Cameco buys into PhosEnergy technology

10 November 2009

Australia's Uranium Equities has announced that Canada's Cameco is to partner it in the continued development and commercialization of the PhosEnergy process for extracting uranium from phosphates. Cameco could invest up to $16.5 million to earn a 63% stake in the technology.


Uranium Equities, through US-registered Urtek, has undertaken the development of the PhosEnergy technology for the extraction of uranium from phosphoric acid streams produced in the production of phosphate-based fertilizers. It currently holds a 43% interest in Urtek and through ongoing process development expenditure has the right to acquire up to 90%.


Through a tranched investment of up to $16.5 million, Cameco will have the right to aquire up to 70% of Uranium Equities' right to a 90% stake in the PhosEnergy technology. The first tranche of $2.5 million will earn Cameco a 10.6% interest with subsequent investment tranches of two lots of $5 million and a final $4 million to see its interest increase. Cameco has the option to cease sole funding at the conclusion of each tranche.


Should Cameco decide to fund the entire $16.5 million, it has also agreed to provide a funding facility for a minimum of 50% of Uranium Equities' portion of capital expenditure related to the construction of the first commercial plant developed by the joint entity.


Uranium Equities will continue to manage the development of the PhosEnergy technology. However, a joint technical and commercial committee will be established to guide the technology.


According to Uranium Equities, the PhosEnergy process has "progressed through pilot plant scale at a significant rate at a US-based phosphoric acid facility which has confirmed the effectiveness of the process in the extraction of uranium from phosphoric acid streams." It added, "Operating cost estimates based on the pilot plant operation results indicate that, with contingency, the PhosEnergy process is capable of producing uranium at operating costs in the order of $25 to $30 per pound with over 90% uranium recovery."


Agreements have already been reached with two phosphate fertiliser producers to carry out laboratory test work to establish the commercial applicability of the PhosEnergy process at their operations, while negotiations with a further two producers for preliminary screening tests are well advanced, Uranium Equities said.


Historically, production from phosphoric acid peaked at over 5 million pounds U3O8 (1925 tU) per annum during 1978-1983. All worldwide uranium production from these sources ceased in the early 1990s as a consequence of high operating costs and the price of uranium falling below $20 per pound.


Worldwide over 100 million tonnes of phosphate rock is processed into phosphoric acid annually. It is estimated that in the order of 20 million pounds of U3O8 (7700 tU), potentially worth some $1 billion, is contained in these streams. This uranium is currently not being recovered, leaving a large dormant resource waiting to be exploited. The major phosphate-based fertiliser producers are located in Northern Africa, North America and Asia.


In July, Uranium Equities announced that it had entered into a joint venture agreement with Cameco's Australian subsidiary Cameco Australia Pty Ltd to explore and develop its Rudall River uranium project in Western Australia. Cameco was to hold a 60% stake in the joint venture and is to manage the project.


This joint venture represented Uranium Equities' third with Cameco in its Australian uranium projects, the other two being for the Alligator River project in Northern Territory and the Lake Blanche project in South Australia.