Cameco buys Australian uranium project

29 August 2012

Cameco has agreed to buy the Yeelirrie uranium project in Western Australia from BHP Billiton for $430 million. While describing the deposit as "promising," Cameco plans to reassess resources there.

The shallow and extensive Yeelirrie deposit - amenable to open pit mining techniques - was discovered by Western Mining Corporation in 1972. Although the project gained environmental approval from the state and federal governments around 1980, subsequent changes in uranium mining policy stalled the project. In 2005, ownership of the deposit -  some 650 km northeast of Perth and about 750 km south of Cameco's Kintyre exploration project - transferred to BHP Billiton.

The possibility of development was raised anew with the 2008 change of state government and BHP Billiton listed it as an "outstanding long-term opportunity". The company followed this with a new program to better define the ore resource and engage in community consultation. In November 2008, BHP Billiton said it was reactivating work on the project. In February 2010, approval was sought for production at 3500 tonnes per year U3O8.

Based on a historic estimate prepared for BHP Billiton in June by an international mining consulting firm, Yeelirrie has measured and indicated resources of some 139 million pounds U3O8 (53,465 tU), with an average ore grade of about 0.13% U3O8 and inferred resources of around 5 million pounds (1923 tU) at 0.10% U3O8. While the historic resource estimate is compliant with Australia's JORC standard, it has not yet been classified according to the Canadian National Instrument 43-101 (NI 43-101) standard.

Cameco said the historic estimate "should not be relied upon as a quantification of mineral resources," but it considers that it is "relevant as an indication of the potential of the Yeelirrie property and believes that the total uranium content of the historic estimate may be overstated by approximately 10%."

In order to replace the historic estimate for Yeelirrie with a mineral resource estimate that is compliant with NI 43-101, Cameco will "review the gamma logs and the grade-radiometry relationship, consider remodelling at a lower cut-off grade without including significant below cut-off material and revisit the criteria used to classify the historic estimate." Additional drilling for geochemical sampling will be required, the company said.

Cameco expects the transaction - which is subject to approval from the Western Australian government and the Australian Foreign Investment Review Board - to close by the end of 2012. On completion of the deal, the company will be liable to pay $22 million in stamp tax duty to the government of Western Australia.

Cameco president and CEO Tim Gitzel commented, "Yeelirrie represents an attractive deposit that fits well with Cameco's vision and corporate strategy. We are pleased to add this promising deposit to our suite of uranium assets and look forward to advancing this property through our process for assessing development projects."

Researched and written
by World Nuclear News