The uranium exploration process involves the effective use of geoscientific knowledge and exploration technologies, with long time frames required for the discovery and development of economic mineral deposits. Long-term funding of the business of exploration is required. The availability of exploration funding can be linked to the market price of uranium that varies in response to uranium supply and demand and other geopolitical factors that can be mapped as business cycles.
67 FIG. 23. History of Athabasca Basin uranium deposit discoveries by year of discovery, size, and depth.
FIG. 24. Grade-tonnage plot for Australian and Canadian unconformity-related uranium deposits by locality (isolines show thresholds for contained t U).
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Participants in the uranium exploration business environment can have different motivations for their involvement (Fig. 26). Governmental organizations can support exploration directly or indirectly with a focus on securing uranium resources for strategic reasons. This can include the support of domestic nuclear energy programs, and economic development in the domestic mining sector through the generation of royalties and employment opportunities.
FIG. 25. Grade-tonnage plot for Australian and Canadian unconformity-related uranium deposits showing some of the large economic deposits. The isolines show the approximate thresholds for contained t U.
FIG. 26. Rational for uranium exploration
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Major mining companies focus on the exploration and mining of uranium deposits with an objective of generating corporate profits and increasing shareholder value in a sustainable manner. Junior exploration companies are generally focused on increasing company share price through entrepreneurial and promotional activities in the stock market. A common ambition of junior companies is the identification of an economic deposit or highly prospective property and its eventual sale to major mining company. Other forms of agreements between junior and major mining companies are also common, including joint exploration ventures and strategic alliances, with major companies funding junior exploration activities as their surrogates.
Another group of participants in the uranium exploration business include international agencies such as the IAEA, federal and provincial/state geological survey organizations, pure and applied university researchers, consultants/specialists, and contractors. These knowledge brokers have different motivations that include the promotion of peaceful and sustainable uses of nuclear energy, the attraction of investment in countries and provinces/states, the development of innovative geoscience and exploration technologies, and the provision of expert advice and a wide variety of exploration services, respectively. In addition, major exploration and mining companies often employ internal exploration departments to support their business activities.
The business of uranium exploration can be very competitive. Major and junior exploration companies with limited funding must select the jurisdictions where investment is warranted.
The business case for investment is driven by the selection of the geographical area for exploration, the assessment of the economic mineral potential of the area and the selection of exploration technologies that are suited for the environment. Other risk factors that could impact the sale of a resource or the economic viability of a future mining operation are also considered.
Exploration funding over long-time frames is fundamental to discovery success. Junior exploration companies are particularly susceptible to the challenge of raising money through private and public avenues in the share market to sustain their exploration initiatives. The availability of funding as reflected in exploration expenditure is generally sympathetic with the price of uranium.
The sales price of uranium changes as a result of the perception of its scarcity. The price will not stay below the cost of production for extended periods of time, and it will not stay above the cost of production, as new production will eventually enter the market causing prices to drop in response to the additional supply [28]. Emerging situations can also impact perceptions of scarcity that can impact price. These include nuclear incidents, accidents and catastrophes, perceptions of impacts from de-weaponization and secondary supply, financial bubbles, credit crises, and the economics of alternatives to nuclear power generation, among others. A simple model of how major and junior companies and knowledge brokers react to shifts in uranium sales price is presented in Fig. 27. In this model, junior and major companies and researchers and consultants engage or disengage in a logical sequence as funding opportunities become available, or grow scarce with time.
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FIG. 27. Model of the impact of uranium price on exploration activity.
Future discovery is very dependent upon junior exploration activity given that that there are only a few major mining companies currently focusing on the exploration for uranium.
Geological survey organizations must actively market their jurisdictions from both a geopolitical, geoscientific, and technological perspective to attract investment from uranium exploration companies. During exploration booms money is available to support intensive exploration activities that are commonly focused on the re-evaluation of historical prospects and sub-economic deposits in hope of developing previously identified resources into economic deposits. Junior company shareholders are often rewarded through stock transactions as share prices escalate in sympathy with increases in uranium sales price, and in response to promotional announcements about new discoveries and rediscoveries.
The impact of depressed price on uranium exploration can be more pronounced as a lack of funding disrupts exploration strategies because of the flight of venture capital. This can result in reduced or refocused exploration budgets, and the effective demise or mothballing of junior companies. The stifling of frontier exploration (political, physiographic, and technological) is also a common outcome as companies withdraw to historically productive jurisdictions. During times of severe downturn, staff lay-offs can be associated with an irrevocable loss of expertise and with a decrease or elimination of research-and-development activities.
The history of exploration in the Athabasca Basin, Canada is illustrated in Fig. 28. Exploration investment cycles are mapped relative to metal price, the timing of discovery and production, uranium mining investment (including exploration expenditures) and events influencing the market. Exploration investments can lead to significant capital investments in mining infrastructure and on-going operations, supporting economic development and providing revenue streams to governments in the form of royalties.
71 FIG. 28. Exploration cycles and Saskatchewan uranium mining investments relative to events influencing the market. Cycles 1, 2 and 3 correlate with increased exploration investments. Mining investments include capital and exploration investments and exclude operating costs. Mining investment data sourced from [29].
A description of the various roles and interests of the various players in the uranium exploration business is presented in Table 2. Factors influencing uranium exploration and mining investment decisions are illustrated from the perspective of various stakeholders. Within this framework, one of the roles of governments, agencies, geological survey organizations, and consultants is to reduce geopolitical and technical risk for major and junior companies interested in conducting exploration in countries of interest.
Governments and geological survey organizations can promote their country as a good place to conduct exploration by understanding the interests and risk tolerance of exploration companies.
At the exploration stage the role of governments is to attract investors through the development of favorable uranium exploration and mining policies, and the development of a reliable mineral tenure system.
Geological survey organizations can also attract investment by providing access to free or low cost, high-quality, pre-competitive geoscientific datasets. Governmental support for the development of a business environment that is not impacted by corruption is another factor in attracting investment, among many others.
The business case for the development of pre-competitive datasets by geological survey organizations is strong. Organizations that are engaged in the marketing of their particular jurisdiction through the assembly, maintenance, and distribution of relevant information,
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datasets, reports, and mineral potential assessments, help exploration companies to understand the mineral potential and make decisions about the efficacy of investing in exploration programs within the jurisdiction.Governments and geological survey agencies can also understand their competitive position relative to other countries through global rankings related to exploration and mining. These include perceptions of investment attractiveness, mineral policy effectiveness, corruption, expert judgment about prospectivity, and other factors more specifically related to uranium exploration and mining investment decisions.
TABLE 2: FACTORS INFLUENCING URANIUM EXPLORATION AND MINING INVESTMENT DECISIONS. FACTORS ADAPTED FROM [31]
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Competitive benchmarks that can be used by governments and geological survey organizations to benchmark competitiveness include the Fraser Institute annual rankings on perceptions of investment attractiveness and policy perceptions, Transparency International’s anti-corruption index, and measures of annual exploration expenditures, meters of exploration drilling, and the number of deposits discovered, among others (Table 3) [30, 31].
Governments and survey agencies can also rely on the IAEA as a source of education and training opportunities, baseline data, and value-added products, including methodologies for the development of mineral potential assessments for uranium.
TABLE 3: A COMPARISON OF URARNIUM EXPLORATION AND MINING INVESTMENT ATTRACTIVENESS BY COUNTRY (RANKINGS AFTER [30] AND [31]. HIGHER VALUES ARE MORE FAVORABLE)