Once the proud center of the Uranium Universe, and until recently the world’s largest uranium producer, the city of Grants (New Mexico) nearly collapsed in the 1980s as uranium prices sank into a twenty-year depression. Five thousand uranium miners lost their jobs, and the city elders panicked, searching for an industry with which to replace mining. “Uranium companies helped build our hospital, our school and most of our major infrastructure,” Star Gonzales, Cibola County’s Head of Economic Development, told StockInterview.com. “We are a mining community and know it is beneficial.”

Grants is a sleepy town of less than 10,000, north of Interstate 40, off exit 85, and about an hour’s west of Albuquerque. This past November, we toured the town's Mining Museum, which boasts of having the only underground uranium mining museum. Grants is now a “prison town,” and instead of mining uranium, the town runs most of the state’s prison system. The times are changing again, though. Along with the recent $45.50/pound spot uranium price, revival of uranium mining in Grants is all but a done deal. Several uranium companies have taken their first steps into Cibola County. As with the state of Wyoming, more will follow them.

Logo of the Uranium Mining Museum at Grants.
The slogan is “Go Underground!”
The mining friendly local and state politicians want the jobs
uranium mining will bring to Grants and Cibola County.

We wondered what the political pulse on uranium mining would be like in Grants. So we talked to several representatives on the city, county and state level. Fasten your seatbelts, and move over Wyoming. Grants, New Mexico is making a public invitation to all uranium mining companies. “We will greet them with open arms!” Star Gonzales shouted into her phone. “We are very mining friendly in this community.” That’s an understatement. Grants Mayor Joe Murrietta returned from Vietnam after being wounded on the Fourth of July 1968 with a Purple Heart and began working at Anaconda’s uranium mill in Grants, New Mexico. He worked for Anaconda and ARCO for fifteen years before the uranium boom in his town ended. “We can handle the mining industry, and we are looking forward to having it back,” Murrietta told us. The mayor is confident the entire community would welcome uranium miners back.

Grants City Manager Bob Horacek worked in a uranium mill, as a college student twenty five years ago, and remembered it was a nice source of income to help him pay tuition. “We are obviously looking for jobs,” he told us. “It’s a pro, and economically we could use the higher paying jobs.” Asked about one company, which announced it may build a mill, possibly in Cibola County, Horacek quickly responded, “I’d like to visit with them.” State Senator Joseph A Fidel, a Democrat representing District 30, which includes Cibola and Socorro counties, perked up during our interview, when we talked about uranium in his county, “I would be happy to have mining come back. It would be very positive economically.”

Joseph A Fidel

We talked about environmental activists. Senator Fidel explained, “If there are protests, they will come from outsiders, from Taos or other parts of the country.” Ms. Gonzales agreed, “There will be no protests from the local community. The mining spirit still lives today in this town.” These echoed State Senator Leavell’s remarks, in part two of this series, “Most of the protestors have come from San Francisco, DC and Santa Fe.” Fidel concluded, ‘The community will be very supportive of uranium mining. People will be cooperative and will react positively, when the time comes.”

Each of the politicians interviewed were cautious, but optimistic. Grants, New Mexico was hard hit when the uranium mines and mills closed. There were seven uranium mills at the peak of the last uranium bull market. As with the Governor of Wyoming, who basically told uranium companies to put up or shut up, New Mexican decision makers are waiting to hear directly from uranium companies. Are they serious? Fidel pointed out, “I believe it will materialize into something serious.” After all, the county may be sitting on hundreds of millions of pounds of unrecovered uranium. More than 340 million pounds, possibly a great deal more, of uranium was produced before mining came to a standstill during the twenty-year drought. “We have a lot of uranium,” said Senator Fidel. “The county has good potential."

Strathmore Minerals and others have Grants, New Mexico, and the prolific Grants Uranium Belt, in their company crosshairs.

Several uranium development companies have set their sights on New Mexico. Two are actively involved in permitting their properties for production. One was the first to be issued a drilling permit in about a decade; another awaits a permit in order to drill the company’s property. Another is an 800-pound gorilla in the nuclear fuel cycle. Three others have properties or continue to assemble a land package in New Mexico. The following is a brief review of the projects of these uranium development or exploration companies, currently holding property or moving forward.

The front runners include Uranium Resources, Strathmore Minerals and General Atomics. Companies moving forward include Laramide Resources and Western Uranium. Companies to also watch include Energy Metals, Max Resource Corp and Powertech Uranium. Each has various plans to advance their projects and should be reviewed on their merits.

Uranium Resources is the top front runner in New Mexico. The company has devoted a great deal of time and money to permit its Church Rock property. In an interview with Craig Bartels, president of HRI (a wholly owned subsidiary of Uranium Resources), he told us, “We hope we can begin construction at the property in 2007.” The company has cleared numerous hurdles, posed by local environmentalists, having successfully won every legal battle to date. Its parent company produces about 1 million pounds annually in Texas. Earlier this year, Uranium Resources announced a proposed joint venture on the company’s Church Rock property with Japanese conglomerate, Itochu Corporation.

One of the ISR well fields operated by Uranium Resources in Texas.
They hope to begin construction of a similar one in New Mexico by next year. Photo Courtesy of Uranium Resources.

Phillips Petroleum made the Church Rock uranium discovery in the 1950s, and later sold the project to United Nuclear (UNC). UNC constructed a mill and mine to the northeast. One HRI property, at Crownpoint, was developed by Mobil Oil as an In Situ Recovery (ISR) project. Earlier work at Crownpoint was done by Westinghouse and Conoco. Phillips developed HRI’s uranium property at Nose Rock; Kerr-McGee did the original uranium drilling at Roca Honda. Uranium Resources holds about 185,000 acres in the southern San Juan Basin of New Mexico.

Through the uranium depression, Uranium Resources was the “lone man” in New Mexico. Now times have changed. “It is great having other companies coming in here now,” said Bartels. “There is so much uranium, and the national attitude has changed so dramatically over the last year, that there is an actual excitement as to what can be done now.” Bartels looks forward to the success of the company’s first uranium projects in New Mexico, on the western end of the Grants Uranium Belt. He explained, “Using a pretty typical recovery rate of 75 percent for ISR, recovery would be about 4.9 million pounds on Section 8, and 6.3 million pounds recovered at Sec 17.” Bartels told us he has been advertising in the employment opportunities sections of northwestern New Mexico newspapers.

Strathmore Minerals Corp controls a number of advanced uranium properties in New Mexico. The company’s most advanced efforts have been proceeding with the permitting phase on its Church Rock property. To date, the National Instrument 43-101 resource calculations on two properties, the Church Rock and Roca Honda deposits, total nearly 50 million pounds in measured indicated, and inferred categories. Historical uranium calculations on other Strathmore properties in New Mexico, which are non-compliant by National Instrument 43-101 standards, indicate there may a similar amount in addition to what has been reported. Strathmore Minerals President and Chief Operating Officer David Miller told us via email, “It is Strathmore’s intent to become the premier uranium producer in New Mexico.” The company reportedly has approximately C$40 million in the bank to advance its projects.

The company has followed the lead of Uranium Resources in the Church Rock area. Miller told us, “There are two ISR projects in various stages of permitting in the Church Rock area, which Strathmore started a year ago.” The company has issued news releases updating investors on its permitting progress in New Mexico. In February, the company announced it was on schedule and under budget in permitting its Church Rock uranium property. A mid-April update announced Strathmore was developing its mandatory corporate programs in the permitting process and was advancing toward the licensing phase of its In Situ Recovery process. Dependent upon when Uranium Resources receives its final approval to commence its nearby ISR project, Strathmore Minerals should quickly follow with its project. Please see final section of this article about the company’s Roca Honda project.

Meet the 800-pound gorilla. Not only is General Atomics in the front end of the nuclear cycle with a uranium mining subsidiary, it is a privately held company whose interests are widespread across the nuclear fuel cycle. GA is its acronym, and the one used in this industry. Founded in 1955 as a division of General Dynamics, GA has over 20 locations worldwide, manufacturing a variety of high technology products for commercial and government applications. For example, its aeronautical affiliate manufactures unmanned aircraft, surveillance and radar imaging systems.

GA covers a good part of the nuclear fuel cycle. In Australia, through Heathgate Resources, the company owns and operates the Beverly ISR mine. Its ConverDyn affiliate converts U3O8 into UF6 (uranium hexafluoride), which is the step preceding uranium enrichment. Another affiliate, the Cotter Corporation, holds various uranium properties and a licensed mill near Canon City, Colorado.

General Atomics also owns the largest uranium resource in the United States through its affiliate, Rio Grande Resources Corporation. The crown jewel of the company’s uranium holdings are found in the Mt. Taylor deposit. Before the project was placed on standby in 1989, more than 8 million pounds of U3O8 were produced. The deposit occurs at 3000 feet below the surface with ore grades ranging between 0.15 percent and 2 percent U3O8. During the mine’s production, grades average 0.5 percent. Mt. Taylor reportedly contains an in-place resource of more than 100 million pounds of U3O8. GA is reportedly evaluating the deposit for an ISR operation.

Energy Metals Corporation is one of the leading uranium development companies to watch in Wyoming and Texas. In an earlier interview with William Sheriff, Director of Corporate Development, he told us Energy Metals planned production centers in Texas and Wyoming. The company has followed through, opening regional offices in both Corpus Christi (Texas) and Casper (Wyoming). Mr. Sheriff also mentioned his company may not develop its New Mexico properties for another five years, but this may be subject to change.

Energy Metals also holds property at Nose Rock, New Mexico. The company reports holding 16 separate leases over more than 8700 acres. A note on the company’s website explains that the Phillips Uranium Corporation reportedly discussed the Nose Rock property contained eight million pounds of U3O8. No work has been completed on this property to make it compliant with National Instrument 43-101.

The website also discusses the property, “The mineralization occurs as roll front deposits in the Westwater Canyon Member of the Morrison Formation and shows no apparent disequilibrium, with no reported vanadium and trace amounts of molybdenum. The anticipated mining method was underground, although the deposits in this area may be amenable to ISR production.” Other Energy Metals Corporation leases include properties in Crownpoint, Rio Puerco, and Ambrosia Lake areas.

A few weeks ago, Max Resource acquired a drill database comprising 40 years of uranium exploration in the United States. Among the data were reports thought to be lost, but which included original reports prepared by Occidental Minerals Corporation about the company’s wholly owned C de Baca uranium project. Located about 100 miles south of Albuquerque, Max Resource announced it has begun the permitting process for a drill program later this year.

OxyMin, a subsidiary of Occidental Petroleum, drilled 216 holes on the property, during the 1980s, and stated in an historical report that they had identified 1.67 million tons, grading 0.18 percent U3O8. The estimate is not compliant with the National Instrument 43-101 for reporting a resource. Max Resource announced it plans to drill ten shallow holes on its property, spending about $100,000 during its first phase of exploration. OxyMin felt the property might be amenable to the In Situ Recovery process.

Powertech Uranium is a recent arrival among the hundreds of new junior uranium companies. Had Craig Bartels not mentioned this company, it would not have been included in this article. Bartels had worked with Richard Clement, Powertech’s Chief Executive, who previously worked with Uranium Resources. Both uranium miners live in a suburb of Albuquerque, New Mexico. At this time, Powertech has only announced its acquisition of the Dewey Burdock uranium resource in South Dakota. However, in a telephone interview with Mr. Clement, he led us to believe Powertech may be in the process of acquiring claims in New Mexico. While we have little to write about on this company, because it is fairly new, it may be one to watch for developments over the course of the summer and fourth quarter. The company is backed by Canada’s Pacific International brokerage firm. Richard Clement told us the company now has more than $12 million in the bank for acquisition, exploration and development of uranium properties.

“The key to Grants, New Mexico is a state-of-the-art mill,” said Laramide’s Marc Henderson. All of the politicians agreed. “It will be a real boon to New Mexico,” said New Mexico legislator John A. Heaton. “Mining is one of our basic industries in New Mexico.” And after the product is mined, it must be milled.

In an email message, Strathmore Mineral’s David Miller told us, “We have now completed independent scoping studies for the Roca Honda Project.” A registered professional engineer completed an independent evaluation on the mill’s capital and operating costs. While the name of the engineer was not disclosed, Miller said, “This gentleman has 40-plus years of experience and has designed many mills in the U.S. and the world.” Miller told us, “Mill operating costs for various-sized mills range from the low $20/ton of feed to the high $200/ton of feed. The Roca Honda ore runs from five to six pounds per ton. Per pound-to-ton milling cost is at $30/ton operating cost (20 percent higher than the lower number in the evaluation) with a grade of five pounds per ton.”

Miller described the mill’s capital cost at around $100 million, plus/minus $20 million, depending upon the size of the mill to be built. Miller also said, “Environmental aspects of such a mill were also reviewed by consulting specialists, and they concluded that it will be possible to permit a mine and mill in New Mexico.” He explained that no mine design work has yet been done. Operating mine costs would be similar to similarly sized metals mines. “They could vary from a low of $30/ton of ore to a high of $80/ton of ore.” Miller emphasized that milling costs could be as low as $6/pound of U3O8. The Roca Honda project, which Strathmore controls from its purchase of the Kerr-McGee properties from Rio Algom (bought by BHP Billiton) in 2004, was one of the next mines designed to feel the 6,000 ton/day Ambrosia Lake Mill.

What impact would a uranium mill have on Grants, New Mexico? We asked Miller to speculate upon the impact, as he is also a third-term legislator from Wyoming. He told us, “A new mine and mill complex of the size Strathmore would need to consider would be employ a minimum of 200 people, and could be double or higher. The quality of the jobs would be similar to other mining jobs: top pay, top benefits and top health care.” By contrast, In Situ Recovery (ISR) would be less labor intensive. Each ISR facility would employ 50 to 100 people.

With the proposed uranium enrichment facility scheduled for groundbreaking in August, with New Mexico legislators eager to add a nuclear power plant to the state’s nuclear energy renaissance, and with a possible uranium mill being discussed, how long before uranium mining resumes in this state? It may be sooner than you think. In a not-yet published interview with Jon Indall, Executive Director of the Uranium Producers of America, he told us, “I wouldn’t be surprised if the domestic uranium industry were producing up to 20 million pounds annually.” He forecast it might happen within five years, perhaps sooner. A good deal of the uranium production may come from this state. New Mexico’s nuclear renaissance is clearly within reach.