86 |
95 |
97 |
98 |
Pre-tax NPV @ 8% |
($ millions) |
-80 |
-11 |
58 |
72 |
79 |
IRR |
% |
1% |
7% |
12% |
13% |
13% |
|
|
|
|
|
|
|
Parameter Variables |
|
-20% |
-10% |
Base |
10% |
20% |
Operating Cost |
$ millions |
542 |
678 |
829 |
995 |
1,176 |
Pre-tax NPV @ 8% |
($ millions) |
192 |
129 |
58 |
-20 |
-104 |
IRR % |
% |
20% |
16% |
12% |
6% |
-2% |
|
|
|
|
|
|
|
Parameter Variables |
|
-30% |
-15% |
Base |
15% |
30% |
Capital Cost |
$ millions |
242 |
284 |
327 |
369 |
411 |
Pre-tax NPV @ 8% |
($ millions) |
120 |
89 |
58 |
27 |
-5 |
IRR |
% |
18% |
15% |
12% |
10% |
8% |
COMPARISON WITH THE 2012 PEA
The significant changes between the 2012 PEA and the 2015 PEA
are listed in Table 1-6, and the sensitivity financial impacts of these changes
are listed in Table 1-7 and Figure 1-2.
RPA notes that the uranium price used for the 2015 PEA is
$65/lb and the uranium price used for the 2012 PEA was $75/lb. Table 1-7 shows
that if a $75/lb price is used for the 2015 Roca Honda PEA, the pre-tax IRR is
only one percent less than the 2012 Roca Honda PEA.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-14
|
|
www.rpacan.com
|
TABLE 1-6 MAJOR DIFFERENCES BETWEEN THE 2012 ROCA
HONDA
PEA AND THE 2015 ROCA HONDA PEA
Roca Honda Resources LLC Roca Honda
Project
Item Changed in PEA |
2012 PEA Assumption |
2015 Assumption |
Comment |
Uranium Price |
US$75/lb |
US$65/lb |
|
|
|
|
|
Process Plant Location |
Peña Ranch, NM |
Blanding, UT |
|
|
|
|
|
Mill Capital Cost |
US$120 million |
US$0 |
|
(Directs, Indirects, & |
|
|
|
Contingency) |
|
|
|
|
|
|
|
Ventilation Shaft(s) |
Blind Bore |
Raise Boring |
|
Method |
|
|
|
|
|
|
|
Transportation Distance |
25 to 29 road miles |
275 road miles |
|
|
|
|
|
Transportation Cost |
US$4.05/t ore |
US$43.50/t ore |
|
(mine to mill) |
|
|
|
|
|
|
|
Toll Milling Charge of |
US$0.00/t ore |
US$35.90/t ore |
|
Roca Honda Material |
|
|
|
|
|
|
|
Water Pipeline |
10 mile Northern Route |
26 mile Southern |
|
|
|
Route |
|
Capital Cost Estimate |
US$445 million |
US$327 million |
|
(Life of Mine) |
|
|
|
|
|
|
|
Process Plant |
New Construction |
Existing White |
|
|
|
Mesa Mill (WMM) |
|
|
|
|
|
Process Plant Permitting |
Unknown High Risk |
In place Low |
No NRC license required with |
|
Very Long Lead Time to |
Risk |
the WMM |
|
Obtain NRC |
|
|
|
|
|
|
Process Recovery Used |
94% |
95% |
EFR has processed many |
|
|
|
different types of uranium ores |
|
|
|
at their existing White Mesa Mill.
|
TABLE 1-7 FINANCIAL COMPARISON BETWEEN THE 2012 ROCA HONDA
PEA AND THE 2015 ROCA HONDA PEA
Roca Honda Resources LLC Roca
Honda Project
Description |
Units |
Price Sensitivities and Recovery |
Date of PEA |
|
Feb-15 |
Feb-15 |
Feb-15 |
Feb-15 |
Feb-15 |
Aug-12 |
Uranium Price |
US$/lb |
45.00 |
55.00 |
65.00 |
75.00 |
90.00 |
75.00 |
Processing Recovery |
% |
95 |
95 |
95 |
95 |
95 |
94 |
Pre-tax Cash Flow |
$US 000s |
(137,472) |
89,965 |
317,403 |
544,840 |
885,997 |
713,087 |
Pre-tax NPV @ 8% Discount Rate |
$US 000s |
(153,637)
|
(47,821)
|
57,996 |
163,812 |
322,536 |
220,075 |
Pre-tax IRR |
% |
-8 |
4 |
12 |
18 |
26 |
19 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-15
|
|
www.rpacan.com
|
FIGURE 1-2 COMPARISON OF 2015 ROCA HONDA PEA AT DIFFERENT
URANIUM PRICES TO 2012 ROCA HONDA PEA AT US$75/LB
Energy Fuels believes that the financial risk of permitting a
mill in New Mexico is greater than the risk of using the existing White Mesa
Mill in Blanding, Utah. In addition, Energy Fuels believes that the capital cost
risk is lower using the White Mesa Mill than building a mill near the RocaHonda
Mine. Operating costsforthe processingof RocaHonda material at the White Mesa
Mill are higher because of the transportation cost from the Roca Honda Mine to
the White Mesa Mill.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-16
|
|
www.rpacan.com
|
TECHNICAL SUMMARY
PROPERTY DESCRIPTION AND LOCATION
The Roca Honda uranium project is located approximately three
miles northwest of the community of San Mateo, New Mexico, near the southern
boundary of McKinley County and north of the Cibola County boundary, and
approximately 22 miles by road northeast of Grants, New Mexico. The property is
located in the east part of the Ambrosia Lake subdistrict of the Grants Mineral
Belt in northwest New Mexico and comprises nearly all of Sections 9, 10, and a
narrow strip of Section 11, and the New Mexico State Lease, consisting of
Section 16, all in Township 13 North Range 8 West (T13N-R8W), New Mexico
Principal Meridian.
The White Mesa Mill is located on 4,816 acres of private land
owned by Energy Fuels. This land is located in Township 37S and 38S Range 22E
Salt Lake Principal Meridian. The mill is located approximately six miles south
of Blanding, Utah along US Highway 191. Energy Fuels also holds 253 acres of
mill site claims and a 320 acre Utah state lease. No facilities are planned on
the claims or leased land, which will be used as a buffer to the operations.
LAND TENURE
The Roca Honda property is held by RHR, which is jointly owned
by Energy Fuels wholly-owned subsidiary Strathmore Resources, U.S. Ltd. (60%)
and Sumitomos subsidiaries SC Clean Energy and Summit New Energy Holding, LLC
(40%). RHR was established on July 26, 2007, when Strathmore formed a limited
liability company with Sumitomo and transferred the property to RHR.
The Roca Honda property covers an area of 1,886.5 acres, and
includes 63 unpatented lode mining claims in Sections 9 and 10, and one
adjoining New Mexico State General Mining Lease in Section 16. The mining claims
also extend onto a 9.4 acre narrow strip of Section 11. Strathmore acquired the
mining claims on March 12, 2004, from Rio Algom Mining LLC (Rio Algom), a
successor to Kerr-McGee Corporation (Kerr-McGee), which had staked the claims in
1965 and had continuously maintained them. The New Mexico State Lease was
acquired by David Miller (former Strathmore CEO) on November 30, 2004, and
subsequently transferred to Strathmore.
The WhiteMesa Mill is located approximately six miles south of
Blanding, Utah on US Highway 191 on a parcel of land encompassing all or part of
Sections 21, 22, 27, 28, 29, 32, and 33 of T37S, R22E, and Sections 4, 5, 6, 8,
9, and 16 of Township 38 South, Range 22 East, Salt Lake Base and Meridian.
Additional land is controlled by 46 mill site claims. Total White Mesa Mill land
holdings are approximately 5,375 acres.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-17
|
|
www.rpacan.com
|
ROCA HONDA EXISTING INFRASTRUCTURE
Old drill roads were previously established across the
property, and an electrical line transects the northern half of Section 16 in
the Project area. The line continues on the west side of the Project area into
Section 17, where it terminates, and on the east side of Section 16 through the
northwest quarter of Section 15 and along the southern section boundary of
Section 10.
Three monitor water wells were drilled by RHR in 2007, and are
located on Section 16.
WHITE MESA MILL INFRASTRUCTURE
The White Mesa Mill was constructed in 19791980 and is a fully
functioning uranium/vanadium mill. It is the only fully operational and licensed
conventional uranium mill in the US. The mill is capable of functioning
independent of off-site support except for commercial power from Rocky Mountain
Power and supplemental water supply from the City of Blanding, Utah, and the San
Juan Water Conservancy District. Off-site infrastructure includes paved highway
access from State Highway 191, and right-of-ways for commercial power and a
water supply pipeline from Recapture Reservoir, which brings up to 1,000
acre-feet of water per year to the mill site. The mill also has four deep
(2,000+ ft) water supply wells which supply process water during normal
operations. In addition to the mill processing equipment, which includes the
grinding and leaching circuits, CCD (liquidsolid separation), solvent
extraction, and precipitation and drying circuits, the mill has several days
reagent storage for sulfuric acid, ammonia, salt, soda ash, caustic soda,
ammonium sulfate, flocculants, kerosene, amines, and liquefied natural gas
(LNG). The on-site infrastructure also includes an ore stockpile area capable of
storing up to 450,000 tons of ore, and existing tailings capacity of
approximately 3.5 million tons of solids. In addition, the mill has
approximately 90 acres of evaporation capacity.
HISTORY
Kerr-McGee Oil Industries, Inc. (Kerr-McGee) staked the Roca
Honda unpatented mining claims in Sections 9 and 10 in June 1965. Kerr-McGee,
its subsidiaries, and successor in interest Rio Algom had held the claims until
the property was acquired by Strathmore on March 12, 2004. Energy Fuels acquired
a 100% interest in Strathmore in August 2013, assuming Strathmores 60%
ownership interest in RHR and becoming the Project operator.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-18
|
|
www.rpacan.com
|
Drilling on the property began in 1966. Kerr-McGee performed a
number of rotary drill hole exploration programs from 1966 to 1985. In Section
9, the first drill hole wascompleted in July 1966. Discovery was made in drill
hole number 7 completed on August 2, 1970, which encountered mineralization at a
depth of 1,900 ft. From 1966 to 1982, a total of 187 drill holes were completed
for a total of 388,374 ft.
In Section 10, the first hole was drilled in October 1967.
Discovery was made in drill hole number 6 completed on March 19, 1974, which
encountered mineralization at a depth of 2,318 ft. From 1967 to 1985, a total of
175 drill holes were completed for a total of 449,535 ft.
In Section 16, the first drilling was in the 1950s by Rare
Metals, which drilled 13 holes, including two that intercepted high-grade
uranium mineralization at depths of 1,531 ft and 1,566 ft. No records of the
total drilled footage were located. Subsequently, Western Nuclear acquired a
mining lease for Section 16 from the State and began drilling in 1968, with the
first drill hole completed on August 17, 1968. The second drill hole intercepted
high-grade uranium mineralization at a depth of 1,587 ft. From 1968 through
September 1970, Western Nuclear drilled 64 holes totalling 123,151 ft, not
including six abandoned holes totalling 7,835 ft. Two of the drill holes
reported cored intervals, but the cores and analyses were not available.
From the late 1960s to the early 1980s, a total of 444 drill
holes totaling over 971,300 ft were completed on the three Sections of the Roca
Honda property.
There have been several historical mineral resource estimates
prepared for the property, all of which pre-dated NI 43-101. In 2012, RPA
prepared a Mineral Resource estimate and reported it in a NI 43-101 Technical
Report prepared for Strathmore. That estimate is superseded by the Mineral
Resource estimate in Table 1-1.
GEOLOGY AND MINERALIZATION
Rocks exposed in the Ambrosia Lake subdistrict of the Grants
Mineral Belt, which includes the Roca Honda area, comprise marine and non-marine
sediments of Late Cretaceous age, unconformably overlying the uranium-bearing
Upper Jurassic Morrison Formation. The uppermost sequence of conformable strata
consists of the Mesaverde Group, Mancos Shale, and Dakota Sandstone. All rocks
that outcrop at the Roca Honda Project area are of Late Cretaceous age.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-19
|
|
www.rpacan.com
|
The uranium found in the Roca Honda Project area is contained
within five sandstone units of the Westwater Canyon Member. Zones of
mineralization vary from approximately one foot to 32 ft thick, 100 ft to 600 ft
wide, and 200 ft to 2,000 ft long. Uranium mineralization in the Project area
trends west-northwest, consistent with trends of the fluvial sedimentary
structures of the Westwater Canyon Member, and the general trend of
mineralization across the Ambrosia Lake subdistrict.
Core recovery from the 2007 drilling program indicates that
uranium occurs in sandstones with large amounts of organic/high carbon material.
Non-mineralized host rock is much lighter (light brown to light grey) and has
background to slightly elevated radiometric readings.
Uranium mineralization consists of unidentifiable
organic-uranium oxide complexes. The uranium in the Project area is dark grey to
black in color, and is found between depths of approximately 1,650 ft and 2,600
ft below the surface.
Primary mineralization pre-dates, and is not related to,
present structural features. There is a possibility of some redistribution and
stack mineralization along faults; however, it appears that most of the Roca
Honda mineralization is primary. Paleochannels that contain quartz-rich,
arkosic, fluvial sandstones are the primary mineralization control associated
with this trend.
EXPLORATION STATUS
No additional exploration work or activities have been
conducted on the Roca Honda property since November 2011, when a core drill hole
was completed in Section 16 for geotechnical studies.
A few widely spaced holes that were previously drilled in the
central part of Section 16 intersected mineralization in the A and B1 sands
grading over 0.10% U3O8 across a minimum thickness of six feet. Based on this
drilling, an exploration potential of 600,000 tons to 800,000 tons at 0.30% U3O8
to 0.40% U3O8 was identified, containing four million pounds of uranium.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-20
|
|
www.rpacan.com
|
RPA notes that the potential quantity and grade identified are
conceptual in nature and additional exploration is required to define a Mineral
Resource.
MINERAL RESOURCES
The updated Mineral Resource estimate for the Roca Honda
deposit effective as at February 4, 2015, is summarized in Table 1-1. Mineral
Resources are constrained by wireframes generated around individual mineralized
zones within five sand horizons designated as A, B1, B2, C, and D sands.
The Mineral Resource estimate and classification are in
accordance with the CIM definitions.
There are no Mineral Reserves on the property at this time.
MINING METHODS
The PEA includes 2.033 million tons of Measured and Indicated
Mineral Resources at a diluted grade of 0.365% U3O8 and
1.400 million tons of Inferred Resources at a diluted grade of 0.355%
U3O8. To arrive at this estimate, RPA used a diluted
cut-off grade of 0.110% U3O8, a minimum mining thickness
of six feet, and the historical mining recovery of 85% for the step
room-and-pillar mining method and 90% recovery for the drift-and-fill mining
method. RPA notes that Inferred Resources are considered too geologically
speculative to have mining and economic considerations applied to them and to be
categorized as Mineral Reserves.
Dilution is estimated to average 17.1% at a grade of 0.030%
U3O8. This includes both low grade and waste material.
Dilution estimates are based on one foot of overbreak in the roof and six inches
in the floor of all single lift stopes. In the case of multi-lift stopes, the
initial cuts include only six inches of dilution from the floor of the drift.
The final cut includes both floor dilution and roof dilution. Average minimum
stope height is six feet.
The mineralization is relatively flat-lying and will be mined
using both step room-and-pillar (SRP) stoping in the lower grade zones and
drift-and-fill (DF) stoping in the higher grade zones. The transition grade has
been calculated at 0.265% U3O8. Stopes with average
diluted grades of less than 0.265% U3O8 will be mined
using the SRP method. Stopes with average diluted grades higher than 0.265%
U3O8 will be mined using the DF method. With the SRP
method, permanent pillars will be left in a pre-designed pattern and
low-strength cemented rockfill (CRF) will be placed in mined-out areas as
backfill. For the DF method, a high-strength CRF will be placed in the mined-out
areas. The mineralized zones range in thickness from 6 ft to 21 ft. Zones in the
6 ft to 12 ft thickness range will be mined in one pass. Mineralized zones
exceeding 12 ft in thickness will be mined in two sequential overhand cuts with
each cut being approximately one half of the overall zone thickness.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-21
|
|
www.rpacan.com
|
The LoM schedule (24 hours/day, 7 days per week) is based on
initiating development from the production shaft located in Section 16. The
mining areas in the Southwest mining area will be connected to the Northeast
mining area via a 3,600 ft double decline. Primary development connecting the
shaft to the various mineralized zones (including the double decline) will be
driven 10 ft wide by 12 ft high to allow for infrastructure. Stope access
development connecting the primary development to the individual stopes will be
driven 10 ft wide by 10 ft high.
The mining sequence in each area is dependent upon the
development schedule, but in general, prioritizes the mining of the largest and
highest grade zones in each area of the mine. There is also a requirement to
sequence the mining of any stacked zones from top down.
Stope mining begins approximately four years after the start of
construction and the operating mine life spans nine years. The production rate
averages approximately 1,030 stpd during the time that mining occurs in Sections
9 and 16 only, increasing to 1,200 stpd when mining in Sections 9, 16, and 10
are mined simultaneously then dropping to 1,020 stpd when mining from Section 10
only.
Depressurization of the three main aquifers in the Project area
will be accomplished by the use of up to 15 depressurization wells and
underground long holes that supply water to eleven underground pumping stations
that ultimately feed water to the Section 16 shaft sump pumps, and three
discharge pump stations located in the shaft. It has been estimated that the
mine will discharge a nominal 2,500 US gpm of water at temperatures between 90ºF
and 95ºF. An additional 2,000 gpm will be produced by surface wells so the total
discharge rate is anticipated to be up to 4,500 gpm.
The deposit will be developed and mined on the basis of
single-pass ventilation using a series of separate and independent intake and
exhaust networks. The design requires a total of five exhaust ventilation raises
(three in Section 9 and two in Section 10) as well as an intake ventilation
raise in Section 10. Two of the ventilation raises, one in Section 16 and one
in Section 10, will be equipped with emergency evacuation hoisting
equipment. Midway through the mine life, one of the raises in Section 9 will be
converted from exhaust to intake.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-22
|
|
www.rpacan.com
|
METALLURGY AND PROCESSING
The White Mesa Mill utilizes agitated hot acid leach and
solvent extraction to recover uranium. Historical metallurgical tests and White
Mesa Mill production records confirm this processing method will recover 95% of
the contained uranium.
The Energy Fuels owned White Mesa Mill is located near
Blanding, Utah, 275 mi from the Roca Honda Project.
Operations at the White Mesa Mill can receive run-of-mine (RoM)
material from the Roca Honda Project and various other mines. Material will be
dumped from trucks on an ore pad area and stockpiled by type to be blended as
needed. Material will be weighed, sampled, and probed for uranium grade. The ore
pad area has an approximate capacity of 450,000 tons.
Material will be withdrawn from the stockpiles by CAT 980 (or
equivalent) front end loader and fed to a SAG mill at a rate of up to 2,500
stpd. The ground material, which will be in slurry with water, will be placed in
agitated storage tanks and fed to the leaching circuit.
The leaching will be conducted in seven, 25 ft diameter by 26
ft high agitated leach tanks using sulfuric acid, steam, and sodium chlorate.
After leaching, the slurry proceeds to the CCD washing circuit to recover the
dissolved uranium values. Once the uranium is recovered, the tailings solids are
sent to the tailings cells. The pregnant solution recovered in the CCD circuit
is clarified, and then treated in a SX circuit to increase the concentration of
uranium in solution and remove impurities.
Uranium is precipitated from the SX pregnant strip solution
using ammonia for pH control. Precipitated uranium is sent to a thickener and a
centrifuge for washing and dewatering. The uranium is then dried in a
multi-hearth dryer and the resulting yellowcake is placed in 55-gallon sealed
drums for shipment.
The White Mesa Mill was constructed in 1977-1980 and is
currently fully operational. Additional tailings storage capacity is required to
handle the Roca Honda material, and these tailing cells are designed and
identical to the two most recently approved cells, but the design has not been
submitted to Utah Department of Environmental Quality (DEQ) for approval. All
other mill infrastructure items are already in place at the White Mesa Mill.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-23
|
|
www.rpacan.com
|
ENVIRONMENTAL, PERMITTING AND SOCIAL CONSIDERATIONS
The Draft EIS was published by the USFS in February 2013 with
an expected ROD and Final EIS in late 2016. A mine permit is expected to be
issued following the ROD and Final EIS in early 2017.
No permitting is required to start milling Roca Honda material
at the White Mesa Mill. The White Mesa Mill is fully permitted with the State of
Utah, and has all the necessary operating licenses for a conventional uranium
mill.
As additional tailings storage capacity is required, an
Amendment to the Radioactive Materials License issued by the Utah Division of
Radiation Control will be required to construct the next tailing cells. Designs
for the next two cells are complete.
CAPITAL AND OPERATING COSTS
Table 1-8 summarizes the capital cost estimate for the Project.
TABLE 1-8 CAPITAL COST ESTIMATE
Roca Honda
Resources LLC Roca Honda Project
Capital Cost Area |
|
Project |
|
|
Preproduction |
|
|
Production |
|
|
|
Capital Totals
|
|
|
(Years -4 to
-0) |
|
|
(1 to
11) |
|
|
|
(US$000) |
|
|
(US$000) |
|
|
(US$000) |
|
Underground Mine |
|
127,229 |
|
|
127,229 |
|
|
- |
|
Mill |
|
- |
|
|
- |
|
|
- |
|
Surface Infrastructure |
|
46,893 |
|
|
46,893 |
|
|
- |
|
Indirects |
|
29,148 |
|
|
27,146 |
|
|
2,001 |
|
Working Capital |
|
- |
|
|
5,075 |
|
|
(5,075) |
|
Exploration |
|
2,517 |
|
|
2,517 |
|
|
- |
|
Sustaining Capital |
|
71,972 |
|
|
- |
|
|
71,972 |
|
Closure & Reclamation |
|
3,400 |
|
|
- |
|
|
3,400 |
|
Total Capital Before
Contingency |
|
281,159 |
|
|
208,861 |
|
|
72,298 |
|
|
|
|
|
|
|
|
|
|
|
Contingency |
|
45,354 |
|
|
44,978 |
|
|
375 |
|
Total Capital Cost With Contingency
|
|
326,512 |
|
|
253,839 |
|
|
72,673 |
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-24
|
|
www.rpacan.com
|
The average LoM operating costs and the annual estimated
operating costs are shown in Table 1-9. The LoM average operating cost includes
mining, processing at the White Mesa Mill, general and administration, and
freight of the product to a point of sale at the White Mesa Mill located near
Blanding, Utah.
TABLE 1-9 OPERATING COST ESTIMATE
Roca Honda
Resources LLC Roca Honda Project
Operating Cost Summary |
|
Units |
|
|
Total |
|
Mining & Development
(includes mine maintenance) |
|
US$(000) |
|
|
368,136 |
|
Transportation Cost |
|
US$(000) |
|
|
149,314 |
|
Processing (includes Tailings
Reclamation/Replacement Cost) |
|
US$(000) |
|
|
167,022 |
|
Toll Milling Process Cost Average |
|
US$(000) |
|
|
123,227 |
|
Maintenance (labor) |
|
US$(000) |
|
|
2,647 |
|
G&A |
|
US$(000) |
|
|
18,418 |
|
Total Operating |
|
US$(000) |
|
|
828,763
|
|
|
|
|
|
|
|
|
Mining & Development |
|
US$/t mined |
|
|
86.55 |
|
|
|
|
|
|
|
|
Mining & Development |
|
US$/t milled
|
|
|
107.25 |
|
Transportation Cost |
|
US$/t milled |
|
|
43.50 |
|
Processing (includes Tailings
Reclamation/Replacement Cost) |
|
US$/t milled
|
|
|
48.66 |
|
Toll Milling Process Cost Average |
|
US$/t milled |
|
|
35.90 |
|
Maintenance |
|
US$/t milled
|
|
|
0.77 |
|
G&A |
|
US$/t milled |
|
|
5.37 |
|
Total Operating Cost per
Ton |
|
US$/t
milled |
|
|
241.45
|
|
|
|
|
|
|
|
|
Mining & Development |
|
US$/lb |
|
|
15.65 |
|
Transportation Cost |
|
US$/lb |
|
|
6.35 |
|
Processing (includes Tailings
Reclamation/Replacement Cost) |
|
US$/lb |
|
|
7.10 |
|
Toll Milling Process Cost Average |
|
US$/lb |
|
|
5.24 |
|
Maintenance |
|
US$/lb |
|
|
0.11 |
|
G&A |
|
US$/lb |
|
|
0.78 |
|
Total Operating Cost per
lb |
|
US$/lb
|
|
|
35.23
|
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 1-25
|
|
www.rpacan.com
|
2 INTRODUCTION
Roscoe Postle Associates Inc. (RPA) was retained by Roca Honda Resources, LLC (RHR) to prepare an Technical Report on the Roca Honda uranium project (the Project), located in McKinley County, New Mexico. The purpose of this Technical Report is to
present the results of an updated Preliminary Economic Assessment (PEA). This Technical Report conforms to NI 43-101 Standards of Disclosure for Mineral Projects.
RHR is a joint venture between Strathmore Minerals Corp. (Strathmore) and Sumitomo Corporation of Japan (Sumitomo). It was formed in 2007 to develop the Roca Honda deposit. In 2013, Energy Fuels Resources (USA) Inc. (Energy Fuels) acquired all the
assets of Strathmore, which is now a wholly owned subsidiary of Energy Fuels. In 2009, RHR submitted its Roca Honda Mine permit application to the New Mexico Mining and Minerals Division of the New Mexico Energy, Minerals and Natural Resources
Department and the U.S. Forest Service. This permit application was deemed administratively complete by the regulatory agencies, and is now undergoing technical review. The U.S. Forest Service issued a Draft Environmental Impact Statement (EIS) on
the Project in March 2013 and a Scoping Notice for a Draft Supplemental EIS in February 2015. The final EIS is expected to be issued in late 2016 or early 2017. A permit to mine will be issued by the State of New Mexico after issuance of the Final
EIS and Record of Decision (ROD) from the Forest Service. Additionally, the New Mexico Office of the State Engineer issued a dewatering permit for the mine in December 2013. RHR continues advancing other permits as necessary to complete the
permitting process.
RPA has previously prepared a PEA for the Project, and the supporting NI 43-101 Technical Report was published in 2012 (Nakai-Lajoie et al., 2012). The updated PEA includes an underground operation scenario using both step room-and-pillar stoping
in the lower grade zones and drift-and-fill stoping in the higher grade sections. Based on the current Mineral Resources, the mine life will be nine years at a mining rate of 1,085 stpd. Roca Honda mineralization is planned to be processed at the
Energy Fuels owned White Mesa Mill located near Blanding, Utah, 275 miles from the Project. The White Mesa Mill is a conventional uranium mill including agitated acid leaching, counter-current decantation, solvent extraction, and precipitation.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 2-1
|
|
www.rpacan.com
|
This report is considered by RPA to meet the requirements of a
PEA as defined in Canadian NI 43-101 regulations. The economic analysis
contained in this report is based, in part, on Inferred Resources, and is
preliminary in nature. Inferred Resources are considered too geologically
speculative to have mining and economic considerations applied to them and to be
categorized as Mineral Reserves. There is no certainty that the reserves
development, production, and economic forecasts on which this PEA is based will
be realized.
SOURCES OF INFORMATION
RPA has visited the Project multiple times, with the first
visit on November 11, 2009 by Stuart E. Collins, P.E., RPA Principal Mining
Engineer. Patti Nakai-Lajoie, P.Geo., a former Principal Geologist of RPA,
visited the Project on May 10 to 12, 2011, and Robert Michaud, P. Eng., RPA
Associate Principal Mining Engineer, visited the Project on October 13, 2011.
Ms. Nakai-Lajoie and Messrs. Michaud and Collins visited the Strathmore office
in Riverton, Wyoming, on March 1 to 5, 2010. Subsequently Mr. Collins visited
the site on February 17, 2015.
Discussions for this updated report were held with personnel
from Energy Fuels Resources:
|
|
Mr. Harold Roberts, P.E., Executive Vice
President, COO |
|
|
Mr. Ryan Ellis, P.E., Project Engineer |
|
|
Mr. Dan Kapostasy, P.G., Geologist |
|
|
Mr. Dan Hillsten, White Mesa Mill Manager
|
|
|
Terry V. Wetz, P.E., TVWetz Inc. |
|
|
Race Fisher, Mine Superintendent, Colorado
Plateau Operations |
Mr. Barton Stone is responsible for the preparation of Sections
2 to 12 and contributed to Sections 1, 24, 25, and 26. Mr. Mark Mathisen is
responsible for preparation of Section 14 and 19 and contributed to Sections 1,
4, 8 to 10, 12, 24, 25, and 26. Mr. Michaud is responsible for preparation of
Sections 15 and 16 and contributed to Sections 1, 18, 21, 22, 25, and 26. Mr.
Collins is responsible for preparation of Sections 20 to 23 and contributed to
Sections 1, 16, 18, 25, and 26. Mr. Harold Roberts is responsible for Sections
13, 17, and 18 and contributed to Sections 1, 4, 5, 25, and 26.
The documentation reviewed, and other sources of information,
are listed at the end of this report in Section 27 References.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 2-2
|
|
www.rpacan.com
|
Units of measurement used in this report conform to the
Imperial system. All currency in this report is US dollars (US$) unless
otherwise noted. The following lists define the primary abbreviations and
acronyms used in the Technical Report.
LIST OF ABBREVIATIONS
Nomenclature |
Description |
Nomenclature |
Description |
% |
Percent |
m3 |
Cubic meter |
% solids |
Percent solids by weight |
m3/s
|
Cubic meters per second |
o |
Angular degree |
mD |
Duration of Magnitude
(earthquakes) |
oF |
Degree Fahrenheit |
mesh |
US Mesh |
K |
Kelvin |
MeV |
Million electron-volts |
µm |
Micrometer |
mg/kg |
Milligrams per kilogram |
amsl |
Above mean sea level |
mg/L |
Milligrams per liter |
amu |
Atomic mass units |
mi |
Mile (5,280 feet) |
Btu |
British Thermal Units |
min |
Minute |
cfm |
Cubic feet per meter |
mm |
Millimeter |
d |
Day (24 hours) |
mol |
Mole |
dt |
Dry ton |
mph |
Miles per hour |
F80 |
80% Passing Feed |
mR |
Milliroentgen |
fasl |
Feet above sea level |
oz |
Ounce |
ft |
Foot |
Pa |
Million Pascal |
ft/s |
Feet per second |
P100 |
100% Passing, Product |
ft2 |
Square foot |
P80 |
80% Passing, Product |
ft3 |
Cubic foot |
pCi |
Picocurie |
ft3/s |
Cubic feet per second |
pCi/L |
Picocuries per liter |
ft3/st |
Cubic feet per short ton |
pm |
Picometer (atomic radius) |
g |
Gram |
ppm |
Parts per million |
g |
Gravitational acceleration |
psf |
Pounds per square foot |
g/cm3 |
Grams per cubic centimeter |
psi |
Pounds per square inch - gauge
|
gal |
US gallon |
psia |
Pounds per square inch - absolute
|
gpd |
US gallons per day |
rd |
Round (development/mining) |
gph |
US gallons per hour |
s |
Second |
gpm |
US gallons per minute |
stpd |
Short tons per day |
h or hr |
Hour |
S.G. |
Specific Gravity |
hp |
Horsepower |
REO |
Rare Earth Oxide |
Hz |
Hertz |
st |
Short ton (2,000 pounds) |
in |
Inch |
stpd |
Short tons per day |
in2 |
Square inch |
stpa |
Short tons per year |
J |
Joule |
stpa |
Short tons per year |
k |
Kilo, thousand |
td |
Dry tons |
keV |
Thousand electron-volts |
tw |
Wet tons |
ksi |
Kilopounds per square inch |
V |
Volt |
kV |
Kilovolt |
w.g.s.p. |
Water gauge static pressure
|
kW |
Kilowatt |
wk |
Week |
kWh |
Kilowatt hour |
WL |
Working level (ventilation)
|
kWh/st |
Kilowatt hour per short ton |
WLM |
Working level month (ventilation)
|
lb |
Pound |
wt |
Wet ton |
lb/ft3 |
Pounds per cubic foot |
wt% |
Weight Percent |
M |
Million |
y or yr |
Year |
m |
Meter |
yd |
Yard |
|
|
yd3
|
Cubic yard
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 2-3
|
|
www.rpacan.com
|
3 RELIANCE ON OTHER EXPERTS
This report has been prepared by Roscoe Postle Associates Inc.
(RPA) for Roca Honda Resources, LLC (RHR). The information, conclusions,
opinions, and estimates contained herein are based on:
|
|
Information available to RPA at the time of
preparation of this report; |
|
|
|
|
|
Assumptions, conditions, and qualifications as
set forth in this report; and |
|
|
|
|
|
Data, reports, and other information supplied
by RHR and other third-party sources. |
For the purpose of this report, RPA has relied on ownership
information provided by RHR. RHR has provided a legal opinion on current land
status from Comeau, Maldegen, Templeman & Indall, LLP, dated October 12,
2011, and RPA has relied on this opinion in Sections 1 and 4 of this report. RPA
has not researched property title or mineral rights for the Roca Honda Project,
and expresses no opinion as to the ownership status of the property.
RHR has provided a legal opinion on current White Mesa Mill
land status from Parsons, Behle & Latimer, dated October 16, 2013, and RPA
has relied on this opinion in Sections 1 and 4 of this report. RPA has not
researched property title or mineral rights for the White Mesa Mill property,
and expresses no opinion as to the ownership status of the property.
Except for the purposes legislated under provincial securities
laws, any use of this report by any third party are at that partys sole risk.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 3-1
|
|
www.rpacan.com
|
4 PROPERTY DESCRIPTION AND LOCATION
The Roca Honda uranium project is located approximately three
miles northwest of the community of San Mateo, New Mexico, in McKinley County,
just north of the Cibola/McKinley County line, and approximately 22 miles by
road northeast of Grants, New Mexico (Figure 4-1). The property is located in
the east part of the Ambrosia Lake subdistrict of the Grants Mineral Belt in
northwest New Mexico and comprises nearly all of Sections, 9, 10, and a narrow
strip of Section 11, and the New Mexico State Lease, consisting of Section 16,
all in Township 13 North Range 8 West (T13N-R8W), New Mexico Principal
Meridian.
The White Mesa Mill is located on 4,816 acres of private land
owned by Energy Fuels. This land is located in Township 37S and 38S Range 22E
Salt Lake Principal Meridian. The White Mesa Mill is located approximately six
miles south of Blanding, Utah along US Highway 191. Energy Fuels also holds 253
acres of mill site claims and a 320 acre Utah state lease. No facilities are
planned on the claims or leased land, which will be used as a buffer to the
operations (shown in Figure 4-2). Annual property holding costs and property tax
are included in the monthly milling costs as described in Section 21, Table
21-5.
Figure 4-3 shows the relative locations of the Roca Honda
Project and the White Mesa Mill, and the proposed haul route for the Roca Honda
mineralized material to the White Mesa Mill. The mine and the White Mesa Mill
are located approximately 275 road miles apart. Each operation would be
considered as a stand-alone operation, i.e., each would have its own
administration, warehouse, accounting, environmental, and safety staff.
ROCA HONDA LAND TENURE
The Roca Honda property is held by RHR, which is jointly owned
by Strathmore Resources (U.S.) Ltd. (Strathmore) (60%), a wholly-owned
subsidiary of Energy Fuels, and subsidiaries of Sumitomo (40%), SC Clean Energy
and Summit New Energy Holding, LLC. RHR was established on July 26, 2007, when
Strathmore formed a limited liability company with Sumitomo and transferred the
property to RHR. Strathmore acquired the property on March 12, 2004, from Rio
Algom Mining LLC (Rio Algom), a successor to Kerr-McGee Corporation
(Kerr-McGee), which had staked the claims in 1965 and had continuously
maintained them. Energy Fuels acquired a 100% interest in Strathmore in August
2013, and assumed Strathmores 60% ownership interest in RHR. Energy Fuels
through its Strathmore subsidiary is the Projects operator.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-1
|
|
www.rpacan.com
|
The Roca Honda property covers an area of about 1,886.5 acres;
and includes 63 unpatented lode mining claims in Sections 9 and 10, and one
adjoining New Mexico State General Mining Lease in Section 16 (Figure 4-4). The
mining claims also extend onto a 9.4 acre narrow strip of Section 11. The New
Mexico State Lease was acquired by David Miller (former Strathmore CEO) on
November 30, 2004, and subsequently transferred to Strathmore. An official land
survey was completed in 2011 and covered the entire property.
Mining claim numbers RH 252, RH 279, RH 306, and RH 333,
located in the southern part of Section 10, overlap into the northern part of
Section 15, which is privately-owned land, therefore, the overlapping portion of
these claims are not valid. The Roca Honda property extends only to the Section
15 boundary.
Mining claim numbers RH 325 to RH 333 are located along the
eastern boundary of Section 10, extend west across the Section 11 line by
approximately 150 ft.
The 63 unpatented, contiguous mining claims (the Roca Honda
group), covering an area of approximately 1,248.5 acres, are located on
Sections9, 10, and 11, which are federally- owned lands within the Cibola
National Forest administered by the US Forest Service (USFS). Sections 9, 10,
and 11 are open to the public, with the land used for a multitude of purposes
including grazing, mineral extraction, hunting, hiking, and other outdoor
recreation activities. The claims are listed in the US Bureau of Land Management
(BLM) Mining Claim Geographic Index Report (LR2000) with a location date of June
29 and 30, 1965. The latest assessment year is 2015 and the claims are shown as
Active. There is a one percent gross revenue, no deduction royalty payable to
the original claim holders for the claims on Section 9. There is no royalty
associated with the claims on Section 10 or 11.
Holding costs for the 63 claims include a claim maintenance fee
of $155.00 per claim payable to the BLM before September 1 of each calendar year
and recording an affidavit and Notice of Intent to hold with the McKinley County
Clerk, New Mexico. County recording fees for the claims are approximately $400
per year.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-2
|
|
www.rpacan.com
|
New Mexico General Mining Lease number HG-0036-002, located on
Section 16 covers an area of 638 acres. The surface of Section 16, also referred
to as the Lee Ranch, is leased to Fernandez Company, Ltd. (Fernandez) as
rangeland for grazing. The lease has a primary, secondary, tertiary, and
quaternary term, each with annual rentals to be paid in advance. The lease
passed into the quaternary term of five years on November 30, 2014, with an
annual rental of $10.00 per acre. An advanced royalty is also now due. The
advanced royalty starts at $10/acre with the November 2014 payment and increases
$10.00/acre/year through the November 2018 payment. At the end of the quaternary
term, the lease may be automatically extended if production has begun.
The lease stipulates a 5% of gross returns royalty to the State
of New Mexico, less smelting or reduction costs, for production of uranium,
which is designated a special mineral in the lease. Figure 4-4 shows the Roca
Honda land holdings.
WHITE MESA MILL LAND TENURE
The WhiteMesa Mill is located approximately six miles south of
Blanding, Utah on US Highway 191 on a parcel of land encompassing all or part of
Sections 21, 22, 27, 28, 29, 32, and 33 of T37S, R22E, and Sections 4, 5, 6, 8,
9, and 16 of Township 38 South, Range 22 East, Salt Lake Base and Meridian
described as follows (shown in Figure 4-2):
|
|
the south half of the south half of Section 21;
|
|
|
|
|
|
the southeast quarter of the southeast quarter
of Section 22; |
|
|
|
|
|
the northwest quarter of the northwest quarter
and lots 1 and 4 of Section 27 all that part of the southwest quarter of
the northwest quarter and the northwest quarter of the southwest quarter
of Section 27 lying west of Utah State Highway 163; |
|
|
|
|
|
the northeast quarter of the northwest quarter,
the south half of the northwest quarter, the northeast quarter and the
south half of Section 28; |
|
|
|
|
|
the southeast quarter of the southeast quarter
of Section 29; |
|
|
|
|
|
the east half of Section 32 and all of Section
33, Township 37 South, Range 22 East, Salt Lake Base and Meridian; |
|
|
|
|
|
lots 1 through 4, inclusive, the south half of
the north half, the southwest quarter, the west half of the southeast
quarter, the west half of the east half of the southeast quarter and the
west half of the east half of the east half of the southeast quarter of
Section 4; |
|
|
|
|
|
lots 1 through 4, inclusive, the south half of
the north half and the south half of Section 5 (all);
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-3
|
|
www.rpacan.com
|
|
|
lots 1 and 2, the south half of the northeast
quarter and the south half of Section 6 (E1/2); the northeast quarter of
Section 8; all of Section 9 and all of Section 16, Township 38 South,
Range 22 East, Salt Lake Base and Meridian. |
Additional land is controlled by 46 mill site claims. Total
White Mesa Mill land holdings are approximately 5,389 acres. Figure 4-2 shows
the White Mesa Mill property holdings.
ROCA HONDA PERMITTING
A number of required documents were submitted in October 2009,
and revised in 2011, to the State of New Mexico Mining and Minerals Division, of
the New Mexico Energy, Minerals and Natural Resources Department, and
concurrently to the USFS, Cibola National Forest, which address various aspects
of environmental assessment, protection, and analysis related to the Roca Honda
Mine. Details regarding these permits can be found in Section 20 of this report,
but the major permits are listed below. These include:
|
|
Permit Application for a New Mine, Roca Honda
Mine submitted to the New Mexico Mining and Minerals Division; |
|
|
|
|
|
Baseline Data Report (Roca Honda Project Area);
|
|
|
|
|
|
Mine Operations Plan for the Roca Honda Mine;
|
|
|
|
|
|
Reclamation Plan for the Roca Honda Mine; and
|
|
|
|
|
|
Sampling and Analysis Plan (for mine permit
application). |
Additionally, in order to operate the Roca Honda Mine, the
following permits are required from various state and federal agencies:
|
|
A dewatering permit from the New Mexico State
Engineer (issued December 2013); |
|
|
|
|
|
A discharge permit from the New Mexico
Environment Department; |
|
|
|
|
|
A National Pollutant Discharge Elimination
System (NPDES) permit from Region 6 of the Environmental Protection
Agency; and |
|
|
|
|
|
A Nationwide 44 permit from the Army Core of
Engineers to modify the San Jose River at the discharge point of the
dewatering pipeline (Figure 4-5). |
RPA is not aware of any environmental liabilities on the
property. RHR has all required permits to conduct the proposed work on the
property. To RPAs knowledge, there are no other significant factors and risks
that may affect access, title, or the right or ability to perform the proposed
work program on the property.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-4
|
|
www.rpacan.com
|
4-5
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-5
|
|
www.rpacan.com
|
4-6
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-6
|
|
www.rpacan.com
|
4-7
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-7
|
|
www.rpacan.com
|
4-8
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-8
|
|
www.rpacan.com
|
4-9
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 4-9
|
|
www.rpacan.com
|
5 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE AND PHYSIOGRAPHY
ROCA HONDA MINE ACCESSIBILITY
The Roca Honda property is located approximately 17 mi (22 mi
by road) northeast of Grants, New Mexico. The southern part of the property, on
Section 16, can be reached by travelling north from Milan, New Mexico on State
Highway 605 toward the town of San Mateo to mile marker 18 and then north on a
private gravel road. Access rights from Highway 605 onto Section 16 are subject
to an existing temporary agreement with the surface owner, Fernandez Company,
dated January 1, 2014. The agreement expires on December 31, 2015. This
temporary agreement replaces all previous access agreements between RHR and
Fernandez Company. Currently, a long-term access agreement across the Fernandez
Company land is being negotiated.
The north part of the Roca Honda property can be reached by
travelling 23.5 mi from Milan, New Mexico, on paved public Highway 605, and then
west on US Forest Service dirt roads to the southeast corner of Section 10
(Figure 4-1). There are numerous drill roads that provide access to different
parts of Sections 9 and 10, many of which require maintenance.
WHITE MESA MILL ACCESSIBILITY
The White Mesa Mill is accessed byUS Highway 191. Blanding,
Utah has a similar climate to Grants, New Mexico. The majority of mill employees
live in Blanding, Utah, and surrounding communities. The White Mesa Mill is
serviced by commercial line power, and all other supplies are trucked to the
site. Ranching is the primary land use surrounding the White Mesa Mill and
tourism is the primary economy of Blanding, Utah, excluding uranium processing
and State and Federal government services.
ROCA HONDA MINE CLIMATE AND VEGETATION
Climate in the Roca Honda Project area may be classified as
arid to semi-arid continental, characterized by cool, dry winters, and warm, dry
summers. The area is in the north end of Climate Division 4 (Southwestern
Mountains) for New Mexico (Sheppard et al., 1999).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-1
|
|
www.rpacan.com
|
Abundant sunshine, low relative humidity, and large annual and
diurnal ranges in temperature are characteristics of this climate division,
which is a significant distance from any source of oceanic moisture (600 miles
from the Pacific Ocean and 800 mi from the Gulf of Mexico).
On average, the Roca Honda property receives approximately 11
inches of precipitation annually. The major part of annual precipitation occurs
with thunderstorms in July and August. Winter is the driest season, and what
precipitation falls (mostly as snow) is from storms that form in the Pacific
Ocean, move inland, and lose most of their moisture in the mountains of
California and Arizona before reaching western New Mexico. An average of
approximately 13 inches of snow falls annually, mostly during the period from
December through February. Snow is light on the valley floors, but increases at
higher elevations of the nearby mesas and mountains.
Grants, New Mexico has an annual average temperature of
50oF, with an average summer high of 87oF and low of
52oF, and average winter high of 47oF and low of
18oF.
WHITE MESA MILL CLIMATE AND VEGETATION
The climate of southeastern Utah is classified as dry to arid
continental. Although varying somewhat with elevation and terrain, the climate
in the vicinity of the White Mesa Mill can be considered as semi-arid with
normal annual precipitation of about 13.3 in. Most precipitation is in the form
of rain with snowfall accounting for about 29% of the annual total
precipitation. There are two separate rainfall seasons in the region, the first
in late summer and early autumn (August to October) and the second during the
winter months (December to March). The mean annual relative humidity is about
44% and is normally highest in January and lowest in July. The average annual
Class A pan evaporation rate is 68 in. (National Oceanicand Atmospheric
Administration and U.S. Department of Commerce, 1977), with the largest
evaporation rate typically occurring in July. This evaporation rate is not
appropriate for determining water balance requirements for the tailings
management system and must be reduced by the Class A pan coefficient to
determine the latter evaporation rate. Values of pan coefficients range from 60%
to 81%. Energy Fuels has assumed for water balance calculations an average value
of 70% to obtain an annual lake evaporation rate for the White Mesa Mill area of
47.6 in. Given the annual average precipitation rate of 13.3 in., the net
evaporation rate is 34.3 in. per year. The weather in the Blanding, Utah area is
typified by warm summers and cold winters. The National Weather Service Station
in Blanding, Utah, is located about 6.25 mi north of the White Mesa Mill. Data
from the station is considered representative of the local weather conditions.
The mean annual temperature in Blanding was 50.3°F, based on the current Period
of Record Summary (1904-2006). January is usually the coldest month and July is
usually the warmest month. The town of Blanding, Utah has an approximate area of
2.4 mi2, temperatures average 53°F, and it has a precipitation
average of 14 in.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-2
|
|
www.rpacan.com
|
ROCA HONDA MINE LOCAL RESOURCES
The community of Grants, located in Cibola County, is the
largest community near the Roca Honda Project area. As of the 2010 census, there
are 8,772 people residing in Grants, New Mexico, where personnel experienced in
open pit and underground mining, construction, and mineral processing are
available.
WHITE MESA MILL LOCAL RESOURCES
The White Mesa Mill is the only fully licensed and operating
conventional uranium mill in the United States, and only one of three in North
America. The facility has a licensed capacity of 2,000 tons per day and can
produce up to eight million pounds of uranium per year. White Mesa also has a
co-recovery circuit to produce vanadium from Colorado Plateau ores, and an
alternate feed circuit to process other uranium-bearing materials, such as those
derived from uranium conversion and other metal processing.
White Mesa is strategically located in Blanding, Utah, central
to the uranium mines of the Four Corners region of the United States. The White
Mesa Mill was constructed in 1980 by Energy Fuels Nuclear Inc. In 2007, a $31
million refurbishment of the facility was completed. To extract uranium
(U3O8) and vanadium (V2O5), the
White Mesa Mill utilizes sulfuric acid leaching and a solvent extraction
recovery process. The uranium is purchased by utility companies and shipped to
conversion facilities as the next step in the production of fuel for nuclear
power. The vanadium is shipped mostly to steel and alloy manufacturers.
In full operation, the White Mesa Mill employs about 150
people. Blanding is a town in San Juan County, Utah, United States. The
population was approximately 3,500 in 2012, making it the most populated town in
San Juan County. Median income in 2012 was approximately $46,000.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-3
|
|
www.rpacan.com
|
ROCA HONDA MINE INFRASTRUCTURE
There is no infrastructure on the property other than old drill
roads and an electrical distribution power line that transects the northern half
of Section 16 in the Project area. The line continues on the west side of the
Project area into Section 17, where it terminates, and on the east side of
Section 16 through the northwest quarter of Section 15 and along the southern
section boundary of Section 10.
A monitoring well network composed of three wells, completed in
the Westwater Canyon Member of the Morrison Formation, was installed in
2007-2008 by RHR. Other environmental monitoring equipment installed by RHR
include:
|
|
a permanent electrical weather station, which
replaced the old solar powered weather station in 2011; |
|
|
|
|
|
high volume TSP (total suspended particulates)
and PM10 (particulate matter less than 10 microns) air samplers, which
replaced the old air monitoring station in 2011; |
|
|
|
|
|
Three, dry man-made impoundments are also
located within Section 16. All of these ponds have been constructed by
either damming arroyos (brooks) or creating berms. |
WHITE MESA MILL INFRASTRUCTURE
The White Mesa Mill was constructed in 19791980 and is a fully
functioning uranium/vanadium mill. It is the only fully operational and licensed
conventional uranium mill in the US. The mill is capable of functioning
independent of off-site support except for commercial power from Rocky Mountain
Power and supplemental water supply from the City of Blanding and the San Juan
Water Conservancy District. Off-site infrastructure includes paved highway
access from State Highway 191, and right-of-ways for commercial power and a
water supply pipeline from Recapture Reservoir, which brings up to 1,000
acre-feet of water per year to the mill site. The mill also has four deep
(2,000+ ft) water supply wells which supply process water during normal
operations. In addition to the mill processing equipment, which includes the
grinding and leaching circuits, CCD (liquidsolid separation), solvent
extraction, and precipitation and drying circuits, the mill has several days
reagent storage for sulfuric acid, ammonia, salt, soda ash, caustic soda,
ammonium sulfate, flocculants, kerosene, amines, and LNG. The on-site
infrastructure also includes an ore stockpile area capable of storing up to
450,000 tons of ore, and existing tailings capacity of approximately 3.5 million
tons of solids. In addition, the mill has approximately 90 acres of evaporation
capacity.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-4
|
|
www.rpacan.com
|
ROCA HONDA MINE PHYSIOGRAPHY
The Roca Honda Project area is sparsely populated, rural, and
largely undeveloped. The predominant land uses include low density livestock
grazing, hay cultivation, and recreational activities such as hiking,
sightseeing, picnicking, and seasonal hunting.
The Roca Honda property has moderately rough topography in
Sections 9 and 10 and consists of shale slopes below ledge-forming sandstone
beds, forming mesas that dip 7° to 11° northeast. Surface elevations range from
7,100 ft to 7,800 ft. Section 9 consists mostly of steep slopes in the west and
south, with a large sandstone mesa named, Jesus Mesa, in the north-central part.
Section 10 consists mostly of the dip-slope of a sandstone bed that dips from 8°
to 11° due east. Section 16 has less topographic relief because it has no mesas,
but does contain elevations ranging from 7,100 ft to 7,300 ft and easterly
dipping slopes (Fitch 2010).
Jesus Mesa occupies approximately half of Section 9 and slopes
into Section 10. The top and upper portion of the mesa is sparsely vegetated,
with the slopes along the southern perimeter of the mesa consisting of sandstone
ledges with areas of exposed shale. The landscape along the southwest, north,
and southeast perimeters of the mesa are moderately vegetated, with the slopes
dissected by drainages ranging from a few feet to 40 ft deep.
Because Roca Honda is an underground mining operation, the
topography will not have a negative impact on the Project.
Vegetation in the Roca Honda property area consists of grasses,
pinion pine, and juniper trees.
WHITE MESA MILL PHYSIOGRAPHY
The White Mesa Mill site is located near the center of White
Mesa, one of the many finger-like north-south trending mesas that make up the
Great Sage Plain located in Utah. The nearly flat upland surface of White Mesa
is underlain by resistant sandstone caprock, which forms steep prominent cliffs
separating the upland from deeply entrenched intermittent stream courses on the
east, south and west.
Surface elevations across the White Mesa Mill site range from
about 5,550 ft to 5,650 ft and the gently rolling surface slopes to the south at
a rate of approximately 60 feet per mile.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-5
|
|
www.rpacan.com
|
Maximum relief between the mesa's surface and Cottonwood Canyon
on the west is about 750 ft where Westwater Creek joins Cottonwood Wash. These
two streams and their tributaries drain the west and south sides of White Mesa.
Drainage on the east is provided by Recapture Creek and its tributaries. Both
Cottonwood Wash and Recapture Creeks are normally intermittent streams and flow
south to the San Juan River; however, Cottonwood Wash has been known to flow
perennially in the Project vicinity during wet years.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 5-6
|
|
www.rpacan.com
|
6 HISTORY
The following description of the Roca Honda property ownership
and exploration history is based on Fitch (2010) and more recent information
supplied by RHR.
ROCA HONDA OWNERSHIP HISTORY
Kerr-McGee Oil Industries, Inc. (Kerr-McGee) staked the Roca
Honda unpatented mining claims in Sections 9 and 10 on June 29 and 30, 1965, and
then recorded the location notices and affidavits in the McKinley County
Courthouse. Kerr-McGee, its subsidiaries, and successor in interest Rio Algom
had held the claims until the property was acquired by Strathmore on March 12,
2004. Section 16, T13N-R8W, is owned by the State of New Mexico. State Mining
Leases for Section 16 were issued to various companies over the years. Rare
Metals Corporation (Rare Metals) held a State Mining Lease in the 1950s and
performed the first exploration drilling on the Section. Subsequently, Western
Nuclear Corporation (Western Nuclear) held a State Mining Lease during the
period 1968 to lease expiration on May 21, 1971. Reserve Oil and Minerals
Corporation (Reserve) owned a 25% carried interest in the lease at that time.
Western Nuclear and Reserve acquired another lease on Section 16 in October 1979
with a 15-year expiration date of October 2, 1994. During the lease period, an
assignment was made to a company named U.Q.I.T.U., and further, the lease was
cancelled or relinquished on February 15, 1990, before its expiration date (New
Mexico State Land Office form, March 20, 2006). Quivira Mining Company
(Quivira), a wholly-owned subsidiary of Kerr-McGee, acquired lease number Q-1414
effective July 1, 1990, with a 15-year term expiration date of July 1, 2005
(signed New Mexico State Lease Document). Kerr-McGee cancelled or relinquished
the lease on November 11, 2000, before the date of expiration. David Miller
(former CEOof Strathmore) acquired a new State Mining Lease for Section 16,
Lease Number HG 0036-002 in Section 4 in November 2004 and subsequently assigned
the lease to Strathmore. Energy Fuels acquired a 100% interest in Strathmore in
August 2013, assuming Strathmores 60% ownership interest in RHR and becoming
the Project operator. Currently, the Project is held by RHR, a joint venture
between Energy Fuels (60%) and Sumitomo (40%).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-1
|
|
www.rpacan.com
|
ROCA HONDA EXPLORATION HISTORY
Previous drilling on the Roca Honda property was performed by Kerr-McGee on Sections 9 and 10, and by Rare Metals and Western Nuclear on Section 16 using rotary mud drilling with truck-mounted drills contracted by local drilling companies.
Kerr-McGee performed a rotary drill hole exploration program beginning in 1966. The holes were drilled to 4¾ in diameter with truck-mounted drills contracted by local drilling companies (most likely Stewart Brothers Drilling and/or Clyde
Jones Drilling). Common practice used by Kerr-McGee was to drill the holes by conventional rotary using drilling mud fluids. The drill holes were drilled through the Westwater Canyon Member and several feet into the underlying Recapture Member
(non-host) of the Morrison Formation. The cuttings were typically taken at five foot intervals by the driller and laid out on the ground in piles for each interval in rows of 20 samples, or 100 ft. Upon completion of a drill hole, the hole was
logged with a gamma-ray, spontaneous-potential, and resistivity probe by either a Century Geophysical Corp or by Kerr-McGees company-owned logging truck.
Kerr-McGee files contain detailed records of probe truck equipment characteristics for each logging unit, including truck number, probe number, crystal size, dates of use, k-factors, calibration tests, and resulting factors. Each gamma log contains
a footer with a calibration run and a header sheet with the rerun factors and probe unit number.
A geologist examined the drill cuttings in the field and recorded lithology and alteration on a drill log form. Holes were drilled through the Westwater Canyon Member and into the underlying Recapture Member. Upon completion of drilling, the hole
was logged with a gamma-ray, spontaneous-potential, and resistivity probe by either a contract logging company or by Kerr-McGee. After running the log, a drift tool (film-shot) was lowered into the drill hole for survey at 50 ft to 100 ft intervals.
In Section 9, the first drill hole was completed in July 1966. Discovery was made in drill hole number 7 completed on August 2, 1970, which encountered mineralization at a depth of 1,900 ft. From 1966 to 1982, a total of 187 drill holes were
completed for a total of 388,374 ft.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-2
|
|
www.rpacan.com
|
In Section 10, the first hole was drilled in October 1967.
Discovery was made in drill hole number 6 completed on March 19, 1974, which
encountered mineralization at a depth of 2,318 ft. From 1967 to 1985, a total of
175 drill holes were completed for a total of 459,535 ft.
In Section 16, the first drilling was in the 1950s by Rare
Metals, which drilled 13 holes, including two that intercepted high-grade
uranium mineralization at depths of 1,531 ft and 1,566 ft. No records of the
total drilled footage were located. Subsequently, Western Nuclear acquired a
mining lease for Section 16 from the State and began drilling in 1968, with the
first drill hole completed on August 17, 1968. The second drill hole intercepted
high-grade uranium mineralization at a depth of 1,587 ft. From 1968 through
September 1970, Western Nuclear drilled 63 holes totalling 121,164 ft, not
including six abandoned holes totalling 7,835 ft that did not reach the target
bed (Recapture Member). Two of the drill holes reported cored intervals, but the
cores and analyses were not available.
Western Nuclear drilled Section 16 using Clyde Jones Drilling
Company. Logging was performed by Geoscience Associates, Inc. (Geoscience), an
independent contract-logging operator, based in Denver, Colorado. Geoscience
recorded calibration, instrument number, and k-factor on their logs and header
sheets attached to each lot. Calibration runs were recorded on all available
reduced-sizelogs. A complete file of drill summary sheets containing interpreted
grade, thickness, zone, and alteration (oxidation) for each mineralized interval
is available. Drill hole drift surveys are also recorded; however, original
surveys are not available.
In January 1978, Kerr-McGee proposed a Roca Honda mine plan
using a shaft with a maximum depth of 2,750 ft (Falk 1978 cited in Fitch 2010).
The mine plan outlined several options to access the reported resources and
included recommendations for additional drilling to discover additional
resources. No hydrologic study was conducted by Kerr-McGee at the Roca Honda
property; however, the proposed mine plan assumed that excess water would be a
major factor in underground mining. In 1980, a 14 ft diameter shaft was sunk to
a depth of approximately 1,469 ft on Section 17 (adjacent to Section 16), and
work was ceased in 1982 without achieving the planned shaft depth. The shaft was
abandoned prior to any mining due to falling uranium prices.
In 2007 and 2011, RHR completed an additional five holes
totaling 10,265 ft in Section 16. Three of the holes were converted into
monitoring well, while one hole was used as the core hole for the proposed shaft
site location.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-3
|
|
www.rpacan.com
|
ROCA HONDA HISTORIC RESOURCE ESTIMATES
From1976 to 1995, Kerr-McGee prepared a number of historic
resource and reserve estimates for Sections 9, 10 and 16 of the Roca Honda
property.
A cut-off grade of 0.10% U3O8 and a
minimum thickness of six feet were used for determining mineral resources.
Resource areas were calculated on plan by planimeter and multiplied by the
intercept thickness. A tonnage factor of 15 ft3/st was used for the
Roca Honda calculations. An underground dilution factor of 15% at 0%
U3O8 was applied to reserves.
In 2010, a Mineral Resource estimate for the Roca Honda
property was prepared by D. Fitch and documented in a NI 43-101 Technical Report
(Fitch 2010). This 2010 report was an update of previous technical reports
(Fitch 2006 and 2008). Mineral Resources were reported at a cut-off grade of
0.03% U3O8 and a grade multiplied by the thickness (GT)
cut-off of 0.6.
The historic resource estimates prepared by Kerr-McGee and
Fitch are superseded by the current Mineral Resource estimate contained in this
report.
WHITE MESA MILL OWNERSHIP HISTORY
The White Mesa Mill is a uranium/vanadium mill that was
developed in the late 1970s by Energy Fuels Nuclear, Inc. (EFN) as a processing
option for the many small mines that are located in the Colorado Plateau region.
At the time of its construction, it was anticipated that high uranium prices
would stimulate ore production, however, prices started to decline about the
same time as mill operations commenced in the late 1970s.
As uranium prices fell, mines near the White Mesa Mill region
were affected, and mine output declined. After approximately two and one-half
years, the White Mesa Mill ceased ore processing operations altogether, began to
recycle solution, and entered a total shutdown phase. In 1984, a majority
ownership interest was acquired by Union Carbide Corporation's (UCC) Metals
Division, which later became Umetco Minerals Corporation (Umetco), a
wholly-owned subsidiary of UCC. This partnership continued until May 26, 1994
when EFN reassumed complete ownership. In May 1997, Denison (then named
International Uranium (USA) Corporation) and its affiliates purchased the assets
of EFN, and Denison was the owner of the White Mesa Mill facility until 2012. In
August 2012, Energy Fuels purchased all of White Mesa Mill assets and
liabilities.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-4
|
The Source Materials License Application for the White Mesa
Mill was submitted to the NRC on February 8, 1978. Between that date and the
date the first ore was fed to the White Mesa Mill grizzly on May 6, 1980,
several actions were taken including: increasing mill design capacity, permit
issuance from the United States Environmental Protection Agency (EPA) and the
State of Utah, archeological clearance for the White Mesa Mill and tailings
areas, and an NRC pre-operational inspection on May 5, 1980. Today the Source
Material License for White Mesa Mill is under the authority of the State of
Utah.
Construction on the tailings area began on August 1, 1978 with
the movement of earth from the area of Cell 2. Cell 2 was completed on May 4,
1980, Cell 1 on June 29, 1981, and Cell 3 on September 2, 1982. In January 1990,
an additional cell, designated Cell 4A, was completed and initially used solely
for solution storage and evaporation. Cell 4A was only used for a short period
of time and then taken out of service because of concerns about the synthetic
lining system. In 2007, Cell 4A was retrofitted with a new State of Utah
approved lining system and was authorized to begin accepting process solutions
in September 2008. Cell 4A was put back into service in October 2008. Cell 4B
was constructed in 2010 and authorized to begin accepting process solutions in
February 2011. Currently, there are two active tailings cells totaling 110 acres
and two evaporation ponds totaling 95 acres in operation at White Mesa Mill.
Additional tailings storage capacity is required to handle the
Roca Honda material, and these tailing cells are designed and identical to the
two most recently approved cells, but the design has not been submitted to Utah
DEQ for approval.
WHITE MESA MILL OPERATIONS HISTORY
The White Mesa Mill was operated by EFN from the initial
start-up date of May 6, 1980 until the cessation of operations in 1983. Umetco,
as per agreement between the parties, became the operator of record on January
1, 1984. The White Mesa Mill was shut down during all of 1984. The White Mesa
Mill operated at least part of each year from 1985 through 1990. Mill operations
again ceased during the years of 1991 through 1994. EFN reacquired sole
ownership on May 26, 1994, and the White Mesa Mill operated again during 1995
and 1996. After acquisition of the White Mesa Mill by Denison in 1997 several
local mines were restarted and the White Mesa Mill processed conventional ore
during 1999 and early 2000. With the resurgence in uranium and vanadium prices
in 2003, Denison reopened several area mines and again began processing uranium
and vanadium ores in April of 2008. Mill operations were suspended in May of
2009, and resumed in March of 2010. Typical employment figures for the WhiteMesa
Mill are 110 during uranium-only operations and 140 during uranium/vanadium
operations.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-5
|
|
www.rpacan.com
|
Commencing in the early 1990s through today, the White Mesa
Mill has processed alternate feed materials from time to time when the White
Mesa Mill has not been processing conventional ores. Alternate feed materials
are uranium-bearing materials other than conventionally mined uranium ores. The
White Mesa Mill installed an alternate feed circuit in 2009 that will allow the
White Mesa Mill to process certain alternate feed materials simultaneously with
conventional ores.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 6-6
|
|
www.rpacan.com
|
7 GEOLOGICAL SETTING AND MINERALIZATION
REGIONAL GEOLOGY
The Roca Honda Project area is located in the southeast part of
the Ambrosia Lake subdistrict of the Grants uranium district (McLemore and
Chenoweth, 1989) and is near the boundary between the Chaco slope and the Acoma
sag tectonic features. This subdistrict is in the southeastern part of the
Colorado Plateau physiographic province and is mostly on the south flank
(referred to as the Chaco slope) of the San Juan Basin. The regional geology is
shown in Figure 7-1.
Bounding the San Juan Basin to the south-southwest is the Zuni
uplift, where rocks as old as Precambrian are exposed 25 mi to 30 mi southwest
of the Roca Honda Project area. Less than five miles to the east and south of
the Project area, Neogene volcanic rocks of the Mt. Taylor volcanic field cap
Horace Mesa and Mesa Chivato. On the Chaco slope, sedimentary strata mainly of
Mesozoic age dip gently northeast into the central part of the San Juan Basin.
The Roca Honda Project area is structurally complex and is included in the part
of the sub district that is described as the most folded and faulted part of the
Chaco slope. Figure 7-2 identifies the regional structural features in relation
to the Project area.
The San Juan Basin and bounding structures were largely formed
during the Laramide orogeny near the end of the Late Cretaceous through Eocene
time (Lorenz and Cooper 2003). This Laramide tectonism produced compression of
the San Juan Basin between the San Juan and Zuni uplifts, resulting in faults
and fold axes oriented north to north-northeast. The more intensively faulted
east part of the Chaco slope may be related to the development of the McCartys
syncline, which lies just east of the faulted Fernandez monocline (Kirk and
Condon 1986).
The San Rafael fault zone cuts the Fernandez monocline and has
right-lateral displacement as evidence of shear near the San Juan Basin margin.
Other faults in or near the Project area are mostly normal with dip-slip
displacement and vertical movement less than 40 ft. The large,
northeast-striking San Mateo normal fault about two miles west of the Roca Honda
Project area has vertical displacement of as much as 450 ft (Santos 1970).
Strata in the Project area along the Fernandez monocline dip east to southeast
at four to eight degrees toward the McCartys syncline, an expression of the
Acoma sag (Santos 1966a and 1966b).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-1
|
|
www.rpacan.com
|
The Morrison Formation outcrops near the south edge of the San
Juan Basin and dips gently northward into the basin. Formations of Late
Cretaceous age that overlie the Morrison Formation, in ascending order, are
Dakota Sandstone, Mancos Shale, Gallup Sandstone, Crevasse Canyon Formation,
Point Lookout Sandstone, and Menefee Formation. The Gallup Sandstone, Crevasse
Canyon Formation, Point Lookout Sandstone, and Menefee Formation compose the
Mesaverde Group.
The Morrison Formation was deposited in a continental
environment, mainly under fluvial conditions. These deposits were derived from
an uplifted arc terrane to the west and locally from the Mogollon highlands to
the south (Lucas 2004). The Zuni uplift, currently bordering the San Juan Basin
to the southwest, did not exist in Late Jurassic time and therefore was not a
source for Morrison Formation sediments.
Formations of Late Cretaceous age were deposited in or on the
margin of the Western Interior Seaway, a shallow continental sea, and the
formations represent transgressive or regressive episodes of the Seaway. The
Mancos Shale and its several tongues were deposited on the shallow marine sea
bottom, and the formations of the Mesaverde Group were deposited along the
western shoreline of the Seaway.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-2
|
|
www.rpacan.com
|
7-3
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-3
|
|
www.rpacan.com
|
7-4
|
www.rpacan.com
|
LOCAL AND PROPERTY GEOLOGY
Rocks exposed in the Ambrosia Lake sub district of the Grants Mineral Belt, which includes the Roca Honda area, include marine and non-marine sediments of Late Cretaceous age, unconformably overlying the uranium-bearing Upper Jurassic Morrison
Formation. In this section, geologic units are discussed from youngest to oldest. The uppermost sequence of conformable strata consists of the Mesaverde Group, Mancos Shale, and Dakota Sandstone. All rocks that outcrop at the Roca Honda Project
area are of Late Cretaceous age; these rocks and the Quaternary deposits that cover them in some places are shown in the geologic map in Figure 7-3.
The formations and members and their approximate depth from the surface are shown in the stratigraphic section in Figure 7-4, which is based on historical drilling in the area. The Menefee Formation does not outcrop in the Roca Honda Project area
(and it is not shown in Figure 7-4), but a partial thickness of it is below Quaternary colluvium as sub-crop in the SE¼ Section 10. Because of the intertonguing nature of some of the Cretaceous units in the area, some members or tongues of
the Mancos Shale and Dakota Sandstone are included in sequence within the dominant formation in the discussion below.
Formation and member approximate thicknesses are shown in Table 7-1. These thicknesses were determined from geologic mapping by Santos (1966a and 1966b), borehole data from 2007 drilling by RHR in Section 16, and borehole data from historic drilling
by Kerr-McGee and Western Nuclear.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-5 |
|
www.rpacan.com
|
TABLE 7-1 TYPICAL STRATIGRAPHIC THICKNESS DATA FOR THE
PROJECT AREA
Roca Honda Resources LLC Roca Honda Project
|
|
Average |
Maximum |
Minimum |
|
Unit |
Unit Name |
Thickness |
Thickness
|
Thickness |
Data Source
|
|
|
(ft) |
(ft) |
(ft) |
|
Qal |
Alluvium |
- |
Varies |
- |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kmf |
Menefee Formation* |
- |
- |
- |
- |
|
|
|
|
|
Geologic Maps (Santos |
Kp |
Point Lookout Sandstone |
- |
120 |
- |
1966a and 1966b) |
|
|
|
|
|
|
Kcg |
Gibson Coal Member (Crevasse
Canyon Formation) |
- |
240 |
- |
Geologic Maps (Santos 1966a and
1966b) |
|
|
|
|
|
|
Kcda |
Dalton Sandstone Member (Crevasse
Canyon Formation) |
- |
100 |
- |
Geologic Maps (Santos 1966a and
1966b) |
|
|
|
|
|
|
Kmm |
Mulatto Tongue (Mancos Shale) |
305 |
318 |
292 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kcbp |
Borrego Pass Lentil (Crevasse
Canyon Formation) |
40 |
- |
- |
2007 Section 16 Drilling, Brod
and Stone (1981) |
|
|
|
|
|
|
Kcdi |
Dilco Coal Member (Crevasse
Canyon Formation) |
120 |
128 |
108 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kg |
Gallup Sandstone |
73 |
76 |
68 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kmp |
Pescado Tongue (Mancos Shale) |
21 |
22 |
20 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kgb |
Gallup Sandstone (basal) |
11 |
16 |
8 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Km |
Mancos Shale |
710 |
720 |
702 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kdt |
Twowells Sandstone Tongue (Dakota
Sandstone) |
49 |
52 |
46 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kmw |
Whitewater Arroyo Shale Tongue
(Mancos Shale) |
148 |
150 |
146 |
2007 Section 16 Drilling |
|
|
|
|
|
|
Kd |
Dakota Sandstone |
52 |
68 |
19 |
Historic Data |
|
|
|
|
|
|
Jmb |
Brushy Basin Member (Morrison
Formation) |
105 |
269 |
22 |
Historic Data |
|
|
|
|
|
|
Jmw |
Westwater Canyon Member (Morrison
Formation) |
|
|
|
|
|
|
|
|
|
|
JmwA |
Westwater A Sandstone |
34 |
59 |
- |
Historic Data |
|
|
|
|
|
|
JmwA-B1 |
A-B1 Shale (Aob) |
16 |
100 |
- |
Historic Data |
|
|
|
|
|
|
JmwB1 |
Westwater B1 Sandstone |
33 |
56 |
- |
Historic Data |
|
|
|
|
|
|
JmwB1-B2 |
B1-B2 Shale (B1ob) |
10 |
37 |
- |
Historic Data |
|
|
|
|
|
|
JmwB2 |
Westwater B2 Sandstone |
27 |
56 |
6 |
Historic Data |
|
|
|
|
|
|
JmwB2-C |
B2-C Shale (B2ob) |
13 |
39 |
- |
Historic Data |
|
|
|
|
|
|
JmwC |
Westwater C Sandstone |
48 |
90 |
5 |
Historic Data |
|
|
|
|
|
|
JmwC-D |
C-D Shale (Cob) |
15 |
39 |
- |
Historic Data |
|
|
|
|
|
|
JmwD |
Westwater D Sandstone |
17 |
45 |
2 |
Historic Data
|
*No data on Menefee Formation thickness
in the Project area.
Geologic structures on the property are associated with
regional deformation that occurred during the late Cretaceous, following
deposition of the geologic strata seen on the property. There is no evidence of
recent activity. The primary structures are high-angle, north to northeast trending normal faults that cut across the western
portion of Sections 9 and 16, with no major faults evident on Section 10 (Figure
7-3).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-6 |
|
www.rpacan.com
|
Maximum offset along these faults is approximately 150 ft, and
has been estimated from the location of lithologic contacts along a
north-trending fault in Section 16 and adjacent borehole data. All faults on the
property have interpreted downdip offsets to the west and northwest.
The dip along the Fernandez Monocline varies from approximately
3o to 4o in the western portion of the property, to as
much as 20o in Section 10. Possible minor accommodation faults
related to the monocline may be encountered in the subsurface on Section 10;
however, offsets should be minor.
ALLUVIUM
Quaternary alluvial material overlies
bedrock throughout the San Mateo Creek valley, and although it probably accepts
and transmits groundwater from precipitation to underlying bedrock units, it is
most likely unsaturated except near San Mateo Creek. San Mateo Creek alluvial
materials consist of unconsolidated sands and silts. Well logs indicate this
material is from 10 ft to 80 ft thick although it may be significantly thicker
in some areas (OSE 2008).
MENEFEE FORMATION
The Menefee Formation, an
upper unit of the Upper Cretaceous Mesaverde Group, consists of two members,
i.e., the Allison Member underlain by the Cleary Coal Member. The formation
consists of thin to thick sandstone beds interbedded with shale and coal seams.
Geophysical logs from the San Juan Basin indicate that the formation typically
consists of approximately 30% sandstone, 65% shale, and less than 5% coal (Brod
and Stone 1981). Beds of the Allison Member do not outcrop in the Project area,
but are farther to the north, in the central San Juan Basin. Beds of the Cleary
Coal Member outcrop just east and south of the Roca Honda area on the east flank
of the Fernandez monocline. In the Project area, this member occurs as sub-crop
beneath Quaternary colluvium only in the SE¼ of Section 10.
POINT LOOKOUT SANDSTONE
The Point Lookout
Sandstone is a regressive marine beach sandstone in the middle of the Mesaverde
Group. The Point Lookout Sandstone generally consists of light grey, thick
bedded, very fine to medium grained, locally cross bedded sandstone. This unit
is as much as 120 ft thick in the Project area. A resistant cap of Point Lookout
Sandstone forms the top of Jesus Mesa in the Project area and also represents the dip
slope. Just east of Jesus Mesa, the steeper slope that dips to the southeast in
Section 10 represents the dip slope of the Point Lookout Sandstone along the
Fernandez Monocline.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-7 |
|
www.rpacan.com
|
CREVASSE CANYON FORMATION
The Crevasse Canyon Formation is a lower unit of the Mesaverde
Group that outcrops through much of the west part of the Roca Honda Project
area. The unit consists of the following members from youngest to oldest: Gibson
Coal Member, Dalton Sandstone Member, Borrego Pass Lentil, and Dilco Coal
Member. The Mulatto Tongue of the Mancos Shale is below the Dalton Sandstone
Member and above the Borrego Pass Lentil. The Mulatto Tongue is approximately
300 ft thick in the Project area and is a marine deposit representing a
transgression of the Western Interior Seaway.
The Gibson Coal Member is as much as 240 ft thick in the area
of interest and outcrops mainly in the steep slopes on the sides of Jesus Mesa.
The Dalton Sandstone Member, a regressive marine beach sandstone, is as much as
100 ft thick.
Shale and silty sandstone of the Mulatto Tongue of the Mancos
Shale outcrop on gentle slopes and are covered in places by Quaternary alluvium
and colluvium in the southwest part of the Roca Honda area. Below the Mulatto
Tongue is the Borrego Pass Lentil, a transgressive marine sandstone that was
previously referred to as the Stray sandstone of local usage (Santos 1966a).
Boreholes drilled in 2007 in the Project area indicate that the Borrego Pass
Lentil is about 40 ft thick. The entire thickness of the Mulatto Tongue is not
exposed in the west part of the Project area because several normal faults
disrupt the sequence. Therefore, it is not known whether the Borrego Pass
Lentil, which lies just below the Mulatto Tongue, outcrops in that area.
The Dilco Coal Member has an average thickness of about 120 ft
and outcrops just west of the Project area in Section 17. The member contains
thin sandstone, shale, and discontinuous coal beds representative of a
back-shore swamp environment associated with a regression of the Western
Interior Seaway (Fassett 1989).
GALLUP SANDSTONE
The lowest formation of the Mesaverde Group is the Gallup
Sandstone, which is solely in the subsurfacein the RocaHonda Project area and is
separated into two units by the thin Pescado Tongue of the Mancos Shale. The upper unit (or main body) of
the Gallup Sandstone is a regressive marine beach sandstone that is fine to
medium grained and is about 75 ft thick. The Pescado Tongue, approximately 20 ft
thick, consists of thin alternating and interfingering beds of sandstone,
siltstone, and shale. A thin, fine to coarse grained sandstone (average
thickness of approximately 10 ft) forms the basal bed of the Gallup Sandstone
and marks a brief regression of the Western Interior Seaway. The upper Gallup
sandstone is a regional aquifer with good water quality water.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-8 |
|
www.rpacan.com
|
MANCOS SHALE
The main body of Mancos Shale
represents the full transgression of the Western Interior Seaway and, in the
Roca Honda area, its subsurface thickness averages approximately 710 ft. The
marine deposits of this formation consist mainly of dark grey to black silty
shale with minor interbedded sandstone. In the southern San Juan Basin, the
lower part of the Mancos Shale is intertongued with the underlying upper part of
the Dakota Sandstone. The intertongued units generally represent a transgressive
rock sequence (Landis et al. 1973).
In the subsurface of the Project area, the main body of Mancos
Shale is underlain by the Twowells Sandstone Tongue of the Dakota Sandstone
(Pike 1947), which is about 50 ft thick. Underlying the Twowells Sandstone
Tongue is the Whitewater Arroyo Shale Tongue of the Mancos Shale (Owen 1966),
which is about 150 ft thick. In the Project area, the base of the Mancos Shale
is considered to be the base of the Whitewater Arroyo Shale Tongue.
DAKOTA SANDSTONE
Marine shoreface deposits of
Dakota Sandstone are composed mainly of fine-grained gray sandstone. In the
subsurface in the Project area, the Dakota Sandstone is approximately 50 ft
thick. In the main Ambrosia Lake subdistrict about five miles northwest of the
Roca Honda area, the Dakota Sandstone is composed of four members (Landis et al.
1973). For ease of presentation, the four members are not shown in Figure 7-5.
The four members are in descending stratigraphic order: Paguate Sandstone Tongue
of the Dakota Sandstone, Clay Mesa Shale Tongue of the Mancos Shale, Cubero
Sandstone Tongue of the Dakota Sandstone, and Oak Canyon Member of the Dakota
Sandstone. The Dakota Sandstone is the lowermost Upper Cretaceous formation,
unconformably overlies the Upper Jurassic Morrison Formation, and is a regional
aquifer with poor quality water from the overlying Gallup Sandstone.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-9 |
|
www.rpacan.com
|
MORRISON FORMATION
The uppermost member of the
Morrison Formation in the Roca Honda area is the Brushy Basin Member. The Brushy
Basin Member is variable in thickness (22 ft to 269 ft), but the average
thickness is approximately 105 ft, based on historical drilling in the area.
Figure 7-5 is a typical stratigraphic depiction of the Dakota Sandstone and
Morrison Formation in the Project area. The fluvial/lacustrine deposits of the
Brushy Basin Member are underlain by the Westwater Canyon Member, which hosts
the uranium deposits in the Roca Honda area. The fluvial, sandstone-dominated
WestwaterCanyon Member is approximately 100 ft to 250 ft thick under the Project
area. The Westwater Canyon Member is informally subdivided into sandstone and
shale units. The sandstone units, which contain the uranium mineralization, have
grains composed of quartz (~61%), feldspar (~35%), chert (~3%), and heavy
minerals (<1%).
Four members of the Morrison Formation are recognized by the
USGS in the Grants uranium district. These members are, in descending order,
Jackpile Sandstone Member, Brushy Basin Member, Westwater Canyon Member, and
Recapture Member. The Jackpile Sandstone Member, the uppermost fluvial sandstone
in the formation, was not deposited in the Ambrosia Lake sub district, but was
deposited east of Mt. Taylor where it hosts uranium mineralization in the Laguna
sub district. The mostly greenish-grey, mudstone-dominated Brushy Basin Member
is as much as 269 ft thick in the Project area. The Westwater Canyon Member
consists of grey, light yellow-brown and reddish-grey arkosic sandstone (Fitch
2006) and is as much as 250 ft thick in the Project area. Greyish-red siltstone
and claystone compose the Recapture Member.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-10 |
|
www.rpacan.com
|
7 - 11
|
www.rpacan.com
|
7-12
|
www.rpacan.com
|
7-13
|
www.rpacan.com
|
SEISMIC EVALUATION
The Roca Honda site lies on
the northwestern edge of the Jemez Lineament seismic area, but is outside the
two most prominent seismic areas in New Mexico: the Rio Grande Rift and the
Socorro Fracture Zone (Sanford and Lin 1998). Few earthquakes greater than a
magnitude of 3.0 mD, and none greater than 5.0 mD have occurred near the
Property from 1962 through 1998. Data prior to this period are unavailable or
non-existent (Sanford et al. 1998). The New Mexico duration magnitude scale, mD,
was first developed by Dan Cash at Los Alamos National Laboratory and is
calculated by:
mD=2.79 log td-3.63,
where td is the duration in seconds (Sanford et al. 2002.)
Local magnitude (M1) calculated from the amplitudes on the Wood Anderson
seismograms were linearly related to the logarithm of td, measured on the
seismograms from the Albuquerque station of the World Seismograph Network, and
shown to be equivalent to moment magnitude (M0).
MINERALIZATION
This section is summarized from Fitch
(2010).
ROCA HONDA MINERALIZATION
The uranium found in the
Projectarea is contained within five sandstone units of the Westwater Canyon
Member. Zones of mineralization vary from approximately one foot to 32 ft thick,
100 ft to 600 ft wide, and 200 ft to 2,000 ft long. Uranium mineralization in
the Project area trends west-northwest, consistent with trends of the fluvial
sedimentary structures of the Westwater Canyon Member, and the general trend of
mineralization across the Ambrosia Lake sub district.
Core recovery from the 2007 drilling program indicates that
uranium occurs in sandstones with large amounts of organic/high carbon material.
Non-mineralized host rock is much lighter (light brown to light grey,) and it
has background to slightly elevated radiometric readings.
Uranium mineralization consists of dark organic-uranium oxide
complexes. The uranium in the Project area is dark grey to black in color and is
found between depths of approximately 1,650 ft to 2,600 ft below the surface. Although coffinite and
uraninite have been identified in the Grants Mineral Belt, their abundance is
not sufficient to account for the total uranium content in a mineralized sample.
Admixed and associated with the uranium are enriched amounts of vanadium,
molybdenum, copper, selenium, and arsenic in order of decreasing abundance.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-14 |
|
www.rpacan.com
|
Primary mineralization pre-dates, and is not related to,
present structural features. There is a possibility of some redistribution and
stack ore along faults; however, it appears that most of the Roca Honda
mineralization is primary. Redistributed, post-fault, or stack mineralization
occurs in the Ambrosia Lake sub district of the Grants Mineral Belt, but is not
apparent in the Roca Honda area.
MINERALIZATION CONTROLS
Paleochannels that contain quartz-rich, arkosic, fluvial
sandstones are the primary mineralization control associated with this trend.
Previous mining operations within the immediate area suggest that faults in the
Roca Honda area associated with the San Mateo fault zone post-date the
emplacement of uranium, therefore, it may be expected that mineralized zones in
the Roca Honda area are offset by faults.
The mineralization is typically confined to sandstones in the
Westwater Canyon Member, although there is some overlap into the shales that
divide the sandstones, and also some minor extension (less than 10 ft) into the
underlying Recapture Member. The mineralization is contained in the Westwater
Canyon Member sandstones across the Project area, but in Sections 9 and 16, the
mineralization is typically found in the upper sandstones (A, B1, and B2). In
Section 10, the A and B1 sandstones pinch out in some areas due to thickening of
the overlying Brushy Basin Member. Mineralization in the middle and western
portions of Section 10, and it is typically in the lower sandstones (sands C and
D).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-15 |
|
www.rpacan.com
|
Sedimentary features may exhibit control on a small scale. At
the nearby Johnny M mine, a sandstone scour feature truncates underlying black
mineralization, indicating nearly syngenetic deposition of uranium
mineralization with the sandstone beds. Uranium mineralization in places is
related to clay-gall (cobbles) layers within the host sandstone. The presence of
pyrite and bleaching alteration is also important. Alteration bleaching forms a
halo that encloses mineralization. The bleaching caused by the removal of
reddish ferric-iron pigmentation imparts a light grey color to the sandstone,
and a greenish rim on red-colored claystone cobbles or galls.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 7-16 |
|
www.rpacan.com
|
8 DEPOSIT TYPES
More than 340 million pounds (lbs) of U3O8 have been produced from the Grants uranium deposits in New Mexico between 1948 and 2002, and at least 403 million lbs of U3O8 remain as unmined resources. The Grants district is one of the largest uranium
provinces in the world. The Grants district extends from east of Laguna to west of Gallup in the San Juan Basin of New Mexico. Three types of sandstone uranium deposits are recognized: tabular, redistributed (roll-front, fault-related), and
remnant-primary. The tabular deposits formed during the Jurassic Westwater Canyon time. Subsequently, oxidizing solutions moved downdip, modifying tabular deposits into redistributed roll-front and fault-related deposits. Evidence, including age
dates and geochemistry of the uranium deposits, suggests that redistributed deposits could have been formed shortly after deposition in the early Cretaceous and from a second oxidation front during the mid-Tertiary (McLemore, 2010)
Primary mineralization deposits are generally irregular, tabular, flat-lying bodies elongated along an east to southeast direction, ranging from thin pods a few feet in thickness and length to bodies several tens or hundreds of feet long. The
deposits are roughly parallel to the enclosing beds, but may form rolls (tabular lenses) that cut across bedding. The deposits may occur in more than one layer, form distinct trends, commonly parallel to depositional trends, and occur in clusters.
Primary mineralization in the Ambrosia Lake subdistrict consists mostly of uranium-enriched humic matter that coats sand grains and impregnates the sandstone, imparting a dark colour to the rock. The uranium mineralization consists largely of
unidentifiable organic-uranium oxide complexes that are light grey-brown to black. A direct correlation exists between uranium content and organic-carbon content by weight percent in the ores (Squyres 1970, Kendall 1972).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 8-1 |
|
www.rpacan.com
|
9 EXPLORATION
As there are no reliable surface methods for detecting uranium
deposits at depths of 1,500 ft to 2,500 ft, coupled with the fact that the
uranium deposits in Ambrosia Lake and at Roca Honda have no surface expression;
historical exploration has consisted primarily of drilling, for both discovery
and delineation.
Additional work conducted by RHR:
|
|
Reinterpretation of historic drill logs in 2006
and 2007. |
|
|
|
|
|
Preparations of a Baseline Data Report in 2009
to support a mine permit application. This report includes archaeological,
biological, air, radiometric, soil, meteorological, and water surveys. The
most recent revision was January 2011. |
|
|
|
|
|
Monitor well installation and monitoring with a
pump test in May 2010, including continual collection of water data.
|
|
|
|
|
|
Survey of the State lease (Section 16) and mine
claims on Sections 9 and 10, and survey of some drill hole collars on
Section 16 in August 2010, conducted by Land Survey Company, LLC. |
|
|
|
|
|
Property aerial surveys in 2008 and 2011,
conducted by Thomas R. Mann & Associates Inc. |
|
|
|
|
|
A groundwater flow model completed by Intera
Geosciences & Engineering, in September 2011. The most recent revision
was August 2012. |
|
|
|
|
|
A geotechnical survey conducted by Earthworks
Engineering Group, LLC, in August and September 2011. |
|
|
|
|
|
In November 2011, a core hole (S14-Jmw-CH-11)
was drilled at the Section 16 proposed shaft location (1,586,542.7 N,
2,767,093.8 E). Core was tested at Advanced Terra Testing for numerous
geotechnical properties and a geotechnical report was issued by URS in
June 2012. |
EXPLORATION POTENTIAL
A few wide-spaced holes in the central part of Section 16
contain mineralization in the A and B1 sands, above 0.1% U3O8 across a minimum
thickness of six feet.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 9-1 |
|
www.rpacan.com
|
Six mineralized intersections are located in the A sand, and appear to align along an approximate 100° azimuth trend, parallel to the A zone trend identified in the north part of Section 16. This includes 0.56% U3O8 over a 15 ft thickness,
intersected by the recent RHR hole, S2-Jmw-CH-07. Although this is an isolated intersection in the central part of Section 16, potential for additional mineralization exists along the projected trend. Potential also exists eastward, where drill
hole 16055 intersected 0.145% U3O8 over an 11 ft thickness.
Drill hole 16058 is another isolated hole in the central part of Section 16, which intersected 0.136% U3O8 over a 15 ft thickness in the B1 sand. Potential exists for additional mineralization east and west of this intersection, and parallel to the
adjacent potential A zone trend. Available data from Section 17 (west of Section 16) and Section 15 (east of Section 16), indicate that this trend extends beyond Section 16 into each of these sections.
Based on maximum lengths and widths determined from existing A and B1 zone mineralization models, a tonnage factor of 15 ft3/st, and an average 6 ft thickness, total exploration potential is estimated at 600,000 tons to 800,000 tons at
0.30% U3O8 to 0.40% U3O8, containing approximately four million pounds U3O8. Exploration potential is located in Section 16 as presented in Figure 9-1.
The potential quantity and grade of the central part of Section 16 are conceptual in nature. There has been insufficient exploration to define a Mineral Resource, and it is uncertain if further exploration will result in the reclassification of the
exploration target as a Mineral Resource.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 9-2 |
|
www.rpacan.com
|
9-3
|
www.rpacan.com
|
10 DRILLING
Since completion of the 2012 Technical Report on the Roca Honda
Project, McKinley County, State of New Mexico, U.S.A., no drilling has been
conducted on the property. Drilling on the Roca Honda Project has been conducted
in phases by Rare Metals, Kerr-McGee, Western Nuclear, and RHR from 1950 to
2011, and consists of 444 surface drill holes totalling 971,325 ft. A drill
summarytable by section is included in Table 10-1. The drill hole location map
is shown in Figure 10-1.
TABLE 10-1 SUMMARY OF DRILLING
Roca Honda
Resources LLC Roca Honda Project
Section |
Year |
Company |
Number of Holes |
Total Footage |
9 |
1966 |
Kerr-McGee |
2 |
3,730 |
|
1967 |
Kerr-McGee |
1 |
2,106 |
|
1968 |
Kerr-McGee |
1 |
1,760 |
|
1970 |
Kerr-McGee |
6 |
11,601 |
|
1971 |
Kerr-McGee |
3 |
6,634 |
|
1972 |
Kerr-McGee |
11 |
22,824 |
|
1973 |
Kerr-McGee |
71 |
144,530 |
|
1974 |
Kerr-McGee |
27 |
59,786 |
|
1975 |
Kerr-McGee |
18 |
37,684 |
|
1977 |
Kerr-McGee |
43 |
88,587 |
|
1979 |
Kerr-McGee |
1 |
2,018 |
|
1980 |
Kerr-McGee |
1 |
2,414 |
|
1981 |
Kerr-McGee |
1 |
2,200 |
|
1982 |
Kerr-McGee |
1 |
2,500 |
9 Total |
|
|
187 |
388,374
|
|
|
|
|
|
10 |
1967 |
Kerr-McGee |
2 |
4,850 |
|
1971 |
Kerr-McGee |
2 |
5,240 |
|
1972 |
Kerr-McGee |
1 |
2,421 |
|
1974 |
Kerr-McGee |
33 |
83,764 |
|
1975 |
Kerr-McGee |
22 |
60,027 |
|
1976 |
Kerr-McGee |
34 |
87,719 |
|
1977 |
Kerr-McGee |
74 |
188,030 |
|
1979 |
Kerr-McGee |
1 |
2,528 |
|
1980 |
Kerr-McGee |
1 |
2,522 |
|
1981 |
Kerr-McGee |
1 |
2,530 |
|
1982 |
Kerr-McGee |
1 |
2,200 |
|
1983 |
Kerr-McGee |
1 |
2,570 |
|
1984 |
Kerr-McGee |
1 |
2,557 |
|
1985 |
Kerr-McGee |
1 |
2,577 |
10 Total |
|
|
175 |
449,535
|
|
|
|
|
|
16 |
1950 |
Rare Metals |
13 |
Unknown |
|
1967 |
Western Nuclear |
1 |
1,573 |
|
1968 |
Western Nuclear
|
10 |
18,725 |
|
1969 |
Western Nuclear |
14 |
25,315 |
|
1970 |
Western Nuclear
|
39 |
77,538 |
|
2007 |
RHR |
4 |
8,212 |
|
2011 |
RHR |
1 |
2,053 |
16 Total |
|
|
82 |
133,416 |
Grand Total |
|
|
444 |
971,325
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 10-1 |
|
www.rpacan.com
|
10-2
|
www.rpacan.com
|
RHR DRILLING
RHR drilled four pilot holes, on Section 16, of which three were completed as monitor wells totalling 8,050 ft for environmental baseline and monitoring purposes in Section 16 from June through November 2007. One drill hole was located outside of
known mineralization and three holes were located within mineralized areas. Drill sites were also chosen based on proximity to existing roads in order to limit disturbance. Drilling was conducted by Stewart Brothers Drilling, based in Grants, New
Mexico.
The entire thickness of the Westwater Sandstone, except for zones with no recovery, was cored in the pilot holes for these wells. The cores are PQ diameter (3.345 in.) and were taken principally for laboratory testing of hydraulic conductivity,
effective porosity, density, and chemical analysis.
The four pilot holes were probed by Jet West Geophysical Services, LLC (Jet West), Farmington, New Mexico, for gamma, resistivity, deviation, standard potential, and temperature.
RHR has developed and implemented stringent standard operating procedures for lithologic logging of cuttings and core, and core handling (Strathmore 2008).
In November 2011, a core hole (S14-Jmw-CH-11) was drilled at the Section 16 shaft location (Figure 10-2). The hole was drilled to a depth of 2,053 ft. Core was tested at Advanced Terra Testing for numerous geotechnical properties and a geotechnical
report was issued by URS in June 2012.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 10-3 |
|
www.rpacan.com
|
10-4
|
www.rpacan.com
|
LITHOLOGIC LOGGING OF CUTTINGS AND CORE
The RHR
logging procedure provides a uniform set of instructions on how to describe
cuttings and core samples, establish accurate and consistent geologic
descriptions, and ensure that proper steps, quality controls, and required
documentation are performed. A systematic methodology for the description of
lithology will ensure consistency in descriptions between individual loggers.
The RHR Lead Geologist is responsible for implementing this procedure.
Drill hole cuttings are collected at regular intervals
(typically five feet) during the drilling of a boring or well. Cuttings are
collected by the driller or designate. A portion of the cuttings are set aside
for logging in piles laid out from left to right, in groups of four piles,
containing cuttings over a total of 20 ft. Each group of four piles is separated
by a space then followed by another group of four piles. After a total of 20
piles have been completed, a new row of cuttings is started.
The field geologist logs the cuttings after they have been
collected and enters the data on standard logging forms. The description of
cuttings and core includes stratigraphic assignment, lithologic type, color,
matrix composition, inclusion composition, texture, induration, alteration,
presence of fractures, and other characteristics including any unusual
conditions.
Rock Quality Designation (RQD) of core is included in the
standard operating procedure and measured to provide information on the mass
quality of the rock.
GAMMA LOGGING PROCEDURES AND VERIFICATION
RHR employed the services of Jet West Geophysical Services,
LLC, headquartered in Farmington, New Mexico, for all gamma logging of its drill
holes. Jet West used its own internal company procedures to calibrate and
operate the gamma-ray probe, and provided a digital and graphic log of the
readings for each drill hole. An RHR project geologist was onsite during these
activities.
SURVEYS
RHR drill hole collar locations were surveyed in 2008 by Apogen
Technologies R&D, based in Los Alamos, New Mexico, and resurveyed in 2010 by
Land Surveying Company, LLC, based in Santa Fe, New Mexico. Both companies surveyed drill hole
collars in State Plane coordinates, NAD 83, New Mexico Western Zone 3003.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 10-5 |
|
www.rpacan.com
|
Jet West conducted downhole surveys using a deviation tool,
which utilizes an accelerometer and magnetic compass to determine tool
inclination and corrected direction from magnetic to true north. Downhole
measurements were taken at 20 ft, 25 ft, or 50 ft spacing. Easting, northing,
and elevation points were also computed for each azimuth and dip measurement.
Jet West conducted periodic checks on the deviation tool for operational
accuracy.
RECOVERY
When completing the four monitor well pilot holes on the Roca
Honda property, RHR cored the Westwater Sandstone in each of the holes.
Core recovery measurements were taken following the core
logging procedure and recorded on the lithologic log. Core recoveries within the
RHR drill holes are as follows:
|
1. |
S1-Jmw -CH-07: Over the interval from 1880 ft to 2,092
ft, core recovery varied locally from approximately 62% to 100% in the Jmw
A sand exclusive of two intervals (1,909.4 ft to 1,916 ft and 2,005.6 ft
to 2,007 ft) that had 0% recovery. Below the Jmw A, core recoveries in the
A-B1 shale to Jmw B sand range from 77% to 100%. |
|
|
|
|
2. |
S2-Jmw -CH-07: Over the interval from 1,651 ft to 1,855
ft, core recoveries within the Jmw A sand varied from 55% to 97%, with 0%
recovery from 1,743 ft to 1,756 ft, 1,774 ft to 1,778 ft, 1,809.9 ft to
1,814 ft, 1,818.5 ft to 1,834 ft, 1,835.1 ft to 1,836.5 ft, and 1,848 ft
to 1,855 ft. Below the Jmw A sand, 0% to 50% recovery was recorded down to
the B1- B2 shale. |
|
|
|
|
3. |
S3-Jmw -CH-07: Recoveries of 91% to 93% were recorded in
the Jmw A sand and 98% to 100% below in the A-B1 shale and Jmw B2 sand.
Recovery was not recorded below Jmw B2. No recovery of core from 1,840 ft
to 1,942 ft. |
|
|
|
|
4. |
S4-Jmw -CH-07: Over the interval from 1,775 ft to 2,004.9
ft, no recovery from 1,812.0 ft to 1,825.0 ft, 1,860.0 ft to 1,861.0 ft,
1,886.3 ft to 1,902.5 ft, 1,921.7 ft to 1,922.5 ft, and 1,961.0 ft to
1,975.0 ft. Recoveries of 50% to 100% were recorded in the A-B1 shale to
Jmw D sand. Jmw A sand was not recorded on the lithologic
log. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 10-6 |
|
www.rpacan.com
|
Pilot hole S1-Jmw-CH-07 was cored and chemically assayed, but
due to hole stability issues a gamma-log was not run. S1a-Jmw-CH-07 was drilled
approximately 30 ft from S1-Jmw-CH-07. Core was not retrieved, but a gamma-log
of the mineralized zone was run. The purpose of drilling S1 and S-1a was to
retrieve core and install a monitoring well. Issues encountered during the
drilling of S-1 led to the decision to drill, log and install a well without
coring S1a-Jmw-CH-07. Pilot holes S2-Jmw-CH-07, S3-Jmw-CH-07, and S4-Jmw-CH-07
were cored. Chemical assays were conducted for all mineralized zone core.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 10-7 |
|
www.rpacan.com
|
11 SAMPLE PREPARATION, ANALYSES AND SECURITY
HISTORIC SAMPLING METHODS
GAMMA-RAY LOGS
All mineralized intercepts used for
historical resource estimates were calculated by Kerr-McGee from gamma-ray logs
probed for each drill hole. Each log consists of gamma-ray, resistivity, and
spontaneous-potential curves plotted by depth. The resistivity and
spontaneous-potential curves provide bed boundaries and are mainly used for
correlation of sandstone units and mineralized zones between drill holes (Figure
11-1).
The equivalent U3O8
(eU3O8) content was calculated by Kerr-McGee
following the industry-standard method developed originally by the U.S. Atomic
Energy Commission (Kerr-McGee manual, undated). For mineralized zones greater
than two feet thick, an upper and lower boundary was initially determined by
choosing a point approximately one-half of the height from background to peak of
the anomaly. The counts per second (cps) were determined for each one-foot
interval and then divided by the number of intervals to calculate an average cps
for the anomaly. The counts per second (cps) were converted to percent
eU3O8 using the appropriate Kerr-McGee charts for the
specific logging unit used.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-1 |
|
www.rpacan.com
|
11-2
|
www.rpacan.com
|
DISEQUILIBRIUM
Uranium grade is determined
radiometrically by measuring the radioactivity levels of certain daughter
products formed during radioactive decay of uranium atoms. Most of the gamma
radiation emitted by nuclides in the uranium decay series is not from uranium,
but from daughters in the series.
Where daughter products are in equilibrium with the parent
uranium atoms, the gamma-ray logging method will provide an accurate measure of
the amount of parent uranium that is present. A state of disequilibrium may
exist where uranium has been remobilized and daughter products remain after the
uranium has been depleted, or where uranium occurs and no daughter products are
present. Where disequilibrium exists, the amount of parent uranium present can
be either underestimated or overestimated. It is important to obtain
representative samples of the uranium mineralization to confirm the radiometric
estimate by chemical methods.
Core is sampled over mineralized intervals as determined by a
hand-held Geiger counter or scintillometer to define mineralized boundaries.
Core intervals are split and sampled. Each sample is crushed and pulverized, and
then two, separate assays are made of the same pulps; a scaler-radiometric or
closed can radiometric log and a chemical assay. The disequilibrium factor is
the ratio of the actual amount of uranium (measured by chemical assay) to the
calculated amount (based on the gamma-ray activity of daughters). If the
quantities are equal, there is no disequilibrium. If the ratio is less than one,
some uranium has been lost and the calculated values are overestimating the
quantity of uranium.
The degree of disequilibrium will vary with the mineralogy of
the radioactive elements and their surroundings (which may create a reducing or
oxidizing environment), climate, topography, and surface hydrology.
The sample volume will also affect the determination of
disequilibrium, as a small core sample is more likely to show extreme
disequilibrium than a larger bulk sample. In some cases, the parents and
daughters may have moved apart over the length of a sample, but not over a
larger scale, such as the mineralized interval.
Generally, checks are made for disequilibrium when drilled
resources reach approximately 100,000 lb to 500,000 lb of contained
U3O8 (Fitch 1990). In new areas, disequilibrium is checked after the first few core holes. For large uranium
producers with years of operating experience in well-known districts, such as
Ambrosia Lake subdistrict, and with extensions on-trend with mined deposits, it
was common to drill out most of the resources and obtain several core hole
intercepts of selected mineralized zones for logging, assaying and metallurgical
checks prior to large capital expenditures such as shaft-sinking and underground
development.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-3 |
|
www.rpacan.com
|
Analysis of chemical equilibrium of uranium for the Grants
Mineral Belt indicates that various relationships are present. In most areas and
deposits, uranium is in equilibrium, or is slightly enriched relative to gamma
determinations
(chemU3O8>eU3O8).
There is no report of core holes or core assays for the
drilling performed by Kerr-McGee on Sections 9 and 10. Western Nuclear reports
cored intervals on Section 16 for Hole 68 and Hole 69; however, no logging
and/or assay data are available (Fitch 2010).
Based on Kerr-McGees extensive operating experience in the
Ambrosia Lake sub district of the Grants Mineral Belt there were no historical
concerns regarding disequilibrium for gamma-ray results (Fitch 2010).
Additionally, RHR core showed no major negative disequilibrium. Therefore, based
on this information, no disequilibrium factor has been applied to the Roca Honda
eU3O8 gamma logs and/or assays.
RHR has results of analyses of chemical equilibrium from four
samples from three core holes (totalling 17 ft of mineralized core) located in
Section 16. Results indicate positive average equilibrium
(chemU3O8/eU3O8) for the four
samples.
Based on a review of available reports describing the state of
chemical equilibrium for uranium in the vicinity of the Roca Honda deposit and
in similar deposits with primary-type uranium mineralization, RPA considers it
probable that the Roca Honda deposit taken as a whole, will have an average
state of equilibrium that is slightly favorable with regard to chemical uranium
versus eU3O8.
RPA is of the opinion that there is a low risk of negative
equilibrium (chemical uranium lower than radiometrically determined uranium) in
the Roca Honda deposit. Additional sampling and analyses are recommended to
supplement results of the limited disequilibrium testing conducted by RHR.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-4 |
|
www.rpacan.com
|
RHR SAMPLING
RHR completed four pilot holes in 2007 and one geotechnical
hole in 2011 (not included in resource database, because it was completed after
the resource computation) as discussed in detail in Section 10 Drilling. Most of
the Westwater Sandstone was cored at PQ diameter (39/32 in.) and collected for laboratory testing of hydraulic conductivity,
effective porosity, density and chemical analysis.
RHR developed stringent in-house standard operating procedures
for core handling (including collecting, sampling, processing, and archiving
core), and decontamination of small equipment used for sampling. The following
sections summarize RHRs standard operating procedures.
RHR CORE SAMPLING PROCEDURE
The standard operating
procedures provide guidance for proper and consistent core collection practices,
and to ensure that proper core handling procedures, quality control, and
required documentation are undertaken. The RHR Lead Geologist was responsible
for implementing the core handling and sampling procedures.
The RHR field geologist was responsible for ensuring that all
standard operating procedures were conducted in accordance with Strathmore
standards, under the direction of the RHR Lead Geologist.
The field geologist observed the core from the time it was
pulled from the hole until it was transported to a locked storage facility
adjoining RHRs Grant, New Mexico geology office.
Core intervals selected for sampling were split in half
lengthwise with a hydraulic splitter. One half was sent for analysis, with the
other half logged and archived with the remaining core. Core samples were
inserted into sample bags labelled with the well identification, core run
number, date, and core interval. Core intervals sampled for laboratory analysis
were sealed to preserve the natural state of the core.
A sample block is placed in the location of the sampled core
and labelled with the boring or well identification, date, depth intervals,
sample identification, sample type, and the name of the individual or
organization receiving the sample.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-5 |
|
www.rpacan.com
|
Each core box is photographed using a digital camera and
includes a color bar, scale and label containing the borehole designation, box
number, box interval, and the date of the photograph. All photography logs and
photographs are archived by RHR.
Core Box and Custody Record Forms are completed before the core
box is closed and sealed.
All records and forms are reviewed by the field geologist for
accuracy and completeness.
RHR GAMMA-RAY RESULTS
Pilot hole S1-Jmw-CH-07 was
cored and assayed, but it was not possible to run a gamma-log. Pilot hole
S1a--Jmw-CH-07 was drilled approximately 30 ft from S1-Jmw-CH-07, but was not
cored. Pilot holes S2-Jmw-CH-07, S3-Jmw-CH-07, and S4-Jmw-CH-07 were cored.
The gamma-ray probe intercepted zones of moderate to
significant uranium mineralization in S1a-Jmw-CH-07, S2-Jmw-CH-07, and
S3-Jmw-CH-07 as presented in Table 11-1.
TABLE 11-1 RHR GAMMA-RAY RESULTS
Roca Honda
Resources LLC Roca Honda Project
|
Total |
From |
To |
|
Thickness |
Lithology |
Drill Hole |
Depth (ft) |
(ft) |
(ft) |
%eU3O8 |
(ft) |
Unit |
S1a-Jmw-CH- |
2108 |
|
|
|
|
|
07 |
|
1,904.3 |
1,910.8 |
0.37 |
6.5 |
Jmw A |
|
|
|
|
|
|
|
|
|
1,953.8 |
1,957.3 |
0.48 |
3.5 |
Jmw B1/ B1- |
|
|
|
|
|
|
B2 Shale |
|
|
1,971.5 |
1,981.0 |
0.16 |
9.5 |
Jmw B2 |
S2-Jmw-CH- |
2020 |
|
|
|
|
|
07 |
|
1,731.0 |
1,734.0 |
0.61 |
3.0 |
Jmw A |
|
|
|
|
|
|
|
|
|
1,748.0 |
1,757.0 |
0.56 |
9.0 |
Jmw A |
|
|
1,792.0 |
1,793.5 |
0.20 |
1.5 |
Jmw B1 |
S3-Jmw-CH- |
2073 |
|
|
|
|
|
07 |
|
1,942.5 |
1,944.5 |
0.07 |
2.0 |
B1-B2 Shale
|
Note:
|
1. |
Jmw = Jurassic Morrison Formation |
RHR CORE SAMPLING RESULTS
RHR has completed four pilot holes for monitor wells and cored
the Westwater Sandstone in each of the holes. The cored intervals are listed in
Section 10 Drilling under Recovery. RHR also completed a geotechnical hole in
2011 that is not included in the resource data base.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-6 |
|
www.rpacan.com
|
Selected intervals of core were split and sampled for
multi-element chemical analysis (uranium, vanadium, organic carbon) by
inductively coupled plasma mass spectrometry (ICP-MS) and atomic emission
spectrometry (ICP-AES) or for hydrologic studies. Chemical analyses were
performed by Energy Laboratories, Inc. (ELI), Casper, Wyoming, by ICP-MS and
ICP-AES methods, and by The Mineral Lab, Inc., Lakewood, Colorado, using X-ray
fluorescence methods (XRF). Uranium is reported as U (ppm), and converted to %
U3O8 (ppm U* 1.17924/10,000) .
Additional sampling continued in 2008. Samples were taken
adjacent to the 2007 core samples. Chemical analyses results from the 2007 and
2008 sampling programs are listed in Table 11-2.
Closed can analyses were also conducted on samples for
comparison with ICP and XRF results. The closed can method involves calculating
the radiometric assay of the sample by determining the amount of gamma
radiation given off by the daughter products of natural uranium radioactive
decay. The difference between the radiometric assay and the chemical assay
determined using ICP and XRF is what is referred to as disequilibrium.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-7 |
|
www.rpacan.com
|
TABLE 11-2 CORE SAMPLE
RESULTS
Roca Honda
Resources LLC Roca Honda Project
|
|
Interval (ft) |
ICP |
XRF |
Closed Can |
Equilibrium |
Total |
|
|
|
|
|
|
|
|
|
Organic |
|
|
|
|
U3O8 % |
U3O8 % |
U3O8 % |
ICP/Closed |
XRF/Closed |
Carbon |
Hole ID |
Sample ID |
From |
To |
(calculated) |
(calculated) |
(calculated) |
Can (%) |
Can (%) |
(TOC, %) |
|
RH07-0017 |
1919.10 |
1919.90 |
|
|
|
|
|
|
|
RH07-0018 |
1947.50 |
1948.40 |
|
|
|
|
|
|
|
RH07-0019 |
2089.30 |
2090.40 |
|
|
|
|
|
|
|
RH07-0020 |
1884.00 |
1885.00 |
0.0001 |
0.0024 |
|
|
|
0.3 |
|
RH07-0021 |
1896.00 |
1897.00 |
1.2028 |
0.9434 |
|
|
|
2.1 |
|
RH07-0022a |
1895.00 |
1905.00 |
0.6792 |
0.5896 |
0.647 |
105.0% |
91.1% |
1.8 |
S1a-
|
RH07-0022b |
1895.00 |
1905.00 |
0.6780 |
0.5896 |
0.654 |
103.7% |
90.2% |
1.8 |
Jmw- |
RH07-0023 |
1918.30 |
1919.10 |
0.0067 |
0.0050 |
|
|
|
0.3 |
CH-
|
RH07-0024 |
1948.40 |
1949.50 |
0.0054 |
0.0090 |
|
|
|
0.4 |
07 |
RH07-0025 |
1981.00 |
1982.00 |
0.0016 |
0.0041 |
|
|
|
0.2 |
|
RH07-0026 |
1983.50 |
1984.50 |
1.0247 |
1.4150 |
0.595 |
172.2% |
237.8% |
1.4 |
|
RH07-0027 |
2047.00 |
2048.00 |
0.0020 |
0.0019 |
|
|
|
0.4 |
|
RH07-0028 |
2090.40 |
2091.40 |
0.0007 |
0.0025 |
|
|
|
0.2 |
|
RH07-0029 |
1925.50 |
1926.20 |
0.0015 |
0.0050 |
|
|
|
0.2 |
|
RH07-0030 |
1958.50 |
1959.00 |
0.0002 |
0.0046 |
|
|
|
0.3 |
|
RH07-0031 |
2013.50 |
2014.00 |
0.0014 |
0.0045 |
|
|
|
0.3 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-8 |
|
www.rpacan.com
|
Table 11-2 Contd
|
|
Interval
(ft) |
ICP |
XRF |
Closed Can |
Equilibrium |
Total |
|
|
|
|
|
|
|
|
|
Organic |
|
|
|
|
U3O8 % |
U3O8 % |
U3O8 % |
ICP/Closed |
XRF/Closed |
Carbon |
Hole ID |
Sample ID |
From |
To |
(calculated) |
(calculated) |
(calculated) |
Can (%) |
Can (%) |
(TOC, %) |
|
RH07-0009 |
1762.00 |
1762.75 |
|
|
|
|
|
|
|
RH07-0010 |
1801.00 |
1802.00 |
|
|
|
|
|
|
|
RH08-0008 |
1734.80 |
1734.90 |
0.0088 |
|
|
|
|
|
|
RH08-0009 |
1735.30 |
1735.40 |
0.0292 |
|
|
|
|
|
|
RH07-0011 |
1735.80 |
1736.80 |
0.3762 |
0.4599 |
|
|
|
0.3 |
|
RH08-0010 |
1737.30 |
1737.40 |
0.4493 |
|
|
|
|
|
|
RH08-0011 |
1737.80 |
1737.90 |
0.0973 |
|
|
|
|
|
S2- |
RH08-0012 |
1738.30 |
1738.40 |
0.0075 |
|
|
|
|
|
Jmw- |
RH08-0013 |
1738.80 |
1738.90 |
0.0077 |
|
|
|
|
|
CH- |
RH07-0012 |
1759.00 |
1761.00 |
1.1910 |
1.5330 |
|
|
|
0.7 |
07 |
RH08-0014 |
1761.40 |
1761.50 |
0.7464 |
|
|
|
|
|
|
RH08-0015 |
1761.90 |
1762.00 |
1.0047 |
|
|
|
|
|
|
RH08-0016 |
1796.50 |
1796.60 |
0.0054 |
|
|
|
|
|
|
RH08-0017 |
1797.00 |
1797.10 |
0.0057 |
|
|
|
|
|
|
RH08-0018 |
1797.50 |
1797.60 |
0.0010 |
|
|
|
|
|
|
RH07-0013 |
1798.00 |
1799.30 |
0.1863 |
0.2476 |
|
|
|
0.2 |
|
RH08-0019 |
1799.50 |
1799.60 |
0.0028 |
|
|
|
|
|
|
RH07-0034a |
1756.00 |
1761.00 |
0.6745 |
0.8254 |
0.583 |
115.7% |
141.6% |
1.2 |
|
RH07-0034b |
1756.00 |
1761.00 |
0.7052 |
0.8254 |
0.702 |
100.5% |
117.6% |
1.2 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-9 |
|
www.rpacan.com
|
Table 11-2 Contd
|
|
Interval
(ft) |
ICP |
XRF |
Closed Can |
Equilibrium |
Total |
Hole ID |
Sample ID |
|
|
|
|
|
|
|
Organic |
|
|
|
|
U3O8 % |
U3O8 % |
U3O8 % |
ICP/Closed |
XRF/Closed |
Carbon |
|
|
From |
To |
(calculated) |
(calculated) |
(calculated) |
Can (%) |
Can (%) |
(TOC, %) |
|
RH07-0014 |
1872.60 |
1873.70 |
|
|
|
|
|
|
|
RH07-0015 |
1928.30 |
1929.30 |
|
|
|
|
|
|
|
RH07-0016 |
2025.40 |
2026.30 |
|
|
|
|
|
|
|
RH08-0020 |
1916.00 |
1916.10 |
0.0039 |
|
|
|
|
|
|
RH08-0021 |
1916.50 |
1916.60 |
0.0053 |
|
|
|
|
|
|
RH08-0022 |
1917.00 |
1917.10 |
0.0046 |
|
|
|
|
|
|
RH08-0023 |
1917.50 |
1917.60 |
0.0058 |
|
|
|
|
|
|
RH08-0024 |
1918.00 |
1918.10 |
0.0074 |
|
|
|
|
|
|
RH08-0025 |
1918.50 |
1918.60 |
0.0068 |
|
|
|
|
|
|
RH08-0026 |
1919.00 |
1919.10 |
0.0125 |
|
|
|
|
|
|
RH08-0027 |
1919.50 |
1919.60 |
0.0111 |
|
|
|
|
|
S3- |
RH08-0028 |
1920.00 |
1920.10 |
0.0084 |
|
|
|
|
|
Jmw- |
RH07-0032 |
1920.50 |
1921.50 |
0.0798 |
0.0909 |
0.0369 |
216.3% |
246.4% |
0.4 |
CH- |
RH08-0029 |
1922.00 |
1922.10 |
0.0288 |
|
|
|
|
|
07 |
RH08-0030 |
1922.50 |
1922.60 |
0.0300 |
|
|
|
|
|
|
RHO8-0031 |
1923.00 |
1923.10 |
0.0179 |
|
|
|
|
|
|
RH08-0032 |
1923.50 |
1923.60 |
0.0180 |
|
|
|
|
|
|
RH08-0033 |
1924.00 |
1924.10 |
0.0222 |
|
|
|
|
|
|
RH08-0034 |
1924.50 |
1924.60 |
0.0131 |
|
|
|
|
|
|
RH08-0035 |
1925.00 |
1925.10 |
0.0136 |
|
|
|
|
|
|
RH08-0036 |
1925.50 |
1925.60 |
0.0132 |
|
|
|
|
|
|
RH08-0037 |
1926.00 |
1926.10 |
0.0182 |
|
|
|
|
|
|
RH08-0038 |
1926.50 |
1926.60 |
0.0137 |
|
|
|
|
|
|
RH08-0039 |
1927.00 |
1927.10 |
0.0099 |
|
|
|
|
|
|
RH08-0040 |
1927.50 |
1927.60 |
0.0037 |
|
|
|
|
|
|
RH08-0041 |
1936.50 |
1936.60 |
|
|
|
|
|
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-10 |
|
www.rpacan.com
|
Table 11-2 Contd
|
|
Interval
(ft) |
ICP |
XRF |
Closed Can |
Equilibrium |
Total |
Hole ID |
Sample ID |
|
|
|
|
|
|
|
Organic |
|
|
|
|
U3O8 % |
U3O8 % |
U3O8 % |
ICP/Closed |
XRF/Closed |
Carbon |
|
|
From |
To |
(calculated) |
(calculated) |
(calculated) |
Can (%) |
Can (%) |
(TOC, %) |
|
RH08-0042 |
1937.00 |
1937.10 |
0.0006 |
|
|
|
|
|
|
RH08-0043 |
1937.50 |
1937.60 |
|
|
|
|
|
|
S3- |
RH08-0044 |
1938.00 |
1938.10 |
0.0010 |
|
|
|
|
|
Jmw- |
RH08-0045 |
1938.50 |
1938.60 |
0.0015 |
|
|
|
|
|
CH- |
RH08-0046 |
1939.00 |
1939.10 |
0.0017 |
|
|
|
|
|
07 |
RH08-0047 |
1939.50 |
1939.60 |
0.0044 |
|
|
|
|
|
|
RH08-0048 |
1940.00 |
1940.10 |
0.0037 |
|
|
|
|
|
|
RH08-0049 |
1940.50 |
1940.60 |
0.0033 |
|
|
|
|
|
|
RH07-0033 |
1941.00 |
1942.00 |
0.0238 |
0.0282 |
|
|
|
0.4 |
|
RH07-0001 |
1808.90 |
1809.70 |
|
|
|
|
|
|
|
RH07-0002 |
1840.00 |
1841.00 |
|
|
|
|
|
|
S4- |
RH07-0003 |
1871.00 |
1872.00 |
|
|
|
|
|
|
Jmw- |
RH07-0004 |
1958.25 |
1959.10 |
|
|
|
|
|
|
CH- |
RH07-0005 |
1787.20 |
1788.00 |
0.0013 |
|
|
|
|
0 |
07 |
RH07-0006 |
1807.20 |
1805.50 |
0.0002 |
|
|
|
|
0.2 |
|
RH07-0007 |
1847.60 |
1848.80 |
0.0001 |
|
|
|
|
0 |
|
RH07-0008 |
1882.90 |
1884.30 |
0.0001 |
|
|
|
|
0 |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-11 |
|
www.rpacan.com
|
Strathmores quality assurance and quality control (QA/QC)
officer visited the ELI facility in Casper, Wyoming, on March 4 and 5, 2009. The
audit was conducted to evaluate the laboratorys compliance with the ELI Quality
Assurance Program Manual. No concerns were noted during the visit.
SAMPLE PREPARATION, ANALYSES AND SECURITY
RHR
implemented and followed strict standard operating procedures as documented in
Standard Operation Procedure 006 Sample handling, packaging, shipping, and
chain of custody (2008). The Standard Operating Procedure (SOP) outlines the
preparation of environmental and waste characterization samples for shipment to
the off-site analytical laboratory, and the chain of custody procedures to
follow from the sample collection stage to the entry of results into the RHR
database.
An RHR or contract geologist monitored removal of core from the
core barrel to transportation of core to the locked storage facility adjoining
RHRs Grants geology office. Sampling was done at this facility. All logging,
sampling, and handling of core was supervised by the RHR Senior Development
Geologist, and performed by RHR contract geologists.
All samples were collected, packaged, sealed, and labelled
according to the SOP. All sample containers used for transport were checked for
the existence of external contamination. If contamination was identified, the
container was decontaminated in accordance with the applicable SOP.
All samples were packaged so as to minimize the possibility of
breakage during shipment. The shipping package was sealed with tape or locked,
so that tampering could be readily detected.
Prior to transporting the samples to the analytical laboratory
for analysis, the field geologist checked each sample for proper containment,
preservatives, if required, and labels, and verified that the correct
information was recorded on the Chain of Custody (COC) form and seals. If
discrepancies were noted, the sample documentation was corrected. Samples were
then packaged and shipped to the designated analytical laboratories. All sample
information was recorded in a sample logbook, including date and time of sample
collection, sampler name, sample location and depth interval, sample number,
sample type, and observations during sampling (e.g., temperature, wind).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-12 |
|
www.rpacan.com
|
The sampler attached a unique sample label to each sample with the date and time of sample collection, sample location and depth interval, sample number and sample type.
A COC/analytical request form was completed and accompanied all sample shipments from the field to the laboratory. Samples were shipped via a commercial carrier or transported to the analytical laboratory under COC.
Upon receipt of samples, laboratory personnel confirmed that the contents of the shipment were accurately recorded by the COC, and signed and dated the COC, indicating receipt of the samples. After the samples have been verified with the COC
documentation, custody of the samples was relinquished to the laboratory personnel.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 11-13 |
|
www.rpacan.com
|
12 DATA VERIFICATION
HISTORIC QUALITY ASSURANCE AND QUALITY CONTROL
The following summary is taken largely from Fitch (2010).
Gamma-ray logs were run by Kerr-McGee and Century Geophysical for Sections 9 and 10 and by Geoscience Associates logging trucks and Century Geophysical for Section 16. The radiometric probe method of (gamma log) analysis provides a continuous
record of mineralization with depth. The probe is calibrated with a known radioactive source, is lowered to the bottom of the drill hole, and processes and records a continuous gamma-log while being lifted up the hole. When a mineralized interval is
encountered, the probe is pulled up through the zone to determine the upper limit, lowered again, and the mineralized zone is run a second time at a less sensitive scale to better fit the plot on the log paper. All information of the second run is
recorded on the log for later computation of grade.
Each logging truck periodically made logging runs of the Atomic Energy Commission (AEC) test pit, a set of shallow holes with known concentrations and thickness of uranium. In addition to the gamma log, plots are made of the resistivity and
spontaneous-potential (SP). The resistivity and SP generate a continuous strip chart of the lithologies as the probe is lifted up the drill holes. The log plot records gamma anomalies correlated to specific footages and lithologic units directly at
the source, so there is no possibility of later mix-up of data.
The probe calibration procedure with the AEC test pit is the standard by which the uranium industry operated. The test pits were designed with similar grade and uranium mineralization common to the Grants Mineral Belt.
RHR QUALITY ASSURANCE AND QUALITY CONTROL
Quality assurance (QA) consists of evidence to demonstrate that the gamma logging and assay data has precision and accuracy within generally accepted limits for the sampling and analytical method(s) used in order to have confidence in a resource
estimate. Quality control (QC) consists of procedures used to ensure that an adequate level of quality is maintained in the process of collecting, preparing, and assaying the exploration drilling samples. In general, QA/QC programs
are designed to prevent or detect contamination and allow assaying (analytical) precision (repeatability) and accuracy to be quantified. In addition, a QA/QC program can disclose the overall sampling-assaying variability of the sampling method
itself.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-1 |
|
www.rpacan.com
|
The four RHR pilot holes and the geotechnical hole were probed by Jet West Geophysical Services, LLC (Jet West), Farmington, New Mexico. Jet West maintains a policy of regularly calibrating gamma-ray probes to determine instrument k-factor, using
the five calibration pits (cased holes) in Grand Junction, owned by the U.S. Department of Energy and maintained by Stoller Corporation (Jet West, 2007). Jet West provides a digital and graphic log with counts per second (cps) as well as %eU3O8
computed by the k-factor and other recorded calibration factors.
The QA/QC procedures undertaken by Jet West for geophysical logging of holes have been reviewed by RPA and meet industry best practices.
All sample preparation, ICP-MS, ICP-AES and radiometric analysis of the core samples was performed by ELI, Casper, Wyoming. All analysis was performed in compliance with National Environmental Laboratory Accreditation Conference (NELAC) and ELI is
certified in the NELAC program. Further, ELI practices rigorous internal Chain of Custody and QA/QC processes (www.energylab.com).
RHR did not submit blanks or standard reference samples. All QA/QC work was completed internally by the respective third party laboratories.
Duplicate samples were submitted for analysis in 2007 and are listed in Table 11-2. Two duplicate samples are insufficient to make statistical comparisons; however, the duplicate ICP sample results are within 4% of the original results and
considered acceptable.
RPA recommends implementing a QA/QC protocol for sample analysis that includes the regular submission of blanks and standards for future drill programs.
RPA is of the opinion that the QA/QC procedures undertaken to date support the integrity of the database used for Mineral Resource estimation.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-2 |
|
www.rpacan.com
|
DATA VERIFICATION 2004 TO 2008
All original data including drill hole maps, gamma-ray logs, resource estimations and other information originated from Kerr-McGee and Rio Algom, the successor for Sections 9 and 10, and Western Nuclear for Section 16. These data were provided to
Strathmore as part of the acquisition of the Roca Honda property.
Fitch conducted a detailed review of the extensive files in Strathmores warehouse in Riverton, Wyoming,from October14 to 15, 2004, and visited the property on October 16, 2004 (Fitch 2008). Over 300 boxes, file cabinets, and map files covering
the Roca Honda property as well as other projects were available for review. The files were generally complete and contained original data consisting of gamma-ray logs, mini logs, drill hole summaries, resource estimation sheets, copies of drill
hole maps, mine estimation maps, reports of mine plan, survey documents, logging truck calibration records, and a few representative cross-sections. During the site visit, a number of drill hole locations, claim posts, and the US Mineral
Survey monuments for MS2292 were examined.
A detailed review of Section 16 data continued in February and March 2006. This included drill hole maps by Rare Metals, Western Nuclear, and Kerr-McGee, reduced gamma-ray logs (scale of 1 in = 50 ft), drill data summary sheets with depths,
thickness, grade and horizon of uranium mineralization, drift survey results and color of host rock. The dataset also included a set of drill hole data sheets prepared by Kerr-McGee for Section 16 that summarized the mineralized intercepts by drill
hole, together with a rough calculation of ore reserves with the initials JWS and dated 9-25-79. These notes did not have supportive maps with block outlines and may have been preliminary evaluation notes.
Items not recovered for review, but listed in the data list, are mylar cross-sections, lithological logs, and AEC test pit logging files, which are stored at RHR field offices.
Fitch conducted a site visit from November 18 to 19, 2007, to examine core from the pilot holes and review additional files, maps, and data in the field and in the RHR regional office in Santa Fe, New Mexico. Several mineralized intervals of core
from RHR holes drilled in 2007 were examined by Fitch, who concluded that there was no apparent contamination or disturbance of core.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-3 |
|
www.rpacan.com
|
Additional analytical data for the RHR pilot holes drilled on Section 16 were received and reviewed on February 2008.
Fitch concluded that the data collected by Kerr-McGee and Western Nuclear was of high quality and prepared in a reliable manner.
RPA DATA VERIFICATION 2010 TO 2011
RPA visited the Strathmore office in Riverton, Wyoming, from March 1 to 5, 2010. During the visit, RPA reviewed historic plans and sections, geological reports, historic and recent drill hole logs, digital drill hole database, historic drill hole
summary radiometric logs and survey records, property boundary surveys, and previous resource estimates for the Project. Discussions were also held with Strathmore personnel involved in the Project.
The RPA data review included a discussion between RPA and David Fitch, author of the 2006, 2008, and 2010 NI 43-101 Technical Reports.
Patti Nakai-Lajoie, Principal Geologist with RPA and an independent QP, visited the Roca Honda property, the Grants office, and the Santa Fe office in May 2011. During the visit, she examined plans and sections, reviewed core logging and sampling
procedures, and checked a few property boundary markers and drill hole collar locations. As part of the data verification process, RPA independently measured counts per second (cps) of selected drill core samples using a hand held scintillometer,
and checked a few drill hole collars and section boundaries on the property using a hand held GPS. Results are presented in Tables 12-1 and 12-2. A few independent checks are insufficient to make statistical comparisons; however, RPAs checks
confirm the RHR drill hole locations and presence of uranium mineralization.
No significant discrepancies were identified during the verification process or the independent field data verification.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-4 |
|
www.rpacan.com
|
TABLE 12-1 INDEPENDENT SURVEY CHECK
Roca Honda
Resources LLC Roca Honda Project
|
|
UTM NAD
83 |
TRMann
State |
TRMann
State |
Surveyed |
Location |
(RPA
GPS) |
Plane (RPA
GPS) |
Plane
(RHR) |
Point |
|
Easting |
Northing |
Easting |
Northing |
Easting |
Northing |
Hole 16011 |
Section 16 |
256,220 |
3,916,432 |
2,769,084 |
1,587,580 |
2,769,092 |
1,587,588
|
Hole 16040 |
Section 16 |
256,272 |
3,916,432 |
2,769,255 |
1,587,585 |
2,769,267 |
1,587,572 |
Section corner |
Section 9 SE
corner |
256,367 |
3,916,566 |
2,769,554 |
1,588,034 |
2,769,553 |
1,588,037
|
Hole 10096 |
Section 10 |
257,518 |
3,917,310 |
2,773,259 |
1,590,582 |
2,773,263 |
1,590,582 |
Claim corner |
303, 330, 304,
331 |
257,571 |
3,917,021 |
2,773,460 |
1,589,639 |
2773,452 |
1,589,642
|
TABLE 12-2 INDEPENDENT CORE GAMMA-RAY CHECK
Roca
Honda Resources LLC Roca Honda Project
Hole |
From (ft) |
To (ft) |
CPS (RHR) |
CPS (RPA check) |
S2-Jmw-CH-07 |
1,758.0 |
1,758.3 |
100 |
60 |
S1-Jmw-CH -07 |
1,898.0 |
1,898.3 |
210 220 |
111 |
S1-Jmw-CH -07 |
1,898.0 |
1,901.0 |
110 - 220 |
105 162
|
S1-Jmw-CH -07 |
1,901.0 |
1,905.0 |
85 - 220 |
25 - 109 |
RHR DATABASE REVISIONS
All Kerr-McGee drill hole collar locations were originally
surveyed in a historic local grid coordinate system.In 2008, Thomas R. Mann and
Associates (TRMann) surveyed the Roca Honda property, which included a limited
ground survey of control points and an aerial survey, which produced aerial
imagery and surface contours. All surface data were converted into the TRMann
coordinate system, which is a modified NAD 83 State Plane New Mexico Western
Zone system (Surveying Control Inc., 2008).
Available historic records for Section 16 contained
discrepancies or had data missing for drill hole collar locations. RHR reviewed
all database records and historic aerial photographs from 1978 and determined an
appropriate location for each collar. Some Section 16 holes had recorded no
drift records and were therefore assigned no drift in the RHR database.
Some holes were removed from the RHR digital database as the
drill hole records were determined to be unreliable, either due to missing
survey data or missing geophysical log.
In August 2010, a resurvey of the property was conducted by
Land Survey Company LLC, to collect data on the Section corners, mineral
surveys, Section 11 drill hole collars, and RHR wells.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-5 |
|
www.rpacan.com
|
All section corners and mineral survey markers that were
located in the field and determined to be reliable, were surveyed. Section 11
collars marked either by a collar casing or drill hole cuttings were surveyed.
RHR wells drilled in 2007 were resurveyed.
Eleven Section 16 collars, which were marked by wooden posts or
pipes, were determined to be reliable and were surveyed. Collar locations for
the remaining Section 16 holes were calculated based on the locations of the
surveyed holes.
A detailed description of the 2010 field survey and resultant
plan map are included in the memorandum titled August 3 Field Survey
(Kapostasy 2010).
DATABASE VERIFICATION 2011
RPA checked the Vulcan
digital drill hole database against available historic records, including
Kerr-McGee drill hole summary sheets, drill hole plan maps, historic collar
survey summaries, and gamma logs. Drill hole collar locations and downhole drift
were checked for all holes drilled on Sections 9, 10, and 16. RPA checked
approximately 10% of historic drill hole records for discrepancies in lithology
and radiometric log records in the areas of the interpreted mineralized zones.
Drill logs and associated data sheets also include K-factors, dead time, hole
size, date drilled, and date logged.
RPA did not encounter any significant discrepancies with the
Sections 9 and 10 drill holes in the vicinity of modelled mineralized zones.
RPA reviewed the revised Section 16 collar locations and is of
the opinion that the surveyed drill locations are accurate. The remaining
locations were located based on an origin calculated using the surveyed holes
and coordinates given by Western Nuclear. These locations have a small level of
uncertainty associated with them as the origin used is an average and has an
error of ± 3 ft. RPA believes that this uncertainty is insignificant and does
not affect the calculated resource.
RPA recommends removing the Section 16 drill holes with no
recorded drift, from the drill hole database in the future. Drill holes in
Sections 9 and 10 with no recorded drift were removed from the database, and it
is unlikely that the Section 16 holes would not deviate. Only a few Section 16
holes have no recorded drift, and they are located away from mineralized models,
so they do not have an impact on the current resource model.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-6 |
|
www.rpacan.com
|
No significant discrepancies were identified with the lithology and assay data in the Section 16 drill holes.
RPA also checked the 2007 RHR drill hole data in the digital database against original records. No significant discrepancies were encountered. The 2011 geotechnical hole is accurately located.
Downhole gamma-ray, self-potential (SP), and resistivity logs generated on the RHR drill holes were analyzed by RHR for lithology and uranium grades. Interpreted lithology and measured uranium grades were entered and compiled with all historic drill
holes in MS Excel spreadsheets, and later imported into a Vulcan database. RHR geologists also recorded detailed descriptions of logged lithology based on visual inspection of recovered core; however, this information was not entered into the
database and was used for comparative purposes.
RPA reviewed the conversion of drill hole collar coordinates from historic to TRMann coordinates. No significant discrepancies were identified.
Descriptions of recent drilling programs, logging and sampling procedures have been well documented by RHR. No significant discrepancies were identified.
In 2012 RPA reviewed RHR original lithology logs, gamma-ray, SP, and resistivity logs. All data corresponded with respect to lithology intervals and %U3O8 grades and disequilibrium analysis, as presented in Tables 12-3 and 12-4. A detail description
of the lithology can be found in Section 7, Figure 7-5. The data presented in both tables includes a comparison between two different holes, S1-Jmw-CH-007 and S1a-Jmw-CH-007, drilled 30 ft apart.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-7 |
|
www.rpacan.com
|
TABLE 12-3 GAMMA LOG VS. CORE LITHOLOGY
Roca Honda
Resources LLC - Roca Honda Project
|
Vulcan
Database |
Core
Lithology Logs |
|
(from
gamma-ray logs) |
|
|
|
|
|
To |
|
|
To |
|
|
From (ft) |
|
Lithology |
From (ft) |
|
Lithology |
Drill Hole |
|
(ft) |
|
|
(ft) |
|
|
1,904.0 |
1,927.0 |
A |
1,896.0 |
1,924.5 |
A |
|
1,927.0 |
1,940.0 |
Aob |
1,924.5 |
1,943.1 |
Aob |
|
1,940.0 |
1,957.0 |
B1 |
1,943.1 |
1,956.4 |
B1 |
S1-Jmw -CH-07 |
1,957.0 |
1,968.0 |
B1ob |
1,956.4 |
1,964.0 |
B1ob |
(Compared to S1a- |
1,968.0 |
1,997.0 |
B2 |
1,964.0 |
2,004.0 |
B2 |
Jmw -CH- 07) |
|
|
|
|
|
|
|
1,997.0 |
2,016.0 |
B2ob |
2,004.0 |
2,018.6 |
B2ob |
|
2,016.0 |
2,064.0 |
C |
2,018.6 |
2,078.9 |
C |
|
2,064.0 |
2,070.0 |
Cob |
2,078.9 |
2,086.3 |
Cob |
|
2,070.0 |
2,084.0 |
D |
2,086.3 |
N/A |
D |
|
1,731.0 |
1,760.0 |
A |
1,728.0 |
1,757.0 |
A |
|
1,760.0 |
1,792.0 |
Aob |
1,757.0 |
1,789.0 |
Aob |
|
1,792.0 |
1,825.0 |
B1 |
1,789.0 |
N/A |
B1 |
|
1,825.0 |
1,830.0 |
B1ob |
|
|
B1ob |
S2-Jmw -CH-07 |
1,830.0 |
1,844.0 |
B2 |
N/A |
1,841.0 |
B2 |
|
1,844.0 |
1,865.0 |
B2ob |
1,841.0 |
|
B2ob |
|
1,865.0 |
1,894.0 |
C |
|
|
C |
|
1,894.0 |
1,896.0 |
Cob |
|
|
Cob |
|
1,896.0 |
1,910.0 |
D |
|
|
D |
|
1,862.0 |
1,885.0 |
A |
1,858.7 |
1,881.7 |
A |
|
1,885.0 |
1,915.0 |
Aob |
1,881.7 |
1,911.7 |
Aob |
|
1,915.0 |
1,942.0 |
B1 |
1,910.4 |
1,938.6 |
B1 |
|
1,942.0 |
1,962.0 |
B1ob |
1,938.6 |
N/A |
B1ob |
S3-Jmw -CH-07 |
1,962.0 |
1,970.0 |
B2 |
|
|
B2 |
|
1,970.0 |
1,976.0 |
B2ob |
|
|
B2ob |
|
1,976.0 |
2,014.0 |
C |
|
|
C |
|
2,014.0 |
2,016.0 |
Cob |
|
|
Cob |
|
2,016.0 |
2,022.0 |
D |
|
|
D |
|
1,708.0 |
1,752.0 |
A |
|
|
A |
|
1,752.0 |
1,779.0 |
Aob |
|
|
Aob |
|
1,779.0 |
1,794.0 |
B1 |
1,779.0 |
1,796.0 |
B1 |
|
1,794.0 |
1,796.0 |
B1ob |
1,796.0 |
1,796.5 |
B1ob |
S4-Jmw -CH-07 |
1,796.0 |
1,812.0 |
B2 |
1,796.5 |
1,816.3 |
B2 |
|
1,812.0 |
1,832.0 |
B2ob |
1,816.3 |
1,841.3 |
B2ob |
|
1,832.0 |
1,898.0 |
C |
1,841.3 |
1,898.0 |
C |
|
1,898.0 |
1,932.0 |
Cob |
1,898.0 |
1,932.0 |
Cob |
|
1,932.0 |
1,948.0 |
D |
1,932.0 |
1,953.0 |
D |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-8 |
|
www.rpacan.com
|
TABLE 12-4 GAMMA LOG VS. CORE SAMPLE ANALYSES
Roca
Honda Resources LLC - Roca Honda Project
|
Vulcan
Database |
Core
Lithology Logs |
|
(from
gamma-ray logs) |
|
|
|
|
|
|
%U3O8 |
|
|
|
|
|
To |
(gamma- |
From |
To |
%U3O8 |
Drill Hole |
From (ft) |
(ft) |
ray) |
(ft) |
(ft) |
(calc from ICP)
|
S1a-Jmw-CH-007/S1- |
|
|
|
1,884.0 |
1,885.0 |
0.000130 |
Jmw-Ch-0071 |
|
|
|
1,896.0 |
1,897.0 |
1.203 |
|
1,904.3 |
1,910.8 |
0.37 |
1,895.0 |
1,905.0 |
0.679 |
|
1,910.8 |
1,915.8 |
0 |
|
|
|
|
1,915.8 |
1,917.3 |
0.06 |
|
|
|
|
1,917.3 |
1,953.8 |
0 |
1,918.3 |
1,919.1 |
0.007 |
|
|
|
|
1,925.5 |
1,926.2 |
0.002 |
|
|
|
|
1,948.4 |
1,949.5 |
0.005 |
|
1,953.8 |
1,957.3 |
0.48 |
|
|
|
|
1,957.3 |
1,971.5 |
0 |
1,958.5 |
1,959.0 |
0.000165 |
|
1,971.5 |
1,981.0 |
0.16 |
|
|
|
|
1,981.0 |
1,983.0 |
0 |
1,981.0 |
1,982.0 |
0.002 |
|
1,983.0 |
1,984.5 |
0.08 |
1,983.5 |
1,984.5 |
1.025 |
|
1,984.5 |
1,987.8 |
0 |
|
|
|
|
1,987.8 |
1,989.8 |
0.06 |
|
|
|
|
1,989.8 |
2,073.0 |
0 |
2,013.5 |
2,014.0 |
0.001 |
|
|
|
|
2,047.0 |
2,048.0 |
0.002 |
|
2,073.0 |
2,074.5 |
0.09 |
|
|
|
|
2,074.5 |
2,108.0 |
0 |
2,090.4 |
2,091.4 |
0.001 |
S2-Jmw-CH -007 |
1,628.0 |
1,731.0 |
0 |
|
|
|
|
1,731.0 |
1,734.0 |
0.16 |
1,731.0 |
1,732.0 |
0.376 |
|
1,734.0 |
1,748.0 |
0 |
|
|
|
|
1,748.0 |
1,757.0 |
0.56 |
1,750.0 |
1,755.0 |
0.675 |
|
1,757.0 |
1,792.0 |
0 |
1,753.8 |
1,755.0 |
1.191 |
|
1,792.0 |
1,793.5 |
0.2 |
|
|
|
|
1,793.5 |
2,010.0 |
0 |
1,792.0 |
1,793.3 |
0.186 |
S3-Jmw-CH-007 |
1,795.0 |
1,925.5 |
0 |
|
|
|
|
1,925.5 |
1,932.5 |
0.02 |
1,925.5 |
1,926.6 |
0.08 |
|
1,932.5 |
1,942.5 |
0 |
|
|
|
|
1,942.5 |
1,944.5 |
0.07 |
1,942.5 |
1,944.5 |
0.024 |
|
1,944.5 |
2,068.0 |
0 |
|
|
|
S4-Jmw-CH-007 |
1,600.0 |
1,777.5 |
0 |
|
|
|
|
1,777.5 |
1,781.5 |
0.02 |
|
|
|
|
1,781.5 |
2,006.0 |
0 |
1,787.2 |
1,788.0 |
0.001 |
|
|
|
|
1,807.2 |
1,808.5 |
0.000153 |
|
|
|
|
1,847.6 |
1,848.8 |
0.0000708 |
|
|
|
|
1,882.9 |
1,884.3 |
0.0000708 |
1 Gamma-ray results taken from S1-Jmw-CH-007, core
samples taken from S1a-Jmw-CH-007
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-9 |
|
www.rpacan.com
|
K-FACTORS
RPA reviewed the logs and related
information for ten drill holes to confirm the interpretation and calculation of
grade and thickness recorded by RHR in the resource database. The review was
limited by the availability of probe logs in the full size format, and only
included holes from Section 10. The holes were drilled by Kerr-McGee over the
period from 1958 to 1979. K-factors and the identification numbers of the units
and probes used for surveying were recorded on the logs and drill summary
reports. RHR provided k-factors with corresponding probe numbers from historic
Kerr-McGee documents.
RPA did not identify any significant problems with the
interpretations and calculations and is of the opinion that the historic
k-factors are acceptable.
RPA is of the opinion that the database issues will not
significantly impact on the current resource model, and that the database is
valid and suitable to estimate Mineral Resources at the Roca Honda Project.
CONTINUITY OF MINERALIZATION
RPA conducted a
preliminary review of grade continuity for each mineralized sandstone unit.
Results indicate continuity of mineralization within each sandstone unit in both
plan and section in elongate tabular or irregular shapes. Mineralization also
occurs in various horizons within the sandstone units. Based on a minimum
cut-off of 0.1% U and six foot thickness, in general for each mineralized
sandstone unit (A, B1, B2, C, and D), 3% of the mineralization is located
adjacent to the upper sandstone boundary, 83% is located within the unit, and
14% is located adjacent to the lower boundary. Although the majority of this
high grade mineralization is located mid unit, continuity is variable perhaps
due to local controlling sedimentary features or structures. This will affect
the interpretation of continuity between holes.
Mineralization intersected in recent RHR holes aligns with and
confirms mineralization trends based on historic holes. In addition, recent
holes barren of mineralization are located in areas of barren historic holes.
Grades intersected in recent holes are comparable to, or are higher than, grades
in adjacent mineralized historic holes. Although this comparison is limited to
areas local to recent drilling, it provides additional support for the use of
historic holes for resource estimation.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-10 |
|
www.rpacan.com
|
RPA is of the opinion that although continuity of mineralization is variable, drilling confirms that local continuity exists within individual sandstone units.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 12-11 |
|
www.rpacan.com
|
13 MINERAL PROCESSING AND METALLURGICAL TESTING
There is no metallurgical testing or operational experience
that is specific to the Roca Honda Project, however, the nature of the Grants
Mineral Belt is that the Westwater Canyon uranium mineralized sand zones occur,
more or less, throughout the Ambrosia Lake District, and have yielded millions
of pounds that were locally milled using conventional uranium leaching
technology in the past. For this reason, one can draw some preliminary
conclusions regarding recovery at Roca Honda.
The districts previous production and milling experience was
incorporated into the milling assumptions for Roca Honda.
MINERALIZED SAND ZONES
There are four mineralized sand zones on the Roca Honda
property: A, B, C, and D. Table 13-1 presents the overall expected metallurgical
recovery for the four mineralized domains. The expected metallurgical recovery
presented below is +/- 1% of the initial 95% overall recovery calculation.
TABLE 13-1 METALLURGICAL RECOVERY BY ZONE
Roca
Honda Resources LLC - Roca Honda Project
|
Tons |
% of |
% |
Metallurgic |
lb U O |
% eU O |
% of |
Sand Domain |
|
|
|
|
3 8 |
3 8 |
Resource |
|
(000) |
Resource |
eU3O8 |
Recovery % |
Produced |
Produced |
Produced |
A |
497 |
14.2% |
0.358 |
92.2% |
3,281 |
0.330 |
12.5% |
B1 |
460 |
13.1% |
0.300 |
90.0% |
2,486 |
0.270 |
9.4% |
B2 |
733 |
21.0% |
0.353 |
90.0% |
4,654 |
0.317 |
17.7% |
C |
1,304 |
37.3% |
0.550 |
95.7% |
13,733 |
0.526 |
52.1% |
D |
503 |
14.4% |
0.241 |
90.0% |
2,180 |
0.217 |
8.3% |
Grand Total |
3,498 |
100.0% |
0.404 |
93.2% |
26,334 |
0.376 |
93.2% |
SW Deposit (A-B) |
1,690 |
48.3% |
0.340 |
90.7% |
10,421 |
0.308 |
39.6% |
NE Deposit (C-D) |
1,807 |
51.7% |
0.464 |
94.9% |
15,912 |
0.440 |
60.4% |
Notes:
|
1. |
The breakdown of the resource uses a 0.13% eU3O8 cut-off
grade. |
|
2. |
Values in the table are based on the 2012 Technical
Report.. RPA did not update the mine design and production schedule, which
was developed using a cut-off grade of 0.13% U 3O8. The previous work was
reviewed, and it was determined that stopes remain above the updated
cut-off grade of 0.19% U3O8. Some material below 0.19% U3O8 is included
within the stope designs, and should be considered incremental material.
|
|
3. |
Recovery percentage is assumed. |
|
4. |
Numbers may not add due to
rounding. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-1 |
|
www.rpacan.com
|
HISTORICAL METALLURGICAL TESTING
RHR provided, as part of the technical back-up for the PEA, two
reports of metallurgical test work by Kerr-McGee regarding the Lee Ranch mine
and the Marquez project. The first is a Technical Center Memorandum (TCM) No.
80011 titled Characterization of Uranium Ore from the Lee Mine, McKinley
County, New Mexico and dated August 28, 1980. This TCM deals exclusively with
the uranium mineralization in Section 17 adjacent to RHRs Section 16. The other
document is TCM-82007 dated June 30, 1982 titled Marquez Uranium Ore
Characterization Interim Report. This latter TCM addresses the uranium
recovery from the A and B Westwater Canyon sand zones with particular emphasis
on the refractory ores in the B zone of these properties (Marquez). It was
reported that the Marquez mill also completed metallurgical testing of ore from
throughout the Grants Mineral District because the Marquez mill was being
designed to be used as a toll mill. At this time, RHR is unaware of any publicly
available test data, which included mineralized material from Roca Honda. The
Juan Tafoya mill was built on the border between Section 31 and 32, Township
13N, Range 4W, Sandoval County, in the late 1970s. The Juan Tafoya mill was
designed to handle 2,200 tpd as a uranium processing mill with conventional acid
leach SX circuit, primarily for Westwater member mineralized material from the
Marquez deposit. A 1,842 foot shaft was sunk to develop the Marquez deposit.
Both mine and mill were closed in 2001 and dismantled without any mining of the
deposit.
In 2011, Lyntek Incorporated (Lyntek), then a co-author on
RPAs PEA (Nakai-Lajoie, 2012), contacted Mr. John Litz, a well-respected
metallurgical engineer with extensive uranium experience, and specifically
experience in the testing of ores at the nearby Mount Taylor mine. Lyntek
understands that the ore from the Mount Taylor mine was from C zone Westwater
Canyon sands.
TCM-80011
The Lee Ranch mine was formerly known as
the Roca Honda mine. The shaft was located in Section 17 immediately west and
adjacent to Section 16, where the proposed Roca Honda shaft would be located.
Shaft sinking was begun in 1980 with a planned depth of 2,475 ft but was terminated at a 1,475 ft depth due to low uranium prices
(Chenoweth, 1989 NMBM). The TCM-80011 report concedes that the results are at
best qualitative and not definitive and therefore are weighted appropriately in
the historical results for the district.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-2 |
|
www.rpacan.com
|
TCM-82007
The Kerr McGee report TCM-82007 addresses
the A zone ores and the refractory ore in the B zone of the Marquez project,
both from the Westwater Canyon A and B sands. The Marquez deposits are 20.6 mi
east of the Project on the eastern side of the Mount Taylor Volcanic Field.
Similar horizons of the Westwater are planned for development in the proposed
RHR plan.
MOUNT TAYLOR
Lyntek in 2011 received information from
John Litz regarding his experience with the Mount Taylor ore. It is understood
that Mount Taylor was mining primarily C sand zone ore of the Westwater Canyon
Member of the Morrison Formation. The Mount Taylor mine is approximately five
miles to the southeast of the proposed Roca Honda Section 16 shaft location. It
should be noted that the sedimentary lithologic strata appear to be consistent
between the Mount Taylor mine and the Roca Honda Project.
Table 13-2 provides a summary of the general operating
parameters of the Mount Taylor mine and an associated uranium mill that operated
in the Grants, New Mexico area, up to 1988.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-3 |
|
www.rpacan.com
|
TABLE 13-2 MOUNT TAYLOR PROCESSING DATA
Roca Honda
Resources LLC Roca Honda Project
|
|
|
H2SO4 |
NaClO3 |
|
|
Temp.pC
|
Leach |
Consumption |
Consumption |
Extraction |
Conditions |
|
Time |
(lb/st) |
(lb/st) |
(%) |
Kerr McGee processing |
54 |
3 hrs |
130 |
3.2 |
95.7 |
Conventional Agitated |
|
|
|
|
|
Leach |
|
|
|
|
|
Heap Leach Column |
Ambient |
51 days |
123 |
6-9 |
95-98 |
Leach Test Results
(1) |
|
|
|
|
|
Severe Leach Conditions |
85 |
16 hrs |
150 |
6 |
98-99 |
Laboratory Agitated |
|
|
|
|
|
Leach Test (2) |
|
|
|
|
|
Notes:
|
1. |
The sample was cured overnight with 80 lb/st H2SO4, 30
g/L H2SO4 lixiviant, added NaClO3 to SX raffinate to maintain oxidizing
conditions. Lixiviant rate 12 gpd/ft2. Uranium extraction: 95%
to 98% at 51 days . |
|
2. |
The procedure included an acid kill at 65pC for one
hour. |
The Homestake Mill used a pressurized alkaline leach circuit as
compared to the acid leach at the other mills. The recovery reported at the
Homestake Mill was 95%, while the other mills reported higher recoveries.
LEE RANCH
There were no concerns of metallurgical problems reported in
the original Roca Honda mine (now known as the Lee Ranch mine) plan report (Falk
1978). Kerr-McGee operated an acid leach mill, processing over 7,000 stpd in
Ambrosia Lake, with typical recoveries of 94% to 97%.
Kerr-McGee prepared two reports on metallurgical test work in
1980 and 1982 that discuss uranium recovery from the A and B sand zones on the
Lee Ranch (Section 17) and the Marquez Project (approximately 15 mi east of
Section 16), with particular emphasis on the refractory ores in the B zone.
The Lee Ranch mine was formerly known as the Roca Honda mine.
The shaft was located in Section 17 immediately adjacent to Section 16 where the
proposed Roca Honda shaft is located. The 1980 report concedes that the results
are at best qualitative and not definitive and therefore are weighted
appropriately in the historical results for the District.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-4 |
|
www.rpacan.com
|
The 1982 Kerr McGee report addresses the A zone ores and the
refractory ore in the B zone of the Marquez project. The Marquez project was
at the east end of the district, well away from the proposed Roca Honda shaft.
The work reported is more comprehensive than the 1980 report and is somewhat
academic. The report results are also weighted appropriately in the historical
results for the District.
Metallurgical test work was completed for Mount Taylor ore by
Mr. John Litz, a metallurgical engineer with extensive uranium experience. The
Mount Taylor mine is approximately five miles to the southeast of Section 16.
Mount Taylor was mining primarily C zone sands.
SUMMARY
Kerr-McGee metallurgical test results are
related to laboratory work completed on A and B sand zones. The A and B zone
mineralization represent 40.7% of the Roca Honda mineralization. The operational
experience (Mount Taylor) is from unspecified sand zones, but is believed to be
from C zone sands. The C zone sands represent 57.8% of the Roca Honda
mineralization. There is no data available regarding the D zone sands, but they
represent only 1.5% of the Roca Honda mineralization.
CONCLUSIONS
The metallurgical test results provided by RHR are related to
laboratory work completed by Kerr-McGee on A and B sand zones. The A and B zone
mineralization represent approximately 40.7% of the Roca Honda resource. The
operational experience (Mount Taylor and the Ambrosia Lake District) is from
unspecified sand zones, but is believed to be from C zone sands. The C zone
sands represent approximately 57.8% of the Roca Honda resource. There is no data
available regarding the D zone sands; however, they represent only 1.5% of the
Roca Honda resource.
RPA can support the conclusions of the metallurgical processes
on the basis of Kerr McGee test reports and historical data as modified with
current technology, namely:
|
|
Grind to 28 mesh; |
|
|
|
|
|
Agitated leach at 60oC for three
hours with 130 lb/st of H2SO4 and 3.5 lb/ton of NaClO3; and |
|
|
|
|
|
Uranium precipitation using ammonia.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-5 |
|
www.rpacan.com
|
RHR completed some initial metallurgical work in late 2012early 2013 on mineralized material from the 2007 core program and compared it with Mt. Taylor ore. The purpose was to see if the chemistry of the two deposits was similar enough to use
Mt. Taylor ore, which is readily available, in place of Roca Honda mineralization for future RHR metallurgical work. Once Strathmore was acquired by Energy Fuels, that work ceased. There are no plans to do additional work on Roca Honda
mineralization until RHR can drill and obtain more material post permit approval.
It is proposed that uranium recovery of 95% be used for the evaluation of processing RHR mineralized material, and the historical recoveries realized at the White Mesa Mill. Additional site specific metallurgical samples are required for testing in
order to validate the mill recoveries. For this PEA, the White Mesa Mill process and costs are based on historical processing results and methods.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 13-6 |
|
www.rpacan.com
|
14 MINERAL RESOURCE ESTIMATE
SUMMARY
For this report, RPA revisited the August 2012 Mineral Resource
estimate prepared by RPA and RHR for the Roca Honda deposit (Nakai-Lajoie et
al., 2012). Mineral Resources are constrained by wireframes generated around
individual mineralized zones. Along with a renaming of the previously
constructed uranium mineralization wireframes to match the proposed mining stope
naming convention, the update of resource estimates resulted in a two percent
decrease from the previous resource estimate. No reclassification of Mineral
Resources was made during the review.
The Qualified Person for the Roca Honda Mineral Resource
estimate review is Mark B. Mathisen, C.P.G., Senior Geologist with RPA, and the
effective date of the updated estimate is February 4, 2015.
The Roca Honda Mineral Resource estimate is summarized in Table
14-1 at a 0.19% U3O8 cut-off grade. The resource model and underlying data have
not changed since the 2012 Technical Report (Nakai-Lajoie, 2012), however, RPA
has reported Mineral Resources at a higher cut-off grade, consistent with the
production scenario proposed in this PEA.
|
|
RPA did not update the mine design and
production schedule, which was developed using a cut-off grade of 0.13%
U3O8. The previous work was reviewed, and it was determined that stopes
remain above the updated cut-off grade of 0.19% U3O8. Some material below
0.19% U3O8 is included within the stope designs, and should be considered
incremental material. |
|
|
|
|
|
In RPAs opinion, a stope re-design at a higher
cut-off grade would remove some incremental material, raise the average
production grade, and improve the cash flow, although the mine life would
be somewhat shorter. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-1 |
|
www.rpacan.com
|
TABLE 14-1 MINERAL RESOURCES FEBRUARY 4, 2015
Roca Honda Resources LLC Roca Honda Project
Classification |
Tons |
Grade |
Pounds
U3O8 |
|
(000) |
%U3O8 |
(000) |
Measured Resources |
208 |
0.477 |
1,984 |
Indicated Resources |
1,303 |
0.483 |
12,580 |
Total Measured and Indicated Resources |
1,511 |
0.482 |
14,564 |
|
|
|
|
Inferred Resources |
1,198 |
0.468 |
11,206 |
Notes:
|
1. |
CIM definitions were followed for Mineral
Resources. |
|
2. |
Mineral Resources are estimated using an undiluted
cut-off grade of 0.19% U3O8. |
|
3. |
A minimum mining thickness of six feet was used, along
with $241/ton operating cost and $65/lb U3O8 cut-off grade and 95%
recovery. |
|
4. |
Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability. |
|
5. |
Numbers may not add due to
rounding. |
The Mineral Resource estimate and classification are in
accordance with the Canadian Institute of Mining, Metallurgy and Petroleum
Definition Standards on Mineral Resources and Mineral Reserves (CIM definitions)
adopted on May 10, 2014, incorporated by reference in NI 43-101.
RPA is not aware of any known environmental, permitting, legal,
title, taxation, socioeconomic, marketing, political, or other relevant factors
that could materially affect the current resource estimate.
DATABASE
The Roca Honda drill hole database is maintained in Microsoft
Excel spreadsheets and a Vulcan Isis database. The database includes tables for
collar, survey, lithology, and mineral grades. The RHR database includes
drilling from 1966 to 2011, comprising a total of 1,158 drill holes with
2,186,472 ft of drilling at an average hole length of 1,888 ft, of which five
drill holes totalling 13,161 ft at an average hole length of 2,193 ft were
drilled by RHR in 2007 (four holes) and 2011(one hole).
Of the 1,158 surface holes, only 418 drill holes totaling
943,211 ft of drilling were used for resource estimation as some holes are
located outside of the Roca Honda property and/or have unreliable and/or unconfirmed drill hole collar
coordinates. Table 14-2 lists the number of holes and corresponding sections
included in the final resource database.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-2 |
|
www.rpacan.com
|
TABLE 14-2 RESOURCE DATABASE
Roca Honda Resources
LLC Roca Honda Uranium Project
Section |
Year |
Company |
No. of Holes Total Footage |
9 |
1966 |
Kerr-McGee |
1 |
1,790 |
|
1967 |
Kerr-McGee |
1 |
2,106 |
|
1968 |
Kerr-McGee |
1 |
1,760 |
|
1970 |
Kerr-McGee |
6 |
11,601 |
|
1971 |
Kerr-McGee |
2 |
4,296 |
|
1972 |
Kerr-McGee |
11 |
22,824 |
|
1973 |
Kerr-McGee |
71 |
144,530 |
|
1974 |
Kerr-McGee |
26 |
57,416 |
|
1975 |
Kerr-McGee |
18 |
37,684 |
|
1977 |
Kerr-McGee |
41 |
84,289 |
|
1979 |
Kerr-McGee |
1 |
2,018 |
|
1980 |
Kerr-McGee |
1 |
2,414 |
|
1981 |
Kerr-McGee |
1 |
2,200 |
|
1982 |
Kerr-McGee |
1 |
2,500 |
10 |
1967 |
Kerr-McGee |
1 |
2,233 |
|
1971 |
Kerr-McGee |
2 |
5,240 |
|
1972 |
Kerr-McGee |
1 |
2,421 |
|
1974 |
Kerr-McGee |
32 |
81,264 |
|
1975 |
Kerr-McGee |
21 |
57,293 |
|
1976 |
Kerr-McGee |
34 |
87,719 |
|
1977 |
Kerr-McGee |
72 |
183,265 |
|
1979 |
Kerr-McGee |
1 |
2,528 |
|
1980 |
Kerr-McGee |
1 |
2,522 |
|
1981 |
Kerr-McGee |
1 |
2,530 |
|
1982 |
Kerr-McGee |
1 |
2,200 |
11 |
|
Conoco |
4 |
10,848 |
16 |
1968 |
Western Nuclear |
10 |
18,725 |
|
1969 |
Western Nuclear |
14 |
25,315 |
|
1970 |
Western Nuclear |
36 |
71,415 |
|
2011
|
RHR
|
5
|
10,265 |
Grand Total |
|
|
418 |
943,211
|
RPA notes that drill holes outside the Roca Honda property in
Sections 8, 11, and 17 were included in the database. RHR purchased drill hole
data from Kerr McGee on Sections 8 and 17, which provide supporting information
on the continuity of uranium mineralization beyond the property boundaries. Four
drill holes on Section 11 were acquired from the public domain records.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-3 |
|
www.rpacan.com
|
RPA audited drill hole records to ensure that the grade,
thickness, elevation, and location of mineralization used in preparing the
current resource estimate correspond to mineralization. The quality control
measures and the data verification procedures included the following:
|
|
Checked for duplicate drill hole traces,
twinned holes, etc. |
|
|
|
|
|
Checked collar locations for zero/extreme
values. |
|
|
|
|
|
Checked that drill hole collar coordinates and
drill hole deviations were entered in the database, displayed in plan
views and sections, and visually compared to relative locations of the
holes. |
|
|
|
|
|
Checked assays in database for missing
intervals, long intervals, extreme high values, blank/zero values,
reasonable minimum/maximum values. |
|
|
|
|
|
Ran validity report to check for out-of-range
values, missing intervals, overlapping intervals, etc.
|
No geophysical logs were available for this review.
The resource database is considered by RPA to be sufficiently
reliable for grade modelling and use for Mineral Resource estimation. The
resource model and underlying data have not changed; however, RPA has reported
Mineral Resources at a higher cut-off grade, consistent with the production
scenario proposed in this PEA.
LITHOLOGY WIREFRAME MODELS
RHR generated lithology wireframe models for the hangingwall
and footwall of the Jmw A, Jmw B1, Jmw B2, Jmw C, and Jmw D sand units across
the Roca Honda property. Integrated stratigraphic grid models based on modelling
algorithms were generated in Vulcan for lithology surface wireframes using the
drill hole intervals corresponding to the respective sand unit horizons.
RPA reviewed the lithology surfaces and noted that the
modelling algorithms do not always adhere to the sand unit intervals in the
drill holes. Although there are no overall significant discrepancies between the
models and the logged lithology intervals, RPA for this report revised the
lithology surfaces using Leapfrog software to include the interbedded clay units
separating the individual A through D sands. This new modelling shows that the
previously reported mineralization that is located adjacent to, but
outside the major sand units exists across the contacts between the interbedded
clays and overlying sand units.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-4 |
|
www.rpacan.com
|
MINERALIZATION WIREFRAME MODELS
The Roca Honda property was subdivided into two modelling zones
based on sand unit and mineralization extents. The Northeast zone includes
mineralization in the C and D sands in Section 10. The Southwest zone includes
mineralization in the A and B sand units crossing the Section 9, 10, and 16
boundaries. Block model and modelling boundaries are illustrated in Figure 14-1.
All mineralization surfaces were generated by RPA in ARANZ Geo
Limiteds Leapfrog version 2.1.1.209. Mineralized drill hole intervals were
selected by sand unit, with a minimum thickness of six feet, a minimum grade of
0.1% U3O8, and minimum grade x thickness of 0.6 . Additional intervals below the
minimum thickness and grade were selected in holes adjacent to the mineralized
holes; to restrict the extent of the wireframe models.
Surfaces were generated for the hanging wall and footwall of
mineralized zones within each sand unit. These surfaces were used to create
solids for each mineralized zone.
A 0.10% eU3O8 grade contour was created around mineralized
intervals with a minimum thickness of six feet in plan view. Solids were
generated from the grade contours and used as boundaries to cookie cut
individual mineralization solids.
For this report, RPA conducted audits of the wireframes to
ensure that the wireframes used in preparing the current resource estimate
correspond to the reported mineralization. The quality control measures and the
data verification procedures included the following:
|
|
Checked for overlapping wireframes to determine
possible double counting. |
|
|
|
|
|
Checked mineralization/wireframe extensions
beyond last holes to determine if they are reasonable and consistent.
|
|
|
|
|
|
Compared basic statistics of assays within
wireframes with basic statistics of composites within wireframes for both
uncut and cut values. |
|
|
|
|
|
Checked for capping of extreme values and
effect of coefficient of variation. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-5 |
|
www.rpacan.com
|
|
|
Checked for reasonable compositing intervals.
|
|
|
|
|
|
Checked that composite intervals start and stop
at wireframe boundaries. |
|
|
|
|
|
Checked that assigned composite rock type
coding is consistent with intersected wireframe coding. |
|
|
|
|
|
Checked that blocks were classified as
Measured, Indicated, and Inferred. |
|
|
|
|
|
Validated the solids for closure and consistent
topology, and checked that the triangles intersect properly (crossing).
Any issues found were corrected with the appropriate Vulcan utility to
ensure accurate volume and grade calculations. |
The wireframes are considered by RPA to be sufficiently
reliable for grade modelling and use for Mineral Resource estimation.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-6 |
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-7
|
|
www.rpacan.com
|
RADIOMETRIC STATISTICS
Roca Honda mineralization wireframes contain a total of 197
mineralization intercepts from 105 drill holes. Grade statistics are shown in
Table 14-3.
TABLE 14-3 GRADE STATISTICS
Roca Honda Resources,
LLC Roca Honda Uranium Project
Measurement |
C1 |
C2 |
C3 |
C4 |
C5 |
C2_2_1 |
C2_2_2 |
C2_2_3 |
Minimum Grade (%U3O8) |
0.00 |
0.28 |
0.00 |
0.00 |
0.06 |
0.08 |
0.12 |
0.00 |
25th Percentile (%U3O8) |
0.043 |
0.430 |
0.095 |
0.185 |
0.073 |
0.088 |
0.120 |
0.000 |
Median Grade (%U3O8) |
0.280 |
0.880 |
0.140 |
0.315 |
0.110 |
0.110 |
0.120 |
0.120 |
75th Percentile (%U3O8) |
0.670 |
1.980 |
0.170 |
0.600 |
0.163 |
0.110 |
0.120 |
0.240 |
Maximum Grade (%U3O8) |
1.620 |
2.350 |
1.030 |
1.470 |
0.180 |
0.110 |
0.120 |
0.240 |
Mean Grade (%U3O8) |
0.470 |
1.17 |
0.192 |
0.43 |
0.117 |
0.100 |
0.120 |
0.120 |
Standard Deviation (%U3O8)
|
0.530 |
0.870 |
0.259 |
0.366 |
0.049 |
0.014 |
0.000 |
0.120 |
Co-efficient of Variation |
1.13 |
0.74 |
1.35 |
0.85 |
0.42 |
0.14 |
0.00 |
1.00 |
Number of Samples |
7 |
3 |
12 |
20 |
3 |
3 |
1 |
2
|
GRADE CAPPING
All mineralization intercepts located inside the mineralization
wireframes were used together to determine an appropriate capping level for all
mineralized zones. Mineralization intercept data were analyzed using a
combination of histogram, probability, percentile, and cutting curve plots. All
mineralization intercepts flagged inside the mineralization wireframes are
plotted in Figure 14-2 through 14-4. Although drill hole number 10124 contains a
high grade intercept of 2.35% eU3O8, located in the C
sand, it is located adjacent to and along the same horizon as other high grade
mineralization intercepts.
RPA is of the opinion that high grade capping is not required
at this time; however, capping should be reviewed once additional data have been
collected.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-8
|
|
www.rpacan.com
|
FIGURE 14-2 HISTOGRAM PLOT
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-9
|
|
www.rpacan.com
|
FIGURE 14-3 LOG NORMAL PROBABILITY PLOT
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-10
|
|
www.rpacan.com
|
FIGURE 14-4 CUMULATIVE FREQUENCY PLOT
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-11
|
|
www.rpacan.com
|
SAMPLE COMPOSITES
Run-length composites were generated at six foot lengths inside
the domain wireframes and flagged by mineralization domain. These accounted for
a small percentage of the total composites and will not significantly affect the
resource estimate. RPA recommends reviewing and removing all small length
composites in future resource composite databases.
Two composite databases were generated for resource estimation,
rhr_sw_6ft.cmp.isis for the A and B zones and rhr_ne_6ft_.cmp.isis for the C and
D zones. Detailed statistics for the final composite database are presented in
Table 14-4.
TABLE 14-4 MINERALIZED WIREFRAME COMPOSITE STATISTICS
Roca Honda Resources, LLC Roca Honda Uranium Project
Measurement |
A1_04 |
A1_03 |
A1_02 |
A1_01 |
A1_05 |
A1_06 |
B1_05 |
B1_04 |
Minimum Grade
(%U3O8) |
0.59 |
0.00 |
0.23 |
0.16 |
0.17 |
0.12 |
0.00 |
0.00 |
25th Percentile (%U3O8) |
0.590 |
0.000 |
0.231 |
0.232 |
0.170 |
0.120 |
0.285 |
0.030 |
Median Grade
(%U3O8) |
0.590 |
0.245 |
0.231 |
0.336 |
0.170 |
0.120 |
0.475 |
0.157 |
75th Percentile (%U3O8) |
0.590 |
0.560 |
0.231 |
0.405 |
0.170 |
0.120 |
0.550 |
0.217 |
Maximum Grade
(%U3O8) |
0.590 |
0.950 |
0.231 |
0.439 |
0.170 |
0.120 |
0.850 |
0.300 |
Mean Grade (%U3O8) |
0.590 |
0.310 |
0.231 |
0.318 |
0.170 |
0.120 |
0.434 |
0.145 |
Standard
Deviation (%U3O8) |
|
0.284 |
|
0.103 |
|
|
0.243 |
0.094 |
Co-efficient of Variation |
|
0.91 |
|
0.32 |
|
|
0.56 |
0.65 |
Number of
Samples |
1 |
24 |
1 |
4 |
1 |
1 |
8 |
10
|
|
B1_06_ |
|
|
|
|
|
B1_09_ |
|
|
S_01- |
|
B1_07_ |
|
|
|
S_01- |
|
Measurement |
03 |
B1_08 |
S_01 |
B1_02 |
B1_01_S |
B1_10 |
02 |
B1_050 |
Minimum Grade
(%U3O8) |
0.00 |
0.57 |
0.13 |
0.00 |
0.65 |
0.44 |
0.00 |
0.12 |
25th Percentile (%U3O8) |
0.000 |
0.570 |
0.130 |
0.195 |
0.650 |
0.440 |
0.073 |
0.121 |
Median Grade
(%U3O8) |
0.185 |
0.570 |
0.520 |
0.390 |
0.650 |
0.440 |
0.290 |
0.218 |
75th Percentile (%U3O8) |
0.700 |
0.570 |
0.961 |
0.440 |
0.650 |
0.440 |
0.600 |
0.280 |
Maximum Grade
(%U3O8) |
0.730 |
0.570 |
0.910 |
0.490 |
0.650 |
0.440 |
0.700 |
0.480 |
Mean Grade (%U3O8) |
0.300 |
0.570 |
0.520 |
0.318 |
0.650 |
0.440 |
0.330 |
0.240 |
Standard
Deviation (%U3O8) |
0.306 |
|
0.390 |
0.187 |
|
|
0.287 |
0.121 |
Co-efficient of Variation |
1.02 |
|
0.75 |
0.59 |
|
|
0.87 |
0.51 |
Number of
Samples |
6 |
1 |
2 |
4 |
1 |
1 |
3 |
6
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-12
|
|
www.rpacan.com
|
Measurement |
B1_11 |
B2_04 |
B2_09 |
B2_01 |
B2_03 |
B2_02 |
B2_05 |
B2_06 |
Minimum Grade
(%U3O8) |
0.66 |
0.00 |
0.00 |
0.02 |
0.26 |
0.16 |
0.36 |
0.00 |
25th Percentile (%U3O8) |
0.660 |
0.085 |
0.025 |
0.125 |
0.261 |
0.206 |
0.360 |
0.100 |
Median Grade
(%U3O8) |
0.660 |
0.370 |
0.100 |
0.440 |
0.261 |
0.263 |
0.800 |
0.205 |
75th Percentile (%U3O8) |
0.660 |
0.550 |
0.235 |
0.628 |
0.261 |
0.310 |
1.240 |
0.315 |
Maximum Grade
(%U3O8) |
0.660 |
1.180 |
0.280 |
0.690 |
0.261 |
0.357 |
1.240 |
0.420 |
Mean Grade (%U3O8) |
0.660 |
0.379 |
0.127 |
0.383 |
0.261 |
0.260 |
0.800 |
0.208 |
Standard
Deviation (%U3O8) |
|
0.316 |
0.116 |
0.276 |
|
0.064 |
0.440 |
0.136 |
Co-efficient of Variation |
|
0.83 |
0.91 |
0.72 |
|
0.25 |
0.55 |
0.65 |
Number of
Samples |
1 |
44 |
3 |
3 |
1 |
6 |
2 |
8
|
Measurement |
B2_10 |
B2_08 |
C1 |
C2 |
C3 |
C4 |
C5 |
C2_2_1 |
Minimum Grade
(%U3O8) |
0.00 |
0.40 |
0.00 |
0.28 |
0.00 |
0.00 |
0.06 |
0.08 |
25th Percentile (%U3O8) |
0.045 |
0.400 |
0.046 |
0.430 |
0.095 |
0.185 |
0.073 |
0.088 |
Median Grade
(%U3O8) |
0.180 |
0.400 |
0.280 |
0.880 |
0.140 |
0.315 |
0.110 |
0.110 |
75th Percentile (%U3O8) |
0.375 |
0.400 |
0.670 |
1.980 |
0.170 |
0.600 |
0.163 |
0.110 |
Maximum Grade
(%U3O8) |
0.440 |
0.400 |
1.620 |
2.350 |
1.030 |
1.470 |
0.180 |
0.110 |
Mean Grade (%U3O8) |
0.207 |
0.400 |
0.470 |
1.170 |
0.192 |
0.430 |
0.117 |
0.100 |
Standard
Deviation (%U3O8) |
0.180 |
|
0.530 |
0.870 |
0.259 |
0.366 |
0.049 |
0.014 |
Co-efficient of Variation |
0.87 |
|
1.13 |
0.74 |
1.35 |
0.85 |
0.42 |
0.14 |
Number of
Samples |
3 |
1 |
7 |
3 |
12 |
20 |
3 |
3
|
Measurement |
C2_2_2 |
C2_2_3 |
D1_03 |
D1_01-02 |
D1_04 |
D1_05 |
|
|
Minimum Grade (%U3O8) |
0.12 |
0.00 |
0.14 |
0.05 |
0.16 |
0.00 |
|
|
25th Percentile (%U3O8) |
0.120 |
0.000 |
0.140 |
0.118 |
0.170 |
0.110 |
|
|
Median Grade (%U3O8) |
0.120 |
0.120 |
0.200 |
0.190 |
0.200 |
0.135 |
|
|
75th Percentile (%U3O8) |
0.120 |
0.240 |
0.260 |
0.290 |
0.230 |
0.160 |
|
|
Maximum Grade (%U3O8) |
0.120 |
0.240 |
0.260 |
0.550 |
0.240 |
0.490 |
|
|
Mean Grade (%U3O8) |
0.120 |
0.120 |
2.000 |
0.216 |
0.200 |
0.172 |
|
|
Standard Deviation (%U3O8)
|
|
0.120 |
0.060 |
0.130 |
0.030 |
0.150 |
|
|
Co-efficient of Variation |
|
1.00 |
0.30 |
0.60 |
0.16 |
0.88 |
|
|
Number of Samples |
1 |
2 |
2 |
13 |
3 |
6
|
|
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-13
|
|
www.rpacan.com
|
BLOCK MODEL PARAMETERS
Two Roca Honda non-rotated block models were generated in
Vulcan. The NE_Ore_Body.bmf includes mineralization in the C and D sand units.
The SW_Ore_Body.bmf includes mineralization in the A, B1, and B2 sand units.
Parent blocks are 50 ft (x) by 50 ft (y) by 30 ft (z) in size.
Blocks inside mineralization wireframes were limited to a maximum of 10 ft (x)
by 10 ft (y) by 6 ft (z) with one foot by one foot by one foot sub-blocks
generated along mineralization domain wireframe boundaries. Block model extents
are listed in Table 14-5.
TABLE 14-5 BLOCK MODEL EXTENTS
Roca Honda
Resources LLC Roca Honda Project
|
Minimum |
Maximum |
Minimum |
Maximum |
Minimum |
Maximum |
Block Model |
Easting |
Easting |
Northing |
Northing |
Elevation |
Elevation |
|
(E) |
(E) |
(Y) |
(Y) |
(Z) |
(Z) |
NE_Ore_Body |
2,771,110 |
2,774,960 |
1,588,750 |
1,592,500 |
4,480 |
5,230 |
SW_Ore_Body |
2,765,970 |
2,770,670 |
1,586,830 |
1,589,930 |
5,060 |
5,540
|
Resource model boundaries extend beyond the Roca Honda property
in order to include data in drill holes located outside the property boundaries,
however, only Mineral Resources located on the property are reported.
DENSITY
No records of sampling for bulk density determinations were
found from work performed prior to RHRs recent core drilling project. Fitch
assumed a tonnage factor of 15 ft3/st for the June 30, 2010 resource
estimate (Fitch 2010). This is the typical tonnage factor used by most operators
including Kerr-McGee in the Ambrosia Lake subdistrict and the Mt. Taylor
deposit, for mineralized intervals in the Westwater sandstone unit. This tonnage
factor was derived by the AEC and the major operators from years of actual
mining and milling based on over 300 million pounds of U3O8 that was produced in
the Ambrosia Lake subdistrict. The recently completed density determinations by
RHR of 11 core samples from the four pilot holes S1-Jmw-CH-07, S2, S3, and S4
yield an average tonnage factor of 15.9 ft3/st for mostly barren
sandstone of the Westwater Canyon Member (Table 14-6). One sample, RH07-0009 is
from a mineralized interval and has a tonnage factor less than (i.e. density
greater than) 15 ft3/st.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-14
|
|
www.rpacan.com
|
Fitch (2008) recommended carrying out density determination of
the remaining core samples containing uranium mineralization to better
characterize the specific gravity for subsequent resourceestimations. RPA
concurs with this recommendation, but suggests additional density determinations
should be carried out using mineralized material, to confirm and support future
resource estimates.
TABLE 14-6 DENSITY DETERMINATION OF CORE SAMPLES
Roca Honda Resources LLC Roca Honda Project
|
|
|
|
|
|
|
Dry Bulk |
Tonnage |
Wet Bulk |
|
|
From |
To |
Thickness |
|
Sand |
Density |
Factor |
Density |
Sample ID |
DHID |
(ft) |
(ft) |
(ft) |
Lab |
unit |
(g/cm3) |
(ft3/st) |
(g/cm3) |
RH07-0017 |
S1-Jmw-CH-07
|
1,919.1 |
1,919.9 |
0.8 |
DBS&A |
Jmw A |
1.81 |
17.7 |
2.05 |
RH07-0018 |
S1-Jmw-CH-07 |
1,947.5 |
1,948.4 |
0.9 |
DBS&A |
Jmw B1 |
1.88 |
17.0 |
2.12 |
RH07-0019 |
S1-Jmw-CH-07
|
2,089.3 |
2,090.4 |
1.1 |
DBS&A |
Jmw D |
2.04 |
15.7 |
2.23 |
RH07-0009 |
S2-Jmw-CH-07 |
1,762.0 |
1,762.8 |
0.8 |
DBS&A |
Jmw A |
2.52 |
12.7 |
2.56 |
RH07-0010 |
S2-Jmw-CH-07
|
1,801.0 |
1,802.0 |
1.0 |
DBS&A |
Jmw B1 |
2.04 |
15.7 |
2.26 |
RH07-0015 |
S3-Jmw-CH-07 |
1,928.3 |
1,929.3 |
1.0 |
DBS&A |
Jmw B2 |
2.01 |
15.9 |
2.25 |
RH07-0016 |
S3-Jmw-CH-07
|
2,025.4 |
2,026.3 |
0.9 |
DBS&A |
Jmw D |
1.89 |
16.9 |
2.15 |
RH07-0001 |
S4-Jmw-CH-07 |
1,808.9 |
1,809.7 |
0.8 |
DBS&A |
Jmw B2 |
2.09 |
15.3 |
2.27 |
RH07-0002 |
S4-Jmw-CH-07
|
1,840.0 |
1,841.0 |
1.0 |
DBS&A |
Jmw C |
2.04 |
15.7 |
2.22 |
RH07-0003 |
S4-Jmw-CH-07 |
1,858.3 |
1,859.1 |
0.8 |
DBS&A |
Jmw C |
1.84 |
17.4 |
2.13 |
RH07-0004 |
S4-Jmw-CH-07 |
1,871.0 |
1,872.0 |
1.0 |
DBS&A |
Jmw D |
2.17 |
14.7 |
2.33 |
Average |
|
|
|
|
|
|
2.03 |
15.9 |
2.23
|
Notes:
|
1. |
Analyses by Daniel B. Stephens and Associates, Inc.,
Albuquerque, New Mexico. |
|
2. |
Tonnage Factor (Cubic Feet/Short Ton) calculated from
2,000 lb/(specific gravity x 62.43 lb/ft3). |
|
3. |
Sample RH07-0009 is from a mineralized interval
corresponding to 1% U 3O8. |
GRADE ESTIMATION
Block grades were estimated using the Inverse Distance Cubed
(ID3) method. Domain models were used as hard boundaries to limit the
extent of influence of composite grades within the domains.
Suitable variograms could not be generated for individual or
combined domain models due to the small number of contained sample composites.
Search ranges were determined visually based on continuity of mineralization and
drill hole spacing.
Search directions were determined visually for each domain.
Isotropic search ranges in the major and semi-major directions following the
trend of individual domain models were applied.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-15
|
|
www.rpacan.com
|
Minor search ranges were also determined visually and were
shorter. Search directions and trends are listed in Table 14-7.
TABLE 14-7 VULCAN DOMAIN SEARCH PARAMETERS
Roca
Honda Resources LLC Roca Honda Project
Domain |
General
Trend |
|
Vulcan
Rotation |
Model |
Azimuth (°) |
Dip (°) |
Z rotation |
Y rotation |
X rotation |
A1 |
10 |
-5.5E |
100 |
-5.5 |
0 |
A2 |
10 |
-4.0E |
100 |
-4.0 |
0 |
A3 |
10 |
-4.5E |
100 |
-4.5 |
0 |
A4 |
10 |
-7.0E |
100 |
-7.0 |
0 |
A5 |
10 |
-11.0E |
100 |
-11.0 |
0 |
A6 |
10 |
-15.0E |
100 |
-15.0 |
0 |
B1_1 |
10 |
-8.0E |
100 |
-8.0 |
0 |
B1_2 |
10 |
-5.0E |
100 |
-5.0 |
0 |
B1_3 |
10 |
-5.0E |
100 |
-5.0 |
0 |
B1_4 |
10 |
-3.5E |
100 |
-3.5 |
0 |
B1_5 |
10 |
-2.5E |
100 |
-2.5 |
0 |
B1_6 |
10 |
-7.5E |
100 |
-7.5 |
0 |
B1_7 |
10 |
-16.0E |
100 |
-16.0 |
0 |
B1_8 |
10 |
-5.0E |
100 |
-5.0 |
0 |
B1_9 |
10 |
-15.0E |
100 |
-15.0 |
0 |
B1_10 |
10 |
-7.0E |
100 |
-7.0 |
0 |
B1_11 |
10 |
-10.0E |
100 |
-10.0 |
0 |
B2_1 |
10 |
-6.0E |
100 |
-6.0 |
0 |
B2_2 |
10 |
-7.0E |
100 |
-7.0 |
0 |
B2_3 |
10 |
-7.0E |
100 |
-7.0 |
0 |
B2_4 |
10 |
-6.5E |
100 |
-6.5 |
0 |
B2_5 |
10 |
-4.5E |
100 |
-4.5 |
0 |
B2_6 |
10 |
-2.0W |
100 |
2.0 |
0 |
B2_7 |
10 |
-4.0E |
100 |
-4.0 |
0 |
B2_8 |
10 |
-3.0E |
100 |
-3.0 |
0 |
B2_2_1 |
10 |
-16.0E |
100 |
-16.0 |
0 |
C1 |
15 |
-9.0E |
105 |
-9.0 |
0 |
C2 |
40 |
-12.0E |
130 |
-12.0 |
0 |
C3 |
10 |
-70.0E |
100 |
-7.0 |
0 |
C4 |
40 |
-10.0E |
130 |
-10.0 |
0 |
C5 |
40 |
-8.0E |
130 |
-8.0 |
0 |
C2_2_1 |
10 |
-9.0E |
100 |
-9.0 |
0 |
C2_2_2 |
40 |
-13.0E |
130 |
-13.0 |
0 |
C2_2_3 |
40 |
-9.0E |
130 |
-9.0 |
0 |
D1 |
10 |
-7.0E |
100 |
-7.0 |
0 |
D2 |
40 |
-7.0E |
100 |
-7.0 |
0 |
D3 |
10 |
-8.0E |
100 |
-8.0 |
0 |
D4 |
40 |
-7.0E |
130 |
-7.0 |
0 |
Two grade estimation passes were run with the major,
semi-major, and minor search ranges increased by a factor of 1.5 in the second
estimation run. Estimation flags were stored for each estimation run based on increasing search distances. The
number of samples and holes were stored in separate block variables for use in
determining resource classification.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-16
|
|
www.rpacan.com
|
Octant restrictions were not enforced in order to preserve
local grades. Only the closest composites to block centroids (adhering to
defined trends) were used. Grade estimation parameters are listed in Table 14-8.
TABLE 14-8 GRADE ESTIMATION PARAMETERS
Roca Honda
Resources LLC Roca Honda Project
|
|
|
Search Ranges |
|
Number of Samples per
Estimate |
|
|
Major |
Semi- |
|
|
|
|
Estimation |
Wireframe |
Axis |
major |
Minor |
Min. samples |
Max samples |
Max sample |
Run |
Domain |
(ft) |
Axis (ft) |
Axis (ft) |
per estimate |
per estimate |
per drill hole |
1 |
All C, D |
600 |
200 |
50.0 |
1 |
3 |
1 |
1 |
All A, B1, B2 |
600 |
200 |
25.0
|
1 |
3 |
1 |
2 |
All C, D |
900 |
300 |
75.0 |
1 |
3 |
1 |
2 |
All A, B1, B2 |
900 |
300 |
37.5
|
1 |
3 |
1 |
3 |
A1, B1_1, C1 |
1,350 |
450 |
112.5 |
1 |
3 |
1 |
BLOCK GRADE VALIDATION
Visual validation comparing mineralization intercepts and
composite grades to block grade estimates showed reasonable correlation with no
significant overestimation or overextended influence of high grades apparent. A
vertical longitudinal section through the Northeast deposit model is presented
in Figure 14-5.
Final block grades were compared to nearest neighbor block
grades by domain. Nearest neighbor grade estimates were run with run-length
compositesgenerated acrossthe thickness of the mineralization models. The
comparison showed good correlation with less than 10% difference in average
grade for most domains. A few mineralized sand wireframe domains showed larger
grade differences. B2_05 had higher average nearest neighbor grades due to
widely spaced high grade composites influencing a higher number of blocks.
B1_09_S_01-02 contained only one hole, with a higher run-length composite grade
compared to lower grade six-foot composites.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-17
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-18
|
|
www.rpacan.com
|
No significant discrepancies were identified with the block
grade validation. The resource model and underlying data have not changed,
however, RPA has reported Mineral Resources at a higher cut-off grade,
consistent with the production scenario proposed in this PEA.
RESOURCE CLASSIFICATION
The CIM (2014) definitions are based on the level of confidence
in the geological information available, the quality and quantity of data
available, and the interpretation of the data and information. Key concepts are
continuity of mineralized zones and grade within the zones.
A Measured Mineral Resource is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape, and
physical characteristics are estimated with confidence sufficient to allow
the application of Modifying Factors to support detailed mine planning and
final evaluation of the economic viability of the deposit. Geological
evidence is derived from detailed and reliable exploration, sampling and
testing and is sufficient to confirm geological and grade or quality
continuity between points of observation. |
|
An Indicated Mineral Resource is that part of a Mineral
Resource for which quantity, grade or quality, densities, shape and
physical characteristics are estimated with sufficient confidence to allow
the application of Modifying Factors in sufficient detail to support mine
planning and evaluation of the economic viability of the deposit.
Geological evidence is derived from adequately detailed and reliable
exploration, sampling and testing and is sufficient to assume geological
and grade or quality continuity between points of observation. |
|
An Inferred Mineral Resource is that part of a Mineral
Resource or which quantity and grade or quality are estimated on the basis
of limited geological evidence and sampling. Geological evidence is
sufficient to imply but not verify geological and grade or quality
continuity. |
Roca Honda resource classification within mineralization
domains is primarily based on drill hole spacing and continuity of grade, and
was manually completed after review of the geology and mineralization. Blocks
estimated by drill holes with a maximum spacing of approximately 100 ft and well
established geological and grade continuity were classified as Measured
Resources. Blocks estimated by drill holes with a maximum spacing of
approximately 200 ft and sufficient geological and grade continuity were classified
as Indicated Resources. Manual adjustments were made to eliminate the unusual
artifacts generated from the estimation passes.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-19
|
|
www.rpacan.com
|
Inferred Resources have been defined by the wide spacing of
drill holes and resultant uncertainty in geological and grade continuity.
Figures 14-6 to 14-10 illustrate the Mineral Resource
classification by domain, within the four separate sand units.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-20
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-21
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-22
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-23
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-24
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-25
|
|
www.rpacan.com
|
MINERAL RESOURCE ESTIMATE
The Roca Honda Mineral Resource estimate is summarized in Table
14-9 by domain at a 0.19% U3O8 cut-off grade.
Assumptions used in the determination of a 0.19% U3O8 cut-off
grade are:
|
|
Total operating cost (mining, G&A,
processing) of US$241 per short ton; |
|
|
|
|
|
Royalty cost of 5% (only on Section 16); |
|
|
|
|
|
Process recovery of 95%; and |
|
|
|
|
|
Uranium price of US$65.00 per pound.
|
The resource model and underlying data have not changed,
however, RPA has reported Mineral Resources at a higher cut-off grade,
consistent with the production scenario proposed in this PEA.
TABLE 14-9 MINERAL RESOURCE ESTIMATE AT FEBRUARY 4, 2015
Roca Honda Resources LLC Roca Honda Project
0.19% Cut-off
U3O8 |
Measured
Resources |
Indicated
Resources |
Inferred
Resources |
Mineralized Sand |
Tons |
% eU3O8 |
lb
U3O8 |
Tons |
% eU3O8 |
lb
U3O8 |
Tons |
% eU3O8 |
lb
U3O8 |
Domain |
(000) |
(000) |
(000) |
(000) |
(000) |
(000) |
A1_01 |
10 |
0.319 |
65 |
36 |
0.305 |
223 |
47 |
0.279 |
264 |
A1_02 |
|
|
|
|
|
|
21 |
0.192 |
81 |
A1_03 |
3 |
0.514 |
33 |
139 |
0.451 |
1,251 |
153 |
0.445 |
1,361 |
A1_04 |
|
|
|
|
|
|
14 |
0.197 |
55 |
A1_05 |
|
|
|
|
|
|
|
|
|
A1_06 |
|
|
|
|
|
|
|
|
|
A-Sand Subtotal |
13 |
0.365 |
98 |
175 |
0.420 |
1,474 |
235 |
0.374 |
1,761
|
B1_01_S |
|
|
|
|
|
|
|
|
|
B1_02 |
|
|
|
15 |
0.305 |
91 |
|
|
|
B1_03_S_01-02 |
14 |
0.193 |
53 |
41 |
0.257 |
211 |
|
|
|
B1_04 |
|
|
|
|
|
|
|
0.000 |
|
B1_05 |
|
|
|
41 |
0.357 |
294 |
136 |
0.463 |
1,260 |
B1_06_S_01-03 |
|
|
|
12 |
0.239 |
58 |
|
|
|
B1_07_S_01 |
4 |
0.333 |
27 |
13 |
0.317 |
84 |
|
|
|
B1_08 |
|
|
|
|
|
|
|
0.000 |
|
B1_09_S_01-02 |
|
|
|
|
|
|
13 |
0.537 |
140 |
B1_10 |
|
|
|
|
|
|
|
|
|
B1_11 |
|
|
|
|
|
|
|
|
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-26
|
|
www.rpacan.com
|
0.19% Cut-off
U3O8 |
Measured
Resources |
Indicated
Resources |
Inferred
Resources |
Mineralized Sand |
Tons |
% eU3O8 |
lb
U3O8 |
Tons |
% eU3O8 |
lb
U3O8 |
Tons |
% eU3O8 |
lb
U3O8 |
Domain |
(000) |
(000) |
(000) |
(000) |
(000) |
(000) |
B1-Sand Subtotal |
4 |
0.332 |
27 |
122 |
0.301 |
737 |
149 |
0.469 |
1,400
|
B2_01 |
|
|
|
14 |
0.322 |
92 |
37 |
0.334 |
245 |
B2_02 |
21 |
0.294 |
121 |
61 |
0.283 |
343 |
29 |
0.256 |
147 |
B2_03 |
|
|
|
|
|
|
59 |
0.261 |
310 |
B2_04 |
52 |
0.483 |
506 |
281 |
0.446 |
2,504 |
|
|
|
B2_07 |
|
|
|
0.124 |
0.232 |
0.577 |
|
|
|
B2_05 |
5 |
0.716 |
69 |
11 |
0.745 |
167 |
14 |
0.589 |
168 |
B2_06 |
13 |
0.266 |
70 |
3 |
0.242 |
15 |
|
|
|
B2_08 |
|
|
|
|
|
|
|
|
|
B2_09 |
|
|
|
|
|
|
|
|
|
B2_10 |
|
|
|
|
|
|
2 |
0.395 |
17 |
B2-Sand Subtotal |
91 |
0.421 |
766 |
370 |
0.422 |
3,120 |
141 |
0.314 |
887 |
C1_01 |
68 |
0.551 |
748 |
416 |
0.611 |
5,078 |
249 |
0.419 |
2,084 |
C1_02 |
6 |
0.282 |
33 |
4 |
0.282 |
22 |
29 |
0.273 |
160 |
C1_03 |
|
|
|
80 |
0.765 |
1,217 |
94 |
0.771 |
1,452 |
C1_04 |
18 |
0.752 |
272 |
45 |
0.583 |
525 |
124 |
0.904 |
2,243 |
C1_05 |
|
|
|
|
|
|
|
|
|
C2_02_S_C1 |
|
|
|
|
|
|
|
|
|
C2_01_S_C1 |
|
|
|
|
|
|
|
|
|
C2_03 |
|
|
|
|
|
|
|
|
|
C-Sand Subtotal |
92 |
0.574 |
1,053 |
544 |
0.629 |
6,842 |
496 |
0.598 |
5,939
|
D1_01-02 |
8 |
0.259 |
40. |
32 |
0.229 |
149 |
169 |
0.353 |
1,192 |
D1_03 |
|
|
|
25 |
0.229 |
117 |
|
|
|
D1_04 |
|
|
|
8 |
0.196 |
32 |
7 |
0.193 |
27 |
D1_05 |
|
|
|
26 |
0.213 |
110 |
|
|
|
D-Sand Subtotal |
8 |
0.259 |
40 |
92 |
0.222 |
407 |
176 |
0.347 |
1,219 |
SW Deposit Total |
108 |
0.411 |
890 |
667 |
0.399 |
5,331 |
526 |
0.385 |
4,048 |
NE
Deposit Total |
100 |
0.549 |
1,093 |
636 |
0.570 |
7,250 |
672 |
0.533 |
7,158 |
Grand Total |
208 |
0.477 |
1,984 |
1,303 |
0.483 |
12,580 |
1,198 |
0.468 |
11,206
|
Notes:
|
1. |
CIM definitions were followed for Mineral
Resources. |
|
2. |
Mineral Resources are estimated using a cut-off grade of
0.19% U3O8. |
|
3. |
A minimum mining thickness of six feet was used, along
with $241/ton operating cost and $65/lb U3O8 cut-off grade and 95%
recovery. |
|
4. |
Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability. |
|
5. |
Numbers may not add due to
rounding. |
Figure 14-11 shows the sensitivity of the grade model results
to cut-off grade
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-27
|
|
www.rpacan.com
|
FIGURE 14-11 ROCA HONDA RESOURCE GRADE VS. TONS
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 14-28
|
|
www.rpacan.com
|
15 MINERAL RESERVE ESTIMATE
There are no current Mineral Reserves for the Roca Honda
property.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 15-1
|
|
www.rpacan.com
|
16 MINING METHODS
The majority of the Mineral Resources of the Roca Honda deposit
are located approximately 2,200 ft below the surface, directly beneath gently
sloping washes and a mesa. The mineralization exists in the A, B, C, and D
Sandstone units of the Westwater Canyon Member of the Morrison Formation in
Sections 9, 10, 11, and 16. The deposit will be mined with a combination of step
room-and-pillar (SRP) and drift-and-fill (DF) mining methods. Open pit mining
was not considered due to the lack of economic grade mineralization near surface
and the large magnitude of the surface disturbance that would be required. Any
significant land disturbance associated with open pit mining was also considered
to be a major impediment to obtaining permits.
The deposit will be accessed by a 2,100 ft shaft collared in
Section 16, located approximately five miles west of the historic Mount Taylor
mine. Mining is planned to access the higher grade resources at the base of the
deposit and to minimize the surface disturbance. Ground conditions are expected
to be fair to poor and primary stopes are expected to be stable at widths of 10
ft to 15 ft. Due to the high value of the resources in Section 10, and to
maximize extraction, the use of high strength backfill is proposed. Mining will
be done with a first pass of primary stopes followed by pillar extraction after
the primary stopes have been backfilled.
The production plan is predicated on the mineralized material
being processed at the White Mesa Mill. The yellowcake product will be sold and
trucked off-site for further refining by other parties. RHR will be paid for the
sale of the yellowcake produced at the White Mesa Mill. The layouts of the
proposed mine and mill sites are shown in Figures 16-1 and 16-2,
respectively.
RPA did not update the mine design and production schedule,
which was developed using a cutoff grade of 0.13% U3O8. The previous work (2012
PEA) was reviewed, and it was determined that stopes remain above the updated
cut-off grade of 0.19% U3O8. Some material below 0.19% U3O8 is included within
the stope designs, and should be considered incremental material.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-1
|
|
www.rpacan.com
|
MINING OPERATIONS
The mining operation is designed on the basis of an average
1,085 stpd operation with a nine year mine life. The milling operation is
designed for 2,000 stpd operation.
MINING METHOD
Mineral Resources are based on an underground mine design and
stope schedule. The Westwater Canyon Member (Westwater) of the Morrison
Formation, which hosts the mineralized horizons, is comprised primarily of
sandstones with interbedded shales and mudstones. The A and B mineralized
horizons (Sections 9/16) are located in the upper area of the Westwater. The C
and D mineralized horizons (Section 10) are located in the lower portion of the
Westwater. The Recapture Zone is located immediately below the Westwater Canyon
member. Due to historical significant difficulties in both developing and
maintaining the integrity of drifts in the Recapture Zone, the mine design
avoids any excavations in this Zone.
In Sections 9/16, the mineralized horizons will be defined
using longhole drills from a dedicated drilling horizon located below the
mineralized zones. In Section 10, the mineralized horizons will be defined using
longhole drills on a stope by stope basis.
The transition grade was calculated at 0.265% U3O8. Stopes with
average diluted grades of less than 0.265% U3O8 will be mined using the SRP
method. Stopes with average diluted grades greater than 0.265% U3O8 will be
mined using the DF method. With the SRP method, permanent pillars will be left
in a pre-designed pattern and low-strength cemented rockfill (CRF) will be
placed in mined-out areas as backfill. For the DF method, a high-strength CRF
will be placed in the mined-out areas. The minimum thickness used in the
development of the Mineral Resource estimate was six feet. The mineralized zones
range in thickness from 6 ft to 21 ft. Mineralized zones with thicknesses from 6
ft to 12 ft will be mined in one pass. Mineralized zones exceeding 12 ft in
thickness will be mined in two sequential overhand cuts with each cut being
approximately one half of the overall zone thickness.
The Life of Mine (LoM) schedule was developed on the basis of
initiating development from the production shaft located in Section 16. The
mining areas in Sections 9/16 will be connected to Section 10 by means of a
3,600 ft double decline haulageway. Primary development connecting the shaft to
the various mineralized zones (including the double decline) will be driven 10
ft wide by 12 ft high. Stope access development connecting the primary
development to the individual stopes will be driven 10 ft wide by 10 ft
high.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-2
|
|
www.rpacan.com
|
The mining sequence in each Section is dependent upon the
development schedule but, in general, is sequenced to prioritize the mining of
the largest and highest grade zones in each section of the mine. There is also a
requirement to sequence the mining of any stacked ore zones from top down.
Stope mining begins approximately four years after the start of
construction and the operating mine life spans nine years. The production rate
averages approximately 900 st per milling-day during the time that mining occurs
in Sections 9 and 16 only, increases to 1,040 st per milling-day when Sections
9, 16, and 10 are mined simultaneously, and drops to 800 st per milling-day when
mining from Section 10 only.
Depressurization of the three, main aquifers in the Project
area will be accomplished by the use of 19 depressurization wells and
underground long holes that will supply water to eleven underground pumping
stations that will ultimately feed water to the Section 16 shaft sump pumps and
three discharge pump stations located in the shaft. It has been estimated that
the mine will discharge a nominal 2,500 US gallons per minute (gpm) of water at
temperatures between 90ºF and 95ºF. An additional 2,000 gpm will be produced by
surface wells and therefore the total discharge rate could be as high as 4,500
gpm.
The deposit will be developed and mined on the basis of
single-pass ventilation using a series of separate and independent intake and
exhaust networks. The design requires a total of five exhaust ventilation raises
(three in Section 9 and two in Section 10) as well as an intake ventilation
raise in Section 10. Two of the ventilation raises, one in Section 16 and one in
Section 10, will be equipped with emergency evacuation hoisting equipment.
Midway through the mine life, one of the raises in Section 9 will be converted
from exhaust to intake.
The LoM statistics for the Roca Honda Project are summarized in
Table 16-1.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-3
|
|
www.rpacan.com
|
TABLE 16-1 KEY LIFE OF MINE PRODUCTION STATISTICS
Roca Honda Resources LLC Roca Honda Project
|
|
Life of Mine
|
Metric Area |
Units |
Quantity |
Development - Primary (feet)
|
000 ft |
15.2 |
Development - Stope Access (feet) |
000 ft |
109.5 |
Stope Mining - SRP (tons) |
000 t |
1,166.9 |
Stope Mining - DF (tons) |
000 t |
2,060.9 |
Production (tons) |
000 t |
3,417.3 |
Backfill from Underground Development - SRP
(tons) |
000 t |
386.1 |
Backfill from Surface
Stockpile - SRP (tons) |
000 t |
49.2 |
Backfill from Surface Quarry - SRP (tons) |
000 t |
147.3 |
Backfill from Surface
Stockpile - DF (tons) |
000 t |
463.6 |
Backfill from Surface Quarry - DF (tons) |
000 t |
1,185.2 |
Definition Drilling (feet)
|
000 ft |
2,875.0
|
Note: For production only; does not include costs incurred
during development.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-4
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-5
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-6
|
|
www.rpacan.com
|
MINERALIZED MATERIAL TRANSPORTATION
The mining will be done with rubber-tired mechanized equipment
to provide operational flexibility. Broken mineralized material will be hauled
and deposited in an ore pass leading to a skip pocket chamber. At each of the
two, skip loading pockets, located on either the 5340 or 5260 shaft stations, 15
in. fine mineralized material will be stored in a 650 ton storage area. From the
shaft stations, the mineralized material will be transported to surface by a
vertical shaft double drum hoist. Shaft highlights are:
|
|
Finished Diameter: 18 ft |
|
|
|
|
|
Concrete lining: 1 ft |
|
|
|
|
|
Type of Hoist: Clutched Double Drum, 8 ft
diameter |
|
|
|
|
|
Size of Rope(s): 1.5 in. |
|
|
|
|
|
Height of Headframe: 80 ft |
|
|
|
|
|
Headframe Type: Structural Steel with Backlegs
|
|
|
|
|
|
Size of Skips: Two, 6.5 ft by 5.5 ft |
|
|
|
|
|
Hoist Capacity: 1,250 ton/8 hr shift |
|
|
|
|
|
Skip Capacity: 10 tons |
|
|
|
|
|
Man Cage Capacity: 12 miners; |
|
|
|
|
|
Emergency Hoist Capacity: 12 miners; |
|
|
|
|
|
Emergency Hoist Power: 600 hp |
|
|
|
|
|
Hoist power: 1,000 hp |
|
|
|
|
|
Collar Elevation: 7,240 fasl |
|
|
|
|
|
Sump Elevation: 5,140 fasl |
|
|
|
|
|
Shaft depth: 2,100 ft |
|
|
|
|
|
Primary production levels: 5,340 fasl, 5,260
fasl |
|
|
|
|
|
Booster pumping stations: 5,260 fasl, 5,945
fasl, 6,545 fasl |
|
|
|
|
|
Stratigraphy: Mancos Shale and Jurassic
Morrison Formation, especially Westwater |
|
|
|
|
|
Aquifers: Gallup, Dakota and Westwater |
|
|
|
|
|
Schedule: Approximately 925 days for
construction |
Once the mineralized material is hoisted to the surface, it
will be transferred into highway trucks, which will deliver the material to the
White Mesa Mill.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-7
|
|
www.rpacan.com
|
MINE DESIGN
The key design criteria for the Roca Honda Project were:
|
|
Mine capacity up to 1,200 stpd and process
plant capacity up to 2,000 stpd (700,000 stpa) |
|
|
|
|
|
227,000 st in year one, approximately 400,000
stpa thereafter |
|
|
|
|
|
Nine-year mine life |
|
|
|
|
|
Mine production from Sections 9, 16 and 10,
plus a small part from Section 11 |
|
|
|
|
|
Mechanized mining |
|
|
|
|
|
Double-drum shaft hoisting of mineralized
material to the surface and highway truck haulage to the White Mesa Mill
|
|
|
|
|
|
Backfill, where needed for maximum extraction
|
RPA recommends the use of medium-sized mechanized equipment
suitable for headings of 100 ft2 to 150 ft2. Mechanized
equipment will be selected to minimize employee exposure to working areas.
The mine plan was developed by RPA and reviewed by RHR. The
stoping plan starts in the highest grade areas of Sections 9 and 16, and then
proceeds to Section 10. The stoping is planned in a series of primary and
secondary stopes.
Mining methods considered included the following constraints:
|
|
Open stope areas will require stable back conditions
during extraction. Back stability will need to consider rock strength, and
proximity and condition of recent workings and groundwater drainage
conditions. |
|
|
|
|
|
Blocks of ground serving as temporary or
permanent pillars must remain stable during extraction of adjacent ground.
|
|
|
|
|
|
Backfilling of primary openings needs to
provide sufficient back support to allow secondary pillars to be mined
with a stable back. |
|
|
|
|
|
Backfill from primary openings should not
slough into rib pillar cross-cuts during extraction. |
|
|
|
|
|
Backfill operations will require tight filling against
supported rock including pillar ribs and stope backs by up-dip filling
operations. In multi-cut areas that require working from fill, the working
mat surface should be sufficiently competent to support equipment.
|
|
|
|
|
|
Temporary access ramps should remain stable
during their expected life and can be re- cut provided roof and rib
stability can be maintained. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-8
|
|
www.rpacan.com
|
|
|
Backfilling operations should include water
management provisions to control drainage to main haulages. |
|
|
|
|
|
Mineralized lenses can be stacked one above the
other with as little as tens of feet of separation. |
|
|
|
|
|
Considerations should be made in each mining
area for variations in mining-induced stresses, rock failure mechanisms,
and local ground deformations. |
Stopes were designed with flat footwalls and were oriented in
each of the three areas to maximize the mineralized extraction and minimize
dilution due to the variations in the footwall of the Section 10. Stopes will be
accessed through a system of ramps located outside the Mineral Resources in
Sections 9, 16, and 10, plus a small part in Section 11. The locations of the
ramps are shown in Figures 16-3 through 16-5. The access ramps will connect to a
haulage drift and also to ventilation raises to the surface. For each stope, a
short stope access will be driven to the first cut and then slashed to access
subsequent cuts above or below the initial cut.
Mine ventilation will be achieved with surface fans located at
exhaust raise locations. Fresh air will enter the mine via the Section 16
production shaft or an intake ventilation raise. Fresh air will travel through
primary haulage ways to active mining areas. Fresh air will then enter active
stopes via the fresh air stope access drift, pass through the stope and finally
exit the stope where the air will be directed toward a one pass only ventilation
exhaust raise.
Room-and-pillar mining is a simple, low-capital cost mining
method where 70% to 90% recovery can be expected dependent upon the rock
strengths and geological structures encountered. Although pillars are
anticipated to remain unmined, even with tight backfilling and artificial
support, the method is sufficiently flexible to achieve required production
rates, control cut-off grades, and maintain safe working conditions. The
operational sequence must be modified when mining heights are high (>12 ft)
since multi-cuts and stacked pillars (low width-to-height ratios) are required
and backfilling must be used to ensure pillar stability. This method becomes a
hybrid of the cut-and-fill method in areas where the mineralization is thick (12
ft to 21 ft high) because slender pillars are ineffective for roof support and
strong global backfill support must enhance local roof support.
Drift-and-fill methods are well suited for selective precision
mining in variable-grade areas and are quite flexible resulting in high
extraction ratios. The volume of open ground at any one time is small since
drifts are mined and immediately backfilled before adjacent drifts are mined.
The
development can be placed in the mineralized areas, minimizing waste rock. This method is not well suited for high production rates, unless many stopes are simultaneously opened, which requires a laterally extensive mineralized zone. The cost of
local support (roof cabling through multi-cuts) is high because all cuts must be fully supported. This method would be considered in variable high-grade areas, where maximum recovery is desired.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-9
|
|
www.rpacan.com
|
Open stoping, longhole panel mining is considered a quasi-precision underground mining method that can be managed through blasthole loading. High-tonnage production rates can be obtained with a limited number of active stopes and
flexible stope layouts accommodate variable mineralized grades. Open stoping is not considered an attractive method here because anticipated roof strengths and stand-up times are too low and support costs could be excessive.
Shortwall and longwall mining methods are capital intensive and are inflexible with steep dips (>8° to 10°) and fault throws. These fixed-dimension methods are unattractive for the mineralization at the Roca Honda Project because of
mineable grade variations and the non-tabular shape, which require variable mining configurations. Wall lengths would not be long enough to justify capital and move costs.
Block cave methods are frequently used in massive deposits, especially when the mineralized material is vertically extensive, because extraction is primarily gravity driven. This is not an attractive method in this type of deposit because of the
limited vertical extent, need to minimize overburden disturbance (aquifers and at surface), and tonnage is insufficient to justify initial capital cost.
Sublevel caving is similar to block caving, but it can be implemented over smaller volumes. This method works well in steeply dipping tabular deposits since it affords greater grade control and less capital than block cave methods. The method is not
amenable for the Roca Honda Project for the same reasons as block caving is not attractive.
Open pit mining is not recommended due to the 2,000 ft depth of the mineralized material body. The cost of waste removal would be excessive.
In summary, these trend-type mineralized deposits will be developed and mined by two modified room-and-pillar methods using ground support during development to ensure roof stability, especially in weak ground conditions.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-10
|
|
www.rpacan.com
|
With the wide range of mineralized zone thicknesses (from 6 ft
to 21 ft) and dips/plunges (from flat to 15°), one of the mining methods
selected for Roca Honda is SRP incorporating moderate strength cemented rock
fill. This method allows for mobile equipment to be used effectively in the
range of dips/plunges encountered at Roca Honda. This method is being
recommended for the lower grade mineralized lenses.
DF mining is also recommended for the higher grade mineralized
lenses. This method is widely used in other mines with similar ground conditions
and will result in higher mining recoveries as the need to leave permanent
pillars will be significantly reduced. This method, however, requires a high
quality, high strength engineered backfill in order to be successful.
Bulk mining methods were investigated, particularly for the
thick (up to 20 ft) zones. One method considered involved mining of the thick
zones in staggered primary and secondary panels using engineered cemented
backfill. This method was not considered to be applicable due to the weak rock
conditions. The low rock strengths and limited stand-up time made this method
impractical given the relatively high stope walls, which would be exposed during
the benching process.
MINING RECOVERY AND DILUTION
The deposit is relatively flat-lying and will be mined using
both SRP stoping in the lower grade zones and DF stoping in the higher grade
sections. Dilution is estimated to average 17.1% at a grade of 0.030% U3O8. This
relationship includes both low grade and waste material dilution estimates are
based on one foot of overbreak in the roof and six inches in the floor of all
single lift stopes. In the case of multi-lift stopes, the initial cuts include
only six inches of floor dilution. The final cut includes both floor dilution
and roof dilution.
To arrive at the Mineral Resources that are potentially
mineable in this PEA, RPA used a diluted cut-off grade of 0.110% U3O8, a minimum
mining thickness of six feet, and an average calculated mining recovery of 88%.
The resource model and underlying data have not changed, however, RPA has
reported Mineral Resources at a higher cut-off grade, consistent with the
production scenario proposed in this PEA.
SHAFT PILLAR CONSIDERATIONS
|
|
The shaft should be located as near to the
centroid of the mineralized structures as possible to minimize haulage
distances . |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-11
|
|
www.rpacan.com
|
|
|
The shaft should not penetrate the Recapture
mudstone formation to any appreciable extent to avoid swelling and closure
problems when distressed and wet. |
|
|
|
|
|
The shaft should be located at least 400 ft
from the major northeast-southwest fault system to minimize the potential
for mining-induced stress displacements . |
|
|
|
|
|
The shaft should be at least 350 ft from any high
extraction mining so as to avoid having mineralized material tied up in
shaft pillar and mining-induced subsidence differential displacements
impacting stability of the shaft liner and hoist guide alignment.
|
GEOTECHNICAL ANALYSIS
The estimated geotechnical conditions determined the mine
design parameters. These parameters included support for open spans in both
long-term haulages and in short-term drifts within a stope. The support
requirements were then used to estimate the cost for ground support.
The approach adopted considers that the empirical methods used
for making estimates of the support parameters are based on similar case
histories in a range of applicable ground conditions. The use of empirical
methods have been shown to be a reasonable approach to assessing ground support
as long as anticipated ground conditions are within the data range. Although
rock mass strengths at Roca Honda are considered poor to average quality, their
Rock Mass Rating (RMR) values are within the data range of the empirical
methods.
No analyses beyond these empirical assessments were performed
to check the recommended support parameters. Such analyses will be warranted
when additional site specific data from underground are available and where
analyses might include numerical modelling.
To account for the anticipated variability in rock quality a
range of rock mass strengths were considered. For this reason, a range of three
anticipated ground conditions were defined: weak, medium, and strong. For each
of these we have estimated the percentage of excavations that will be in each
ground condition, and thus the type of support required for the type of opening
(long-term primary, stope access development, and short-term stope drifts.
The groundwater table is estimated to be at a depth of 886 ft
at the Section 16 proposed shaft location (elevation of 6,378 ft amsl, where the
ground elevation is 7,264 ft amsl).
DEVELOPMENT AREAS
Stability of open spans in a blocky rock mass is anticipated to
be governed by the thickness of bedding in the roof and intersection of joints
producing massive sandstone blocks that may be removable into the opening. Stability was analyzed using a
simple limit equilibrium method that balanced block loads and support loads. The
analysis used the following assumptions.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-12
|
|
www.rpacan.com
|
|
|
Drift width = 10 ft |
|
|
|
|
|
Unit weight of roof rock = 145
lb/ft3 |
|
|
|
|
|
Max bedding slab thickness = 50% of room width
|
|
|
|
|
|
Minimum shear strength of roof rock = 350 psi
|
The minimum safety factor for bolts is 1.50. The bolts were
assumed to be 45 ksi yield steel.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-13
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-14
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-15
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-16
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-17
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-18
|
|
www.rpacan.com
|
UNDERGROUND LAYOUT
MINE DEVELOPMENT
Primary level development will be excavated 12 ft high by 10 ft
wide incorporating a semi-circular arched back in the upper 3 ft of the heading.
This heading size was selected as the best compromise between the need to
minimize the drift excavation dimensions and span due to the relatively weak
rock conditions, yet be sufficiently large to allow adequate clearance for
suitably sized mobile equipment and the associated piping, electrical and
communications cables, services and, most importantly, the 36 in. diameter rigid
ventilation ducting. This heading size was also selected as these drifts will be
the primary ventilation routes for both intake and exhaust air, most importantly
between the production shaft in Section 16 and the Northeast mineralized zone
workings.
It is expected that the weak sandstones and shales will degrade
from vehicular traffic. The use of roadbase material will therefore be
necessary. Roadbeds will be constructed by placing a Tensar mesh mat on the
floor of the drift to prevent mixing of the weak floor material and the roadbed
material. A six-inch layer of screened rock will be placed on the mesh mat. All
roads will be ditched and crowned.
The 3,600 ft decline connecting the Southwest and Northeast
mineralized zones has been designed as a double heading. This is required for
ventilation purposes, both during the driving of the decline as the need for
booster fans is eliminated, and for subsequent mining in the Northeast. When
completed, one of the decline headings will serve as a dedicated fresh airway
connecting the Northeast workings to the Section 16 production shaft fresh air
intake. The other decline heading will serve as a dedicated exhaust airway,
connecting to the various exhaust boreholes in the Southwest mining area, thus
supplementing the exhaust capacity of the boreholes in the Northeast area.
Depressurizing of the water in the decline area will precede the initiation of
the decline construction, and it will be maintained after completion.
Development productivity calculations were prepared to estimate
the rate of advance and the manpower and equipment requirements for the
development work. The productivity was developed from first principles with each
part of the development cycle time estimated to generate the overall cycle time
for development headings.
In all cases, the mucking was assumed to be to a muck bay with
re-mucking as a separate activity such that the face could be turned around as
rapidly as possible. Truck loading and hauling are considered to be activities that can be undertaken
simultaneously with the other activities at the face.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-19
|
|
www.rpacan.com
|
Over the course of the mine life, a total of 31,564 ft of
primary development is scheduled to be excavated. Of this total, 19,799 ft
(62.7%) will be driven single face incline and 4,630 ft (14.7%) will be driven
single face decline. In addition, 7,135 ft (22.6%) will be driven multi-face
decline. The latter relates to the double-decline ramp connecting Sections 9/16
to Section 10.
UNDERGROUND MOBILE EQUIPMENT
A fleet of mobile equipment, suitable for the proposed heading
sizes and mining methods, has been selected and quantified. Budget quotes were
obtained from equipment suppliers for the production equipment. Service
equipment cost estimates were obtained from other recent RPA studies. Equipment
needs for development and stoping are almost identical and, as development
requirements diminish over time, the equipment is transferred to stoping. This
eliminates the need to procure additional mobile equipment as the number of
active stopes increases. Mobile equipment requirements are shown in Table
16-2.
TABLE 16-2 MINE EQUIPMENT SUMMARY
Roca Honda
Resources LLC Roca Honda Project
Mobile Equipment |
hp |
Quantity |
Total hp |
Jumbo - 1 boom (development)
|
80 |
4 |
320 |
LHD 3-yd (development) |
130 |
4 |
520 |
Materials Handler with
man-basket (development) |
101 |
2 |
202 |
Roofbolter (development) |
80 |
4 |
320 |
Shotcreter (development) |
148 |
2 |
296 |
Remix Transporter (development) |
200 |
2 |
400 |
Jumbo - 1 boom (stoping) |
80 |
5 |
400 |
LHD 1.75-yd (stoping) |
75 |
3 |
225 |
LHD 3-yd (stoping) |
130 |
2 |
260 |
Roofbolter (stoping) |
80 |
5 |
400 |
LHD 1.75-yd Backfill Rammer
(stoping) |
75 |
2 |
150 |
LHD 3-yd Backfill Rammer (stoping) |
130 |
2 |
260 |
Materials Handler with man-basket (stoping) |
101 |
3 |
303 |
Truck 16-ton ejector box (development and
stoping) |
210 |
8 |
1,680 |
LHD 3 yd (shaft station transfer to skip pocket) |
130 |
2 |
260 |
Jumbo - 1 boom (spare) |
80 |
1 |
80 |
LHD 3-yd (spare) |
130 |
1 |
130
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-20
|
|
www.rpacan.com
|
Mobile Equipment |
hp |
Quantity |
Total hp |
LHD 1.75-yd Backfill Rammer
(spare) |
75 |
1 |
75 |
LHD 3-yd Backfill Rammer (spare) |
130 |
1 |
130 |
Roofbolter (spare) |
80 |
1 |
80 |
Truck 16 ton ejector box (spare) |
210 |
1 |
210 |
U/G Longhole Drill |
73 |
2 |
146 |
Materials Handler with boom |
101 |
2 |
202 |
Boom Truck |
148 |
2 |
296 |
Caterpillar 272C |
90 |
2 |
180 |
Maintenance Utility Vehicle
|
148 |
2 |
296 |
Pump Crew Utility Vehicle |
148 |
1 |
148 |
Electrical Utility Vehicle
|
74 |
2 |
148 |
Supervision and General Utility Vehicle |
22 |
3 |
66 |
Engineering/Geology Utility
Vehicle |
22 |
3 |
66 |
Surveyor Utility Vehicle |
74 |
1 |
74 |
Personnel Transport Vehicle
|
148 |
2 |
296 |
Grader |
110 |
1 |
110 |
Total Mobile Equipment
|
|
79 |
8,729
|
The Load Haul Dumps (LHDs), trucks, and jumbos will be required
for the mine development and will be utilized by contractors for the
pre-production period. In operations, these units are expected to experience
relatively low utilization, but the fleet size is considered necessary to
provide the back-up for this remote site operation.
Equipment will be selected based upon price and support and it
is planned to purchase as many units as possible from one supplier to minimize
the number of suppliers and to increase the level of common spares.
MINE INFRASTRUCTURE
UNDERGROUND CONVEYANCE
Historically, the size of the mineralized material supplied
from the mine to the process plant has not required a crushing circuit.
Mineralized material will be dumped into a single dump point feeding the ore
pass. The dump will be equipped with a grizzly and rock breaker.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-21
|
|
www.rpacan.com
|
SPACE REQUIREMENTS
Space requirements for the mine were determined based on the
staffing requirements, production rate, type of mining method, and equipment.
The mine surface requirements are summarized in Table 16-3.
TABLE 16-3 MINE SURFACE INFRASTRUCTURE SPACE REQUIREMENTS
BUILDINGS
Roca Honda Resources LLC Roca Honda Project
Area Description |
Estimated
Square |
Comments |
Feet |
Mine Dry and Office Building
|
30,572 |
|
2 Floors |
Office and Dry |
19,528 |
|
1st & 2nd floor |
Maintenance and Shop |
8,160 |
|
1st & 2nd
floor |
Indoor Warehouse |
4,080 |
|
1st & 2nd floor |
Emergency Services Building
|
3,784 |
|
|
Entrance, Guard Shack and Scale House |
1,542 |
|
|
Assay Laboratory Building |
320 |
|
Trailer |
Outdoor Warehouse |
9,800 |
|
Cold Warehouse is in corner of
yard |
Cold Warehouse (Not Insulated
or heated) |
3,200 |
|
|
Explosives Magazine No 1 |
160 |
|
|
Detonators, Caps and Fuse
Magazine No. 2 |
36 |
|
|
Tank Farm Containment Area |
800 |
|
20,000 gal |
Batch Plant Area |
900 |
|
|
Stockpile (At the headframe) |
2,500 |
|
|
Waste Stockpile (At the
headframe) |
2,500 |
|
|
ELECTRICAL DISTRIBUTION
Electrical power will be supplied by existing power lines that
transverse the Project mine area. Backup generated power will be supplied by a 5
MW diesel power station located at the site. The power will be generated and
distributed about the site at 600 V and 4,160 V. The feed to the mine will be by
4,160 V power cables installed in the decline feeding load centers with
4,160:600 V transformers. Whenthe ventilation raise is in place an additional
line may be installed in the raise to provide a loop for power distribution. As
an alternative, bore holes may be used as conduit for power lines to the
underground mine to provide multiple feeds and to reduce the line loss with the
shorter supply cables.
Electrical power will be required at the mobile load centers to
provide power for jumbos and fans in the development and production areas. An
electrical power supply to the main surface fan locations will also be required.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-22
|
|
www.rpacan.com
|
A new transmission tap substation at or near Continental Divide
Electric Cooperatives existing Gulf Minerals substation would reduce the
transmission level voltage to 25 kV for distribution to the mine site and water
treatment plant. The distribution line will be run overhead on poles along
existing right of way to the water treatment plant site. The existing cable is
not sized properly for the expected load, so it would need to be upgraded. After
the distribution line reaches the mine site the overhead distribution will be
dropped off at one or more locations as required to service the mine,
ventilation fans and de-watering wells.
Power distribution on the mine site includes: main shaft,
de-watering pumps, ventilation shafts, and escape shafts. It will be distributed
as 25 kV on overhead lines with taps and individual transformers for each
location. The main shaft area will have two transformers. One will be 25 kV/4.16
kV to service the hoist and power for the mine. The other transformer will
reduce the voltage from 4.16 kV/480 V for the other surface loads around the
shaft.
The underground loads include some at 4.16 kV and the rest will
be reduced to 480 V or 120/208 V for the other loads as required. All low
voltage motors will be started and controlled through standard Motor Control
Centers. Medium voltage (MV) motors will be started and controlled with their MV
starters.
The site electrical utilization is three phase, 60 Hz, 480 V
for all motors 200 hp or less, all motors larger than 200 hp will be 4,160 V.
Surface grounding will be per National Electric Code (NEC) requirements and
Institute of Electrical and Electronic Engineers (IEEE) 142 standards.
Underground grounding will be per Mine Safety and Health Administration (MSHA)
requirements.
UNDERGROUND POWER REQUIREMENTS
The estimated power consumption for the underground mining,
including ventilation is 1.6 MW as shown in Table 16-4
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-23
|
|
www.rpacan.com
|
TABLE 16-4 ESTIMATED ELECTRICAL LOAD MINE ONLY
Roca Honda Resources LLC Roca Honda Project
Load Description |
|
|
|
|
|
Surface Plant - Main Hoist Area |
No. |
Unit hp |
Connected |
Load |
Load hp |
Units |
hp |
Factor |
Main Hoist |
1 |
1,000 |
1,000 |
80% |
800 |
Compressors |
2 |
150 |
300 |
67% |
201 |
Surface Pumps |
1 |
700 |
700 |
90% |
621 |
Heat Trace |
5 |
30 |
150 |
100% |
150 |
Shop Equipment |
1 |
15 |
15 |
40% |
6 |
Hot Water Heaters |
1 |
25 |
25 |
70% |
18 |
Lighting |
1 |
15 |
15 |
90% |
14 |
Office |
1 |
20 |
20 |
40% |
8 |
|
|
|
|
|
|
Surface Plant - Ventilation Shaft
Areas |
|
|
|
|
|
Primary Ventilation Fans |
3 |
150 |
450 |
65% |
294 |
Lighting |
1 |
10 |
10 |
90% |
9 |
Shops |
1 |
20 |
20 |
50% |
10 |
Portable Welder |
1 |
25 |
25 |
80% |
20 |
|
|
|
|
|
|
Underground |
|
|
|
|
|
Shaft Pumps |
8 |
250 |
2,000 |
40% |
800 |
Pumps |
12 |
150 |
1,800 |
78% |
1,401 |
Secondary Fans |
8 |
50 |
400 |
100% |
400 |
Underground Shops |
2 |
100 |
200 |
23% |
46 |
Longhole Drill |
1 |
75 |
75 |
43% |
32 |
Backfill/Aggregate Mixing Plant |
2 |
100 |
200 |
12% |
24 |
Cement Mixing Tank |
2 |
50 |
100 |
12% |
12 |
Electrohydraulic Drill Jumbo |
8 |
75 |
600 |
24% |
144 |
Rockbolter |
8 |
75 |
600 |
24% |
144 |
Shotcreter |
1 |
75 |
75 |
24% |
18 |
Lunch Rooms |
2 |
20 |
40 |
8% |
3 |
Underground Lighting |
1 |
30 |
30 |
58% |
17 |
|
|
|
|
|
|
Subtotals |
|
|
8,850 |
|
5,191 |
Contingency |
|
|
10% |
|
10% |
Total Connected Horsepower (hp) |
|
|
9,735 |
|
|
Total Load (hp) |
|
|
|
|
5,710
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-24
|
|
www.rpacan.com
|
WATER TREATMENT PLANT POWER REQUIREMENTS
The Continental Divide Electric Cooperative 25 kV line that
provides power to the mine will be extended to provide power for the Water
Treatment Plant. At the plant site a 25 kV/480 V transformer will be used to
supply power to a motor control center for distribution to the various low
voltage loads. A 100 kW back-up power plant supplies emergency power to the
water treatment plant.
VENTILATION
One of the major operating costs associated with underground
mining is the electrical cost associated with operating a mines primary and
auxiliary ventilation circuit. In this regard, RPA, in planning Roca Hondas
primary ventilation, has taken steps to minimize the impact that the raise
boring development will have on the mines development and operating costs. The
primary goal will be to maintain a sound work environment.
Roca Hondas primary ventilation system consists of:
|
|
A Production Shaft (Section 16 Shaft) |
|
|
|
|
|
Two (9 ft finished diameter) Emergency Egress
Raises (Section 16-EE1 and Section 10- EE2) |
|
|
|
|
|
Four (9 ft finished diameter) Ventilation
Raises (Section 16-V3, Section 16-V7, Section 10-V5 and Section 10-V6)
|
The Section 16 Shaft will have an 18 ft finished inside
diameter, in which two skips and a man cage will operate.
The two emergency egress raises, Section 16-EE1 and Section
10-EE2, will be a steel-lined, 9 ft finished diameter raise with rope guides for
the egress capsule. The egress capsule will be located outside the raise in
either the respective emergency egress hoists head frames, or immediately below
the raise, on the 5260 Level or the 4665 Level, which will reduce impeding
airflow.
The remaining ventilation raises, Section 16-V3 through Section
16-V7, are exhaust raises. They are also 9 ft diameter steel-lined raises. While
the steel-lining was initially installed for ground control issues, the lining
system also appreciably reduces the systems air resistance.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-25
|
|
www.rpacan.com
|
It is assumed that the presence of radon and thoron gas from
the rock will not be an issue with the correct installation of the proposed
ventilation system, and that these contaminants will be appropriately diluted
and exhausted with the mine air. Procedures for closing unused areas and for
checking areas prior to reopening unventilated areas will be established to
ensure that areas are suitably ventilated and that there are no noxious gases
present before work commences in a new area or an area, which has been closed
for some time.
The mine ventilation air flow was based upon the mine equipment
fleet with an estimate of equipment utilization and an additional allowance for
losses and additional needs, and the dilution of any deleterious gases such as
radon. The mine ventilation requirements, per mining phase, vary from 35,000 cfm
during shaft sinking to approximately 1,200,000 cfm at the end of the mine
life.
MINE AIR HEATING INTAKE
In light of the sub-zero temperatures at or near the surface
and the need to prevent freezing of water lines and ice buildup, the mine air
will be heated using direct fired mine air heaters located at the mine air
intake. The coldest mean monthly low temperature on record at nearby weather
stations was14.4 oF. In sizing the Section 16 Shaft Heating Plant,
RPA utilized a 30oF temperature rise to determine the plants maximum
heating capacity. The mine area heating requirements should be minimal, because
of the rock temperatures of the mine. The main shaft will be an intake shaft for
ventilation; therefore, cold air will be drawn into the mine at this point.
DEWATERING
The mine is expected to be a wet mine and groundwater inflows
are expected to be moderate to high with a maximum estimated 2,500 gpm of
groundwater inflow initially into the mine. The estimate of groundwater inflow
has been based upon the observations of the numerous core drill programs and
observations from historical mine and public reports previously developed in the
Ambrosia Lake uranium mining subdistrict.
The estimated water inflow is:
|
|
Groundwater 2,500 gpm |
|
|
|
|
|
Drilling 2 gpm/ boom 10 gpm |
|
|
|
|
|
Diamond drilling 10 gpm |
|
|
|
|
|
Mine dust suppression carried on rock
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-26
|
|
www.rpacan.com
|
All water will be diverted to the base of the decline either
along the decline or by boreholes specifically installed for mine drainage.
The main mine dewatering pumps will be designed to operate by
automatic controls. The low head pumps at the sump will operate on automatic
controls such that high levels in the sump activate the operation of the pumps.
BACKFILL
In the caseof SRP mining, backfill is designed to supplement
the carrying capacity of the unmined pillars during the mining process. In this
regard, a low strength backfill is sufficient. With DF mining, backfilling of
the stope headings is primarily designed to replace pillars and fully support
the back of the stope during the mining process. In this context, the backfill
needs to be of consistent high quality and high strength.
CRF is the backfill method recommended for use with both of
these mining methods. High strength or low strength CRF can be mixed underground
then transported, dumped and jammed into place, increasing density through
mechanical compaction. Truck, LHD, and jammer placement provide for operational
flexibility.
Over the mine life, a total of 2.24 million tons of backfill
will be needed with the high strength variety comprising 75% of the total. Of
this total, 387,000 tons of underground development waste will be directly
placed into stopes. The surface development waste stockpile will contribute
516,000 tons, which includes hoisted waste, surface excavations, main shaft and
other mine surface structureexcavations. The remaining 1.34 million tons will be
generated from the surface quarry.
The primary source of high strength backfill material will be
quarried and screened (concrete quality) surface rock. RHR has recently
communicated that an agreement with a local landowner is possible. The location
of the quarry has not yet been specifically identified, nor have there been any
test work to confirm that surface rock from the site will be suitable for high
strength backfill. RHR has estimated the costs of quarrying, screening, and
transporting backfill material to the backfill raise to be $9.00 per ton.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-27
|
|
www.rpacan.com
|
The backfill rock will be transported from the backfill raise
to the backfill mixing facilities located at each of the 5260 and 5340 Level
shaft stations. The backfill material and cement slurry will be mixed in a 27
in. diameter by 8.5 ft long pug mill prior to loading into 17 ton ejector box
dump trucks (such as the MTI DT-1604). The truck will then travel to the stope
requiring backfill. The telescopic dump box allows for dumping in heights as low
as nine feet. In mining zones with heights of nine feet or greater, the truck
will dump backfill directly into the stope drift being filled. In lower stope
height areas, the truck will dump in the stope access or sill drift and the
backfill will then be transported to the backfill area by LHD.
MINE MAINTENANCE
Two shops will be constructed underground in the vicinity of
the Section 16 shaft bottom on the 5260 and 5340 levels. The shops include 700
lineal feet of concrete floors with oil collection and separation facilities.
The area also contains parts storage, compressors, diesel fuel, hydraulic hoses,
communication, lighting and nearby refuge chambers.
The work stations in the shop include areas for welding,
vehicle repair, tire repair, and tire storage. It is anticipated that all
equipment repairs and rebuilds will be done in these locations. Major equipment
repairs, such as engine replacement, will be completed by installing a re-built
component overhauled elsewhere and brought into the mine using the main hoist.
The larger maintenance work on the mine equipment will be competed in surface
heavy equipment shops located adjacent to the White Mesa Mill complex. This work
will include all major repairs and major services. The surface shop will be used
for the surface and underground mobile equipment at the site.
MISCELLANEOUS
MATERIAL STORAGE
Material storage will be built underground for short term
storage of mine supplies such as rock bolts, mesh and ventilation duct and spare
fans. These bays will be located near the service area and will be accessed by
mobile equipment such as the forklift and tool handler.
COMMUNICATIONS
Most areas of the mine will have access to an underground radio
communications system. The system will be installed in the Section 16 shaft,
permanent pump stations, maintenance shops, refuge stations, and muck handling
facilities at the shaft bottom. Antenna cables will be installed as part of the normal water, air and power lines. Handheld
radios will be able to communicate through this line up to 1,250 ft away. The
radios have digital and analog capability and can transmit emergency contact and
instructions on their display. Separate channels are provided for geology,
engineering, contractors, mine production, management, and surface departments.
Ninety radios are included in the estimate.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-28
|
|
www.rpacan.com
|
Emergency hard wired phones are installed in the shaft bottom,
emergency escape raises, and refuge chambers to provide a redundant
communications path. All communications will have battery backup.
EXPLOSIVES
Detonators, primers and stick powder will be stored in separate
approved explosives magazines. All of these explosives will be stored either in
the underground magazines and/or the surface explosives magazines.
The main explosive planned for use at the Roca Honda Project is
ammonium-nitrate fuel oil (ANFO), which will be supplied in 50-lb bags or in
larger capacity tote bags as required. However, there will still be a
requirement for packaged slurry explosives and stick powder for wet holes or
for boosting the ANFO in some applications. These are easily provided by the
explosives manufacturer in containers, which will be stored and inventoried. It
is assumed that the stopes will be sufficiently dewatered to allow for ANFO to
be used as the primary blasting agent.
An average powder factor of 1.34 lb/ton was used for costing
purposes. An allowance of 10% of the total explosives for stick powder and
package slurry is recommended for purchase and storage on site. A non-electric
detonation system will be used with in-the-hole delays on all detonators. A
range of delay periods will be required and approximately 45,000 are required
for a year of operation. Costs have been based upon the use of Nonel detonators
however, RPA recommends that Roca Honda Resources investigate and consider the
electronic initiation systems that are now available as this may provide better
fragmentation and ground control.
SANITARY SYSTEM AND POTABLE WATER
Potable water for the underground mine will be provided in
specific containers that will be resupplied regularly from the site potable
water supply. Sanitary facilities in the mine will be approved self-contained
units.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-29
|
|
www.rpacan.com
|
HAULAGEWAY MAINTENANCE
A grader will be included in the equipment fleet for the
maintenance of underground roadways.
GRADE CONTROL
Grade control is the responsibility of all personnel who come
in contact with the mineralized material on a regular basis. These personnel are
the geologists, engineers, production miners; ore control technicians,
surveyors, truck drivers, samplers, and metallurgists.
Approximately 100 million pounds of U3O8 has been produced from
mines located close to (approximately 15 mi) the Roca Honda Project. The grade
control procedures, methods, and key items discussed below are an amalgamation
of the information gathered from RHR staff, and other articles from the public
domain.
ROCA HONDA GRADE CONTROL
Grade control is a day-to-day mine production activity that
must be maintained during underground development and mining. The goals of grade
control are to identify the limits of mineralization prior to blasting,
accurately account for the tons and grade of the broken material after blasting
that will be transferred from the mine to the White Mesa Mill, mine all the
mineralized material, and minimize dilution. It should be noted that the Roca
Honda should not experience any negative disequilibrium problems. In addition,
it was reported by Kerr McGee and others that the mines in the Ambrosia Lake
subdistrictgenerally realized a positive reconciliation of the milled tonnage
compared to the geological resource model.
Measurements and evaluations can be divided into two general
time frames:
|
(a) |
Before blasting: Guide the mining
teams by giving them the mineralized volume according to cut-off grade and
local stope constraints. This grade control is based on radioactivity
measured either by a counter on the working face, by a gamma ray probe in
blast holes and long holes, or by a beta/gamma scaler or x-ray counter.
Physical samples will also be collected for chemical assay, on a regular
basis but not for every blast. The gamma ray probe is the normal method
for pre-blast measurements by RHR. |
|
|
|
|
(b) |
After blasting: Provide the ability
to sort mineralized material and waste, which can become mixed during
blasting, so as to avoid milling material that would be too expensive to
process (dilution). During loading (mucking), it is possible to segregate
the different grades of mineralized materials and waste selectively.
The blasted material will be sampled for chemical assay and probed
with a Geiger-Müller -type probe or an instrument similar to the Princeton
Gamma Tech (PGT) X-Ray Fluorescence Microanalysis System and/or the SAM
940 Handheld Radioisotope. Also, mineralized materials will need to
be segregated by land title for royalty purposes. The gamma ray
probe is the normal method of post blast measurements planned to be used by
RHR. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-30
|
|
www.rpacan.com
|
Grade control for the Roca Honda Project will be essential in
reducing dilution, improving the head-grade to the process plant, and aiding the
geology and engineering department with accurately estimating and planning mine
development and stope production. Dilution in mines is a major issue that
increases costs.
Sampling is used to help optimize the delivery of head grade to
the mill, and to separate the different royalty groups. The sampling areas of
the underground mine grade control system are listed below:
|
|
Selected production development and stope blast
holes; |
|
|
|
|
|
All development and production blasted material
(Muck piles); |
|
|
|
|
|
Development headings and production heading
sampling, which would contain, but not be limited to the following areas:
|
|
|
|
|
|
Back sampling; |
|
|
|
|
|
Rib sampling; |
|
|
|
|
|
Sill sampling; |
|
|
|
|
|
All underground transfer points (re-muck bays,
storage drifts); and |
|
|
|
|
|
Hoisting areas, which include the surface and
storage pads located near the Section 16 shaft. |
As observed in the above mentioned sampling-location list,
grade control will be employed in all areas where the mineralized material-grade
type material is handled on a regular basis. The locations where uranium grades
can be investigated are all development headings and production stope areas.
Certain tasks are necessary in order to have a successful grade control program.
The following list of tasks, which are for data collection and analyses, is
needed for the successful implementation of the Roca Honda grade control
program:
One of the most important methods that needs to be employed for
a successful grade program is the visual inspection of face by a well-trained
geologist, engineer, technician, or underground mine foreman. RHRs experience
has been that geologists and grade control technicians will become experienced
in visually identifying the limits of mineralization for determining the best
control method for a given stope.
Precise recordings of all planned and active mining faces,
i.e., mine plan and production (as-built) drawings. This mine plan will show the
exact location (X, Y, and Z) of all underground workings.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-31
|
|
www.rpacan.com
|
All development and production headings will be surveyed and
measured. Particularly, the following minimum work should be completed as part
of the Standard Operating Procedure for grade control:
|
1. |
Sill elevations must be obtained and recorded. |
|
|
|
|
2. |
Advance maps must be kept up to date, showing each round
with at least five probe readings. |
|
|
|
|
3. |
Before drilling of a blast round, vertical and rib holes
will be drilled, sampled and probed. The purpose is to determine if the
rock surrounding a face contains any significant uranium mineralization.
This information must be recorded. |
|
|
|
|
4. |
Prior to the design of access drifts, 100 ft to 300 ft
long holes must be drilled and probed in advance of work. If no parallel
trends or mineralized material extensions are identified, then the access
drifts should be planned at the given cut-off grade. |
|
|
|
|
5. |
If the stope pillars are mined, pillars will be drilled,
sampled, and probed prior to blasting. |
An accurate recording of all geological characteristics
including: rock type, formation member, sand horizon (A, B, C, or D sand)
discontinuities (faults, folds) identified and mapped, alteration, organic
content, estimated amount of moisture content, mineralization direction, grade
and waste contacts, and potential disequilibrium values. Channel samples should
be taken on five-foot centers with a differentiation of lithologies and rock
unit colors.
Radioactivity measurements will be recorded either
electronically with the probe and/or recorded in a mineralized material control
technicians field book. Once the grade control technician returns to the
office, the data will be transferred to the grade control databases for storage
and future retrieval.
DISEQUILIBRIUM
Disequilibrium can be an issue in sandstone-hosted uranium
deposits within a dynamic hydrologic regime, where mobilization of the uranium
into and out of the deposition site results in an overestimation or
underestimation of the uranium content, based on radiometric measurements.
However, information gathered to date indicates that Roca Honda should not
experience a negative disequilibrium problem.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-32
|
|
www.rpacan.com
|
PRODUCTION SCHEDULE
Geotechnical criteria for underground mining include providing
estimates of maximum spans, maximum back area, types and use of ground support,
mining orientation relative to stress loading, and maximum rib heights for large
openings. These criteria consider the following mining requirements:
|
|
The mineralized material is concentrated in pods whose
mined area will range in width from 200 ft to 500 ft and extend from 200
ft and 2,000 ft in length. The height of the mining seam is expected to
vary from 6 ft to 21 ft. In the Southwest mining area, the lenses range in
depth from 1,800 ft to 2,100 ft below ground northwest to southeast. In
the Northeast mining area, depths of the zones range from 2,100 ft to
2,500 ft. |
|
|
|
|
|
The pod-shaped mineralized material zonesplunge at an
average of 3° to southeast (125° bearing) perpendicular to the San Mateo
and Ambrosia fault zones. Locally, plunges range from flat to 15°.
|
|
|
|
|
|
Mine access will be via shaft on Section 16 with most of
the mineralized material structures to the north (Southwest mineralized
zone) and northeast (Northeast mineralized zone). |
|
|
|
|
|
The mineralized structures are located in the Westwater
Canyon Member of the Morrison Formation in sequential sand units, referred
to as (from top to bottom) A, B1, B2, C, and D sands. The vertical extent
of the mineralized structures will either bottom-up access or top-down
access from the sides of the mineralized structures. Minimum grade cut-off
requirements in the variable grade mineralized material zones will result
in low-grade unmined blocks of ground within mineralized structures that
will remain after mining as pillars. |
|
|
|
|
|
Historic mining is more than two miles from the
mineralized structures being considered for current mining. There are no
current plans to connect new mining to old historic workings. Therefore,
new mining does not need to consider the proximity of the historic
workings. |
A preliminary conceptual design was based on room-and-pillar
mining methods used in the nearby historic mines (Fitch 2010). The mining
concept included stopes consisting of developing primary rooms and pillars
extending transversely across the mineralized structure the full mineralized
structure height for an equivalent 85% recovery ratio. Stope access was via
drill/sampling/drainage galleries beneath the mineralized material structure,
but above the Recapture Formation. The resource model and underlying data have
not changed, however, RPA has reported Mineral Resources at a higher cut-off
grade, consistent with the production scenario proposed in this PEA.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-33
|
|
www.rpacan.com
|
The LoM schedule is shown in Section 22 Economic Analysis, and
an annual summary of the underground mining schedule and key metrics is
presented in Table 16-5. This schedule is based on monthly, crew by crew
scheduling, and encompasses the period from the expected receipt of the Mining
Permit until the completion of mining. The potentially mineable material is
composed of Measured and Indicated Mineral Resources of 2.033 million tons at a
diluted grade of 0.365% U3O8, and the potentially mineable Inferred Resources
included in this economic analysis are 1.400 million tons at a diluted grade of
0.355% U3O8.
Initial activities include development of primary mine access
components including shaft sinking and preliminary station development, blind
boring of the exhaust and emergency escape way boreholes and construction of the
backfill/aggregate raises. This is followed by the sequential development and
stope mining schedules for the 5340, 5260 4465, and 4435 levels. The mine
schedule then continues production to the end of the mine life.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-34
|
|
www.rpacan.com
|
TABLE 16-5 ANNUAL
PRODUCTION STATISTICS FROM LIFE-OF-MINE
SCHEDULE
Roca Honda Resources, LLC Roca
Honda Project
|
|
|
Pre-production |
Operations |
Category |
Units |
Total |
YR -2 |
YR -1 |
YR 1 |
YR 2 |
YR 3 |
YR 4 |
YR 5 |
YR 6 |
YR 7 |
YR 8 |
YR |
Development (waste) |
(000) feet |
116.8 |
1.9 |
18.8 |
29.2 |
19.5 |
13.8 |
7.3 |
8.7 |
8.2 |
4.0 |
4.1 |
1 |
Development (Planned Production) |
(000) feet |
29.5 |
0.0 |
1.1 |
5.7 |
6.1 |
4.2 |
3.9 |
3.1 |
2.6 |
1.3 |
1.2 |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Planned Production - Section 16 |
(000) ton |
430.6 |
0.0 |
0.6 |
83.2 |
165.7 |
148.4 |
15.5 |
0.0 |
0.0 |
0.0 |
0.0 |
17 |
Planned Production - Section
9 |
(000) ton |
947.7 |
0.0 |
13.9 |
58.3 |
197.1 |
224.9 |
200.1 |
158.6 |
51.3 |
43.5 |
0.0 |
0 |
Planned Production - Section 10 |
(000) ton |
1,992.6 |
0.0 |
0.0 |
26.0 |
84.8 |
96.9 |
195.3 |
273.2 |
351.5 |
325.3 |
339.5 |
300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Planned Production |
|
3,432.5 |
0.0 |
15.2 |
227.0 |
449.1 |
470.2 |
411.0 |
431.8 |
402.8 |
368.8 |
339.5 |
317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lb U3O8 Contained - Section 16 |
(000) lb |
1,802.7 |
0.0 |
2.8 |
407.8 |
768.3 |
535.6 |
43.6 |
0.0 |
0.0 |
0.0 |
0.0 |
44 |
Lb U3O8 Contained - Section
9 |
(000) lb |
5,958.1 |
0.0 |
71.4 |
327.4 |
1,281.9 |
1,293.1 |
1,442.4 |
949.6 |
432.6 |
159.7 |
0.0 |
0 |
Lb U3O8 Contained - Section 10 |
(000) lb |
17,003.7 |
0.0 |
6.3 |
691.1 |
743.7 |
934.3 |
1,873.6 |
2,926.1 |
2,975.5 |
2,674.5 |
2,513.8 |
1,664. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total lb U3O8 Contained |
(000) lb |
24,764.6 |
0.0 |
80.5 |
1,426.3 |
2,794.0 |
2,763.0 |
3,359.6 |
3,875.6 |
3,408.1 |
2,834.2 |
2,513.8 |
1,709 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste Produced from Development |
(000) ton |
821.0 |
14.8 |
144.6 |
205.9 |
136.8 |
94.2 |
48.3 |
57.8 |
54.4 |
26.7 |
27.1 |
10 |
Waste Directly Used as
Backfill |
(000) ton |
386.5 |
0.0 |
0.0 |
35.6 |
116.1 |
92.5 |
13.4 |
33.9 |
33.8 |
25.6 |
25.3 |
10 |
Waste Hoisted to Surface for Stockpiling |
(000) ton |
434.4 |
14.8 |
144.6 |
170.3 |
20.6 |
1.6 |
35.0 |
24.0 |
20.6 |
1.1 |
1.8 |
0 |
|
|
|
|
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0 |
Total Hoisting - Waste + Planned Production
|
(000) ton |
3,866.9 |
14.8 |
159.8 |
397.4 |
469.7 |
471.8 |
446.0 |
455.8 |
423.4 |
369.8 |
341.4 |
317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development Waste Backfill from Surface
Stockpile (SRP) |
(000) ton |
49.2 |
0.0 |
0.0 |
0.0 |
9.7 |
34.1 |
4.6 |
0.8 |
0.0 |
0.0 |
0.0 |
0 |
Development Waste Backfill
from Surface Stockpile (DF) |
(000) ton |
466.7 |
0.0 |
3.1 |
47.2 |
62.6 |
75.6 |
139.5 |
115.1 |
20.6 |
1.1 |
1.8 |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Imported Backfill from
Surface Quarry (SRP) |
(000) ton |
147.3 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
1.1 |
7.9 |
20.0 |
28.9 |
89 |
Imported Backfill from Surface Quarry (DF)
|
(000) ton |
1,188.3 |
0.0 |
3.1 |
47.2 |
62.6 |
75.6 |
139.5 |
156.0 |
221.2 |
214.2 |
176.6 |
92 |
Imported Roadbed Aggregate
from Surface Quarry |
(000) ton |
71.3 |
1.1 |
11.5 |
17.8 |
11.9 |
8.4 |
4.4 |
5.3 |
5.0 |
2.4 |
2.5 |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Quarried Material |
(000) ton |
1,406.8 |
1.1 |
14.6 |
65.0 |
74.5 |
84.0 |
144.0 |
162.4 |
234.1 |
236.6 |
208.0 |
182
|
SRP Step-Room-and-Pillar
DF Drift-and-Fill
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-35
|
|
www.rpacan.com
|
SCHEDULING ASSUMPTIONS AND RISKS
As indicated in previous sections of this report, development
and stope mining productivities used for scheduling purposes have been
calculated based on average ground conditions and substantial depressurization
and reduction of the volumes of local groundwater inflow. Based on current rock
strength testing information, it is estimated that 40% of the ground will be
very weak, 40% average and 20% stronger than average. It can be expected,
therefore, that, in some instances, ground conditions or water flows will be
better than the average, but more often, will be significantly worse than
average. Whenever higher than expected groundwater inflows or weaker rocks are
encountered, productivities will be significantly reduced and the ability to
meet the development and production targets included in this schedule will be
challenging.
In the Southwest mineralized zones, dedicated definition
drilling and dewatering drifts will be located below the mineralized horizons.
The scheduled elapsed time between the definition and dewatering of a specific
stoping block, the subsequent development of stope accesses followed by the
initiation of mining, has been maximized. This approach should result in
improved ground and water inflow conditions, enhancing the probability of
meeting schedule targets. In the Northeast mineralized zones, due to the
proximity of the mineralized horizons to the Recapture Zone, definition drilling
and dewatering is undertaken sequentially and the dewatering efficiency will
therefore be reduced.
HEALTH AND SAFETY
Refuge stations will be provided for all personnel who are not
able to reach the designated emergency escape route in the regulated timeframe.
Two types of stations will be used; one is permanent chambers constructed near
the shaft and ventilation raises lower levels while the other is a mobile,
self-contained, unit that is part of the mining and development crews
equipment. The permanent stations have a capacity of 50 people and are equipped
with first aid supplies, firefighting supplies, bulkhead and ventilation cloth,
sanitary facilities, communications, seating and tables, food stuffs, compressed
air, and water, as required by Federal and State laws. The stations will
normally serve as lunch rooms or training and conference rooms and will be
accessed through a metal door that can be made air tight.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-36
|
|
www.rpacan.com
|
All crews will be issued TLDs to monitor the exposure to
radiation in the work place. Records will be maintained and exposure limits will
be set such that if workers are exposed to radiation above a certain limit they
will be moved to a different work area to reduce their exposure and to maintain
safe working conditions. In addition, radon and thoron (radon isotope produced
by thorium) levels within the mine, and plant air would be monitored to ensure
that mine ventilation is sufficient to reduce radon and thoron to acceptable
concentrations.
Site crews will be trained in mine rescue procedures and a mine
rescue station will be set up and equipped to respond to an emergency. An
ambulance will be maintained at the site for use on surface, and fully equipped
first aid rooms will be set up and maintained underground and on the surface.
There will be first aid coverage at the site at all times. A helipad will be
constructed.
Surface firefighting equipment will be kept on site, and
hydrants and hose stations for firefighting will be installed at strategic
locations on surface.
RADIOACTIVE MATERIAL LICENSE REQUIREMENTS
MINE
Since conventional uranium mining does not involve the
processing of source material as defined under the US Atomic Energy Act
(AEA), a uranium mine is not a facility that requires a radioactive
material license from the United States Nuclear Regulatory Commission (US NRC)
or an Agreement State* under the AEA. The AEA defines source material as (10 CFR
40.4):
(1) Uranium or thorium, or any combination thereof, in any
physical or chemical form or (2) ores which contain by weight one-twentieth of
one percent (0.05%) or more of: (i) Uranium, (ii) thorium or (iii) any
combination thereof. Source material does not include special nuclear material.
However, exemptions under 10 CFR 40.13 define unimportant
quantities of source material to include unrefined and unprocessed ore
containing source material. Accordingly, unprocessed (not yet milled) uranium
ore is not licensable material under the AEA and therefore uranium mines in the
US do not need radioactive material licenses.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-37
|
|
www.rpacan.com
|
A radiological public exposure limit of 10 millirem/year
(mrem/yr) from radon released from mine shafts and vents is established by the
EPA at 40 CFR 61, Subpart B, National Emission Standards for Radon Emissions
from Uranium Mines. In the design phase of the mine, preliminary HVAC and
related facility design information will be used in combination with local
meteorological and demographic information to demonstrate that compliance to
this standard will be achievable.
MILL
The US NRC establishes a radiological exposure limit of 100
mrem/yr to a member of the public from all releases (radionuclide particulates
and radon) from any licensed facility at 10 CFR 20.1301. An applicant for a
source material license (e.g., for a conventional uranium mill or in-situ
recovery (ISR) must provide to the US NRC with the license application an
analysis demonstrating that compliance to this standard will be achievable
during operations (e.g., see NRC Regulatory Guide 3.8, Preparation of
Environmental Reports for Uranium Mills, Section 5.2.3) and to demonstrate
that the design is as low as reasonably achievable (ALARA) (prior to
availability of effluent and environmental monitoring data during
operations).
Details of the White Mesa Mills existing permits and licences
are included in Section 20.
FUTURE MINING
In addition to the potential mineable material included in the
LoM plan presented above, there are Indicated and Inferred Resources located
outside of the mine plan, but within the Roca Honda Project area. Additional
mine planning and exploration is recommended to allow the development of the
most efficient exploration and exploitation plan for the additional resources.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 16-38
|
|
www.rpacan.com
|
17 RECOVERY METHODS
The ore produced from the Roca Honda Project is planned to be
milled at the Energy Fuels owned White Mesa Mill located near Blanding, Utah.
The White Mesa Mill was originally built in 1980. Since construction, the White
Mesa Mill has processed approximately five million tons of uranium and vanadium
containing ores from Arizona, Colorado, and Utah. The White Mesa Mill is
currently operated on a campaign basis to produce yellowcake (U3O8). It can also
process alternate feed materials.
Capable of processing 2,000 stpd, the White Mesa Mill will
process mineralized materials from the Roca Honda Project, other Energy Fuels
uranium mines as well as potential toll milling ores for other producers in the
area, and alternate feed material. This report only addresses the costs and
revenues of the Roca Honda Project including project specific costs at the White
Mesa Mill. The location of the White Mesa Mill is included as Figure 17-1. The
site features of the White Mesa Mill are shown in Figure 17-2.
The White Mesa Mill process is described in the following
sections and the flow sheet is shown in Figure 17-3.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-1
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-2
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-3
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-4
|
|
www.rpacan.com
|
ORE RECEIVING
Ore will be hauled from the Roca Honda Mine to the White Mesa
Mill in 24-ton highway haul trucks. When trucks arrive at the White Mesa Mill,
they are weighed and probed prior to stockpiling. Samples are collected to
measure the dry weight, and to perform amenability testing for process control.
Trucks are washed in a contained area, and scanned for gamma radiation prior to
leaving the White Mesa Mill site.
GRINDING
A front end loader will transfer the mineralized material from
the stockpiles to the White Mesa Mill through the 20 in. stationary grizzly and
into the ore receiving hopper. The ore is then transferred to the 6 ft by 18 ft
diameter semi-autogenous grinding (SAG) mill via a 54 in. wide conveyor belt.
Water is added with the ore into the SAG mill where the grinding is
accomplished. The SAG mill is operated in closed circuit with vibrating screens.
The coarse material, P80 +28 mesh (28 openings per linear inch) is returned back
to the SAG mill for additional grinding and the P80 -28 mesh portion is pumped
to the pulp (wet) storage tanks.
The pulp storage tanks are three 35 ft diameter by 35 ft high
mechanically agitated tanks. These tanks serve two basic purposes. First, they
provide storage capacity for the ore prior to chemical processing; and second,
they provide a facility for blending the various types of ore prior to
processing.
LEACHING
From the pulp storage tanks, pre-leach and leaching are
employed to dissolve the uranium. A hot, strong acid treatment is utilized in
the second stage in order to obtain adequate recoveries. This results in high
concentrations of free acid in solution. Therefore, a first stage "acid kill" is
employed, which is referred to as pre-leach. Ore from the pulp storage tanks is
metered into the pre-leach tanks at the desired flow rate. The slurried ore from
the pulp storage tanks will usually be about 50% solids mixed with 50% water.
This slurry is mixed in the pre-leach tanks with a strong acid solution from the
counter current decantation (CCD) circuit resulting in a density of
approximately 22% solids. This step is employed to neutralize the excess acid
from the second stage leach with raw ore. By doing this, not only is the excess
acid partially neutralized, but some leaching occurs in the pre-leach circuit,
and less acid is needed in the second stage leach. The pre-leach ore flows by gravity to the
pre-leach thickener. Here, flocculent is added and the solids are separated from
the liquid. The underflow solids are pumped into the second stage leach circuit
where acid, heat, and an oxidant (sodium chlorate) are added. About three hours
retention time is expected to be needed in the seven second stage leach tanks.
Each tank has an agitator to keep the solids in suspension. The discharge from
the leach circuit is a slurry consisting of solids and a sulfuric acid solution
with dissolved uranium and vanadium. The leach slurry is then pumped to the CCD
circuit for washing and solid liquid separation. The liquid or solution from the
pre-leach thickener overflow is pumped first to the clarifier and then the SX
feed tank.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-5
|
|
www.rpacan.com
|
COUNTER CURRENT DECANTATION
The CCD circuit consists of a series of thickeners in which the
pulp (underflow) goes in one direction, while the uranium/vanadium bearing
solution (overflow) goes in a counter current direction. The solids settle to
the bottom of the first thickener tank and flocculant is added to each thickener
feed to increase the settling rate of the solids. As the pulp is pumped from one
thickener to the next, it is gradually depleted of its uranium and vanadium.
When the pulp leaves the last thickener, it is essentially barren waste that is
disposed of in the tailings cells.
Eight thickeners are utilized in the CCD circuit to wash the
acidic uranium bearing liquids from the leached solids. Water or barren
solutions are added to the No. 8 thickener and flow counter-current to the
solids. As the solution advances toward the No. 1 thickener it carries the
dissolved uranium. Conversely the solids become washed of the uranium as they
advance toward the last thickener. By the time the solids are washed through the
seven stages of thickening they are 99% free of soluble uranium and may be
pumped to the tailings pond. The clear overflow solution from No. 1 CCD
thickener advances through the pre-leach circuit and pre-leach thickener as
previously explained and to the clarifier, which is an additional thickener
giving one more step in order to settle any suspended solids prior to advancing
the solution to the solvent extraction (SX) circuit.
TAILINGS MANAGEMENT
Tailings solutions (approximately 50% solids) are pumped to the
tailings cells for permanent disposal. The sands are allowed to settle and the
solutions are transferred to the evaporation cells prior to reuse in the milling process. Additional details
on the tailings cells and mill water balance are discussed in the White Mesa
Mill portion of Section 19 - Project Infrastructure.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-6
|
|
www.rpacan.com
|
SOLVENT EXTRACTION
The primary purpose of the uranium solvent extraction (SX)
circuit is to concentrate the uranium. This circuit has two functions. First,
the uranium is transferred from the aqueous acid solution to an immiscible
organic liquid by ion exchange. Alamine 336 is a long chain tertiary amine that
is used to extract the uranium compound. Then a reverse ion exchange process
strips the uranium from the solvent, using aqueous sodium carbonate. As
previously noted, the solution extraction (SX) circuit is utilized to
selectively remove the dissolved uranium from the clarified leach solution.
Dissolved uranium is loaded on kerosene advancing counter currently to the leach
solution. The uranium-loaded kerosene and leach solution are allowed to settle
where the loaded kerosene floats to the top allowing for separation. The uranium
barren leach solution is pumped back to the CCD circuit to be used as wash
water. The loaded organic is transferred to the stripping circuit where
acidified brine (stripping solution) is added and strips the uranium from the
kerosene. Within the SX circuit, the uranium concentrations increase by a factor
of four when loading on the kerosene and again by a factor of ten when removed
by the stripping solution. The barren kerosene is returned to the start of the
SX circuit. The loaded strip solution is transferred to the precipitation
circuit.
With respect to impurities removal, the SX circuit of the White
Mesa Mill is highly selective to uranium and consistently produces yellowcake in
the 98% to 99% purity range. This includes ores that contain vanadium, arsenic,
and selenium which have shown to be problematic with other uranium recovery
methods. The White Mesa Mill has a vanadium recovery circuit, but it is only
operated when the head grades are greater than 2 g/L vanadium. This high of a
head grade is only expected when the vanadium to uranium ratio is greater than
3:1. Vanadium recovery is not anticipated from the Roca Honda mineralized
material based on the low vanadium content.
PRECIPITATION, DRYING AND PACKAGING
In the precipitation circuit the uranium, which up to this
point has been in solution, is caused to precipitate or actually "fall out" of
the solution. The addition of ammonia, air, and heat to the precipitation
circuit causes the uranium to become insoluble in the acid strip solution.
During precipitation, the uranium solution is continuously agitated to
keep the solid particles of uranium in suspension. Leaving the precipitation
circuit, the uranium, now a solid particle in suspension, rather than in
solution, is pumped to a two-stage thickener circuit where the solid uranium
particles are allowed to settle to the bottom of the tank. From the bottom of
the thickener tank the precipitated uranium in the form of a slurry, about 50%
solids, is pumped to an acid re-dissolve tank and then mixed with wash water
again. The solution is then precipitated again with ammonia and allowed to
settle in the second thickener. The slurry from the second thickener is
de-watered in a centrifuge. From this centrifuge, the solid uranium product is
pumped to the multiple hearth dryer. In the dryer, the product is dried at
approximately 1,200ºF, which dewaters the uranium oxide further and also burns
off additional impurities. From the dryer, the uranium oxide (U3O8) concentrated
to +95%, is stored in a surge bin and packaged in 55-gallon drums. These drums
are then labeled and readied for shipment.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-7
|
|
www.rpacan.com
|
WHITE MESA MILL UPGRADES
ROCA HONDA PROJECT SPECIFIC UPGRADES
The White Mesa Mill was refurbished in 2009, and it does not
require any plant related upgrades to process the Roca Honda ore. Additional
tailings capacity will be required to facilitate permanent storage of the
tailings sands and barren solutions. There are additional, permitted areas
available for future tailings storage beyond the current capacity of 3.5 Mt.
The White Mesa Mill is currently licensed to construct Cell 1,
Cell 2, Cell 3, Cell 4A, and Cell 4B. Cell 1 is strictly an evaporation pond,
and it will continue to be used as one. Cell 1, Cell 2, Cell 3, Cell 4A, and
Cell 4B have been built and are currently used for tailings-related process
storage. Cell 2 and Cell 3 have been used for tailings disposal over the life of
the White Mesa Mill to date. Cell 4A is the current tailings disposal cell, and
it has 1.5 million tons (Mt) of capacity remaining. Cell 4B has all of its
original two (2) million tons (Mt) of capacity remaining, because it has only
been used as a water evaporation pond. Cell 4B was constructed in 2011 at a cost
of US$12 million. The estimated cost to reclaim Cell 4B is $2.5 million. The
tailing capacity replacement has been estimated at US$5/t of tailings for the
Roca Honda ore.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-8
|
|
www.rpacan.com
|
The processing parameters obtained from historical production
of the Grants District ores and from the Kerr-McGee metallurgical test work have
been shown to be similar to the ores milled in 2009 and 2010 at the White Mesa
Mill.
PROCESS DESIGN CRITERIA
The principal design criteria selected are tabulated below in
Table 17-1. The process operation parameters will be finalized following testing
of site specific metallurgical samples. Required reagents and mill labor is
discussed in Section 21 Capital and Operating Costs of this report.
TABLE 17-1 PRINCIPAL PROCESS OPERATION CRITERIA
Roca Honda Resources LLC Roca Honda Project
General
|
Criteria |
Processing rate |
547,500 stpa |
|
1,800 stpd |
Feed grade |
0.365 % uranium |
Uranium circuit |
|
Final grind |
80% passing 28 Mesh |
Typical sulfuric acid consumption |
150 lb/t |
Final concentrate mass |
122 lb/ft3 |
Product assay |
97 % U3O8 |
Recovery to final concentrate |
95% uranium in feed
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 17-9
|
|
www.rpacan.com
|
18 PROJECT INFRASTRUCTURE
Infrastructure at the Roca Honda mine has been designed to
accommodate all mining and transportation requirements. This includes offices,
mine dry, warehousing, stockpiles, standby generators, fuelling station, rapid
response services, equipment utilities, and workshops.
The Roca Honda Project area is an undeveloped site with gravel
road access and no site facilities. The White Mesa Mill is an operating uranium
mill six miles from Blanding, Utah with good paved road access on US Highway 191
from the Roca Honda mine site. The proposed Roca Honda Project layout is shown
in Figure 16-1. The White Mesa Mill layout is shown in Figure 16-2.
ROCA HONDA ROADS AND ACCESS
Site roads will be required to access the following locations
from the mine complex:
|
|
Mine shaft |
|
|
|
|
|
Dewatering wells |
|
|
|
|
|
Water treatment plant |
|
|
|
|
|
Mine fresh air raises, two escape way raises,
and mine air heater |
|
|
|
|
|
Four secondary mine exhaust raises |
|
|
|
|
|
Water reclaim area |
Site roads will be low-speed, two lane and single lane roads
with turnouts to permit vehicles to meet.
A parking area for employee and company vehicles will be
provided beside the mine offices.
ACCESS ROAD FROM THE MINE TO THE WHITE MESA MILL
The access road from the site to Highway 605 will be improved
during haul road construction. All other roads are paved and in place.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-1
|
|
www.rpacan.com
|
MATERIAL HANDLING AND STORAGE
The storage area at the mine will require space for fuel
storage and some bulk materials storage. The yards will be designed to divert
surface drainage away from roads and storage yards and appropriate spill
response plans will be developed for the various products that are to be handled
in the area.
Mine development material will be either be hoisted to the
surface and either used for surface construction or stockpiled in storage areas
for backfill and reclamation, in temporary locations for run of mine (RoM)
mineralized material, or used as backfill in underground excavated areas. The
stockpiles of RoM material will subsequently be used as plant feed.
PRODUCT SHIPMENTS
All mill related product storage is in place and shown on
Figure 16-2.
Dried yellowcake will be packaged in appropriately labeled,
Department of Transportation (DOT)-approved, 55 gal drums, each containing 650
lb to 1,000 lb of dry yellowcake. Yellowcake is classified by the DOT as
radioactive material of Low Specific Activity according to 49 Code of Federal
Regulations (CFR) 172-178 (CFR, 1976). Each drum will be labeled on two
sides with the drum number, net yellowcake weight, and radioactivity stickers
labeled Low Specific Activity and Caution - Radioactive Material.
MINE AND MILL FACILITIES
ROCA HONDA MINE
Offices for site management personnel will be located within
the operations complex at the mine. These will include administration,
management, mine, process, and maintenance personnel. Mine personnel will have
offices in the mine administration building.
WAREHOUSE FACILITIES
A central warehouse located on surface will be established at
the mine site. The heated indoor storage will be supplemented with an organized
container storage yard and some outdoor lay down area. The warehouse area will
be manned by a purchasing agent and an assistant.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-2
|
|
www.rpacan.com
|
MAINTENANCE FACILITIES
The surface maintenance shop will be used for maintenance of
all surface and limited, small underground equipment at the mine site. The
underground fleet and part of the surface fleet will see service through the
year.
The planned underground shop will have service bays for heavy
equipment as well as space for light equipment. The shop will be equipped with
an overhead crane for servicing equipment.
A machine shop with milling tools, a lathe, saws, and work
benches will be installed to provide emergency replacement of parts, if
necessary. There will be a welding bay for the repair of boxes and buckets and
other welding jobs.
FUEL FACILITIES
Fuel will be loaded at Grants, New Mexico for transport to the
mine. A bermed fuel storage area; containing diesel fuel tank(s) will be
provided along the main haul access road at the mine and mill areas. This area
will include a fuel load out from tankers and dispensing station for vehicles.
Fuel dispensing will be monitored to provide documentation of use and
environmental compliance. The storage areas will be lined with an impermeable
liner and the berm will be large enough to contain the required quantity of fuel
based upon storage regulations.
MINE POWER
Electricity is available at the substation with power coming
from the New Mexico Energy grid. A new overhead transmission line supplies power
to the mine. Back up diesel generation of 5 MW will be required at the mine in
case of a power failure. Standby diesel generators for the mine, dewatering
wells, water treatment plant will be required, and will be installed in a
separate powerhouse so that a major failure or loss of the main power house does
not impact the standby units.
MINE WASTE STOCKPILE AREA
The mine waste stockpile has been sized at 11 acres. No special
handling is required for the mine waste rock. Mine waste will be placed directly
on the ground after the topsoil stripping and grubbing has been completed. The
mine waste rock will be hauled from the mine to the stockpile, placed, and
spread. This size waste stockpile will accommodate a total of 0.35 million cubicyards of mine waste. Mine development waste will
only be stockpiled during initial development and the stockpile is sized
assuming that most development waste will be used as backfill during mining
operations.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-3
|
|
www.rpacan.com
|
WHITE MESA MILL
There is office space for the administration, technical, mill
and maintenance personnel in a central office location at the White Mesa Mill
facility.
MILL POWER
Total online power for the White Mesa Mill is presented in
Table 18-1. Electrical loads were inventoried from existing equipment. The
majority of electrical components installed are low voltage 460 V. Medium
voltage, 4,160 V, is used for the SAG mill.
TABLE 18-1 WHITE MESA MILL PLANT ESTIMATED ELECTRICAL LOAD
Roca Honda Resources LLC Roca Honda Project
Connected Load Rating |
hp |
kW |
kVA |
SAG Mill |
700 |
567 |
651 |
All Pumps |
604 |
489 |
615 |
Conveyors/Feeders/Screens |
94 |
76 |
95 |
Agitators/Settlers/Mixers |
550 |
446 |
512 |
CCD |
200 |
162 |
186 |
Presses/Flocculant |
22 |
18 |
23 |
Fans/Scrubbers/Cranes |
45 |
36 |
42 |
Bag
House/Miscellaneous |
91 |
65 |
81 |
Totals |
2,306 |
1,859 |
2,205
|
|
|
|
|
Operating Load Rating |
|
|
|
SAG Mill |
581 |
471 |
540 |
All Pumps |
451 |
358 |
449 |
Conveyors/Feeders/Screens |
71 |
55 |
68 |
Agitators/Settlers/Mixers |
457 |
370 |
425 |
CCD |
166 |
134 |
154 |
Presses/Flocculants |
17 |
14 |
18 |
Fans/Scrubbers/Cranes |
37 |
30 |
35 |
Bag House/Miscellaneous |
58 |
48 |
60 |
Totals |
1,838 |
1,480 |
1,749
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-4
|
|
www.rpacan.com
|
MILL MAKEUP WATER
Fresh water to be used in the uranium leach plant is provided
by four existing on site wells.
WHITE MESA TAILINGS MANAGEMENT
GENERAL
The White Mesa Mill is currently licenced to construct Cell 1,
Cell 2, Cell 3, Cell 4A, and Cell 4B. Cell 1 is strictly an evaporation pond and
will continue to be used as one. Cell 2 and Cell 3 have been used for tailings
disposal over the life of the White Mesa Mill. Cell 4A is the current tailings
disposal cell and has 1.5 million tons of capacity remaining and Cell 4B has all
of its original 2.0 million tons of capacity remaining as it has only been used
as a evaporation pond. The next 2 Cells to be installed have already been
designed and will be permitted as needed. Tailing cell liner systems are
installed to protect groundwater resources.
Cell 4B was constructed in 2011 at a cost of $12 million. The
estimated cost to reclaim Cell 4B is $2.5 million. The tailing capacity
replacement has been estimated at $5/st of tailings for the Roca Honda ore.
The construction will be scheduled to ensure that there is
always sufficient storage capacity available in the facility to avoid
overtopping if a major storm event occurs. The embankment provides sufficient
freeboard to safely accommodate the supernatant pond and Environmental Design
Storm event, combined with wave run-up. A spillway is included to pass the
Inflow Design Flood event.
TAILINGS WATER MANAGEMENT
Process solutions are stored in a combination of Cell 1, Cell
4A, or Cell 4B, depending on water storage and evaporation needs.
Water handling records are reported to the State of Utah
quarterly to comply with the Groundwater Discharge permit (No. UGW37004).
TAILINGS DEWATERING
During tailings deposition in the tailings cells, solutions are
drawn from the cell to maintain capacity for additional tailing solids. When the
cells fill to capacity, reclamation is commenced and solutions are continued to
be removed from the solids to further protect groundwater resources.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-5
|
|
www.rpacan.com
|
LAYOUT AND DESIGN
The White Mesa Mill site and tailings locations are shown on
Figure 16-2. Cell 1, Cell 2, and Cell 3 were installed prior to 40 acre limit
being imposed by the US EPA.
TAILINGS PROPERTIES
Mill tailings will be acidic with a pH ranging from one to
three. Uranium grade in the tailings should average below 0.02% assuming a 95%
recovery of uranium in the mill.
DIVERSION STRUCTURES
Three stormwater diversions currently protect the White Mesa
Mill area and tailings cells from large storm events.
SURFACE EQUIPMENT
The surface equipment fleet at the mine will be required for
site services on a year round basis plus the seasonal demands of the annual
concentrate shipment and resupply. The surface mobile equipment at the mine and
mill will be required to support the operation. In light of the potential to
hire local equipment from Grants, New Mexico or other local area communities, it
will not be necessary to be completely self-sufficient. The White Mesa Mill
surface equipment comprises the equipment already on-site.
A list of the surface mobile equipment for the mine is shown in
Table 18-2.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-6
|
|
www.rpacan.com
|
TABLE 18-2 SURFACE EQUIPMENT FLEET
Roca Honda
Resources LLC Roca Honda Project
Area
|
Units |
Primary Uses |
Warehouse/Water Treatment
Plant/Pipeline Maintenance |
Fork lift |
1 |
Freight Handling, Pipelines, General |
Bobcat |
1 |
Mine Clean Up |
HDPE Pipe Welder |
1 |
Water Supply/Dewatering/Tailings Lines |
Surface |
|
|
Fuel Trucks |
1 |
Fuel Haul |
Container Trailers |
1 |
Container Moves |
Pick-up Truck |
2 |
Garbage/Maintenance/Inspection |
Management |
|
|
Pick-up Truck |
2 |
Management |
Vans For Crews |
4 |
Crew Transportation |
Ambulance |
1 |
Emergency Rescue |
Fire Truck |
1 |
Fire Fighting |
Spill Response |
1 |
|
SECURITY
In view of the remote nature of the mine site, there is little
risk to the general public and little risk of public access to the site. There
will be occasional visitors in summer, who will come to the site by passenger
vehicles. Such visitors will be met with signs and personnel who will explain
that this is a private mine and mill site, and visitors are not allowed on site
and there are no services available. There will be manned security stations at
entrance locations on the mine and mill sites.
Where necessary, fencing will be installed to keep wildlife out
of areas such as the reagent storage. The use of containers for storage will
minimize the requirement for such fencing.
The White Mesa Mill is fenced. All visitors are required to
check in and they are required to have an RHR escort.
MEDICAL FACILITY
The medical facilities at each site (mine or mill) will consist
of an appropriately-supplied first aid station, and there will be appropriately
qualified first aid personnel on site and on call at all times. First aid rooms
will be located in the mine office and mill office complex areas.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-7
|
|
www.rpacan.com
|
An ambulance will be available on site for the transport of
injured personnel to the first aid stations and or site helipad. Seriously
injured personnel will be evacuated from the mine site by helicopter to
Albuquerque, New Mexico or Grand Junction, Colorado in the case of a serious
injury at the White Mesa Mill. The ambulance will be certified for operation. A
helipad will be constructed at the mine site.
A fire truck will be available on site to respond to surface
fire incidents. The surface fire brigade will be a combination of personnel from
the site.
Mine rescue gear will be purchased and located within a mine
rescue training area in the office complex. Mine rescue personnel will be
selected and trained as required under the Mine Safety and Health Administration
Rules.
LANDFILL
Garbage will be collected periodically and shipped to the
appropriate municipal landfill. Recyclable materials will be collected
separately and shipped out annually for processing. A waste management site will
be established for the long term storage of waste materials. All waste generated
at the White Mesa Mill is disposed of in dedicated areas of the tailing
cells.
GREYWATER AND SEWAGE TREATMENT
The greywater and sewage from the mine will be sent to separate
sewage treatment facilities (Biodisk or equivalent) after which the water will
be discharged. Solids in the sewage treatment units will be removed on an annual
basis and disposed at the appropriate municipal treatment facility. The White
Mesa Mill utilizes a septic system and leach field to treat sanitary sewage.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 18-8
|
|
www.rpacan.com
|
19 MARKET STUDIES AND CONTRACTS
MARKETS
The uranium market is controlled by a few traders on both the
supply and the demand side. The value of world primary source uranium production
is approximately US$5.5 billion per year. That is less than ten percent of the
value of newly mined gold production or newly mined copper production.
SUPPLY
According to the International Atomic Energy Agency/OECD
Nuclear Energy Agency Red Book, world uranium requirements totaled more than
61,600 t U in 2012 and are expected to decrease to 59,370 t U in 2013. In 2011,
2012 and 2013, uranium was produced in 21 different countries, with Germany,
Hungary and France producing small amounts of uranium only as the result of mine
remediation activities (Bulgaria did not report uranium recovery from mine
remediation for the 2014 edition of the Red Book; hence there is one less
producing country than in 2010). Kazakhstans growth in production continued,
albeit at a slower pace, and it remains the worlds largest producer with 21,240
t U produced in 2012 and 22,500 t U expected in 2013. In 2012, production in
Kazakhstan amounted to more than the combined 2012 production of Canada and
Australia, respectively, the second and third largest producers.
Niger produced 4,822 t U in 2012, which is only slightly more
than Namibia which produced 4,653 t U. The top five producing countries
(Kazakhstan, Canada, Australia, Niger, and Namibia) retained their dominance
accounting for 79% of world production in 2012. Eleven countries, Kazakhstan
(36%), Canada (15%), Australia (12%), Namibia (8%), Niger (8%), the Russian
Federation (5%), Uzbekistan (4%) and the United States (3%), China (2%), Malawi
(2%), and Ukraine (2%) accounted for approximately 97% of world production. In
2013, world uranium production (59,370 t U) provided 100% of world reactor
requirements with Kazakhstan, Canada, and Australia accounting for 65% of the
production.
In 2013, eight companies marketed 82% of the world's uranium
mine production. In 1990, 55% of world production came from underground mines,
but since then ISR mining has steadily increased its share of the total. In 2013, underground/open pit
mines accounted for 47%, while ISR accounted for 46% with remaining coming from
by-product and secondary sources.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 19-1
|
|
www.rpacan.com
|
DEMAND
Demand is primarily as a source for nuclear power plants. The
use of nuclear power generation plants has become increasingly acceptable
politically. Both China and India have indicated an intention to increase the
percentage of power generated by nuclear plants. The largest increase in demand
will come from those two countries.
Because the time required for the permitting, financing, and
construction of power plants the increase in demand will be slow. It can be
concluded that the demand side of the market is expected to grow, slowly in the
near term, but increasingly over the long term. Most, but not all current
projections, show that the market will be in a slight oversupply balance in the
near term moving into an undersupply balance as early as 2020. Some analysts
project a near term undersupply.
PRICE
The key to understanding any mineral market is knowing how the
mineral price is determined. There are generally considered to be two prices in
the uranium market: 1) long term contract prices, and 2) spot prices. These are
published by companies that provide marketing support to the industry with UxC
being the most commonly followed price report. Over the long term price follows
the classic market force of supply demand balance with a speculative
investment market that creates price volatility.
There is also a budding futures market for uranium. That,
coupled with a speculative demand market, may have increased the volatility in
the uranium price.
The average annual uranium spot price is shown in Figure 19-1.
It may be seen that the price has varied from US$10.00 per pound of U3O8 in 2000
to almost US$100 per pound in 2007. The current uranium spot price is
approximately US$39 per pound.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 19-2
|
|
www.rpacan.com
|
FIGURE 19-1 AVERAGE ANNUAL PRICE SPOT MARKET 2000-2014
Source:
http://ycharts.com/indicators/uranium_spot_price
Figure 19-2 is an example of forecasts by some of the worlds
major banks and uranium traders long-term price. The use of a $65/lb uranium
price in this PEA can be considered reasonable if one compares the forecast of
uranium price in Figure 19-2.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 19-3
|
|
www.rpacan.com
|
FIGURE 19-2 MAJOR BANK URANIUM PRICE FORECAST 2013
Source:
http://www.investorsguru.com/ViewNewsletter.html?id=177
CONTRACTS
At this time, RHR has not entered into any long term agreements
for the provision of materials, supplies or labor for the Project. The
construction and operations will require negotiation and execution of a number
of contracts for the supply of materials, services and supplies.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 19-4
|
|
www.rpacan.com
|
20 ENVIRONMENTAL STUDIES, PERMITTING, AND SOCIAL OR
COMMUNITY IMPACT
ROCA HONDA RESOURCES ENVIRONMENTAL POLICY
As a steward of the land and resources in its charge, RHR is
committed to working for the wellbeing of its employees and the communities in
which it operates. RHR is committed to achieving excellence in all aspects of
its operations, in particular health, safety, radiological and environmental
protection. It will do so by implementing corporate health, safety and community
relations policies and procedures, as well as regulatory requirements and best
management practices.
Specifically, RHR will implement the following actions:
|
|
Integrate corporate and site-specific
environment, health, safety and emergency preparedness policies,
management systems, programs and plans with the goal of continuous
improvement; |
|
|
|
|
|
Design and operate its facilities to ensure
compliance with regulatory and Company requirements and minimize risks to
employee and community health and safety and the environment; |
|
|
|
|
|
Meet or exceed all regulatory requirements with
respect to protection of environmental resources; |
|
|
|
|
|
Train and equip employees with the
understanding, skills and facilities to achieve an injury-free, safe
workplace and to fulfill the Companys environmental obligations; |
|
|
|
|
|
Require on-site contractors to implement
practices consistent with Company health, safety, radiological and
environmental protection policies, procedures and plans; |
|
|
|
|
|
Train employees and on-site contractors to the
site- and job-specific health, safety, radiological and environmental
plans; |
|
|
|
|
|
Encourage resource conservation and pollution
prevention measures among employees and site contactors; |
|
|
|
|
|
Provide information and training for the safe
handling, use, transport, and disposal of radiological and other hazardous
materials; |
|
|
|
|
|
Operate radiological areas as low as reasonably
achievable; |
|
|
|
|
|
Educate employees on practices to improve
on-the-job safety; |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-1
|
|
www.rpacan.com
|
|
|
Conduct regular health, safety, radiological,
quality assurance and environmental protection audits, identifying and
implementing corrective actions as necessary ; and |
|
|
|
|
|
Communicate openly and on a timely basis with
employees, the public, government agencies, and other stakeholders on
activities involving health, safety, and environmental issues.
|
Extensive environmental baseline studies have been completed
for the Roca Honda site. A mine permit application was submitted in October
2009, revised in 2011 and deemed administratively complete. The permit
application is now undergoing technical review. A Draft EIS was issued by the
USFS in February 2013. An ROD and Final EIS is scheduled to be completed by
December 2016.
A summary of the major observed baseline conditions, possible
risks and mitigation measures are discussed below.
ROCA HONDA
SURFACE FEATURES
Jesus Mesa occupies approximately half of Section 9 and slopes
into Section 10. The top and upper portion of the mesa is sparsely vegetated,
and the perimeter of the mesa consists of sandstone ledges with areas of exposed
shale, particularly to the south of the mesa. The landscape southwest, north,
and southeast of the mesa is moderately vegetated, and the slopes are dissected
by drainages ranging from a few feet to 40 ft deep.
A local drainage basin, beginning from the base of Jesus Mesa
in Section 9, runs south and southwest just east of the center of Section 16.
There are also smaller drainages generally running southeast from the highest
point in Section 16 on an unnamed mesa at 7,292 ft. Drainages exist on both the
west and east sides of this mesa, with steep slopes and cliffs up to 50 ft high.
Section 16 is moderately vegetated.
BASELINE STUDIES
RHR prepared an environmental baseline analysis to support a
mine permit application. The Baseline Data Report was prepared in 2009 and
revised in 2011 to detail baseline environmental conditions at the mine site.
Since that time the report has been supplemented as needed to better describe
water quality and quantity, wildlife and wildlife habitat, and vegetation resources within the Project area. Details of all
baseline activities are documented in the report, and continually updated as
needed.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-2
|
|
www.rpacan.com
|
MINE SITE
Environmental Baseline Studies for the mine site were begun in
2006. Methods and results of work to date were documented in the Baseline Data
Report and Sampling and Analysis Plan submitted in October 2009 and revised in
2011 to the New Mexico Mining and Minerals Division and the U.S. Forest Service
(Cibola National Forest).
The Roca Honda Project area is sparsely populated, rural, and
largely undeveloped. The predominant land uses include low density grazing,
limited agricultural production, and recreational activities such as hiking,
sightseeing, picnicking, firewood gathering, and seasonal hunting.
MILL SITE
Strathmore Resources had previously planned to construct a new
mill to process ore from the mine on property owned by Roca Honda Resources
about 15 mi north of the mine site. Extensive environmental characterization
studies were completed to support permit applications but a source material
license application was never submitted to the U.S. Nuclear Regulatory
Commission, the federal agency charged with permitting uranium processing
facilities. Although Energy Fuels now intends to transport uranium ore to its
whollyowned White Mesa Mill in Blanding, Utah, the baseline studies completed
at the proposed mill site would be valuable for future permitting purposes if
market conditions eventually justified a local mill.
The White Mesa Mill operations and monitoring stations are
monitored daily with monthly and quarterly reports to the State of Utah, to
demonstrate compliance with State and Federal regulations.
PRIOR MINING ACTIVITIES
No prior mining operations, which may have affected the Project
area, exist on the proposed mine area. There were, however, more than 400
historic exploration boreholes drilled from the late 1960s to the early 1980s in
various locations throughout the Project area. Additionally, some of the
property immediately surrounding the Project area contains drill holes to
varying degrees; however, RHR has no knowledge of particular drilling locations
in these areas. Field inspections of the these areas conducted in conjunction with
other field activities revealed occasional pipe and other markers that may
identify possible drill hole locations, but they cannot be confirmed as such. In
addition to the drill holes themselves, the USGS mapped a network of drill roads
present mainly in Section 9 and 10 that accessed the drill sites. Most of these
roads have naturally re-vegetated, but are largely still passable.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-3
|
|
www.rpacan.com
|
HYDROGEOLOGY
The Roca Honda Project area is located in the southeastern part
of the San Juan structural basin, within the southeast part of the Ambrosia Lake
uranium subdistrict, which was the site of previous uranium mining and
associated mine dewatering activities from the 1960s through the 1980s. The
Project area lies within the Bluewater Underground Water Basin as extended by
the New Mexico Office of the State Engineer on May 14, 1976.
Large amounts of data on groundwater exist for the San Juan
Basin because the area contains deposits of recoverable uranium and valuable
groundwater resources. The USGS, the New Mexico Bureau of Mines and Mineral
Resources, and the New Mexico State Engineer cooperated in several
hydrogeological studies of the San Juan Basin, which have described area
aquifers and compiled and analyzed groundwater quality data and estimates of
hydraulic parameter values (Brod and Stone 1981, Frenzel and Lyford 1982, Stone
et al. 1983, Craigg et al. 1989, Dam et al. 1990, Dam 1995, and Craigg 2001).
Moreover, as part of the Regional Aquifer System Analysis program, the USGS
developed a steadystate multiaquifer groundwater flow model of the San Juan
Basin (Kernodle 1996). Roca Honda Resources developed a comprehensive and
accurate model of groundwater occurrences in the southern portion of the San
Juan Basin in support of mine permitting efforts. The model was accepted by the
New Mexico State Engineers Office in 2013 as part of the mine dewatering permit
process.
The RocaHonda Project area is approximately three miles
northwest of the Mt. Taylor uranium mine formerly operated by Gulf Mineral
Resources Company and others, and it is now owned by Rio Grande Resources
Corporation (General Atomics). This mine was dewatered during the 1970s and
early 1980s. Groundwater quality data and hydraulic parameter estimates were
collected both at the Mt. Taylor mine and at various mines west of the Roca
Honda Project area in the Ambrosia Lake subdistrict (NMEI 1974, GMRC 1979, and
Kelley et al. 1980). The groundwater quality and hydraulic characteristics of
the Westwater Canyon Member of the Morrison Formation were re-evaluated more recently during site
licensing in the Crownpoint and Church Rock areas (HRI 1988 and 1991 and US NRC
1997).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-4
|
|
www.rpacan.com
|
Historic exploratory drilling conducted by others, and more
recent drilling conducted by RHR, determined that the strata beneath the Project
area represent the same sequence of rocks found in the San Juan structural
Basin.
Potentiometric data collected from wells in and near the
Project area indicate that groundwater moves continuously through the Project
area in the same aquifers found to the west. The aquifers and aquitards
encountered in the Project area likely have hydraulic characteristics similar to
those found in the same units elsewhere in the San Juan structural Basin.
In general, the hydraulically significant structural features
of the southeastern San Juan Basin have been previously identified, and the
groundwater quality and hydraulic characteristics of the aquifers in the Roca
Honda Project area are expected to lie within the ranges identified in previous
studies. RHR has compiled the relevant published and unpublished groundwater
information near the Project area. This effort included an inventory of wells
previously identified in published and unpublished reports as being present
within a ten mile radius of the Roca Honda Project area. The inventory includes
location, completion dates, well depth, producing formation, measured water
levels, and availability of chemical data for each well. The wells were
field-checked and RHR incorporated some of them, along with three wells drilled
by RHR within the Project area, into a quarterly water quality sampling program.
The well data inventory, earlier studies, recent drilling by RHR, and the water
quality sampling program provide a great deal of baseline information for the
groundwater in and adjacent to the Project area. To date, RHR has collected four
years of water quality data, contracted Intera Geosciences and Engineering
(Intera) to complete a groundwater model and conducted an onsite pump test in
May 2010.
SURFACE HYDROLOGY
Watercourses in the vicinity of the RHR Project area are
identified as ephemeral, intermittent, or perennial. San Mateo Creek is part of
the Rio Grande drainage basin as a tributary of the Rio San Jose. The Rio San
Jose joins the Rio Puerco west of the city of Las Lunas and the Rio Puerco
confluences with the Rio Grande near the community of Bernardo, south of the
town of Belen, New Mexico.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-5
|
|
www.rpacan.com
|
The headwaters of San Mateo Creek are on the north flank of Mt.
Taylor. One branch heads in San Mateo Canyon above the community of San Mateo
and drains down San Mateo Canyon, while the other drains the San Mateo
arch/Jesus Mesa area via Marquez and Maruca canyons. Within the San Mateo Canyon
branch, springs maintain a small perennial flow that is captured in San Mateo
Reservoir, located above the community of San Mateo. Field investigations
conducted by RHR during 2009 and 2010 have determined that from San Mateo
downstream to a pond on the Lee Ranch, San Mateo Creek is an intermittent stream
that has flow when water is being diverted from the reservoir for irrigation
purposes and during high rainfall events. The creek is ephemeral downstream of
the pond.
POLITICAL DISCUSSION
The development of clean, sustainable energy is a goal
supported by the Government of New Mexico. The state appears to be moving in a
pro-development, pro-energy direction, and recent discussions between RHR
representatives and the State of New Mexico government indicate support within
the administration for developing nuclear energy-related projects, including
uranium mining.
Sensitivity related to development of the Roca Honda Project
exists relative to the historic use and cultural significance of the area to the
native peoples, whose use of the area dates to prehistoric times. Archaeological
evidence indicates that the Anasazi, Basketmaker, and Pueblo cultures have all
used the Project area and, more recently, the Navajo and Anglo cultures as well.
In April 2008, the USFS determined that certain areas of Mt.
Taylor and certain surrounding forest property, known commonly as the Mt. Taylor
Traditional Cultural Property (TCP), were eligible for listing on the National
Register of Historic Places (NRHP). Sections 9 and 10 of the Project area are
within the boundary of the proposed USFS Mount Taylor TCP. Additionally, Section
11, through which access will be gained to Section 10, is also in the TCP.
Figure 20-1 indicates the boundary of the TCP.
Although the State designation was contested in court, the New
Mexico Supreme Court ultimately upheld the TCP designation. Designation of a TCP
does not preclude mineral development or prohibit mining operations within the
TCP; it just adds another layer of regulatory review and opportunity for
stakeholders in the Section 106 Consultation process to seek more mitigation
than might otherwise be required.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-6
|
|
www.rpacan.com
|
POTENTIAL IMPACTS OF THE PROPOSED MINE
Impacts to water resources at and around the Roca Honda Project
area were evaluated as part of a groundwater model report produced for RHR by
Intera (Nov. 4, 2011). The Roca Honda Project could impact area water resources
in three ways:
|
1. |
Depressurizing of the mine may cause local water level
declines within the confined aquifer system present in the Westwater
Canyon Member of the Morrison Formation. Water levels in the Dakota
Sandstone, and possibly sandstone units in the lower part of the Mancos
Shale may be locally affected. It is unlikely that depressurizing will
impact water levels in the aquifers relied on by water users in the San
Mateo area, who use wells that produce from the shallow aquifers in the
alluvium, i.e., the Menefee Formation, and the Point Lookout Sandstone.
These geologic units are from 2,000 ft to 2,300 ft above the units to be
dewatered. Groundwater in aquifers below the Westwater Canyon Member will
not be impacted by mine dewatering because an aquitard, the Recapture
Shale Member of the Morrison Formation, underlies the Westwater Canyon
Member and separates the aquifers. |
|
|
|
|
2. |
Shallow aquifers, which may be vulnerable to potential
impacts from facility activity or from discharged water include the
alluvium, the Point Lookout Sandstone, and the Dalton Sandstone Member of
the Crevasse Canyon Formation. Although the Menefee Formation is used as
an aquifer in the San Mateo Creek watershed, it is not present down
gradient of the proposed surface facility area. It is present, however,
beneath colluvium in the SE¼ Section 10. |
|
|
|
|
3. |
The treated mine water will be piped to the community of
Milan to assist in recharging the Rio San Jose. An influx of this quantity
of water into the overlying soil/alluvium found in the irrigated area will
likely raise the water table. The water produced from depressurizing
activities will be treated to state and federal water discharge standards.
Therefore, there will be no adverse impact on water quality within the
alluvial aquifer or other formations recharged by the discharge where they
outcrop in the arroyo. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-7
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-8
|
|
www.rpacan.com
|
Groundwater in aquifers below the Westwater Canyon Member will
not be impacted by mine depressurizing because geologic units of low vertical
permeability underlie the Westwater Canyon Member and separate the Westwater
Canyon Member from underlying aquifers. Specifically, the mine workings will be
in the Westwater Canyon Member, and the shaft will extend through the Westwater
Canyon Member a few tens of feet into the underlying aquitard, the Recapture
Member of the Morrison Formation.
Groundwater flow modeling was performed to estimate the impacts
of mine depressurizing on ground and surface water systems in and near the
Project area. The model predicted that the maximum drawdown in the Gallup
Sandstone causes a 10 ft drawdown contour to extend no further than the Project
area; the maximum drawdown in the Dakota Sandstone causes a 10 ft drawdown
contour to extend approximately to a 2,000 ft radius around the shaft; and the
maximum drawdown in the Westwater Canyon Member causes a 10 ft drawdown contour
to extend eight to ten miles out from the mine areas. These drawdowns would be
expected to cause temporary water level declines in wells in each of these three
formations within these radii. Since the Gallup and Dakota Sandstones are only
depressurized during shaft sinking, recovery of these aquifers begins shortly
after shaft sinking is complete. Recovery in the Westwater Canyon Member does
not begin until mining operations and depressurizing has ceased. The New Mexico
Office of the State Engineer (NMOSE) determined that three domestic wells would
be impacted by dewatering of the Westwater Canyon Member. Those wells are
subject to Plans of Replacement approved by the NMOSE. RHR will be responsible
for supplying water to or drilling new wells for those three well owners.
The potential impact of mine depressurizing on perennial stream
systems was analyzed using the RIVER package of MODFLOW-2000. The groundwater
flow model simulated that the impact of depressurizing on area streams would be
negligible. As part of the mine dewatering permit process, RHR demonstrated that
potential impacts to seeps and springs, including those of primary concern to
downstream pueblos, would be undetectable to insignificant.
All stormwater runoff within the mine site or from disturbed
areas will either be diverted around the disturbed areas or captured and
conveyed to stormwater retention ponds so there will be no surface discharge of
water from the site. All chemical, fuel, and explosives storage areas will be
bermed to contain potential spills or leaks. All mine water and water pumped
from dewatering wells will be conveyed to a lined surge pond and passed through
the water treatment plant to meet discharge standards prior to release
via the reuse pipeline. Consequently no detrimental impacts to surface water
resources are expected to occur.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-9
|
|
www.rpacan.com
|
PROJECT PERMITTING
ROCA HONDA PERMITTING
PERMITTING REQUIREMENTS - STATE
Mine permitting authority in New Mexico resides primarily with
the Mining and Minerals Division (MMD) of the New Mexico Energy, Minerals, and
Natural Resources Department. The permitting process entails preparation of
three major documents: a Sampling and Analysis Plan, a Baseline Data Report, and
a Mining, Operations and Reclamation Plan. In October 2009, RHR submitted a five
volume Mine Permit application to the MMD that included a detailed Sampling and
Analysis Plan, a Baseline Data Report, Mining Operations Plan, and a Reclamation
Plan. MMD determined that the application was administratively complete in
November 2009 and commenced a technical review of the application documents.
The New Mexico Environment Department (NMED) regulates mining
operations through the issuance of a Discharge Permit and establishment of
standards for discharges or potential releases from mining operations. The
Discharge Permit requires characterization of all materials or structures (e.g.,
waste rock piles) that could be exposed to environmental dispersal agents, and
designs for all systems that will be used to prevent or control potential
releases to the environment (e.g., liner systems for ponds). RHR submitted a
Discharge Permit application to the NMED in January 2009.
Mine dewatering is regulated by the New Mexico Office of the
State Engineer (NMOSE) through approval of a Mine Dewatering Permit. Under the
Mine Dewatering Act, the applicant is required to provide a Plan of Replacement
for wells or other water sources that could be impaired by the proposed
dewatering activities over the Projected life of the mine. Water pumped from the
mine is considered produced water and conveys no water right but can used for
beneficial purposes. RHR submitted a mine dewatering permit application in
August 2011.
These three permit applications constitute the major State
approvals needed for new mining projects in New Mexico. Most of the planned mine
facilities would be located in Section 16 on State lands. Therefore a Mining
Lease is also required from the New Mexico State Land Office (NMSLO) to authorize mine development and operation. RHR
obtained a State Mining Lease for Section 16 in November 2004.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-10
|
|
www.rpacan.com
|
PERMITTING REQUIREMENTS- FEDERAL
Sections 9, 10, and 11 are Federally-owned lands managed by the
USFS. Prior to any development or mining activities on those lands, the Cibola
National Forest (CNF) must prepare an EIS for the Project. RHR submitted a Plan
of Operations to the CNF in October 2009 and the CNF issued a Notice of Intent
to prepare an EIS in November 2010.
Following the publication of the Notice of Intent, the MMD,
NMED, the State Historic Preservation Office (SHPO) and the New Mexico Division
of Game and Fish (NMDG&F) signed a Memorandum of Understanding (MOU) with
RHR and the USFS, agreeing to participate in a mutually beneficial, cooperative
relationship in preparing the EIS. MMD is a cooperating agency (with the USFS),
but it must also prepare a separate Environmental Evaluation (EE) of the
Project. As part of the MOU, MMD agreed to use the EIS prepared by the USFS as
the basis for the EE. The SHPO is involved in the Section 106 consultation
process and must review and approve the reports prepared by the USFS, and sign
off on the Memorandum of Agreement when it is complete.
Other Federal approvals needed are a discharge permit (NPDES)
for the dewatering pipeline and approval of radon releases from the mine under
the National Emission Standards for Hazardous Air Pollutants (NESHAPS), both
issued by the U.S. Environmental Protection Agency (EPA). RHR applied for an
NPDES permit in April 2012. A NESHAPS notification will be submitted to EPA at
least 18 months before shaft construction is anticipated to begin.
Table 20-1 lists the major permits needed to construct a new
underground uranium mine on federal land in the State of New Mexico. Because
there would be no processing or concentrating of natural ore at the mine site,
no U.S. Nuclear Regulatory Commission (NRC) approvals are needed.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-11
|
|
www.rpacan.com
|
TABLE 20-1 MAJOR AND MINOR ROCA HONDA PERMITS
Roca
Honda Resources LLC Roca Honda Project
Agency |
Permit or Approval |
Federal |
|
U.S. Forest Service |
Plan of Operations (plan) |
|
Special use permits (right-of ways, etc.)
|
U.S. Army Corps of Engineers |
Nationwide 44 Permit (Section 404 compliance)
|
U.S. Environmental Protection Agency |
Spill Prevention Control and Countermeasures
Plan (SPCC) |
|
Notification of Hazardous Waste Activity |
|
Storm Water Pollution Prevention Plan (SWPPP)
|
|
Subpart A of the Radionuclide National Emission
Standards for |
|
Hazardous Air Pollutants (NESHAPs) |
|
National Pollutant Discharge Elimination System
(NPDES) permit |
U.S. Fish and Wildlife Service |
Threatened and Endangered Species (Section 7
Consultation) |
Federal Communications Commission |
Radio authorizations |
U.S. Department of Transportation |
Requirements for transport and handling of
radioactive material |
|
including ore |
Treasury Department (Bureau of Alcohol, |
Explosives use permits |
Tobacco, Firearms and Explosives) |
|
Mine Safety and Health Administration |
Mine Identification Number |
|
Legal Identity Report |
|
Ground Control Plan |
|
Miner Training Plan |
|
Worker
exposure standards |
State |
|
New Mexico Energy, Minerals and |
New Mine Permit |
Natural Resources, Department, Mining |
|
and Minerals Division |
|
New Mexico Environment Department |
Discharge Permit |
Groundwater Bureau |
|
New Mexico Environment Department |
Public water supply system |
Drinking Water Bureau |
|
New Mexico Environment Department |
Solid Waste System Permit |
Waste Management Bureau |
|
New Mexico Environment Department |
Registration of diesel and petroleum tanks
|
Petroleum Storage Tank Bureau |
|
New Mexico Environment Department |
Radiation Control License for Nuclear Dentistry
Gauge |
Radiation Control Bureau |
|
New Mexico Office of the State Engineer |
Permit to Appropriate Waters |
|
Mine Dewatering Permit |
|
Dam Safety |
|
Drilling Permit |
New Mexico State Land Office |
Mining Lease (Sec. 16) |
|
Commercial Lease |
New Mexico Game & Fish Department |
Wildlife consultation |
State Historic Preservation Office |
Section 106 (NHPA) consultation |
New Mexico Department of |
Road Access |
Transportation |
ROW
and Pipeline Construction |
McKinley County |
|
Building Department |
Building Permits |
|
Septic System
Approval |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-12
|
|
www.rpacan.com
|
CURRENT PERMIT STATUS
The status of major, long-lead time permits as of February 1,
2015 follows.
USFS EIS
The CNF issued a Draft EIS for the Roca Honda mine to the
public in March 2013. Since then, the CNF and its third party contractor have
been preparing responses to comments on the DEIS and working through the Section
106 Consultation process as required by the National Historic Preservation Act.
RHR recently requested that the final EIS include evaluation of an alternate
mine dewatering pipeline plan that would deliver water to a different drainage
than was evaluated in the Draft EIS. In response to this request, the CNF has
indicated that preparation of a Supplemental EIS will be necessary. Current
expectations are that preparation of a supplemental EIS document will take most
of 2015. The USFS projects that issuance of a final EIS and completion of the
Memorandum of Agreement required under the Section 106 consultation process will
occur in the fourth quarter 2016.
Permit to Mine
The MMD has issued several rounds of comments based on their
technical review of the Mine Permit application documents, all of which have
been addressed. Recent discussions confirm that MMD will evaluate the southern
reuse pipeline option as part of the existing permit application. MMD has also
prepared a Scope of Work for the Environmental Evaluation and confirmed that it
can be derived from the EIS and modified as needed to meet specific state
regulatory requirements.
Discharge Permit
The NMED has completed its administrative and technical review
of the Discharge Permit application. In order to evaluate the southern pipeline
discharge alternative, NMED requested a Work Plan describing how possible
impacts from the discharge will be characterized and monitored. RHR is presently
conducting geophysical surveys and other characterization work of the proposed
discharge area in the Rio San Jose. RHR expects that a draft discharge permit
can be prepared within six months of submittal of the results of the work
plan.
Mine Dewatering Permit
On-going discussions with Acoma Pueblo intended to resolve
their concerns have been fruitful and withdrawal of the dewatering permit appeal
is anticipated in early 2015. Acoma Pueblo has stated that it will withdraw the
appeal, subject to two conditions that RHR has recently satisfied. The first is a formal commitment to pursue the
southern dewatering pipeline alternative that would convey treated water to the
Rio San Jose, a normally dry drainage some 20 mi south of the mine that runs
through Acoma Pueblo lands. The second condition is that the water treatment
plant will produce clean water that meets applicable water quality standards.
Bench test work completed under the direction of Pennoni Associates demonstrates
that the treated water will meet all applicable criteria.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-13
|
|
www.rpacan.com
|
State Mining Lease
The New Mexico State Land Office has agreed to rely on the
results of the EIS and State mine permitting processes to address environmental
considerations pertinent to development of a mine on the lease land. The lease
is currently in effect but will need to be amended or extended if production
from Section 16 does not commence by November 2019. A Commercial Lease may also
be needed to allow stockpiling of materials from off-lease (i.e. Sections 9
and10) although that requirement is unclear.
Other Permits Status
The U.S. Army Corps of Engineers has been involved in the EIS
process since inception and has indicated that it will issue a Nationwide 44
permit for the Project, which involves a less onerous approval process than that
required for an individual permit. The NPDES application was submitted to EPA in
April 2012 and is currently being amended to incorporate the southern reuse
pipeline alternative. As noted earlier, RHR will prepare a NESHAPS notice to the
EPA at least 18 months prior to commencing shaft construction work.
At the State level, the NMED must determine that the Project as
designed will achieve compliance with all applicable air and water quality
standards. NMED has determined an air quality permit to construct and operate is
not needed for the Project. Certification of compliance with State water quality
standards will be provided as part of the MMD permitting process. A Stormwater
Pollution Prevention Plan will need to be filed the State and EPA prior to
construction activities.
Resource studies and engineering work to support the new
discharge pipeline plan are currently underway, using qualified third party
consulting firms. In parallel, RHR staff are revising relevant sections of the
NMED Discharge Permit and the MMD Permit to Mine applications to incorporate the
new mine discharge alternative. Other permits or notifications shown in Table
20-1 are of secondary importance and can be obtained within the time frame projected for the EIS and Permit to Mine. Those permits include
solid waste disposal permits, construction permits for the dewatering pipeline,
and highway access permits from the New Mexico Department of Transportation.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-14
|
|
www.rpacan.com
|
The overall permitting process has been delayed by RHRs
proposal for a new mine dewatering option that was not previously considered.
Regulatory agencies, elected officials, and the Acoma Pueblo are very supportive
of the new alternative that would discharge treated water into the Rio San Jose
where it could be used by a variety of parties including the Acoma and Laguna
Pueblos. Although there will be permitting delays while the USFS prepares a
Supplemental EIS to address this alternative, and other permit applications are
revised, RHR expects that the new alternative will reduce opposition to the
Project. Additionally, the likelihood of successful appeals or challenges to
approvals once issued will be diminished.
SOCIAL OR COMMUNITY REQUIREMENTS
The public participation process was initiated in late 2010,
with scoping meetings held in Grants and Gallup to fully inform the local
citizens of RHRs mining plans and to allow for their input. This was part of
the EIS process. RHR will continue to provide Local, State and Federal agencies
with additional detailed design information regarding the Project as it is
developed and respond to agency comments. RHR staff maintain frequent
communication with representatives of local governmental entities and
organizations, and uses local contractors whenever possible for Project
development work. In addition, RHR has also been involved in on-going
discussions with interested stakeholders, most notably the Acoma and Laguna
Pueblos.
ARCHAEOLOGICAL AND TRADITIONAL CULTURAL
PROPERTY
Consideration of archaeological and cultural resources is an
important part of the USFS and State of New Mexico permitting processes. Initial
cultural resource surveys of the Roca Honda Project area were conducted by Lone
Mountain Archaeological Services, Inc. (LMASI) in 2006. Prior to the field
survey, a literature search was conducted of the National Register of Historic
Places (NRHP), the State Register of Cultural Properties, the Archaeological
Records Management Section of the State Historic Preservation Division (HPD),
and the Cibola National Forest Office in Albuquerque, New Mexico. Following the
literature search, detailed field surveys were completed to identify cultural
resources within the Project area boundary and proposed accesscorridors, so that
appropriate mitigation measures could be implemented in advance of any construction and operations. Archaeological
sites were inventoried and mapped and as required by the State of New Mexico
SHPO and USFS regulations. Detailed inventory reports prepared by LMASI and
submitted to the USFS and SHPO for review.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-15
|
|
www.rpacan.com
|
RHR has designed all anticipated surface disturbances to avoid
the archeological sites identified during the initial and follow-up surveys,
wherever possible. The footprint of proposed surface disturbances, including all
mine site construction and access routes, was located on a map provided to LMASI
for their review and field checked to determine potential impacts to archaeology
sites. Although facility layouts were adjusted to avoid eligible archaeological
sites wherever feasible to do so, LMASI identified several sites that could be
affected by construction or operations. Mitigation of possible impacts to such
sites will be required, likely in the form of data recovery prior to
disturbance.
In conjunction with the EIS, Section 106 of the National
Historic Preservation Act requires the USFS to consult with potentially affected
parties including Native American communities. A significant consultation
process is underway to ensure that Native communities and other stakeholders
have the opportunity to express concerns and provide comments. RHR will continue
to work with the State and federal agencies, and respective Native communities
to addressall issues and develop appropriate mitigation measures, particularly
for archaeological sites that may be disturbed by Project development.
MINE CLOSURE REQUIREMENTS
ROCA HONDA RECLAMATION
Reclamation and closure of the entire mine and mill plant
facilities will be conducted in accordance with the methods and commitments made
in the Mining, Operations and Reclamation Plan (MORP), as amended.
Reclamation and closure will be based on the following general
objectives:
|
|
Reclamation goals and objectives will be
considered during design and planning of construction and operations;
|
|
|
|
|
|
Concurrent (progressive) reclamation will be
implemented where possible; |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-16
|
|
www.rpacan.com
|
|
|
Upon cessation of operations, the areas will be
decommissioned and rehabilitated to allow for future land use as guided by
the federal, state and local agencies; and |
|
|
|
|
|
Reclamation and closure will ensure that
long-term physical and chemical stability is provided.
|
The initial reclamation and closure plan prepared for the mine
and mill plant facilities will be living documents that will be updated
throughout the Projects life to reflect changing conditions and the input of
the applicable federal and state regulatory agencies.
The primary reclamation activities will involve backfilling
mine workings, removal of surface facilities and infrastructure, re-contouring
and scarifying disturbed areas, applying stockpiled organics, and re-vegetation
in accordance with seed mixtures and methods specified in the MORP.
RECLAMATION AND CLOSURE
A detailed closure plan will be developed for the Project. The
closure plan will be developed using the guidelines noted above. The total
calculated closure and reclamation costs for the Roca Honda Project are
currently estimated to be $11.9 million as used in the economic cash flows. The
reclamation estimate for the Roca Honda Mine is estimated to be US$3.4
million.
RHR will be required to post a reclamation performance bond
with the State of New Mexico prior to approval of the Permit to Mine. The New
Mexico Mining and Minerals Division (MMD) regulations allow for phased bonding
so RHR intends to bond initially for approximately $1,000,000 to cover the cost
of plugging the Phase 1 dewatering wells, removing the associated piping, and
reclaiming the access roads, water treatment plant, and storm water retention
pond. The USFS has agreed to accept the bond required by MMD so dual bonding
will not be necessary.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 20-17
|
|
www.rpacan.com
|
21 CAPITAL AND OPERATING COSTS
CAPITAL COST ESTIMATE
The capital cost estimate summarized in Table 21-1 covers the
life of the Project and includes initial capital costs, expansion capital costs,
and end-of-mine-life recovery of working capital. All capital costs are in first
quarter 2015 United States dollars.
TABLE 21-1 CAPITAL COST ESTIMATE
Roca Honda
Resources LLC Roca Honda Project
Capital Cost Area |
Units |
Project |
Pre-production |
Production |
Capital Totals |
(Years -4 to 0) |
(1 to 11) |
Underground Mine |
US$ (000) |
127,229 |
127,229 |
- |
Mill |
US$ (000) |
- |
- |
- |
Surface Infrastructure |
US$ (000) |
46,893 |
46,893 |
- |
Surface Infrastructure Indirects |
US$ (000) |
29,148 |
27,146 |
2,001 |
Working Capital |
US$ (000) |
- |
5,075 |
(5,075) |
Exploration |
US$ (000) |
2,517 |
2,517 |
- |
Sustaining Capital |
US$ (000) |
71,972 |
- |
71,972 |
Closure &
Reclamation |
US$
(000) |
3,400
|
- |
3,400
|
Total Capital Before Contingency |
US$ (000) |
281,159 |
208,861 |
72,298 |
|
|
|
|
|
Contingency |
US$ (000) |
45,354 |
44,978 |
375 |
Total Capital Cost With Contingency |
US$ (000) |
326,512 |
253,839 |
72,673 |
Working capital costs, related to the time between the shipment
from the site and the receipt of payment for the products, are not included in
the capital cost estimate in Table 21-1, but are included in the Project cash
flow.
CAPITAL COST EXCLUSIONS
The capital costs do not include:
|
|
Costs to obtain permits |
|
|
|
|
|
Costs for feasibility study |
|
|
|
|
|
Project financing and interest charges |
|
|
|
|
|
Escalation during construction |
|
|
|
|
|
Sales and use taxes |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-1
|
|
www.rpacan.com
|
|
|
Any additional civil, concrete work due to the
adverse soil condition and location |
|
|
|
|
|
Import duties and custom fees |
|
|
|
|
|
Costs of fluctuations in currency exchanges
|
|
|
|
|
|
Sunk costs |
|
|
|
|
|
Pilot Plant and other test work |
|
|
|
|
|
Corporate administration costs in Santa Fe, New
Mexico and Lakewood, Colorado |
|
|
|
|
|
Exploration activities |
|
|
|
|
|
Salvage value of assets |
CAPITAL COST ESTIMATE DETAILS
MINE AND SURFACE CAPITAL COST ESTIMATE
Mine equipment will be purchased through the pre-production
period. Mine development includes activities prior to mine stope development.
Ventilation and escapeway raise development costs include conventional raise
boring and contractor costs.
SURFACE INFRASTRUCTURE AND EQUIPMENT
Surface equipment is estimated using new equipment. Used
equipment is estimated for low use equipment such as the grader and cranes.
Infrastructure includes roads, yards, power and supplies
storage needs for Roca Honda Project including the materials handling
requirements at White Mesa Mill.
WHITE MESA MILL
The White Mesa Mill is fully permitted, has all necessary
Federal, State, and NRC licenses, and is currently operating as a viable uranium
mill. It also has all of the necessary impoundment structures.
SURFACE INDIRECT COSTS AND TOTAL INDIRECT
COSTS
The surface infrastructure indirect costs are estimated to be
$29.1 million as summarized in Table 21-2. The surface indirect costs exclude
embedded indirect costs allocated to the underground mine
constructioncontractsand surfaceinstallation construction contracts. Total
Project indirect costs are approximately $43.0 million as shown in Table 21-2.
Engineering for the facilities and operations will be carried out through the
permitting and the construction phases. Engineering costs for the completion of
the feasibility engineering are included in this estimate.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-2
|
|
www.rpacan.com
|
TABLE 21-2 SURFACE INFRASTRUCTURE INDIRECT COST ESTIMATE AND
TOTAL INDIRECT COST ESTIMATE
Roca Honda Resources LLC Roca Honda
Project
Capital Cost Estimate Surface Indirects |
Units |
Total ($'000) |
Engineering; Feasibility
(Mine only) |
$'000 |
250 |
Engineering; Basic (Mine only) |
$'000 |
500 |
Engineering; Detailed (Mine
only) |
$'000 |
700 |
Transportation (8% of equip costs) (Mine
only) |
$'000 |
1,493 |
1st year spares (4% of equip
costs) (Mine only) |
$'000 |
548 |
Capital Spares (Mill - 6% of equip costs) |
$'000 |
1,645 |
Capital Spares &
Warehouse Inventory (Mine) |
$'000 |
800 |
Water Treatment Plant |
$'000 |
1,317 |
Construction Management (Mine
only) |
$'000 |
650 |
Working Capital (Separate in Cash
Flow) |
$'000 |
- |
First Fills (Mine only) |
$'000 |
150 |
Owner's Cost |
$'000 |
21,093 |
TOTAL SURFACE INDIRECTS |
$'000 |
29,148 |
|
|
|
F-K Indirect Costs (Included
in F-K Estimate) |
$'000 |
7,951 |
Contractor Indirect Costs (Included in
Contractor Costs) |
$'000 |
3,249 |
Surface Mine, Water Treatment
Plant, Powerline Indirects |
$'000 |
29,148 |
Surface Infrastructure Engineering |
$'000 |
2,645 |
Total Indirects |
$'000
|
42,993
|
Procurement for the Project is forecast to extend over a
three-year period with a crew of three working on purchasing, expediting,
payables and some level of freight handling. The construction management at Roca
Honda is forecast to include a staff of four to five management personnel for a
two-year period. After construction, most of the personnel will continue on with
operations. Supervisor salary rates for this period reflect the overtime in a
remote construction effort.
The construction support crew includes operators for cranes,
forklifts and trucks, as well as laborers to support the construction efforts.
The cost estimate includes construction support items that would be rented or
provided by subcontractors in a less remote location.
The Owners costs include an Owners team of eight staff for two
years prior to the commencement of development and operations. In addition, a
labor cost for operating personnel brought to site in advance of the startup
is included. The estimate is based upon a staff and crew of 160 in 2017. Costs
for the recruitment of the operating team are included. Freight costs for the
White Mesa Mill plant are carried in those individual capital estimates.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-3
|
|
www.rpacan.com
|
The environmental bond is estimated to be $11.9 million for the
combined Roca Honda Mine and White Mesa Mill sites (for the Roca Honda
mineralized material only).
The cost estimate includes a contingency allowance of 16%. RPA
considers this to be a minimum level of contingency for the Project at the
current state of planning and development.
OPERATING COST ESTIMATE
The average LoM operating costs and the annual estimated
operating costs are shown in Table 21-3. The LoM average operating cost includes
mining, processing the White Mesa Mill located near Blanding, Utah, general and
administration, and freight of the product to a point of sale (White Mesa Mill).
Operating costs are in February 2015 United States dollars.
TABLE 21-3 OPERATING COST ESTIMATE
Roca Honda
Resources LLC Roca Honda Project
Operating Cost Summary |
Units |
Cost |
Mining & Development
(includes mine maintenance) |
US$ (000) |
368,136 |
Transportation Cost |
US$ (000) |
149,314 |
Processing (Includes Tailings
Reclamation/Replacement Cost) |
US$ (000) |
167,022 |
Toll Milling Process Cost Average |
US$ (000) |
123,227 |
Maintenance (labor) |
US$ (000) |
2,647 |
G&A |
US$ (000) |
18,418 |
Total Operating |
US$
(000) |
828,763
|
|
|
|
Mining &
Development |
US$/t
mined |
86.55
|
Mining & Development |
US$/t milled |
107.25 |
Transportation Cost |
US$/t milled
|
43.50
|
Processing (includes Tailings
Reclamation/Replacement Cost) |
US$/t milled |
48.66 |
Toll Milling Process Cost
Average |
US$/t milled
|
35.90
|
Maintenance |
US$/t milled |
0.77 |
G&A |
US$/t milled |
5.37 |
Total Operating Cost per Ton |
US$/t milled |
241.45 |
|
|
|
Mining & Development |
US$/lb |
15.65 |
Transportation Cost |
US$/lb |
6.35 |
Processing (includes Tailings
Reclamation/Replacement Cost) |
US$/lb |
7.10 |
Toll Milling Process Cost
Average |
US$/lb |
5.24 |
Maintenance |
US$/lb |
0.11 |
G&A |
US$/lb |
0.78 |
Total Operating Cost per lb |
US$/lb |
35.23
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-4
|
|
www.rpacan.com
|
OPERATING COST EXCLUSIONS
The operating costs do not include:
|
|
Any provision for inflation; |
|
|
|
|
|
Any provision for changes in exchange rates;
|
|
|
|
|
|
Sales and use taxes; |
|
|
|
|
|
Preproduction period expenditures; |
|
|
|
|
|
Corporate administration and head office costs
in Santa Fe, New Mexico and Lakewood, Colorado; |
|
|
|
|
|
Site exploration costs or surface infill
drilling or development for conversion of additional resources to Mineral
Resources; and |
|
|
|
|
|
Severance cost for employees at the cessation
of operations. |
SALARY AND LABOR RATES
Salary and wage rates are based on prevailing regional wage and
salary surveys in the Project area. Federal Insurance Contributions Act (FICA)
tax is estimated at 7.65% tax on the wage and salary costs.
Wages have been not been adjusted either downward or upward
given the nature of the work and the location. RPA does consider this element to
be a cost risk. Skilled operators, maintenance and technical personnel live in
the surrounding area of Grants, New Mexico.
An allowance for workmans compensation, health insurance,
bonuses, FICA, and other benefits are included in the labor rates.
FUEL PRICE AND FUELTAXES
Operating costs are based upon a diesel fuel price of $3.20/gal
FOB mine site. The freight costs are from Grants, New Mexico to the Roca Honda
site.
Propane has been included at a cost of $0.51/therm. Natural gas
is an option, but requires pipeline construction to the proposed mine site. RPA
considers this to be a cost risk as natural gas or propane prices vary over a
wide range. RHR may benefit from purchasing an annual supply in the summer
months.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-5
|
|
www.rpacan.com
|
MINE
Mine costs include all of the underground mining costs except
for haulage of material from the mine to the crusher operation, which is
included in the White Mesa Mill operating costs estimate. The costs are
summarized in Table 21-4.
TABLE 21-4 UNDERGROUND MINE COST SUMMARY
Roca
Honda Resources LLC Roca Honda Project
Area |
Cost |
LoM |
% of LoM |
US$ Per RoM ton |
US$ millions |
Budget |
Labor |
48.72 |
167.23 |
45% |
Ground Support |
16.63 |
57.07 |
16% |
Electrical |
5.51 |
18.90 |
5% |
Drilling |
1.73 |
5.93 |
2% |
Blasting |
4.37 |
14.99 |
4% |
Ventilation |
3.28 |
11.26 |
3% |
Services, Roads, and Propane
|
5.53 |
18.97 |
5% |
Water Treatment (W/O Electricity) |
2.55 |
8.75 |
2% |
Definition Drilling |
1.31 |
4.50 |
1% |
Maintenance |
17.63 |
60.53 |
16% |
Mine Operating Totals
|
107.25
|
368.14
|
100%
|
The major mine supplies are electricity, explosives, ground
support, fuel and propane for mine air heat. Mine power costs are included in
the overall power cost estimate for the site.
An average powder factor of 1.34 lb/ton was used for costing
purposes. Given the uncertain level of groundwater drainage in the development
headings, explosives costs have been based on the use of hand loaded emulsion
cartridges (Orica Senatel Magnafrac small diameter detonator sensitive
emulsion). Explosives costs could be reduced (from $1.82/lb to $0.60/lb) by
replacing the cartridges with a bulk loading system and ANFO.
Mobile equipment costs are estimated on annual operating hours
and equipment utilization.
Salary and wages are included as single line items and are not
allocated to the various activities in the mine.
Backfill placement is included in the mine costs at a cement
addition rate of 4.5% for low strength backfill and 8% for high strength
backfill. The cost of obtaining the quarried and screened rock component of the high strength backfill is
estimated at $9.00/st FOB site. Annual cement requirement is estimated at 17,600
tons.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-6
|
|
www.rpacan.com
|
MILL
Mill operating costs are summarized in Tables 21-5 and 21-6. An
allowance for workmans compensation, health insurance, bonuses, FICA, and other
benefits were also added into the labor costs.
TABLE 21-5 MILL OPERATING COST DETAILS BY AREA
Roca Honda Resources LLC Roca Honda Project
|
Typical Mill |
|
Typical Mill Unit
|
|
Unit Operating
Cost, |
|
Operating Cost,
|
Mill Operating Cost by Area |
US$/t ore |
% of Total |
US$/lb recovered |
Mill Administration |
1.92 |
4.6% |
0.28 |
Legal |
0.76 |
1.8% |
0.11 |
Taxes, Bonding, &
Insurance |
2.73 |
6.5% |
0.39 |
Lab/Mill Technical |
1.28 |
3.1% |
0.19 |
Safety/Environmental/Rad. |
1.88 |
4.5% |
0.27 |
Compliance |
0.99 |
2.4% |
0.14 |
Ore Receiving |
0.73 |
1.8% |
0.11 |
Warehouse |
0.69 |
1.7% |
0.10 |
Grinding |
2.36 |
5.7% |
0.34 |
Leach |
15.82 |
38.0% |
2.29 |
CCD |
1.70 |
70.0% |
0.25 |
Uranium SX |
6.54 |
15.7% |
0.95 |
Uranium Precipitation |
0.79 |
1.9% |
0.11 |
Uranium Drying and Packaging |
1.55 |
3.7% |
0.22 |
Tailings |
1.91 |
4.6% |
0.28 |
Mill Operating Cost by Area |
41.66 |
100.0% |
6.03 |
Reagent costs shown in Table 21-6 are considered as element
costs. The mill area costs as shown in Table 21-5 contain summaries of element
costs, e.g., reagents, electricity, labor, wear parts, supplies, etc.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-7
|
|
www.rpacan.com
|
TABLE 21-6 MILL OPERATING REAGENT USAGE DETAILS
Roca Honda Resources Inc. Roca Honda Project
Reagents Description |
Typical Usage Unit
|
US$/Usage Unit |
Typical Usage Unit/ton
of ore |
Cost, US$/ton |
Kerosene |
gal |
6.03 |
0.50 |
3.02 |
Soda Ash |
lb |
0.12 |
4.50 |
0.54 |
International Barrels |
bbl |
66.00 |
0.01 |
0.49 |
Grinding Media/Liners |
lb |
0.59 |
0.80 |
0.47 |
Chlorate |
lb |
0.61 |
3.50 |
2.14 |
Flocculent |
lb |
2.36 |
0.32 |
0.76 |
Salt |
lb |
0.08 |
0.90 |
0.07 |
Amines |
lb |
4.83 |
0.20 |
0.97 |
Caustic Soda |
lb |
0.38 |
1.50 |
0.57 |
Iso-decanol |
lb |
1.60 |
0.15 |
0.24 |
Ammonium Sulfate |
lb |
0.29 |
0.20 |
0.06 |
Sulfuric Acid |
lb |
0.08 |
137.00 |
10.28 |
Anhydrous Ammonia |
lb |
0.49 |
0.05 |
0.02 |
Propane |
gal |
1.69 |
0.00 |
0.00 |
LNG |
gal |
0.28 |
9.00 |
2.52 |
|
|
|
|
|
Reagents Costs
(Typical, will vary by ore type) |
|
22.14
|
The White Mesa Mill operating costs are based on the listed
line items identified to the level of detail available for the PEA study. The
accuracy of the operating cost estimate is +/- 25% level of accuracy. The
operating personnel costs are based on the actual number of operating,
maintenance, overhead personnel required to operate the facility using
experienced workers, and on salaries provided by Energy Fuels. The reagent and
comminution media costs, based on fourth quarter 2015 budget pricing obtained
from suppliers, include an operating period freight cost. The reagent costs are
based on average mid-range consumptions provided by Energy Fuels for the White
Mesa Mill. The minimum and maximum ranges provided in the PEA imply that the
reagent cost is appropriately noted. The major reagent cost is the cost of
sulfuric acid at $240/ton. Power is based on electrical power cost of $0.06/kWh
for the White Mesa Mill and Roca Honda sites. These power costs are based on
actual power rates for the White Mesa Mill and published power rates for the
Roca Honda Mine.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-8
|
|
www.rpacan.com
|
ROCA HONDA SURFACE
The Roca Honda surface costs include the operation and
maintenance of the surface facilities and the operation of the surface equipment
for the maintenance of roads and movement of materials and supplies. The costs
are shown in Table 21-7.
TABLE 21-7 SURFACE MAINTENANCE COSTS
Roca Honda
Resources LLC Roca Honda Project
|
Typical Cost per Ton |
Description |
US$/t milled |
Maintenance Labor |
0.77
|
ROCA HONDA ADMINISTRATION
The administrative costs for the Roca Honda site cover the mine
site administration on the basis that the operation is a stand-alone site with
site management, purchasing, payroll and accounts payable handled by site
personnel. Health and safety and environment are also included in the mine
administration. The administrative costs are summarized in Table 21-8.
TABLE 21-8 ADMINISTRATION
COSTS
Roca Honda Resources LLC Roca Honda Project
Administration Cost Summary |
Typical Cost per Ton |
US$/t milled |
Direct Labor |
1.45 |
General and Administration Operating |
3.09 |
Site Services |
0.82 |
Total |
5.37 |
Crew transportation costs are included for the transportation
of employees to the mine and the White Mesa Mill from Grants, New Mexico.
SALES AND MARKETING
Sales and marketing costs are included for the sales manager
and personnel to manage the loading and handling of product at the White Mesa
Mill. There are no allowances for sales related travel and activities. The
shipping cost from the White Mesa Mill to the buyer is included.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-9
|
|
www.rpacan.com
|
POWER ROCA HONDA
Power for the Roca Honda site will be generated from
commercially supplied line power with diesel units as emergency backup for shaft
hoist, dewatering pumps, water treatment, and mill critical pumps and essential
equipment. The operating costs are based on the price of $0.06/kWh of electrical
power, and the installation of power factor management facilities to run a power
factor near unity. The estimated annual power generation operating costs are
shown in Table 21-9.
TABLE 21-9 POWER GENERATION
COSTS
Roca Honda Resources LLC Roca Honda Project
Description |
Annual Budget |
US$ (000) |
Mine Power |
|
Electricity - pumping
(surface and underground) |
1,615 |
Electricity - ventilation (surface and underground) |
156 |
Electricity - drilling
and other |
141 |
Electricity - hoist |
314 |
Water Treatment |
188 |
|
|
Mill Power Costs |
634 |
Total Operating Power Costs |
3,048 |
The annual fuel requirement for electrical power generation at
Roca Honda is considered to be inconsequential.
LABOR AND WORK SCHEDULES
Table 21-10 summarizes the staffing requirements for the RHR
Project and White Mesa Mill operations during the peak production period.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-10
|
|
www.rpacan.com
|
TABLE 21-10 MINE AND MILL STAFF REQUIREMENTS
Roca
Honda Resources LLC Roca Honda Project
Type |
Department |
Number of Employees |
Total |
Admin |
7 |
Total |
Maintenance |
3 |
Total |
Mine |
247 |
Total |
Processing |
80 |
Total |
|
337
|
|
|
|
Hourly |
Admin |
1 |
Hourly |
Maintenance |
0 |
Hourly |
Mine |
219 |
Hourly |
Processing |
74 |
Hourly Total |
|
294
|
|
|
|
Staff |
Admin |
6 |
Staff |
Maintenance |
3 |
Staff |
Mine |
28 |
Staff |
Processing |
6 |
Staff Total |
|
43
|
The following is a typical list of schedules for different
working areas for the mine and mill, which were used in this study:
|
|
Most Administration: |
Monday through Friday, 8 am to 5 pm; |
|
|
|
|
|
|
Mill: |
4 crews working 2 shifts per day, 7 day/week 12
hour/shift |
|
|
|
|
|
|
Mine: |
4 Crews, 7 day/week, 3 shift/day, 8 hour/shift
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 21-11
|
|
www.rpacan.com
|
22 ECONOMIC ANALYSIS
RPA conducted an economic analysis of the Roca Honda Project
based on underground mining at an average rate of 1,085 stpd. The Project base
case uses a market price of US$65 per pound U3O8 for all
years. The cash flow results are presented as pre-tax, and as an estimate of
after tax.
The base case for the Roca Honda Project has a production life
of approximately nine years and an undiscounted pre-tax LoM cash flow totals
$317 million including contingency. Payback occurs early in the fifth year of
production. Average annual uranium oxide production during operation is 2.7
million pounds per year. The Project returns a positive pre-tax cash flow
without considering the addition of revenue from toll milling of ores from mines
independent of Energy Fuels.
Table 22-1 summarizes the economics for the Project for the
base case.
RPA notes that the purpose of contingency costs is to account
for the unknowns in estimating the cost of a project and to provide an estimated
allowance for those uncertainties.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-1
|
|
www.rpacan.com
|
TABLE 22-1 PROJECT ECONOMICS SUMMARY BASE CASE (NO TOLL MILLING)
Roca Honda Resources LLC Roca Honda Property
Description |
|
Input |
|
|
Units |
|
|
Total |
|
Production |
|
|
|
|
|
|
|
|
|
Roca Honda Production |
|
|
|
|
Tons (000) |
|
|
3,432 |
|
|
|
|
|
|
|
|
|
|
|
Payable Roca Honda Resource Uranium |
|
|
|
|
lb (000)
U3O8 |
|
|
23,526 |
|
Revenue |
|
|
|
|
|
|
|
|
|
Roca Honda Revenue |
|
|
|
|
US$ (000) |
|
|
1,529,213 |
|
Royalty, Product Transport,
and Severance Tax Charges |
|
|
|
|
US$ (000) |
|
|
56,534 |
|
Net Revenue |
|
|
|
|
US$ (000) |
|
|
1,472,679 |
|
Operating Cost |
|
|
|
|
US$ (000) |
|
|
828,763
|
|
Operating Cost |
|
|
|
|
US$/lb U3O8
|
|
|
35.23 |
|
Capital Cost With
Contingency: |
|
|
|
|
US$ (000) |
|
|
326,512
|
|
Capital Cost (with contingency) |
|
|
|
|
US$/lb U3O8
|
|
|
13.88 |
|
|
|
|
|
|
|
|
|
|
|
Economics |
|
|
|
|
|
|
|
|
|
Pre-tax CF (with contingency)
|
|
|
|
|
US$ (000) |
|
|
317,403 |
|
After-tax CF (with contingency) |
|
|
|
|
US$ (000) |
|
|
233,967 |
|
|
|
|
|
|
|
|
|
|
|
Pre-tax NPV
(with contingency) |
|
5% |
|
|
US$ (000) |
|
|
125,199 |
|
Pre-tax NPV (with contingency) |
|
8% |
|
|
US$ (000) |
|
|
57,996 |
|
Pre-tax NPV
(with contingency) |
|
12% |
|
|
US$ (000) |
|
|
1,341 |
|
IRR (with contingency) |
|
|
|
|
% |
|
|
12% |
|
|
|
|
|
|
|
|
|
|
|
After-tax NPV (with contingency) |
|
5% |
|
|
US$ (000) |
|
|
74,314 |
|
After-tax
NPV (with contingency) |
|
8% |
|
|
US$ (000) |
|
|
19,632 |
|
After-tax NPV (with contingency) |
|
12% |
|
|
US$ (000) |
|
|
(25,391 |
) |
IRR (with
contingency) |
|
|
|
|
% |
|
|
9% |
|
|
|
|
|
|
|
|
|
|
|
Mining & Development |
|
|
|
|
US$/lb U3O8
|
|
|
15.65 |
|
Transportation Cost |
|
|
|
|
US$/lb
U3O8 |
|
|
6.35 |
|
Processing (includes Tailings
Reclamation/Replacement Cost) |
|
|
|
|
US$/lb U3O8
|
|
|
7.10 |
|
Toll Milling Process Cost
Average |
|
|
|
|
US$/lb
U3O8 |
|
|
5.24 |
|
Maintenance |
|
|
|
|
US$/lb U3O8
|
|
|
0.11 |
|
G&A |
|
|
|
|
US$/lb U3O8 |
|
|
0.78 |
|
Total Operating Cost per lb |
|
|
|
|
US$/lb U3O8
|
|
|
35.23 |
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-2
|
|
www.rpacan.com
|
CONTINGENCY FACTORS
The following contingency percentages were applied to the
capital costs based on the capital expenditure timing, level of detail with
regards to the estimation, and risk involved with regards to the expenditure.
|
|
Mill Contingency Not Estimated White Mesa Mill to be
used, which is permitted and operating |
|
|
|
|
|
Mine Contingency (Average of 16%)
|
|
|
Estimation Accuracy Contingency 7% |
|
|
Mine Omissions Contingency 13%
|
|
|
Surface Infrastructure Contingency 25% |
|
|
|
|
|
Indirects Contingency 15% |
TAXES
United States payroll (or employment) taxes are applied to the
Projects labor costs asa benefit cost. This cost was estimated at 7.65% of the
gross salary up to a maximum of $106,800.
The Project economics are on a pre-tax basis. No Federal,
State, or local income taxes are included. No capital depreciation schedules are
included.
ECONOMIC CRITERIA
The economic analysis contained in this report is based, in
part, on Inferred Resources, and is preliminary in nature. Inferred Resources
are considered too geologically speculative to have mining and economic
considerations applied to them and to be categorized as Mineral Reserves. There
is no certainty that economic forecasts on which this PEA is based will be
realized.
A pre-tax cash flow projection has been generated from the LoM
schedule and capital and operating cost estimates, and is summarized in Table
22-2. A summary of the key criteria is provided below.
REVENUE
|
|
Processing of up to an average of 1,085 stpd of Roca
Honda material (base case). |
|
|
Waste mining of 0.82 Mt. |
|
|
Mill recovery averaging 95%Metal price: US$65.00 per
pound U3O8. |
|
|
Revenue is recognized at the time of production.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-3
|
|
www.rpacan.com
|
CAPITAL AND OPERATING COSTS
|
|
Pre-production period of 54 months . |
|
|
Mine life of nine years. |
|
|
Toll milling charge of $35.90 per ton. |
|
|
Pre-production capital cost of $254 million including
contingency of $45 million. |
|
|
Sustaining capital costs of $72 million. |
|
|
Closure capital cost of approximately $3.4 million.
|
|
|
Total mine life capital cost of $326 million including
contingency. |
|
|
Total LoM operating cost of $829 million.
|
ROYALTIES
|
|
There is a New Mexico mining royalty payable on the
value of mineral production for New Mexico state leases. The royalty is
based upon the operating cash flow less a development allowance,
depreciation and a processing allowance. |
|
|
|
|
|
New Mexico mining and private royalties on value of
minerals extracted as shown below: |
|
|
Notional Gross Royalty (1%); |
|
|
Section 9 Gross Royalty (1%); and |
|
|
Section 16 New Mexico State Lease Royalty (5%).
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-4
|
|
www.rpacan.com
|
TABLE 22-2 PRE-TAX CASH FLOW SUMMARY
Roca Honda Resources, LLC - Roca Honda
Project
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-5
|
|
www.rpacan.com
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-6
|
|
www.rpacan.com
|
Considering the Project on a stand-alone basis, the base case
undiscounted pre-tax cash flow and including contingency totals $317 million
over the mine life, and payback occurs early in the fifth year of production.
The annual uranium production during operation is 2.7 million pounds per year
(1,450 tons of uranium oxides) and a maximum annual production of 3.9 million
pounds.
The pre-tax internal rate of return (IRR) is 12% and the
pre-tax net present value (NPV) is as follows:
|
|
$317 million at a 0% discount rate; |
|
|
$125 million at a 5% discount rate; |
|
|
$58 million at an 8% discount rate; and |
|
|
$1 million at a 12% discount rate.
|
The net revenue per pound of product is $62.60, and the
operating cost per pound of product is $35.23/lb.
SENSITIVITY ANALYSIS
Project risks can be identified in both economic and
non-economic terms. Key economic risks were examined by running cash flow
sensitivities:
|
|
Uranium Oxide price |
|
|
Head Grade |
|
|
Recovery |
|
|
Operating Cost per ton milled |
|
|
Capital Cost |
Sensitivity has been calculated over a range of variations
based on realistic fluctuations within above listed factors.
The sensitivities are shown in Figure 22-1 and Table 22-3. The
Project is most sensitive and equally sensitive to head grade, uranium price,
and recovery, and least sensitive and equally sensitive to operating cost, and
capital cost. The sensitivities to metallurgical recovery and head grade are
identical to that of price (for all constituents combined) and are therefore
plotted on the same line.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-7
|
|
www.rpacan.com
|
FIGURE 22-1 SUMMARY OF ROCA HONDA SENSITIVITY ANALYSIS
(PRE-TAX)
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-8
|
|
www.rpacan.com
|
TABLE 22-3 SENSITIVITY ANALYSIS
Roca Honda
Resources LLC Roca Honda Project
Parameter Variables |
Units |
-33% |
-13% |
Base |
20% |
30% |
U3O8
Price |
$/lb |
43 |
56 |
65 |
78 |
87 |
Pre-tax NPV @ 8% |
($ millions) |
-171 |
-34 |
58 |
196 |
287 |
IRR |
% |
-11% |
5% |
12% |
20% |
24% |
Parameter Variables |
|
-25% |
-10% |
Base |
10% |
25% |
Grade |
% |
0.27 |
0.32 |
0.36 |
0.40 |
0.45 |
Pre-tax NPV @ 8% |
($ millions) |
-113 |
-10 |
58 |
126 |
229 |
IRR |
% |
-3% |
7% |
12% |
16% |
22% |
Parameter Variables |
|
-20% |
-10% |
Base |
2% |
3% |
Recovery |
% |
76 |
86 |
95 |
97 |
98 |
Pre-tax NPV @ 8% |
($ millions) |
-80 |
-11 |
58 |
72 |
79 |
IRR |
% |
1% |
7% |
12% |
13% |
13% |
Parameter Variables |
|
-20% |
-10% |
Base |
10% |
20% |
Operating Cost |
$ millions |
542 |
678 |
829 |
995 |
1,176 |
Pre-tax NPV @ 8% |
($ millions) |
192 |
129 |
58 |
-20 |
-104 |
IRR |
% |
20% |
16% |
12% |
6% |
-2% |
Parameter Variables |
|
-30% |
-15% |
Base |
15% |
30% |
Capital Cost |
$ millions |
242 |
284 |
327 |
369 |
411 |
Pre-tax NPV @ 8% |
($ millions) |
120 |
89 |
58 |
27 |
-5 |
IRR |
% |
18% |
15% |
12% |
10% |
8% |
COMPARISON WITH THE 2012 PEA
The significant changes between the 2012 PEA and the 2015 PEA
are listed in Table 22-4, and the sensitivity financial impacts of these changes
are listed in Table 22-5 and Figure 22-2.
RPA notes that the uranium price used for the 2015 PEA is
$65/lb and the uranium price used for the 2012 PEA was $75/lb. Table 22-5 shows
that if a $75/lb price is used for the 2015 Roca Honda PEA, the pre-tax IRR is
only one percent less than the 2012 Roca Honda PEA.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-9
|
|
www.rpacan.com
|
TABLE 22-4 MAJOR DIFFERENCES BETWEEN THE 2012 ROCA HONDA PEA AND THE 2015 ROCA HONDA PEA
Roca Honda Resources LLC Roca
Honda Project
Item Changed in PEA |
2012 PEA Assumption |
2015 Assumption |
Comment |
|
|
|
|
Uranium Price |
US$75/lb |
US$65/lb |
|
Process Plant Location |
Peña Ranch, NM |
Blanding, UT |
|
Mill Capital Cost (Directs, Indirects, &
Contingency) |
US$120 million |
US$0 |
|
Ventilation Shaft(s) Method |
Blind Bore |
Raise Boring |
|
Transportation Distance |
25 to 29 road miles |
275 road miles |
|
Transportation Cost (mine to
mill) |
US$4.05/t ore |
US$43.50/t ore |
|
Toll Milling Charge of Roca Honda Material |
US$0.00/t ore |
US$35.90/t ore |
|
Water Pipeline |
10 mile Northern
Route |
26 mile Southern
Route |
|
Capital Cost Estimate (Life of Mine) |
US$445 million |
US$327 million |
|
Process Plant |
New Construction |
Existing White
Mesa Mill (WMM) |
|
Process Plant Permitting |
Unknown High Risk Very Long Lead
Time to Obtain NRC |
In place Low Risk |
No NRC license required with the WMM
|
Process Recovery Used |
94% |
95% |
EFR has processed
many different types of uranium ores at their existing White Mesa Mill.
|
TABLE 22-5 FINANCIAL COMPARISON BETWEEN THE 2012 ROCA
HONDA PEA AND THE 2015 ROCA HONDA PEA
Roca Honda Resources LLC Roca
Honda Project
Description |
|
Units |
|
|
Price Sensitivities and
Recovery |
|
Date of PEA |
|
|
|
|
Feb-15 |
|
|
Feb-15 |
|
|
Feb-15 |
|
|
Feb-15 |
|
|
Feb-15 |
|
|
Aug-12 |
|
Uranium Price |
|
US$/lb |
|
|
45.00 |
|
|
55.00 |
|
|
65.00 |
|
|
75.00 |
|
|
90.00 |
|
|
75.00 |
|
Processing Recovery |
|
% |
|
|
95 |
|
|
95 |
|
|
95 |
|
|
95 |
|
|
95 |
|
|
94 |
|
Pre-tax Cash Flow |
$ |
US 000s |
|
|
(137,472 |
) |
|
89,965 |
|
|
317,403 |
|
|
544,840 |
|
|
885,997 |
|
|
713,087 |
|
Pre-tax NPV @ 8% Discount
Rate |
$ |
US 000s |
|
|
(153,637 |
)
|
|
(47,821 |
)
|
|
57,996 |
|
|
163,812 |
|
|
322,536 |
|
|
220,075 |
|
Pre-tax IRR |
|
% |
|
|
-8 |
|
|
4 |
|
|
12 |
|
|
18 |
|
|
26 |
|
|
19 |
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-10
|
|
www.rpacan.com
|
FIGURE 22-2 COMPARISON OF 2015 ROCA HONDA PEA AT DIFFERENT
URANIUM PRICES TO 2012 ROCA HONDA PEA AT US$75/LB
Energy Fuels believes that the financial risk of permitting a
mill in New Mexico is greater than the risk of using the existing White Mesa
Mill in Blanding, Utah. In addition, Energy Fuels believes that the capital cost
risk is lower using the White Mesa Mill than building a mill near the Roca Honda
Mine. Operating costs for the processing of Roca Honda material at the White
Mesa Mill are higher because of the transportation cost from the Roca Honda Mine
to the White Mesa Mill.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 22-11
|
|
www.rpacan.com
|
23 ADJACENT PROPERTIES
CURRENT LAND HOLDINGS
Uranium Resources, Inc. (URI) controls, through mining claims
and leases, approximately 3,688 acres of public and private land holdings
surrounding and adjacent to the RHR property. URIs holdings consist of one
section of private mineral lease (Section 17, Township 13 North, Range 8 West)
and 187 federal unpatented lode mining claims (all or portions of Sections 2, 3,
4, 5, 6, 8, 11, and 12, all in T13N, R8W). Rio Grande Resources (RGR) controls
private mineral leases on Sections 13 and 15, T13N, R8W, and additional property
associated with the Mount Taylor Mine. RHR disputes the current claims held by
URI on Sections 5 and 6. Both companies filings with the BLM for those two
sections are current. Section 14, T13N, R8W is held by three separate families
through private mining leases. From the 1970s through the 1980s, exploration
holes were drilled on the properties by various operators. Table 23-1 summarizes
the Non-Reserve Mineralized Material estimates published in 2007 when all
three properties were controlled by URI (Behre Dolbear, 2007).
TABLE 23-1 NON-RESERVE MINERALIZED MATERIAL URIS SECTIONS 13, 15, AND 17
Section |
Tons |
Grade |
Pounds
U3O8 |
Current |
Source |
|
(000) |
(%U3O8)
|
(000) |
Owner |
|
13 |
2,400 |
0.16 |
7,600 |
RGR |
URI, 2007
|
15 |
560 |
0.24 |
2,700 |
RGR |
URI, 2007 |
17 |
718 |
0.337 |
4,833 |
URI |
October 29,
2014 Technical Report |
Note: CIM definitions were not followed.
PAST MINING
In the late 1980s, Kerr-McGee sank a shaft to a depth of
approximately 1,469 ft on Section 17, referred to as the Lee mine (also known as
the Roca Honda mine). Excavation of the shaft stopped before reaching the
mineralized horizons of the Westwater Formation, and the mine closed down in the
mid-1980s. No ore was ever mined from the Lee Mine.
By the end of 1982, Kerr-McGee reported total production from
seven of their nearby mines in the Ambrosia Lake district of 17.9 million tons
grading 0.217% U3O8 containing 77.3 million pounds
U3O8 (Malone, 1980 and 1982).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 23-1
|
|
www.rpacan.com
|
Rio Grande Resources Corporation owns the Mount Taylor
underground uranium mine located approximately 3.5 miles southeast of the Roca
Honda Project area. More than eight million pounds U3O8
were produced from the Mount Taylor mine before it was placed on standby
in 1989. Presently, the Mount Taylor mine is on standby, but is currently
working with the State of New Mexico to go back to active status.
The Johnny M mine is located one mile west of the Project area,
on Section 7 and the east half of Section 18. Approximately five million pounds
U3O8 were mined from the Westwater Canyon Member sandstone
units from 1976 to 1982 (Fitch 2010).
Approximately four miles southwestof the Project area is the
San Mateo underground uranium mine. This mine has not been in operation for many
years; however, approximately 2.8 million pounds U3O8 were
mined from 1959 to 1970 (McLemore et. al. 2002).
RPA has not verified the information on the adjacent
properties. This information is not necessarily indicative of the mineralization
at the Roca Honda property.
Figure 23-1 illustrates the locations of the adjacent
properties.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 23-2
|
|
www.rpacan.com
|
23-3
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 23-3
|
|
www.rpacan.com
|
24 OTHER RELEVANT DATA AND INFORMATION
No additional information or explanation is necessary to make
this Technical Report understandable and not misleading.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 24-1
|
|
www.rpacan.com
|
25 INTERPRETATION AND CONCLUSIONS
RPA offers the following conclusions regarding the Roca Honda
Project:
GEOLOGY AND MINERAL RESOURCES
|
|
The Project is a significant high grade uranium deposit.
|
|
|
|
|
|
Uranium mineralization at the Project is associated with
large amounts of organic/high carbon material in sandstones. |
|
|
|
|
|
Drilling to date has intersected localized, high-grade
mineralized zones contained within five sandstone units of the Westwater
Canyon Member of the Morrison Formation. |
|
|
|
|
|
The sampling, sample preparation, and sample analysis
programs are appropriate for the type of mineralization. |
|
|
|
|
|
Although continuity of mineralization is variable,
drilling to date confirms that local continuity exists within individual
sandstone units. |
|
|
|
|
|
No significant discrepancies were identified with the
survey location, lithology, and electric and gamma log interpretations
data in historic holes. |
|
|
|
|
|
No significant discrepancies were identified with the
lithology and electric and gamma log data interpretations in RHR holes.
|
|
|
|
|
|
Descriptions of recent drilling programs, logging, and
sampling procedures have been well documented by RHR, with no significant
discrepancies identified. |
|
|
|
|
|
There is a low risk of depletion of chemical uranium
compared to radiometrically determined uranium in the Roca Honda deposit.
|
|
|
|
|
|
RPA is of the opinion that the QA/QC procedures
undertaken support the integrity of the database used for Mineral Resource
estimation. |
|
|
|
|
|
The resource database is valid and suitable for Mineral
Resource estimation. |
|
|
|
|
|
The Mineral Resource estimate and classification are in
accordance with the CIM definitions incorporated in NI 43-101. The
resource model and underlying data have not changed since the 2012
Technical Report (Nakai-Lajoie, 2012), however, RPA has reported Mineral
Resources at a higher cut-off grade, consistent with the production
scenario proposed in this PEA. Table 25-1 summarizes the Mineral Resources
for the Roca Honda Project. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 25-1
|
|
www.rpacan.com
|
TABLE 25-1 MINERAL RESOURCES FEBRUARY 4, 2015
Roca Honda Resources LLC Roca Honda Project
|
Classification |
Tons |
Grade
U3O8 |
Pounds
U3O8 |
|
|
(000) |
(%) |
(000) |
|
Measured Resources |
208 |
0.477 |
1,984 |
|
Indicated Resources |
1,303 |
0.483 |
12,580 |
|
Total Measured and
Indicated Resources |
1,511
|
0.482
|
14,564
|
|
|
|
|
|
|
Inferred Resources |
1,198 |
0.468 |
11,206
|
|
Notes: |
|
1. |
CIM definitions were followed for Mineral Resources.
|
|
2. |
Mineral Resources are estimated using a cut-off grade of
0.19% U3O8. |
|
3. |
A minimum mining thickness of six feet was used, along
with $241/ton operating cost and $65/lb U3O8 cut-off
grade and 95% recovery. |
|
4. |
Mineral Resources that are not Mineral Reserves do not
have demonstrated economic viability. |
|
5. |
Numbers may not add due to rounding.
|
|
|
RPA did not update the mine design and
production schedule, which was developed using a cut-off grade of 0.13%
U3O8. The previous work was reviewed, and it was
determined that stopes remain above the updated cut-off grade of 0.19%
U3O8. Some material below 0.19% U3O8
is included within the stope designs, and should be considered
incremental material. |
|
|
|
|
|
In RPAs opinion, a stope re-design at a higher
cut-off grade would remove some incremental material, raise the average
production grade, and improve the cash flow, although the mine life would
be somewhat shorter. |
|
|
|
|
|
RPA is not aware of any known environmental,
permitting, legal, title, taxation, socioeconomic, marketing, political,
or other relevant factors that could materially affect the current
resource estimate. |
MINING
|
|
The mineralization is relatively flat-lying,
and will be mined with a combination of step room-and-pillar and
drift-and-fill stoping. |
|
|
|
|
|
In the development of the Mineral Resource
estimate for this PEA, RPA used a diluted cut-off grade of 0.110%
U3O8, a minimum mining thickness of six feet, and
the historical mining recovery of 85% for the step room-and-pillar mining
method and 90% recovery for the drift-and-fill mining method. |
|
|
|
|
|
The PEA is based on 2.033 million tons of
Measured and Indicated Resources at a diluted grade of 0.365%
U3O8 and 1.400 million tons of Inferred Resources at
a diluted grade of 0.355% U3O8. RPA notes that
Inferred Mineral Resources are considered too geologically speculative to
have mining and economic considerations applied to them and to be
categorized as Mineral Reserves. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 25-2
|
|
www.rpacan.com
|
|
|
RPA considers the mining plan to be relatively simple and
the mining conditions are expected to be acceptable after the ground is
sufficiently dewatered. |
|
|
|
|
|
Mining is dependent upon the use of a suitable backfill,
assumed to be backfill with cement added as a binder. Initial test work to
demonstrate that a suitable backfill will be generated before and during
the mine development period needs to be completed.
|
PROCESSING
|
|
Mineral processing test work indicates that uranium can
be recovered in an acid leaching circuit after grinding to 80% minus 28
mesh with estimated recoveries of 95% from the mineralized material. Feed
to the SAG mill is assumed to be F80 of three inch. The comminution
circuit at White Mesa Mill can produce P80 28-mesh sized material.
|
|
|
|
|
|
White Mesa Mill uses an atmospheric hot acid leach
followed by CCD. This in turn is followed by a clarification stage, which
precedes the SX circuit. Kerosene containing iso-decanol and tertiary
amines extracts the uranium and vanadium from the aqueous solution in the
SX circuit. Salt and sulfuric acid are then used to strip the uranium from
the organic phase. |
|
|
|
|
|
After extraction of the uranium values from the aqueous
solution in SX, uranium is precipitated with anhydrous ammonia, dissolved,
and re-precipitated to improve product quality. The resulting precipitate
is then washed and dewatered using centrifuges to produce a final product
called "yellowcake." The yellowcake is dried in a multiple hearth dryer
and packaged in drums weighing approximately 800 lb to 1,000 lb for
shipping to converters. |
|
|
|
|
|
The yellowcake (U3O8 concentrate)
will be stored in 55 gallon drums at the White Mesa Mill until shipped
off-site. |
|
|
|
|
|
Tailings from the acid leach plant will be stored in
40-acre tailing cells located in the southwest and southern portion of the
mill site. |
|
|
|
|
|
Process solutions will be stored in the evaporation cells
for reuse and excess solutions will be allowed to evaporate.
|
INFRASTRUCTURE
|
|
The Roca Honda site is easily accessed via existing paved
highways and gravel roads that can be readily improved to accommodate haul
trucks. |
|
|
|
|
|
The initial mine site power will be provided by an
upgrade to a 25 kV power line with backup capacity supplied by a diesel,
generating station. The diesel plant design is based upon having two spare
units at any given time. |
|
|
|
|
|
The White Mesa Mill is currently fully operational.
Additional tailings storage capacity is required at White Mesa Mill for
the Roca Honda ore. Costs for construction of additional capacity are
included in the estimated milling operating cost.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 25-3
|
|
www.rpacan.com
|
ENVIRONMENT
|
|
Extensive baseline studies have been completed for the
Projects proposed mine location. All required permits for the White Mesa
Mill to operate are in place. |
|
|
|
|
|
The Draft EIS was published by the USFS in February 2013
with an expected ROD and Final EIS in late 2016. A mine permit is expected
to be issued following the ROD and Final EIS in early 2017. |
|
|
|
|
|
Rock characterization studies indicate that waste rock
from the Project is not an acid producer. |
|
|
|
|
|
Environmental considerations are typical of underground
mining and processing facilities and are being addressed in a manner that
is reasonable and appropriate for the stage of the Project.
|
ECONOMICS
|
|
The uranium prices used in the PEA are higher (US$65.00
per pound) than the current uranium price (February 24, 2015) of US$37.15
per pound. The prices are based on independent, third-party and market
analysts average forecasts for 2015, and the supply and demand
projections are from 2011 to 2015. In RPAs opinion, these long- term
price forecasts are a reasonable basis for estimation of Mineral
Resources. |
|
|
|
|
|
Income taxes and New Mexico mining royalties on the
Project are dependent on the selected method of depreciation of capital,
and may also be reduced by application of credits accumulated by RHR. In
RPAs opinion, there is potential to improve the after- tax economic
results, as the Project is advanced. |
RISKS
|
|
There are potential risks associated with the
fluctuating price of uranium, socio- economic community relations, and the
issue of water, dewatering, and disposal of mine water. Based on previous
mining history in the area, risks associated with water can be managed.
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page25-4
|
|
www.rpacan.com
|
26 RECOMMENDATIONS
RPA recommends that Roca Honda Resources advance the Roca Honda
Project to the Prefeasibility Study stage, and continue the New Mexico and
Federal permitting processes. Specific recommendations by area are as follows.
GEOLOGY
|
|
Although RPA is of the opinion that there is a relatively
low risk in assuming that density of mineralized zones is similar to that
reported in mining operations east and west of the Roca Honda property,
additional density determinations should be carried out, particularly in
the mineralized zones, to confirm and support future resource estimates.
|
|
|
|
|
|
Although there is a low risk of depletion of chemical
uranium compared to radiometrically determined uranium in the Roca Honda
mineralization, additional sampling and analyses should be completed to
supplement results of the limited disequilibrium testing to date.
|
|
|
|
|
|
In the future, implement a QA/QC protocol for sample
analysis that includes the regular submission of blanks and standards.
|
|
|
|
|
|
Review additional fault modelling once additional data
have been obtained. |
|
|
|
|
|
Complete additional confirmation drilling at the earliest
opportunity to confirm historic drill hole data on all zones.
|
RESOURCES
|
|
Complete further definition drilling in the Mineral
Resource areas to increase the quantity and quality of the resources and
improve the overall confidence, i.e., resource classification (Measured,
Indicated, and Inferred). |
|
|
|
|
|
Include one-half foot assays in the geologic database for
future grade shell analysis. |
HYDROLOGY
|
|
Continue to gather data, which will improve knowledge
about the local and regional |
|
|
aquifers. |
|
|
|
|
|
Continue to update the regional groundwater model as new
data becomes available to determine the impacts that the depressurization
of the Roca Honda Project will have on local and regional aquifers. The
regional groundwater model has been accepted by both the USFS and New
Mexico Office of the State Engineer. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 26-1
|
|
www.rpacan.com
|
MINING
|
|
Geotechnical designs are based on the laboratory testing
of only a limited number of core samples. Additional sampling and testing
should be pursued in concert with the definition drilling program.
Boreholes should be located on the centerline of the various proposed
ventilation shafts. The cores from these holes will define the different
lithologies to be encountered, and provide samples for rock strength
testing and other needed geotechnical design information. The geotechnical
study on the proposed shaft core hole was completed in 2012. More detailed
designs and cost estimates should be completed. |
|
|
|
|
|
Investigate more thoroughly the applicability of using
roadheaders, and other selective mining methods that may reduce dilution
for development and stope mining, which will reduce the tonnage and
increase the grade of material shipped and processed at White Mesa Mill.
|
|
|
|
|
|
Pursue the acquisition or joint venturing of potential
extensions of the mineralized zones onto adjacent land. The Project is
sensitive to total resources tonnage and grade, i.e., total pounds of
contained uranium. Potential acquisitions could impact the preferred
locations of underground mine access, surface infrastructure, and possibly
the processing facilities. |
PROCESSING
|
|
Obtain representative metallurgical samples for site
specific test work including disequilibrium analysis of the Roca Honda
Sand Horizons: A, B, C and D Sands. |
|
|
|
|
|
Finalize processing parameters to be used at the White
Mesa Mill. |
PROPOSED PROGRAM AND BUDGET
RPA recommends a two-phase work program and budget for the Roca
Honda property, with Phase 2 being contingent on the outcome of Phase 1. The
focus of the Phase 1 program is to continue the permitting process for the
Project with State and Federal Agencies as well as continue environmental,
engineering, and design studies to support the permitting process. The Phase 2
program includes additional drilling to increase and upgrade existing Mineral
Resources, and mine design. The work programs and budgets are summarized in
Tables 26-1 and 26-2.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 26-2
|
|
www.rpacan.com
|
TABLE 26-1 PROPOSED BUDGET - PHASE 1
Roca Honda
Resources LLC Roca Honda Project
Proposed Budget Item |
|
US$ |
|
Legal/Regulatory |
|
301,500 |
|
Project Management/Staff Cost |
|
419,260 |
|
Expense Accounts/Travel Costs
|
|
25,525 |
|
Holding Costs |
|
84,320 |
|
Access Fees |
|
300,000 |
|
Environmental Studies |
|
40,000 |
|
Engineering Studies |
|
310,000 |
|
Community Relations |
|
13,000 |
|
Permitting |
|
461,000 |
|
Communications |
|
8,820 |
|
Transportation |
|
7,200 |
|
Subtotal |
|
1,970,625 |
|
Contingency (10%) |
|
197,063 |
|
TOTAL |
|
2,167,688 |
|
TABLE 26-2 PROPOSED BUDGET - PHASE 2
Roca Honda
Resources LLC Roca Honda Project
Proposed Budget Item |
|
US$ |
|
Legal/Regulatory |
|
100,000 |
|
Project Management/Staff Cost |
|
400,000 |
|
Expense Accounts/Travel Costs
|
|
25,000 |
|
Holding Costs |
|
90,000 |
|
Access Fees |
|
200,000 |
|
Drilling (32 holes ~60,000 ft) |
|
2,361,000 |
|
Assaying/Geophysical Logging
|
|
124,000 |
|
Environmental Studies |
|
50,000 |
|
Metallurgical Test Work |
|
200,000 |
|
Community Relations |
|
100,000 |
|
Geotechnical Analysis |
|
200,000 |
|
Reclamation Bonding |
|
400,000 |
|
Communications |
|
20,000 |
|
Transportation |
|
30,000 |
|
Subtotal |
|
4,300,000
|
|
Contingency (10%) |
|
430,000 |
|
TOTAL |
|
4,730,000
|
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 26-3
|
|
www.rpacan.com
|
27 REFERENCES
Adams, S.S., and A.E. Saucier, 1980, Geology and recognition
criteria for uraniferous humate deposits, Grants Uranium Region, New Mexico,
GJBX-2-(81), prepared for U.S. D.O.E., Grand Junction, CO, November.
Behre Dolbear & Company (USA) Inc., 2007, Review of
Non-Reserve Mineralized Material of New Mexico Uranium Deposits. Report prepared
for Uranium Resources, Inc., March 15, 2007.
Brod, R.C., and Stone, W.J., 1981, Hydrogeology and water
resources of the Ambrosia Lake-San Mateo area, McKinley and Valencia Counties,
New Mexico: M.S. thesis, New Mexico Institute of Mining and Technology.
Canadian Institute of Mining, Metallurgy and Petroleum (CIM),
2014, CIM Definition Standards for Mineral Resources and Mineral Reserves,
adopted by CIM Council on May 10, 2014.
Carter, G.S., 2014, Technical Report on Mineral Resources: Juan
Tafoya Uranium Project Cibola, McKinley and Sandoval Counties, New Mexico, USA.
NI 43-10 Technical Report Prepared for Uranium Resources by Broad Oak Resources,
May 15, 2014.
Comeau, Maldegen, Templeman & Indall, LLP, 2011, Internal
Correspondence, Mineral Interests on Sections 9, 10 and 16, October 12, 2011.
Dames and Moore, 1979, Ore Reserve Estimate, Basic Mine Design,
and Capital and Operating Costs for the Roca Honda property of Kerr-McGee
Nuclear Corporation, Report prepared for Roca Honda, August 1979.
Falk, E.L., 1978, Roca Honda Mine Plan, Sections 9 and 10,
T13N, R8W, McKinley County, NM. Kerr-McGee Resources Corporation internal
correspondence.
Fassett, J.E., 1989. Coal Resources of the San Juan Basin, in
Southeastern Colorado Plateau, New Mexico Geological Society, 40th Field
Conference Guidebook, pp. 303307.
Fitch, D.C., 1990, Uranium Exploration and Geology, in Kennedy,
B.A., ed., Surface Mining, 2nd edition, Society for Mining,
Metallurgy, and Exploration Inc., Littleton, CO, Chapter 2.4, p. 35-48.
Fitch, D.C., 2006, Technical Report on the Roca Honda Uranium
Property, McKinley County, New Mexico, Technical Report prepared for Strathmore
Minerals Corp, March 31, 2006.
Fitch, D.C., 2008, Technical Report on the Roca Honda Uranium
Property, McKinley County, New Mexico, prepared for Strathmore Minerals Corp.,
May 14, 2008.
Fitch, D.C., 2010, Technical Report on the Roca Honda Uranium
Property, McKinley County, New Mexico, prepared for Strathmore Minerals Corp.,
June 30, 2010.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 27-1
|
|
www.rpacan.com
|
Granger, H.C., 1963, Radium migration and its effect on the
apparent age of uranium deposits at Ambrosia Lake, New Mexico: U. S. Geological
Survey Professional Paper 475-B, p. 60-63.
Granger, H.C. and Santos, E.S., 1986, Geology and ore deposits
of the Section 23 Mine, Ambrosia Lake District, New Mexico, in Turner-Peterson,
C. E., E.S. Santos, and N.S. Fishman (Editors), 1986, A basin analysis case
study: The Morrison Formation, Grants Uranium Region, New Mexico, AAPG Studies
in Geology #22, January.
Granger, H.C., Santos, E.S., Dean, B.G., and Moore, F.B., 1961,
Sandstone-type uranium deposits at Ambrosia Lake, New Mexico--an interim report:
Economic Geology, V. 56, n.7, pp. 1179-1210.
Herczeg, A.L., Simpson, H.J., Trier, F. R, Trier, R.M.,
Mathieu, G.G., and Anderson, B.L.D., 1998, Uranium and radium mobility in
groundwaters and brines within the Delaware Basin, Southeastern New Mexico,
U.S.A., Chemical Geology: Isotopes Geoscience Section, Vol. 72, #2, 25 March
1988, pp. 181-196.
Holen, H.K. and Hatchell, W.O., 1986, Geological
characterization of New Mexico uranium deposit for extraction by in situ leach
recovery, New Mexico Bureau of Mine and Mineral Resources, Open-File Report No.
251, Funded by New Mexico Energy and Minerals Department, August.
Izzo, T.F., 2006a, Conceptual design criteria, 2500 or 5000
ton-per-day uranium mill for Strathmore Resources (U.S.) Ltd., Minerals
Engineering Co., October 31, 2006.
Izzo, T.F., 2006b, Uranium Mill Operating Costs Rev. 0,
Minerals Engineering Co., prepared for Strathmore Resources (U.S.) Ltd.
Jet West, 2008, Uranium ore logging, procedures and factors for
gamma-ray probing, 5 pages, pdf document received Jan 3, 2008, by Jet West
Geophysical Services, LLC.
Kapostasy, D., 2010, August 3 Field Survey, internal memo
prepared for RHR, September 2010.
Kelley, V.C., 1963, Tectonic Setting, Geology and Technology of
the Grants Uranium Region, New Mexico Bureau of Mines & Mineral Resources,
Memoir 15, 1963.
Kendall, E.W., 1972, Trend orebodies of the Section 27 mine,
Ambrosia Lake district, New Mexico, PhD thesis, University of California
(Berkeley), 167 p.
Kerr-McGee Corp., 1980, Internal Correspondence, TCM-80011,
Characterization of Uranium Ore from the Lee Mine, McKinley county, New Mexico,
Project Number 5326, August 28, 1980.
Kerr-McGee Corp., 1980, Characterization of Uranium Ore from
the Lee Mine, McKinley County, New Mexico, a Technical Center Memorandum No.
80011 (August 28, 1980).
Kerr-McGee Corp., 1982, Marquez Uranium Ore Characterization
Interim Report, a Technical Center Memorandum No. 82007 (June 30, 1982).
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 27-2
|
|
www.rpacan.com
|
Kerr-McGee Resources, undated, Manual Calculation of
thickness and grade, Kerr-McGee method.
King, P.B., and Beikman, H.M., 1974, Geologic Map of the United
States, U.S. Geological Survey Professional Paper 901, scale 1:2,500,000.
Kirk, A.R., and Condon, S.M., 1986. Structural Control of
Sedimentation Patterns and the Distribution of Uranium Deposits in the Westwater
Canyon Member of the Morrison Formation, Northwestern New Mexico A Subsurface
Study, in A Basin Analysis Case Study: The Morrison Formation, Grants Uranium
Region, New Mexico, American Association of Petroleum Geologists Studies in
Geology No. 22, pp. 105143.
Landis, E.R., Dane, C.H., and Cobban, W.A., 1973. Stratigraphic
Terminology of the Dakota Sandstone and Mancos Shale, West-Central New Mexico,
U.S. Geological Survey Bulletin 1372-J.
Litz, J. (2011), Personal communication about process recovery
test work at the Mount Taylor mine, provided to Rod Smith, Lyntek, 2011.
Lorenz, J.C., and Cooper, S.P., 2003. Tectonic Setting and
Characteristics of Natural Fractures in Mesaverde and Dakota Reservoirs of the
San Juan Basin, New Mexico Geology, v. 25, no. 1, pp. 314.
Lucas, S.G., 2004. The Triassic and Jurassic Systems in New
Mexico, in The Geology of New Mexico, A Geologic History, New Mexico Geological
Society, pp. 137152.
Malone, R.A., 1980, The Twenty-third Annual Report of the
Production Geology Department, Report prepared for Kerr-McGee Nuclear
Corporation, Grants Uranium Operations, For the Year 1980.
Malone, R.A., 1982, The Twenty-third Annual Report of the
Production Geology Department, Report prepared for Kerr-McGee Nuclear
Corporation, Grants Uranium Operations, For the Year 1982.
McLemore, V.T., and Chenoweth, W.L., 1989, Uranium resources in
New Mexico, New Mexico Bureau of Geology and Mineral Resources, Map MR-18, 36 p,
1 sheet, scale 1:1,000,000.
McLemore, V.T., et al., 2002, Database of Uranium Mines,
Prospects, Occurrences, and Mills in New Mexico, Open File Report 461, New
Mexico Bureau of Geology and Mineral Resources, New Mexico Institute of Mining
and Technology, April 3, 2002.
McLemore, V.T., 2010, The Grants Uranium District, New Mexico:
Update on Source, Deposition, and Exploration, New Mexico Bureau of Geology and
Mineral Resources, 43 p.
Moore, S.C., and Lavery, N.G., 1980, Magnitude and variability
of disequilibrium in San Antonio Valley Uranium Deposit, Valencia County, pp.
276-283 in A basin analysis case study: The Morrison Formation, Grants Uranium
Region, New Mexico, AAPG Studies in Geology #22, January.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 27-3
|
|
www.rpacan.com
|
Nakai-Lajoie, P., Michaud, R., Collins, S.E., Smith, R.C.,
2012, Technical Report on the Roca Honda Project, McKinley County, New Mexico,
U.S.A., prepared for Roca Honda Resources, LLC, August 6, 2012.
Owen, D.E., 1966. Nomenclature of Dakota Sandstone (Cretaceous)
in San Juan Basin, New Mexico, and Colorado, American Association of Petroleum
Geologists Bulletin, v. 50, pp. 10231028.
OSE (Office of the State Engineer), 2008. New Mexico Office of
the State Engineer and Interstate Stream Commission.
Parker, H.M., 1990, Reserve estimation of uranium deposits, in
Kennedy, B.A., ed., Surface Mining, 2nd edition, Society for Mining,
Metallurgy, and Exploration, Inc., Littleton, CO, Chapter 3.4.2, p. 355-375.
Pike, W.S., 1947. Intertonguing Marine and Nonmarine Upper
Cretaceous Deposits of New Mexico, Arizona, and Southwestern Colorado,
Geological Society of America Memoir 24.
Popoff, C.C., 1966, Computing reserves of mineral deposits:
principles and conventional methods, U.S. Bureau of Mines Information Circular
IC 8283.
Robertson, W.J., and Shaw, R.C., 1982, Marquez Uranium Ore
Characterization, Interim Report for Kerr McGee Corp., June 30, 1982.
Roca Honda Resources, 2009, Baseline Data Report, Report
prepared for New Mexico Mining and Minerals Division and U.S. Forest Service,
October 2009.
Roca Honda Resources, 2009, Permit Application for a New Mine
(Roca Honda Mine), Report Prepared for New Mexico Mining and Minerals Division
and U.S. Forest Service and Report, October 2009.
Roca Honda Resources, 2009, Reclamation Plan for Roca Honda
Mine, Report prepared for New Mexico Mining and Minerals Division and U.S.
Forest Service, October 2009.
Sandefur, R.L., and Grant, D.C., 1976, Preliminary evaluation
of uranium deposits, A geostatistical study of drilling density in Wyoming
solution fronts, in Exploration for uranium deposits, International Atomic
Energy Agency, Vienna, p. 695 714.
Santos, E.S., 1970, Stratigraphy of the Morrison Formation and
Structure of the Ambrosia Lake District, New Mexico, U.S. Geological Survey
Bulletin 1272-E, 1970.
Santos, E.S., 1966a. Geologic Map of the San Mateo Quadrangle,
McKinley and Valencia Counties, New Mexico, U.S. Geological Survey Map GQ-517,
scale 1:24,000.
Santos, E.S., 1966b. Geologic Map of the San Lucas Dam
Quadrangle, McKinley County, New Mexico, U.S. Geological Survey Map GQ-516,
scale 1:24,000.
Sheppard, P.R., Comrie, A.C., Packin, G.D., Angersbach, K., and
Hughes, M.K., 1999. The Climate of the Southwest, Institute for the Study of
Planet Earth, CLIMAS Report Series CL1-99.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 27-4
|
|
www.rpacan.com
|
Smouse, D.E., 1995, Rio Algom Mining Corp., Property summaries report, dated September 21, 1995.
Smouse, D.E., 1995, Rio Algom Mining Corp., Annual uranium resource report, dated January 1, 1995.
Squyres, J.B., 1970, Origin and depositional environment of uranium deposits of the Grants region, New Mexico, PhD thesis, Stanford University, 228 p.
Strathmore Resources, 2008, Report prepared by Standard Operating Procedure 004: Lithologic Logging of Cuttings and Core Revision 0, Prepared by Strathmore Resources, April 2008.
Strathmore Resources, 2008, Report prepared by Standard Operating Procedure 006: Sample, Handling, Packaging, Shipping, and Chain of Custody Revision 0, Prepared by Strathmore Resources, April 2008.
Strathmore Resources, 2009, Internal correspondence, ELI laboratory audit results, March 2009.
Surveying Control Inc., 2008. Memo sent to Strathmore Minerals Re: Photo Control Coordinates and Elevations San Mateo, N.M.
The Mineral Lab Inc., 2007, Letter to Mr. Tim Hollens of Energy Laboratories Inc, October 1, 2007.
US NRC NUREG-1748, Environmental Review Guidance for Licensing Actions Associated with NMSS Programs 2003.
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 27-5
|
|
www.rpacan.com
|
28 DATE AND SIGNATURE PAGE
This report titled Technical Report on the Roca Honda Project,
McKinley County, New Mexico, USA and dated February 27, 2015, was prepared and
signed by the following authors:
|
(Signed & Sealed) Barton G.
Stone |
|
|
Dated at Lakewood, CO |
|
February 27, 2015 |
Barton G. Stone, C. P.G. |
|
Principal Geologist |
|
|
|
|
|
(Signed & Sealed) Robert
Michaud |
|
|
Dated at Lakewood, CO |
|
February 27, 2015 |
Robert Michaud, M.Sc., P.Eng. |
|
Associate Principal Mining Engineer |
|
|
|
|
|
(Signed & Sealed) Stuart E.
Collins |
|
|
Dated at Lakewood, CO |
|
February 27, 2015 |
Stuart E. Collins, P.E. |
|
Principal Mining Engineer |
|
|
|
|
|
(Signed & Sealed) Mark B.
Mathisen |
|
|
Dated at Lakewood, CO |
Mark B. Mathisen, C.P.G. |
February 27, 2015 |
Senior Geologist |
|
|
|
|
|
(Signed & Sealed) Harold R.
Roberts |
|
|
Dated at Lakewood, CO |
Harold R. Roberts, P.E. |
February 27, 2015 |
Executive Vice President and COO |
|
Energy Fuels Resources (USA) Inc
|
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 28-1
|
|
www.rpacan.com
|
29 CERTIFICATE OF QUALIFIED PERSON
BARTON G. STONE
I, Barton G. Stone, C.P.G, as an author of this report entitled
Technical Report on the Roca Honda Project, McKinley County, New Mexico, USA,
prepared for Roca Honda Resources, LLC, and dated February 27, 2015, do hereby
certify that:
1. |
I am a Principal Geologist with RPA (USA) Ltd. of Suite
505, 143 Union Boulevard, Lakewood, Co., USA 80228. |
|
|
2. |
I am a graduate of Dalhousie University, Nova Scotia,
Canada in 1968 with a B.Sc. degree in Geology. |
|
|
3. |
I am a graduate of Regent University, Virginia, USA in
1988 with a Master of Business Administration degree. |
|
|
4. |
I am registered as a Professional Geologist in the States
of North Carolina (Reg #1903), Oregon (Reg # G1341), and Florida (Reg. #
PG 2444). I have worked as a geologist for a total of 47 years since my
graduation. My relevant experience for the purpose of the Technical Report
is: |
|
|
Project evaluations and due diligence reviews of numerous
deposits worldwide. |
|
|
Exploration Manager for Kinross Gold USA Inc.: management
of exploration and evaluation of mineral deposits in North, Central, and
South America. |
|
|
Senior Mine Geologist at a number of base-metal mines in
Canada and the USA including US uranium properties in Texas and New
Mexico. |
|
|
Project Geologist with the Geological Survey of Kenya.
Discovered a number of deposits that became commercial operations.
|
|
|
Consultant on energy fuels of coal, oil sands, oil shales
and uranium in the USA, and Canada |
|
|
Wetlands permitting supervisor, Florida Department of
Environmental Protection |
5. |
I have read the definition of "qualified person" set out
in National Instrument 43-101 (NI 43- 101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a "qualified person" for the purposes of NI 43-101. |
|
|
6. |
I did not visit the Project site. |
|
|
7. |
I am responsible for Sections 2 to 12, and share
responsibility with my co-authors for Sections 1, 24, 25, 26, and 27 of
the Technical Report. |
|
|
8. |
I am independent of the Issuer applying the test set out
in Section 1.5 of NI 43-101. |
|
|
9. |
I have had no prior involvement with the property that is
the subject of the Technical Report. |
|
|
10. |
I have read NI 43-101, and the Technical Report has been
prepared in compliance with NI 43-101 and Form
43-101F1. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-1
|
|
www.rpacan.com
|
11. |
At the effective date of the Technical Report, to the
best of my knowledge, information, and belief, the Technical Report
contains all scientific and technical information that is required to be
disclosed to make the Technical Report not
misleading. |
Dated this 27th day of February, 2015
(Signed & Sealed) Barton G.
Stone |
|
Barton G. Stone, C.P.G. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-2
|
|
www.rpacan.com
|
ROBERT L. MICHAUD
I, Robert L. Michaud, P.Eng., as an author of this report
entitled Technical Report on the Roca Honda Project, McKinley County, New
Mexico, USA, prepared for Roca Honda Resources, LLC, and dated February 27,
2015, do hereby certify that:
1. |
I am Associate Principal Mining Engineer with Roscoe
Postle Associates Inc. of Suite 501, 55 University Ave Toronto, ON, M5J
2H7. |
|
|
2. |
I am a graduate of Queens University in 1976 with a
B.Sc. Degree in Mining Engineering. |
|
|
3. |
I am a graduate of Queens University in 1977 with a
M.Sc. Degree in Mining Engineering. |
|
|
4. |
I am registered as a Professional Engineer in the
Provinces of Ontario (31570013) and Quebec (37287). I have worked as a
mining engineer for a total of 31 years since my graduation. My relevant
experience for the purpose of the Technical Report
is: |
|
|
Operations management of several underground mines;
|
|
|
Project management of the construction and start-up of
several underground mines; |
|
|
Management numerous mine designs and technical studies.
|
5. |
I have read the definition of "qualified person" set out
in National Instrument 43-101 (NI 43- 101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a "qualified person" for the purposes of NI 43-101. |
|
|
6. |
I visited the Roca Honda Project on October 13,
2011. |
|
|
12. |
I am responsible for Sections 15 and 16 and parts of
Sections 1, 18, 21, 22, 25, and 26 of the Technical Report. |
|
|
7. |
I am independent of the Issuer applying the test set out
in Section 1.5 of NI 43-101. |
|
|
8. |
I have previously prepared a NI 43-101 Technical Report
on the Roca Honda Project, dated August 6, 2012. |
|
|
9. |
I have read NI 43-101, and the Technical Report has been
prepared in compliance with NI 43-101 and Form 43-101F1. |
|
|
10. |
At the effective date of the Technical Report, to the
best of my knowledge, information, and belief, the Technical Report
contains all scientific and technical information that is required to be
disclosed to make the technical report not
misleading. |
Dated 27th day of February, 2015
(Signed & Sealed) Robert L.
Michaud |
|
Robert L. Michaud, P.Eng. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-3
|
|
www.rpacan.com
|
STUART E. COLLINS
I, Stuart E. Collins, P.E., as an author of this report
entitled Technical Report on the Roca Honda Project, McKinley County, New
Mexico, USA, prepared for Roca Honda Resources, LLC, and dated February 27,
2015, do hereby certify that:
1. |
I am Principal Mining Engineer with Roscoe Postle
Associates USA Ltd. of 143 Union Boulevard, Suite 505, Lakewood, Colorado,
80123, USA. |
|
|
2. |
I am a graduate of South Dakota School of Mines and
Technology, Rapid City, South Dakota, U.S.A., in 1985 with a B.S. degree
in Mining Engineering. |
|
|
3. |
I am a Registered Professional Engineer in the state of
Colorado (#29455). I have been a member of the Society for Mining,
Metallurgy, and Exploration (SME) since 1975, and a Registered Member
(#612514) since September 2006. I have worked as a mining engineer for a
total of 26 years since my graduation. My relevant experience for the
purpose of the Technical Report is: |
|
|
Review and report as a consultant on numerous
exploration, development and production mining projects around the world
for due diligence and regulatory requirements; |
|
|
Mine engineering, mine management, mine operations and
mine financial analyses, involving copper, gold, silver, nickel, cobalt,
uranium, coal and base metals located in the United States, Canada,
Mexico, Turkey, Bolivia, Chile, Brazil, Costa Rica, Peru, Argentina and
Colombia. |
|
|
Engineering Manager for a number of mining-related
companies; |
|
|
Business Development for a small, privately-owned mining
company in Colorado; |
|
|
Operations supervisor at a large gold mine in Nevada, USA
; |
|
|
Involvement with the development and operation of a small
underground gold mine in Arizona, USA. |
4. |
I have read the definition of "qualified person" set out
in National Instrument 43-101 (NI 43- 101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a "qualified person" for the purposes of NI 43-101. |
|
|
5. |
I visited the Roca Honda property on November 11, 2009,
and the White Mesa Mill on February 9, 2015. |
|
|
6. |
I am responsible for Sections 20 to 23 and parts of
Sections 1, 16, 18, 25, and 26 of this report. |
|
|
7. |
I am independent of the Issuer applying the test set out
in Section 1.5 of NI 43-101. |
|
|
8. |
I have had no prior involvement with the property that is
the subject of the Technical Report. |
|
|
9. |
I have read NI 43-101, and the Technical Report has been
prepared in compliance with NI 43-101 and Form
43-101F1. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-4
|
|
www.rpacan.com
|
10. |
At the effective date of this Technical Report, to the
best of my knowledge, information, and belief, the Technical Report
contains all scientific and technical information that is required to be
disclosed to make the Technical Report not
misleading. |
Dated 27th day of February, 2015
(Signed & Sealed) Stuart E.
Collins |
|
Stuart E. Collins, P.E. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-5
|
|
www.rpacan.com
|
MARK B. MATHISEN
I, Mark B. Mathisen, CPG, as an author of this report entitled
Technical Report on the Roca Honda Project, McKinley County, New Mexico, USA,
prepared for Roca Honda Resources, LLC, and dated February 27, 2015, do hereby
certify that:
1. |
I am Senior Geologist with RPA (USA) Ltd. of Suite 505,
143 Union Boulevard, Lakewood, Co., USA 80228. |
|
|
2. |
I am a graduate of Colorado School of Mines in 1984 with
a B.Sc. degree in Geophysical Engineering. |
|
|
3. |
I am a Registered Professional Geologist in the State of
Wyoming (No. PG-2821) and a Certified Professional Geologist with the
American Institute of Professional Geologists (No. CPG-11648), and a
Registered Member (No. 4156896RM) of the Society for Mining, Metallurgy,
and Exploration (SME). I have worked as a geologist for a total of 22
years since my graduation. My relevant experience for the purpose of the
Technical Report is: |
|
|
Mineral Resource estimation and preparation of NI 43-101
Technical Reports. |
|
|
Director, Project Resources, with Denison Mines Corp.,
responsible for resource evaluation and reporting for uranium projects in
the USA, Canada, Africa, and Mongolia. |
|
|
Project Geologist with Energy Fuels Nuclear, Inc.,
responsible for planning and direction of field activities and project
development for an in situ leach uranium project in the USA. Cost analysis
software development. |
|
|
Design and direction of geophysical programs for US and
international base metal and gold exploration joint venture programs.
|
4. |
I have read the definition of "qualified person" set out
in National Instrument 43-101 (NI 43- 101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a "qualified person" for the purposes of NI 43-101. |
|
|
5. |
I did not visit the Project site. |
|
|
6. |
I am responsible for Sections 14, and parts of Sections
1, 4, 8 to 10, 12, and 24 to 27 of the Technical Report. |
|
|
7. |
I am independent of the Issuer applying the test set out
in Section 1.5 of NI 43-101. |
|
|
8. |
I have had no prior involvement with the property that is
the subject of the Technical Report. |
|
|
9. |
I have read NI 43-101, and the Technical Report has been
prepared in compliance with NI 43-101 and Form
43-101F1. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-6
|
|
www.rpacan.com
|
10. |
At the effective date of the Technical Report, to the
best of my knowledge, information, and belief, the Technical Report
contains all scientific and technical information that is required to be
disclosed to make the Technical Report not
misleading. |
Dated 27th day of February, 2015]
(Signed & Sealed) Mark B.
Mathisen |
|
Mark B. Mathisen |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-7
|
|
www.rpacan.com
|
HAROLD R. ROBERTS
I, Harold R. Roberts, as an author of this report entitled
Technical Report on the Roca Honda Project, McKinley County, New Mexico, USA,
prepared for Roca Honda Resources,LLC, and dated February 27, 2015, do hereby
certify that:
1. |
I am Executive Vice President and Chief Operating Officer
of Energy Fuels Resources (USA) Inc., of Suite 600, 225 Union Boulevard,
Lakewood, CO, USA 80228. |
|
|
2. |
I am a graduate of Montana State University in 1975 with
a B.S. degree in Civil Engineering. |
|
|
3. |
I am a Registered Professional Engineer in the States of
Utah (#165838-2202), Wyoming (#5207), Arizona (#15505), and California
(#36003). I have worked as an engineer and executive for a total of 40
years since my graduation. My relevant experience for the purpose of the
Technical Report is: |
|
|
Uranium Mill design, construction and operations.
|
|
|
Senior Project Engineer on the design and construction of
the Sherwood Uranium Mill owned by Western Nuclear, Inc., located near
Wellpinit, Washington. |
|
|
Senior Project Engineer on the design and construction of
the White Mesa Uranium Mill owned by Energy Fuels Nuclear, Inc., located
near Blanding, Utah. |
|
|
Operational oversight of the White Mesa Uranium Mill for
the past 20 years. |
4. |
I have read the definition of "qualified person" set out
in National Instrument 43-101 (NI 43- 101) and certify that by reason of
my education, affiliation with a professional association (as defined in
NI 43-101) and past relevant work experience, I fulfill the requirements
to be a "qualified person" for the purposes of NI 43-101. |
|
|
5. |
I am responsible for Sections 13 and 17, and parts of
Sections 1 and 5 of the Technical Report. |
|
|
6. |
I am not independent of the Issuer applying the test set
out in Section 1.5 of NI 43-101. |
|
|
7. |
I have involvement with the property that is the subject
of the Technical Report. |
|
|
8. |
I have read NI 43-101, and the Technical Report has been
prepared in compliance with NI 43-101 and Form 43-101F1. |
|
|
9. |
At the effective date of the Technical Report, to the
best of my knowledge, information, and belief, the Technical Report
Sections 1, 5, 13, and 17 for which I am responsible in the Technical
Report contain all scientific and technical information that is required
to be disclosed to make the Technical Report not
misleading. |
Dated 27th day of February, 2015
(Signed & Sealed) Harold R.
Roberts |
|
Harold R. Roberts, P.E. |
Roca
Honda Resources, LLC Roca Honda Project, Project
#2438 |
NI 43-101 Technical Report February 27, 2015
|
Page 29-8
|
Energy Fuels (AMEX:UUUU)
Historical Stock Chart
From Aug 2024 to Sep 2024
Energy Fuels (AMEX:UUUU)
Historical Stock Chart
From Sep 2023 to Sep 2024