The Canyon Mine is the highest-grade uranium mine in the U.S., and based on uranium recovery alone, the Company expects production costs from the Canyon Mine to be competitive with the best underground uranium mines globally, including mines in Canada, based on industry-published cost estimates. However, now that extensive high-grade copper mineralization has been discovered within the deposit – with exploration results to date averaging 8.75% Cu and one intercept hitting 5-feet of 31.69% Cu – the Company is now expanding the scope of the evaluation of the Canyon deposit to analyze recovering copper as a byproduct of uranium recovery, which has the potential to make the economics of the Canyon Mine even better.
As a part of the current evaluation, the Company is completing the production shaft to a planned depth of 1,470-feet and conducting an underground drilling program. At the current time, the shaft is at a depth of approximately 1,250-feet, and underground drilling is currently occurring on the second of the three planned levels. As previously announced, the Company completed a fifteen hole subsurface angled core drilling program from the 1st level that intercepted several large and high-grade areas of uranium mineralization, including 8.5-feet with an average grade of 6.88% eU3O8, 48.0-feet with an average grade of 1.02% eU3O8, and 35-feet with an average grade of 1.39% eU3O8.
The uranium grades above were calculated at that time utilizing gamma analysis. The Company has since performed analysis on select core which has shown that five holes drilled into the middle zone of the deposit contain significant, high-grade copper mineralization. The core from the five holes was separated into individual intercept composites, each being 4-inches in diameter and 5 to 10 feet in length (representing 313-feet of total intercept length). Combined, all copper bearing core holes have an average grade of 8.75% Cu, including one composite that contains an average grade of 31.69% Cu. In addition, the Company is finding small quantities of silver, zinc, and other minerals which have the potential to be recoverable as additional value-added byproducts.
According to a June 27, 2012 technical report prepared in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”), the Canyon deposit contains 83,000 tons of Inferred Mineral Resources with an average grade of 0.98% eU3O8, containing 1.63 million pounds of uranium. As reported in the Company’s news release dated August 18, 2016, the current underground drilling program is further defining and delineating – and potentially expanding and upgrading – the uranium resources within the Canyon deposit.
The high-grade uranium mineralization identified in the Canyon Mine so far is located in three main zones within the deposit: an upper zone, a middle zone, and a lower zone. The high-grade copper mineralization discovered so far is located in the middle zone. It is evident from the foregoing results that the high-grade copper mineralization in the middle zone is found both inside and outside the areas of high-grade uranium mineralization, which suggests that the total tonnage of high grade copper resources may exceed the total tonnage of uranium resources in that zone. The Company also has reason to believe that there is potential for copper in the upper and lower zones as well, all residing within the physical boundaries of the identified deposit. Therefore, if copper is eventually recovered from the Canyon Mine, it is not expected to change the currently contemplated surface area disturbance, the mine depth, the mining method, or significantly increase the unit mining cost.
Due to the extensive high-grade copper mineralization encountered to date, we have expanded the scope of our next drill program to further identify, define, and delineate the copper, uranium, silver, and other mineral resources, and to determine the true width of the mineralized zones. As such, the Company plans to complete percussion and core drilling programs on the 2nd level at the Canyon deposit during Q4-2016. The cost of the additional drilling is not expected to be significant. The Company expects to complete an updated technical report for the Canyon deposit, in accordance with NI 43-101, in the first quarter of 2017, updating the uranium resources and adding any copper resources, other exploration results, or if applicable, other potentially resources.
Copper has been recovered as a byproduct at a number of uranium mills in the western United States in the past, and BHP Billiton’s Olympic Dam mine in Australia currently recovers copper and a uranium byproduct. As previously announced on September 12, 2016, the Company has engaged a team of metallurgical experts to complete a comprehensive review of all of the Company’s processing operations as a part of our optimization program. This review will include an evaluation of the potential for recovering copper utilizing existing circuitry at the Company’s White Mesa Mill located in southeast Utah.
Stephen P. Antony, President and CEO of Energy Fuels stated: “The preliminary drilling results showing an extensive system of high-grade copper mineralization at the Canyon Mine are very exciting for Energy Fuels. We have long known that similar deposits in northern Arizona contain copper. However, the average grades in the five holes sampled thus far, with a total grade of nearly 9% copper and one intercept hitting copper grades over 31%, has far exceeded expectations based on past historical results at other mines in the region. These are remarkable copper grades that one may only encounter a couple of times in a mining career. Even though the Canyon deposit is relatively small compared to other global mines, these grades are world-class. These results also have the potential to significantly improve the economics of the Canyon Mine, which is vitally important in today’s weak uranium market. As a result, we intend to continue to evaluate the Canyon deposit, complete the shaft, perform additional core drilling, and optimize the potential of this exciting high-grade deposit.”
