UPDATE OF GLOBALLY SIGNIFICANT DEVELOPMENTS 2003–2018

Since 2013, exploration activities have been conducted in countries which continued to explore and develop deposits, but also in countries where no exploration were conducted for many decades, such as Botswana, Mauritania and the United Republic of Tanzania, where new uranium deposits have been discovered. Most of the exploration activities were concentrated in areas where unconformity-related, sandstone type and hematite breccia complex deposits could be discovered. From 2004 to 2016 (13 years), world total expenditures amounted to USD 16.4 billion, or 60% of the amount spent from 1970 to 2016 (47 years). Although data are not complete, in particular for the first years of uranium exploration, average annual expenditures during the 2004-2016 period are 3 times more important than prior to 2004. (USD 1.26 billion/year vs USD 0.40 billion/year). More than 26 % of the total reported world exploration expenditures have been spent in Canada (Table 2.53, compare to Table 5.1 in [2.45]).

TABLE 2.53. COUNTRIES WITH HIGHEST EXPLORATION EXPENDITURES (1945-2016)

Country USD million Percentage of world total

Canada 7 985 092 26.7

(a) Includes reclamation and restoration expenditures from 2004 to 2012;

(b) Includes expenditures in former Soviet Socialist Republics of Estonia, Kazakhstan, Kyrgyzstan, Russian Federation;

Turkmenistan, Ukraine and Uzbekistan through the end of 1991;

(c) Expenditures since 1992;

(d) Expenditures since 2000;

(e) Expenditures since 1992.

110

2.9.1. World exploration and development expenditures

Figure 2.33 shows the direct relation between exploration expenditures, in both OECD and non-OECD countries, and uranium market price (NUEXCO spot price). From 2006 to 2013, when the uranium price increased above USD 100 / kgU, (with an average price of USD 258 / kg U in 2007), expenditures stayed at a high level (more than USD 1.5 billion /year), related to exploration activities, but also development of new projects. From 2004 to 2016, OECD countries spent 64% of total expenditures. Most of the non-OECD expenditures were made by China and Namibia, in particular in 2014 when Namibia spent USD 1.04 billion related to the development of the Husab deposit.

2.9.1.1. World Exploration Drilling and Market Price

Drilling is the largest exploration expenditure. Like exploration expenditures, exploration drilling (km) paralleled the market price changes, with a lag of 1 to 3 years behind uranium price. Annual drilling, during the 2005-2016 period, remained much lower than during the previous period of high uranium price (1975-1980). The fact that expenditures are much higher during the 2003-2016 period than during the previous period (Fig. 2.33 and Fig 2.34), can be partially explained by higher drilling cost related to deeper holes as most of the surface deposits were already discovered, in particular in Canada.

FIG. 2.33. Comparison of annual OECD and worldwide exploration and development expenditures and uranium market price (compare to Fig. 5.2 in the 2003 Red Book Retrospective).

FIG. 2.34. World exploration drilling (km) and market price (compare to Fig. 5.3 in the 2003 Red Book Retrospective).

2.9.1.2. Exploration Activities in Selected Countries

History of exploration trends for six major uranium producing countries, Australia, Canada, China, Kazakhstan, Namibia and the United States of America is analysed below. Annual exploration expenditures for each of these countries are compared with market price and with surface drilling (km) to show both the influence of the uranium market on exploration expenditures and the generally close parallel between overall exploration expenditure trends and drilling.

Australia did not report surface drilling after 2005 (Fig. 2.35). One can see a parallelism between exploration expenditures (and surface drilling until 2005) and the uranium spot price. Exploration tends to lag one to two years behind market price trends, which reflects the time the industry needs to obtain permits and financing and to plan exploration campaigns. As uranium price declined after the peak in 2007, exploration activities decreased significantly in 2012.

The main areas where uranium exploration was carried out from 2005 to 2009 were: Gawler Craton/Stuart Shelf region (South Australia) – exploration for hematite breccia complex deposits; Frome Embayment (South Australia) – exploration for sandstone uranium deposits; Western Australia, exploration for sandstone and surficial deposits; Alligator Rivers region (Northern Territory) – exploration for unconformity-related deposits in Palaeoproterozoic metasediments; Mount Isa Region (Queensland) – exploration for extensions of metasomatite type deposits. As a result of these exploration activities, several discoveries were made during that period (e.g., Four Mile, Pepegoona and Yadglin, deposits of the Wiluna and Mulga Rocks projects, extensions of Olympic Dam, Ranger and of Valhala)

112

FIG. 2.35. Exploration activities in Australia (compare to Fig. 5.5 in the 2003 Red Book Retrospective).

As in Australia, one can see that Canada’s exploration expenditures are linked to the market price for uranium. We also observe the same trend in surface drilling. But in Canada, exploration activities have reacted immediately to the increase of the uranium price. After a continuous decrease in exploration and mine development from 1998 to 2003 (USD 21.7 million), spending began to increase in 2004 reaching a total amount of USD 948.2 million in 2011 (Fig. 2.36). The same year, surface drilling amounted to 516.9 km. Expenditures have been declining since 2011 to USD 297 million in 2016. However, Canada has maintained higher than average expenditures than other countries reporting to the Red Book.

Exploration efforts have focused on areas favourable for the occurrence of deposits associated with Proterozoic unconformities in the Athabasca basin, and to a lesser extent, similar geologic settings in the Thelon basin of Nunavut and the Northwest Territories. Uranium exploration has also remained active in the Otish Mountains of Quebec on the Matoush deposit where mineralisation occurs in mafic dykes associated with Proterozoic sandstones. Exploration activity has led to high-grade uranium mineralisation discoveries in the Athabasca basin, including: Centennial, Shea Creek, Wheeler River, Midwest A, Roughrider. Phoenix/Gryphon, Triple R, Arrow and Fox Lake deposits.

FIG. 2.36. Exploration activities in Canada (compare to Fig. 5.7 in the 2003 Red Book Retrospective).

For China, no data, expenditures and surface drilling were reported before 2000 (Fig. 2.37). Since 2001, China is a major player in exploration and development activities, in particular abroad, in Kazakhstan, Namibia, Niger. Domestic exploration and development expenditures have increased from (USD 7.6 million in 2003, with an all-time high of USD 197.5 million in 2014, then decreased to USD 122 million in 2017. In China, exploration focused on sandstone-type deposits amenable to ISL, but activity also restarted on hydrothermal type deposits in southern China, after more than 10 years of inactivity in these areas. The exploration, including regional uranium potential assessment and further works on previously discovered mineralisation and deposits in northern China, has principally been focused on the Yili, Turpan-Hami, Junggar and Tarim basins of the Xinjiang Autonomous Region; the Erdos, Erlian, Songliao, Badanjili and Bayingebi basins of Inner Mongolia; the Caidaum basin in Qinghai province and the Jiuquan basin in Gansu province. As a result, uranium resources have been dramatically increased, in particular with the large Daying deposit (>25 000 tU) which was discovered in the Erdos basin.

For Kazakhstan, no data, expenditures and surface drilling, were reported before 2000 (Fig. 2.38).

Exploration and development expenditures increased from USD 0.7 million in 2004 to USD 94.3 million in 2012, followed by a significant decrease in 2017 to USD 18.5 million (preliminary data). In 2007, Kazakhstan started increasing its exploration and development activities, and consequently its production activities. In 2009, Kazakhstan became the largest uranium producer worldwide. Exploration of sandstone-type deposits was performed in the Shu-Sarysu Uranium Province and in the Syr-Daria Uranium Province. Re-estimation of uranium resources in vein-type deposits was also undertaken in the Northern Kazakhstan Uranium Province. Geological prospecting of sandstone-type deposits amenable for ISL mining was conducted in new perspective areas of the Shu-Sarysu provinces. The decrease in expenditures after 2012 can be partially attributed to a decline in development activities.

114

FIG. 2.37. Exploration activities in China.

FIG. 2.38. Exploration activities in Kazakhstan.

For Namibia, no data, expenditures and surface drilling, were reported before 2003 (Fig. 2.39). Important drilling programmes started in 2006 in order to develop the Langer Heinrich, Trekkopje and Valencia deposits. Exploration activities targeted two major types of deposits, the intrusive type associated with alaskites, as at Rössing, and the surficial, calcrete type, as at Langer Heinrich and Trekkopje. From 2006 to 2016, intensive exploration activities led to an increase in identified resources in Namibia, at Rossing, Langer Heinrich, Husab, Trekkopje, Valencia and several other areas. In 2014, Namibia reported exploration and development expenditures of USD 1.04 billion, principally related to the development of the Husab mine. Expenditures dropped to USD 10.5 million in 2015.

FIG. 2.39. Exploration activities in Namibia.

For the United States of America (USA), expenditures and surface drilling show similarities to those in Australia and Canada, with exploration expenditures sensitive to the uranium price. However, compared to the 1970-1980 period, when the price of uranium increased, exploration activities in the USA, and in particular drilling, have been less important in reaction to the increase of the uranium price in 2006-2008.

In 2005, the USA recorded an increase in exploration expenditures, growing from USD 0.35 million in 2002 to USD 77.8 million (Fig. 2.40).

Rising uranium (and vanadium) prices renewed interest in uranium exploration in several states, in particular in Arizona, Colorado, South Dakota, Wyoming and Texas. Exploration expenditures peaked in 2008, with USD 246.4 million spent, then declined to USD 71.9 million in 2016. This decrease is primarily the result of the current depressed uranium market. Exploration and development drilling, the most important part of the expenditures, increased from 381 km in 2004, up to 2 181 km in 2012, then decreased to 231 km in 2016. Exploration has primarily been for sandstone-type uranium deposits, amenable to ISL mining, in districts such as the Grants Mineral Belt and Uravan Mineral Belt of the Colorado Plateau, in the Wyoming basins and in Texas Gulf Coastal Plain region. Most exploration occurred on deposits that were identified in the 1970s and earlier, or on extensions and satellites of operating mines. However, some exploration activities included previously unexplored targets.

116

FIG. 2.40. Exploration activities in the United States of America.

2.9.2. Uranium exploration expenditures abroad

Non-domestic expenditures are a subset of domestic expenditures - totals reported on a country by country basis are a total of expenditures from domestic and foreign sources within each country (Table 2.54).

TABLE 2.54. NON-DOMESTIC URANIUM EXPLORATION AND MINE DEVELOPMENT EXPENDITURES (USD 1000)

Country Pre-2004 2004-2016 Total

Australia NA NA NA

Belgium 4 500 0 4 500

Canada (a) 27 916 327 728 355 644

China (b) 0 3 110 800 3 110 800

France 753 694 854 188 1 607 882

Germany 403 158 0 403 158

Japan(c) 418 158 39 568 457 726

Korea, Rep of 24 049 NA 24 049

Russian Federation NA 279 137 279 137

Spain 20 400 0 20 400

Switzerland 29 657 22 29 679

United Kingdom 61 263 0 61 263

United States 260 598 NA 260 598

Total > 2 003 566 > 4 611 443 > 6 614 836

(a) USD 327 728 000, from 2004 to 2007, then data not available;

(b) Since 2007. Government expenditures only from 2007 to 2010. Industry expenditures only from 2014 to 2016;

(c) Data not available in 2004-2006. Government expenditures only.

A very important increase in non-domestic exploration and development expenditures started in 2005 and continued afterwards despite the decline of uranium price after 2007 (Fig. 2.41). As the total exploration expenditures, non-domestic exploration and mine development expenditures are much more important from 2003 to 2016, compared to the 1972-2003 period. Only four countries, China, France, Japan and Russia reported non-domestic expenditures since 2005, with more than 85 % of total expenditures reported by China from 2013 to 2016. Canada did not reported non-domestic expenditures after 2007, although it continued to be an important investor. Australia is also known to make foreign investment, but no figures are reported since 2006.

FIG. 2.41. Uranium exploration expenditures abroad (compare to Appendix 5.6 in the 2003 Red Book Retrospective).

2.9.3. Discovery cost

Discovery cost (Expenditures / Resources + production) measures the effectiveness of past exploration activity. Although the expenditures database is incomplete, sufficient data provide a good evaluation of past exploration effectiveness (Table 2.55, Fig. 2.42). In 2003 the known resources recoverable at costs

<USD130/kgU amounted to 345 000 tU. As of January 2017, only 62 890 tU are reported in the same cost category. The average discovery cost in the countries listed in Table 2.55 is USD 3.13/kgU, an increase of 61 % compared to 2003 cost (USD 1.88/kgU). The average discovery cost in countries from the former USSR, Kazakhstan, Russia, Ukraine and Uzbekistan is USD 2.15/kgU, a 4% decrease compared to the average discovery cost in 2003 (USD 2.25/kgU).

Compared to 2003 [2.45], all the selected countries show an increase of their discovery cost, in particular Australia (USD 0.43 to 0.84 / kgU), Canada (USD 1.18 to 6.09 /kgU), Niger (USD 0.68 to 1.86 /kgU),

118

the United States of America. (USD3.57 to 9.10 /kgU). The increase in Australia, Canada and Niger are due to important exploration expenditures made in these countries since 2003, proportionally more important than the resources increases, while in the United States of America the increase of the discovery cost is related to important decrease of the known resources.

TABLE 2.55. DISCOVERY COST OF KNOWN RESOURCES + PRODUCTION (RECOVERABLE AT COSTS

<USD 260 /KGU) IN SELECTED COUNTRIES

(compare to Table 5.3 and Appendix 5.7 in the 2003 Red Book)

Country RAR USSR + Kazakhstan-Russian Fed-Ukraine-Uzbekistan (from 1945 to 2017)*

890,100 1,029,400 1,919,500 825,119 2,744,619 5,716,050 2.08

World total 4,489,100 2,785,100 7,274,200 2,851,869 10,126,069 28,816,016 2.85

* Including USD 3 692 350 000 in USSR from 1945 to 1990 Czech Rep¹. : Exploration expenditures from 1971 to 2017 Germany ² : Including German Democratic Republic

Discovery cost of Total (identified and undiscovered) Resources (recoverable at costs <USD 260/kgU) and Production in selected countries increased in almost all the countries (Table 2.56, Fig. 2.42- and Fig 2.43) except Argentina (USD 2.66 to 1.04/kgU), Brazil (USD 0.24 to 0.18/kgU), India (USD 3.14 to 2.54/kgU), Spain (USD 8.04 to 5.78/kgU ). The average discovery cost from all selected countries increased from USD 0.54/kgU to USD 1.52/kgU. The most important increases are observed in Australia (USD 0.13 to 0.88/kgU), Canada (USD 0.77 to 3.77/kgU), China (USD 0.01 to 3.91/kgU), Namibia (USD 0.08 to 1.68/kgU), Niger (USD 0.66 to 1.66/kgU), Turkey (USD 3.21 to 6.26/kgU), and in the United States of America (USD 0.76 to 8.44/kgU). In the former USSR countries (Kazakhstan, Russia, Ukraine,

Uzbekistan), the average discovery cost decreased from USD 1.07/kgU to USD 1.30/kgU between 2003 and 2017.

Between 2003 and 2017, undiscovered resources decreased significantly in Australia (2 600 000 tU of undiscovered resources were reported in 2003 (Speculative resources in the 1993 edition of the Red Book 1993), 0 tU in 2017), China (1 773 600 tU in 2003, 7 700 tU in 2017), in the United States (2 613 000 tU in 2003, 0 tU in 2017). The increase of discovery cost in Canada, Namibia, Niger and Turkey are due to important exploration expenditures made in these countries since 2003.

FIG. 2.42. Discovery costs of known resources + production in selected countries.

FIG. 2.43. Discovery Cost of Total (Known and Undiscovered) Resources (recoverable at costs <USD 260/kgU) and Production in selected countries.

120

2.9.4. Resources

In 2005, the terminology of Estimated Additional Resources-Category I (EAR-I) was changed to Inferred Resources (IR), Known Conventional resources (KCR) to Identified Resources, Estimated Additional Resources Category II (EAR-II) to Prognosticated Resources (PR). In 2009, a high cost resource category (USD 130/kgU to USD 260/kgU) was added to complement previous editions that reported resources available at costs up to the USD 130/kgU.

TABLE 2.56. DISCOVERY COST OF TOTAL (KNOWN AND UNDISCOVERED) RESOURCES (RECOVERABLE AT COSTS <USD 260/KGU) AND PRODUCTION IN SELECTED COUNTRIES

(Compare to Appendix 5.8 in the 2003 Red Book Retrospective)

Country

Country USSR + Kazakhstan-Russian Fed-Ukraine-Uzbekistan (from 1945 to 2017)

1 919 700 1 687 900 3 607 600 825 119 4 432 719 5 740 954 1.30 World Total 9 672 700 8 974 300 18 410 400 3 598 448 22 008 848 32 407 894 1.47

* Including USD 3 692 350 000 in USSR from 1945 to 1990

Czech Rep¹. : Exploration expenditures from 1971 to 2017 Romania 5 : Exploration expenditures since 1994 Germany ² : Including German Democratic Rep. Russian Fed ^{6 :} Exploration expenditures since 1990 Kazakhstan ³ : Exploration expenditures since 1992 Ukraine 7 : Exploration expenditures since 1996 Mongolia ⁴ : Exploration expenditures from 1992 to 2017 Uzbekistan ^{8 :} Exploration expenditures since 1994

Figure 2.44 shows the changes in Reasonably Assured Resources (RAR) over time for different production cost categories. Resources in the lower cost category, <USD40/kgU, shows an important increase from 1995 to 2005, with a maximum of 1 947 000 tU in 2005. This increase, independent of the uranium price, is the result of re-evaluation of deposits and addition of resources that was not previously reported (Russian Federation, Ukraine). From 2007 to 2009, RAR dropped to 570 000 tU, reflecting the increase in the mining costs and the decrease of the U price. Since then, the amount of RAR in that category remains in the range of 500 000 tU, with an increase to 713 400 tU in 2017. Resources in the

<USD80/kgU cost category, showed a decrease in 2013, from 2 015 000 tU to 1 212 000 tU, reflecting a continued trend towards higher production costs. Resources in the <USD 130/kgU cost category, continued to increase, independently of the U Price, as a result of resources transfer from lower cost category. Inclusion of the new higher cost category (USD 130/kgU to USD 260/kgU) added 479 000 tU in 2009, 950 000 tU in 2017, to RAR, principally as a result of resources reported in Botswana, Canada, Kazakhstan Namibia, Niger, Russian Federation, Ukraine and the United States of America.

122

FIG. 2.44. Changes in RAR over time compared to Uranium market price (compare to Table 6.1 in the 2003 Red Book Retrospective).

Figure 2.45 shows the changes in inferred resources over time for different production cost categories. In the <USD40/kgU and <USD80/kgU cost categories, we observe a parallelism between market price and resources. One explanation for this parallelism could be related to exploration activities. A decrease in the market price would affect the level of exploration activities, in particular in ‘greenfields’ projects, the budgets being affected to delineation works, which tend to convert already identified IR to RAR. In the

<USD130/kgU cost category, we see a continuous increase of the resources until 2007, followed by a small decrease in 2009, in parallel to the decrease of the uranium price. From 2013 to 2017, a significant increase of the resources in the <USD130/kgU and <USD260/kgU cost categories came from Greenland with the addition of 86 000 tU and the Czech Republic with 68 000 tU. A reclassification of prognosticated to inferred resources in Kazakhstan also contributed to the increased overall total.

As for the RAR and IR, a new cost category (USD 130/kgU to USD 260/kgU) was added in 2009 for the prognosticated and speculative resources (Fig. 2.46). The 2003-2017 period is characterized by a decrease of the total speculative resources in 2003, when China changed the total speculative resources from 1.77 million tU to 4 100 tU, and a decrease in all categories in 2013, a large percentage of the decline being attributed to the United States of America who did reported undiscovered resources in 2013.

Prognosticated and speculative uranium resources for the United States of America were last assessed in 1980. Records of these estimates are no longer available. For this reason, undiscovered resources are no longer reported pending development of new undiscovered resources estimates and/or confirmation of the older estimates. In the SR categories, lower values were also reported in the Czech Republic and the Russian Federation.

FIG. 2.45. Changes in Inferred Resources over time compared to marked price (compare to Table 6.2 in the 2003 Red Book Retrospective).

FIG. 2.46. Changes in Undiscovered Resources over time compared to marked price (compare to Table 6.2 in the 2003 Red Book Retrospective).

124

2.9.4.1. Changes in resources over time for selected countries

Figure 2.47 shows how known conventional resources, adjusted for production, have varied over time in Australia, Canada and the United States. The reasons for these variations are discussed in Figs 2.48 to 2.53. Figs 2.54 to 2.58 provide information on changes over time in identified resources for additonal selected counties (Brazil, France, Namibia, Niger, South Africa).

There are several reasons for changes in resources over time: Production is greater than discovery of new resources, or new resources are greater than production. Following a resource evaluation, resources may change and/or move to a different cost category (as observed in 1983, when resources in Canada and USA decrease following re-evaluations associated to an increase of the mining costs). Resources may be removed from country totals when associated to production centres closures, and/or because of environmental issues.

In Australia, known conventional resources, adjusted for production increased significantly from 2003 to 2009, reflecting discovery of new resources (Fig. 2.48). In Canada, the increase of known conventional resources, adjusted for production, has been regular and continuous since 1983. In the United States, known conventional resources, adjusted for production, stayed at the same level until 2005, when it started to decrease.

FIG. 2.47. Variations in known conventional resources adjusted for production in Australia, Canada and the United States (compare to Fig. 6.4 in the 2003 Red Book Retrospective).

For the period after 2003, Figure 2.48 shows the parallelism between uranium market price and know resources in the <USD80/kgU cost category, with a lag of 1-2 years between the two. The decrease in 2013 of the RAR and IR could be related to the impact of increasing mining and milling costs. As a result, resources are moved in higher cost categories compared with previous estimates. Since 2015, Australia no longer reports resources in the lower cost categories.

In 2004 and 2005 (Fig. 2.49), drilling in Australia increased considerably (since 2006, Australia no longer report drilling activity). Drilling activities were located in the Frome Embayment, in the region of Honeymoon, in Western Australia and in the south western portion of Olympic Dam. These activities outlined new resources that where reported the following years, in particular at Olympic Dam. As of 1 January 2017, total identified resources recoverable at costs <USD130/kgU amount to 1 818 300 tU, compared to 1 158 000 tU in 2003 (+72%).

FIG. 2.48. Comparison of resource trends in Australia and uranium market price (compare to Fig. 6.5 in the 2003

FIG. 2.48. Comparison of resource trends in Australia and uranium market price (compare to Fig. 6.5 in the 2003