Uranium Resources Inc (URI) announced that it had reached an agreement with BHP Billiton to acquire Rio Algom Mining. Under the deal, URI would also acquire a licensed mill site in New Mexico, on which it plans to construct a new conventional uranium mill.
Under the agreement, URI will pay BHP Billiton $110 million in cash and would assume certain retirement benefits and reclamation liabilities of up to $35 million. In addition, URI will pay BHP Billiton $16.5 million contingent upon the receipt of a licence from the US Nuclear Regulatory Commission (NRC) to construct and operate a conventional uranium mill. The acquisition is expected to be completed by the beginning of June 2008, subject to customary closing conditions, financing and regulatory approvals.
The purchase includes a strategically important NRC-licensed mill site with associated water rights in the historic Ambrosia Lake District of New Mexico, about 32 km north of Grants. URI said that acquiring the pre-licensed site could cut in half the time needed to build a new mill in the district compared with constructing a mill on a new site.
In addition, URI will acquire 14,000 acres (5700 ha) of land and mineral interests in Ambrosia Lake that contain a reported 20 million pounds of mineralized uranium materials. The company will also acquire a licensed mill site south of Moab, Utah.
"The purchase of Rio Algom provides one of the key assets we need to achieve our strategic goal to produce 10 million pounds of U3O8 [4536 tonnes U3O8] per year by 2014," said Dave Clark, URI's President and CEO. "We believe building a new mill on a NRC licensed site with associated water rights could allow production to begin within four to five years."
Mining at Ambrosia Lake began in the 1950s when Kerr-McGee constructed what was at the time the largest operating mill in the USA. At its peak, the mill processed 6400 tonnes of ore per day. Rio Algom operated the mill until 2002. It was dismantled in 2003.
After the acquisition, URI plans to construct a new environmentally-sound, state-of-the-art milling facility at the Ambrosia Lake site to process uranium ore that is mined from around the region. The planned mill, once in operation, is expected to employ over 200 people and will have the capacity to process up to 8000 tonnes of uranium ore per day. When commissioned, the mill will be capable of processing all of the remaining conventional ore in the Grants Mineral Belt, which could total 200 to 300 million pounds U3O8 (90,700 to 136,080 tonnes U3O8), including up to 70 million pounds (27,000 tonnes U3O8) of uranium from URI-owned projects.
Over the next several months, URI said it plans to evaluate various opportunities for joint venture and/or toll milling arrangements with several companies who could benefit greatly from a local-operating mill.
"Every aspect of the new Ambrosia Lake mill will be planned and designed with the safety and well-being of the environment, the community and our future employees in mind," said Clark. "Not only will the mill have a tremendous positive impact on the local and regional economies, it will also be a significant benefit to other uranium mining companies who require a licensed conventional mill to advance their own projects toward production."
URI has a uranium recovery plant and mining projects in Texas and uranium mineral holdings in New Mexico.
Canada-based Rio Algom was acquired in November 2000 by the UK's Billiton, which then merged with BHP in 2001. In 2002, Cameco agreed to acquire the Smith Ranch in-situ leach (ISL) uranium mine and various other ISL properties in Wyoming from Rio Algom.
Uranium Resources Inc
WNA's US Nuclear Power Industry information paper
WNN: BHP Billiton boosts uranium resource at Olympic Dam