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Uranium Industry Uranium Deposits & Exploration Athabasca Basin Overview
The Uranium Industry
Uranium is the fuel nuclear reactors use to generate electricity. As of June 2011, there are 441 nuclear power reactors operating in 29 countries that generate over 13% of the world's electricity. A further 60 reactors are currently under construction in 13 countries, and an additional 155 reactors in 27 countries are planned. In addition to the commercial power plants, there are ~250 research reactors operating in 56 countries for scientific research and the production of medical and industrial isotopes. A further 180 reactors power ships and submarines.
As with most commodities, the fluctuation in uranium prices relates to demand and supply, and is heavily influenced by perceptions of scarcity and surplus. A rapid rise in uranium prices in the mid-70's was the result of a significant global construction period of nuclear generation facilities. During this same period, multiple uranium deposit discoveries in Saskatchewan and Australia were quickly seen to be of sufficient size and quality to replace higher-cost production in other parts of Canada and the US, which eventually drove prices downward to a level in the early 1990s that was below the cost of production for most mines.
U3O8 15-Yr Price Graph (Source: The Ux Consulting Company; www.uxc.com)
In 1996 spot prices recovered to the point where most mines could produce profitably, but further decline followed reaching a low point in mid 2000 of US$7.10/lb. A concerted upward drive in the spot price did not begin until late 2003, and over the course of four years rose dramatically to a record high in June 2007 of US$138.00/lb. This high was not sustainable however, with prices dropping back to ~US$50/lb by 2009. A steady strengthening of the price since mid 2010 reached a high of US$73.00/lb in early February 2011. In the days following the natural disasters and devastating events at Japan's Fukushima Daiichi nuclear station (March 2011), the spot price dropped more than 20 percent to US$53.00/lb. Relative stability in prices has prevailed since then and as of late June 2011 stood at US$54.25/lb.
Because of the cost structure of nuclear power generation, with high capital and low fuel costs, the demand for uranium fuel is very predictable compared to other mineral commodities. Once reactors are built, it is very cost-effective to keep them running at high capacity. Demand forecasts for uranium thus depend largely on installed and operable capacity, regardless of economic fluctuations.
The 441 operating reactors in the world today require 68,900 tonnes of uranium oxide concentrate from mines (or stockpiles) each year. In 2010, mine production supplied ~53,660 tonnes of uranium, about 78% of utilities' annual requirements. The balance was made up from stockpiled uranium held by utilities, but those stockpiles are now largely depleted. Secondary sources of uranium include: recycled uranium and plutonium from spent fuel; re-enriched depleted uranium tails; ex-military weapons-grade uranium and plutonium; and civil stockpiles.
The direct impacts of the Fukushima accident include the likely accelerated decommissioning of reactors in critical countries (e.g. Germany and Japan) and a reduction in the rate of new reactor construction, especially in the United States and Western Europe. Even with these negative impacts, leading industry analysts, such as the Ux Consulting Company, foresee that nuclear power will be a key component of future energy expansion, especially in the faster-growing regions of the world.
The first generation of nuclear plants were justified by the need to alleviate urban smog caused by coal-fired power plants. Nuclear was also seen as an economic source of base-load electricity, which reduced dependence on overseas imports of fossil fuels. Today's drivers for nuclear build have evolved: (1) Global population growth in combination with industrial development will lead to a doubling of electricity consumption by 2030; (2) There is increased awareness that the use of fossil fuels must be reduced and replaced by low-emission sources of energy, such as nuclear power which is the only readily available and reliable, large-scale alternative to fossil fuels; (3) Security of supply is in the forefront, as countries realize how vulnerable they are to interrupted deliveries of oil and gas; (4) Increasing fossil fuel prices have greatly improved the economics of nuclear power for electricity - several studies show that nuclear energy is the most cost-effective of the available base-load technologies.
The preceding facts and figures were obtained from the World Nuclear Organization and the Ux Consulting Company.
Uranium Deposits & Exploration
Uranium deposits world-wide can be grouped into a number of different deposit types based on their geological setting. In Canada, all of the current uranium production is from unconformity-related deposits located in the Athabasca Basin of northern Saskatchewan. An unconformity is a break or gap in the geologic record, where an older rock unit is overlain by a significantly younger unit following a period of erosion and/or non-deposition. In the Athabasca Basin, the overlying younger rocks are relatively un-deformed mid-Proterozoic-aged sedimentary rocks, primarily sandstones. They were deposited in an inland sea on top of older eroded Precambrian basement, made up of highly-metamorphosed intrusive, sedimentary and volcanic rocks. The contact between the sandstones and the basement rocks is called the unconformity.
The uranium deposits in the Athabasca Basin occur below, across and immediately above the unconformity, which can lie within a few metres of surface at the rim of the Basin, to over a thousand metres deep near its centre. The deposits formed by extensive hydrothermal systems occurring at the unconformity's structural boundary between the older and younger rock units. Major deep-seated structures are also interpreted to have played an important role in the hydrothermal process, likely acting as conduits for hot mineralized fluids that eventually pooled and crystallized in the structural traps provided by the unconformity.
Unlike many metal deposits, the uranium deposits in the Athabasca Basin do not occur as large planar features that can be easily drilled. They rarely outcrop and surface expressions such as glacially-eroded boulder trains are also uncommon. Typically they occur as narrow, linear lenses and can be at considerable depth. For example, over half of the reserves at the McArthur River mine occur in a zone just 70 metres long by 70 metres deep by 30 metres wide, situated half a kilometre below surface. Modern exploration for these types of deposits relies heavily on deep-penetrating geophysics and down-hole geochemistry. Fortunately, the extensive hydrothermal systems associated with these deposits leave significant trace (pathfinder) elements and clay enrichment in the host country rocks well beyond the mineralized zones. There is also a common association with graphite, which is a very good electromagnetic (EM) conductor and can be identified through geophysical surveying. Typically, geophysics is the tool used to localize target areas for drilling. Down-hole geochemistry is then relied on to direct or "vector-in" towards potential mineralization.
Although intersecting uranium mineralization in drill holes is the ultimate goal, given the difficulty presented by the narrow geometry of these deposits and the fact that uranium itself does not exhibit a wide dispersion, great importance is placed on the pathfinder elements. To put it in perspective, imagine stretching out a shoelace on the floor to represent a mineralized conductor at the unconformity. Now imagine holding a pencil over top, representing a drill hole at surface, and dropping it. If it hits the shoelace, and assuming that your conductor is mineralized, you will have uranium mineralization in the drill core. Now move along one foot and try again. If you miss, even by a fraction, your drill core will not contain uranium but will still exhibit a significant concentration of pathfinder elements. The further away you are from the target, the less elevated these element concentrations will be. Drilling for these types of targets can be very expensive and time-consuming, and intersecting uranium mineralization is still a long shot from discovering what could become a viable economic deposit. The ingredients for success encompass strong technical expertise and a good helping of serendipity.
Athabasca Basin Overview
The Athabasca Basin is the name ascribed to a unique geological terrain that contains the largest and richest uranium deposits in the world. Since 1968, 18 deposits totalling over 1.4 billion pounds of uranium have been discovered in the region. It hosts the world's largest high-grade uranium mine, McArthur River, with proven and probable reserves of 801 thousand tonnes at an average ore grade of 25%, or 437 million pounds U3O8.
The Athabasca Basin occupies an area of about 100,000 sq km in northern Saskatchewan. It is comprised of the Athabasca Group of mid-Proterozoic-aged sedimentary rocks, primarily sandstones, which were deposited in an inland sea on top of older Precambrian basement rocks. The basement rocks are made up of highly metamorphosed intrusive, sedimentary and volcanic rocks. The ancient erosional break between the younger sandstones and the older basement rocks is called the "unconformity". All of the uranium deposits in the Athabasca Basin occur at or near this unconformity. Depth to the unconformity ranges from a few metres at the basin's rim to up to 1400 metres at its centre. The uranium deposits that have been discovered to date in the Basin lie anywhere from 50 to 600 metres below surface.
The first major uranium discovery in the Athabasca Basin was at Rabbit Lake in 1968. The Rabbit Lake Mine operated for 25 years producing 120 million lbs U3O8 by open-pit mining of several ore lenses. In 1975, the richest open-pit deposit in the world was discovered at Key Lake. Over its 15-year life the Key Lake deposits produced more than 190 million lbs U3O8.
These early discoveries of relatively near-surface deposits were found by traditional prospecting of mineralized boulders and current-day radiometric geophysical techniques.
In the early 1980's, the MacLean, Midwest and Sue Deposits were found as well as the giant, high-grade Cigar Lake Deposit. Cigar Lake, at 300 metres depth, hosts reserves of 551 thousand tonnes grading 19% U3O8, or 232 million lb U3O8. In 1988, the highest-grade uranium deposit in the world was found beneath 500 metres of sandstone at McArthur River. The McArthur River Mine entered production in 1999 and currently produces 18 million lbs annually with a mine life expectancy of more than 20 years.
These later, deeper discoveries represent "blind deposits" that have no surface expression. Exploration for blind deposits necessitates a collective approach combining knowledge of the geological models derived from earlier discoveries, deep sensing geophysical techniques and skilled interpretation of geochemical and clay alteration patterns associated with these unconformity-type deposits.
The Athabasca Basin in northern Saskatchewan is the world's largest producer of uranium, accounting for about one third of the world's uranium mine output. The extremely high-grade nature of the deposits and the low discovery costs make it the most prospective exploration region in the world. Although exploration in the Basin has been ongoing for 40 years, expenditures declined dramatically in the mid- to late-eighties following the drop in the uranium price. Recovery in the spot price only began in late 2003. As with most commodities, price is the propeller for exploration activity. Consequently much of the region has not been fully explored utilizing more recent advances in exploration techniques and a contemporary understanding of the nature and geological controls of the deposits.
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