EXPLORATION STATUS AND CHALLENGES 1. Claim staking activity and exploration spending

The renewed interest in uranium exploration first started in early 2004, with a sharp increase in claim staking activity. This was followed by a phase of fund raising on stock markets and more recently with some ‘in the ground spending’. In most cases we are still experiencing claim staking and fund-raising. The ‘in the ground spending’ remains at an early stage and must be confirmed for companies new to this business. It is expected that many of these will remain speculators and not become true explorers. Many will disappear within a few years.

The trend in exploration activities and spending since 2004 is similar in countries with good uranium potentials. The situation will not be reviewed country by country because no official data are available at present. However, a few illustrative examples of what has been observed in different parts of the world will be given.

One of the most spectacular examples of the renewed interest in uranium exploration is found in the Athabasca Basin, Saskatchewan, Canada, which hosts the Cigar Lake and McArthur River deposits. During the late 1990s and early 2000, only four companies were actively exploring there for uranium. At present, more than 50 companies are involved in uranium exploration in the basin. Figures 1 and 2 illustrate this spectacular evolution. Similar trends are observed in other parts of Canada (i.e. the Northwest Territories, Nunavut, Quebec, Labrador and Ontario) where the resurgence in uranium exploration is gaining in strength, with more than 40 companies actively involved in uranium exploration.

Australia is another part of the world where there is intense renewed interest in uranium exploration. Activity is mainly located within South Australia and in the Northern Territory but other states may become involved in the near future. In 2003, nine companies held claims related to uranium exploration and four were actively conducting exploration. In 2004, 12 companies held land positions dedicated to uranium exploration and nine were actively conducting exploration. At present, 42 companies hold claims for uranium exploration and 21 are more or less actively conducting exploration.

The level of expenditure has tripled during the same time period and is now around 15 million Australian dollars (Table 1 and Fig. 3).

Kazakhstan, Mongolia, Niger and the Russian Federation are other countries where an increasing interest in uranium exploration is observed.

FIG. 1. Exploration permits in the Athabasca Basin in 2003.

FIG. 2. Exploration permits in the Athabasca Basin in 2005.

In the Athabasca Basin of Canada, the expenditures for uranium exploration (in millions of Canadian dollars) were 15.5 in 2002, 13 in 2003 and 26 in 2004, with 66 predicted for 2005. During the same period, exploration expenditures for all commodities in the basin (in millions of Canadian dollars) were 30.1 in 2002, 31.3 in 2003 and 53.0 in 2004, with 119.8 predicted for 2005, showing that it is not only uranium exploration that is experiencing a boom.

TABLE 1. COMPANIES INVOLVED IN URANIUM EXPLORATION IN AUSTRALIA

Uranium exploration expenditure in AUD$ million (Constant 2000)

FIG. 3. Exploration expenditure in Australia.

2.2. Challenges

The sharp increase in exploration expenditure is very encouraging. It has been eagerly awaited by explorers for many years. The arrival of new players is stimulating for the industry in general and has resulted in increased compe-tition. Next, the short and long term challenges lying ahead need to be addressed. Some of the major challenges facing the uranium industry are now discussed.

2.2.1. Risk assessment

Risk assessments are an common issue for all serious exploration and mining companies who want to conduct their business in a sustainable world.

Risks related to prospectivity (geological potential and economics), exploration (technology), country, environment, mining and reputation are parameters that are taken into consideration in the decision making process.

At present, most of the major players have realized the necessity to integrate these factors into their everyday way of thinking and acting, and they are in the process of successfully managing these risks, although there is still scope for improvements.

2.2.2. Mining legislation

Progressive mining legislation, and licensing and permitting processes must be created by governments and regulatory agencies in order to guarantee long term and stable business environments for the exploration/mining and energy sectors. The uranium industry requires the following:

(a) Well balanced long term legislation and efficient application of the regulations, including international harmonization where and when possible;

(b) Serious but fair competition (speculators could slow down or even discourage serious competitors);

(c) Access to skilled technical and scientific personnel;

(d) Incentives for the mining industry.

Legislation, regulations and permitting processes are becoming increas-ingly complex and time consuming. They often delay exploration activities and the startup of mining activities. This is often due to authorities that do not have adequate human resources to process the increasing workload and complexity

generated by the resurgence of exploration activities. Clear laws and regulations are needed, and also an efficient and fair system.

International harmonization of legislation and regulations would benefit all players. However, different histories and cultures will have to be respected so that this process will require time and patience. Countries with well proven working legislation and regulations should assist the more actively emerging mining nations in setting up their own legislation and regulations.

2.2.3. Research and development

Supporting R&D efforts to obtain access to equipment and new technol-ogies is an important issue facing the uranium industry. National institutions and the industry will have to significantly increase their efforts and investments.

2.2.4. Community consultation

The uranium mining industry will have to make further improvements in its relations and communications with the communities affected by the industry. At present, various types of impact benefit agreement are negotiated whereby the community members share the economic benefits of a project through the jobs and business development opportunities that are created.

Responsible companies operating within a sustainable model are able to provide these economic benefits while respecting the health and safety of workers and the environment. Ethics, environment, safety, security and sustainable development are the main concerns and objectives of all serious parties.

The attitude of the new companies and speculators entering the business is largely unkown regarding some of these issues. Some will certainly have diffi-culties in coping with most of the forthcoming challenges. In some cases this is likely to be damaging to serious players, who have a long term commitment.

2.2.5. Market entry of speculators

As is well recognized, finance is a necessity for, but not a guarantee of, success. Access to short term finance is, as we have observed with the new entrants raising money on the stock markets, the easiest requirement to achieve. On the other hand, insufficient long term finance could tempt these minor players into taking short cuts that could prove catastrophic for the entire mining industry. Such short cuts have been experienced in the past with regards