Black Range Minerals — Growth through Acquisition, Exploration and Development in the USA and Australia
Overview
Black Range Minerals Ltd. (ASX:BLR), with offices in Golden, Colorado and Perth, Australia, is focused on growth through acquisition, exploration and development of uranium projects. Black Range Minerals is advancing the high-grade Hansen/Taylor Ranch Uranium Project toward production. The project is located northwest of Cañon City, Colorado, USA.
Investment Highlights
- 90.9 million pounds U3O8 at a very robust grade of 600 ppm U3O8, making the third largest uranium project within the USA
- Current EV/lb of resources is $0.12 (average for pre-feasibility companies is $1.04) making Black Range Minerals significantly undervalued compared to its peers
- Robust opex and capex numbers in the scoping study for Hansen development
- Projected PEA for Hansen by end of Q4 built on the results of the April scoping study
- Potential for earlier cash flows from Ablation JV
- The Joint Venture deal with Ablation Technologies has provides considerable potential for developing, or acquiring other projects
- Market capitalization of $17M with $2.5M in reserves (at 30 June 2012)
Key Properties
Hansen/Taylor Ranch Uranium Project
Black Range Minerals controls 100 percent of the Hansen/Taylor Ranch Uranium Project which encompasses more than 13,500 acres approximately 150 kilometres southwest of Denver in the Tallahassee Creek District of Colorado, USA.
The vast majority of these mineral rights have been secured under lease and option agreements with surface landowners, together with several State and Federal leases.
Tallahassee Creek is an established mining region and hosts AngloGold-Ashanti Cripple Creek gold mine. From 1954 to 1972, 16 small scale open pit and underground uranium mines operated in the region.
The Hansen/Taylor Project contains JORC Code-compliant Indicated and Inferred resources of approximately 90.9 million pounds U3O8 at a very robust grade of 600 ppm U3O8, making it one of the largest uranium projects within the USA.
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The Hansen mineralisation was first discovered in 1977 and then owner Cyprus Mining Corporation drilled over 2000 holes for more than 350,000 meters and by 1981 had completed a feasibility study and fully permitted the project for mining however the project was never brought to production stage due to low uranium prices at that time.
The work to date by Black Range Minerals, has confirmed the historical results and the company has now assembled a highly reputable team of experts to guide the project through the mine permitting process. The Company is targeting the completion of permitting activities in the second half of 2015 and commencement of production in 2016.
In April 2012 BLR released the results of a scoping study that indicated the best way to develop the Hansen Deposit was with underground borehole mining (UBHM) and Ablation. The scoping study demonstrated the robust nature of the chosen development scenario, with operating costs forecast to be approximately US$30/lb U3O8 (before royalties, taxes & contingency) and capital expenditure, based on off-site uranium milling, forecast to be less than US$80 million.
The project parameters from the scoping study are:
- Annual production of 2Mlbs U3O8 for 7-8 years
- In-situ resource of 19.72Mlbs U3O8 at an average grade of 0.127%
- Ablation testing shows than 95% of the uranium can be recovered in just 10% of the original mass
- Ablation produces a high-grade, high value concentrate ~1.2%
- Off-site milling is preferred option
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Ablation Joint Venture
Ablation is a mineral processing technology that is a low-cost, efficient and robust technology that mechanically separates uranium from the host mineral without the use of chemicals, producing a high-grade, high-value concentrate where recoveries of 90% plus have been achieved in 10-15% of the original mass greatly reducing the OPEX and CAPEX costs to process suitable ore types.
This process has been progressed over the past five years by Ablation Technologies LLC of Casper, Wyoming, from an initial concept to the point that it has been fully developed and tested in a small scale test unit (750/lbs/hr). The next stage of development is to build a larger scale unit to gather operating data, prior to applying it on a commercial basis.
Black Range was so impressed with the potential of the Ablation, not only for its Hansen/Taylor Ranch Project but for wider applications in the uranium industry that it entered into negotiations with AT, which resulted in the parties establishing a Joint Venture (JV) with Ablation Technologies LLC whereby the JV will have a licence to market the ablation process for applications in uranium (and associated minerals) on a world-wide basis.
Because of the time, cost and complexity of permitting and building a uranium mill, a number of projects do not reach the critical mass to justify the expense, nor are they located where transport of run of mine ore to an existing mill is viable. However the Ablation process may be the key to unlocking the potential of these sub-economic resources, as the high-grade, high-value concentrate can be much more economically transported to a mill facility.
Ablation has also been tested on ore samples from several other projects in the USA (with combined resources >150Mlbs U3O8) and returned similar outstanding results, highlighting further opportunities for the Company to evaluate. These may be in the form of JV’s with other uranium companies, or acquisition of other uranium assets amenable to the ablation process.
Summary
The recent Scoping Study, has demonstrated the robust economics of the Hansen Deposit and confirmed the preferred development scenario using UBHM and Ablation. The Company is currently preparing a Preliminary Economic Assessment for Hansen which is due for completion in Q4 of 2012.
Apart from being a major milestone in the development of our Hansen project, the Ablation JV opens up a number of opportunities for the Company to actively look at the acquisition or joint venture of uranium deposits that may not be currently economically viable, but the application of the Ablation has the potential to change this.
Should arrangements for the exploitation of these types of deposits be concluded, BLR will be able to develop earlier cash flow as it continues to move Hansen though the permitting process, which is scheduled to be complete near the end of 2015.
The permit process the Hansen/Taylor project have been significantly enhanced by the company’s choice of developing the project using borehole mining and ablation which are much of an environmental impact on the mine area. Securing ablation and the strategic alliance with Kinley Exploration on bore hold mining mean that two major milestones in the project have been achieved. The JV on the ablation process also significantly de-risks Black Range away from being a one project company as it is likely to open up a number of other opportunities for Black Range whilst it completes the permit process.
Management
Mike Haynes – Managing Director and CEO
Mr. Haynes is a qualified geologist/geophysicist with more than 19 years experience in the resources sector. For the past eight years Mr Haynes has been actively involved in the financing and corporate development of resource companies. Mr Haynes has been a Director of Black Range Minerals Limited since 2005 and held the position of Managing Director. During this period he was instrumental in the Company’s acquisition of a 100% interest in the Hansen/Taylor Ranch Uranium Project.
Ian Cunningham – Company Secretary
Mr Cunningham is a Chartered Accountant and holds a Bachelor of Commerce degree and Bachelor of Laws degree. Mr Cunningham has over 8 years experience in the resources industry in executive and senior management roles, including most recently as Company Secretary of Adamus Resources Limited, during which time Adamus developed the Nzema Gold Mine (Ghana) and subsequently merged with Endeavour Mining Corporation. Prior to entering the resources industry, he worked in the Corporate Finance division of Deloitte in Australia and the UK.
Rod Grebb – VP Government and Regulatory Affairs
Rod has more than 30 years experience in mine permitting and reclamation for uranium projects in the US and has previously worked for Tetra-Tech Inc and SRK in a senior consulting capacity specialising in mine permitting and regulatory matters for their clients.
George Glasier – Consultant
A lawyer by profession, Mr. Glasier has over 40 years experience in the uranium industry in the USA, with extensive experience in sales and marketing, project development, and in permitting of uranium processing facilities.
He was previously President and CEO of Energy Fuels Inc (TSX:EFR). During his time at Energy Fuels, George was responsible for building the company from scratch and leading the application process for licensing of the Piñon Ridge uranium mill planned for construction in Colorado.
Mr. Glasier was most recently President and CEO of American Strategic Minerals Corporation (ASMC), which in early 2012 had established a JV with ABT for the Ablation process. After ASMC elected to focus its efforts away from uranium, he resigned as CEO and was assigned ASMC’s rights to Ablation, which in turn have been acquired by BLR.
Project Team
Black Range Minerals has also assembled a team of highly experienced consultants such as WWC Engineering, TREC, Kinley Exploration, PB Communications, and Whetstone all of whom have extensive experience in mine permitting, development, and stakeholder relations for projects in Colorado and Wyoming. Guided by Managing director Mike Haynes this group will be responsible for permitting the Hansen/Taylor Ranch Project.
