US uranium producers announce contracts and production ramp-ups

The US Department of Energy National Nuclear Security Administration (NNSA) earlier this year issued a solicitation to purchase up to an estimated 1 million pounds (385 tU) of domestically produced U3O8. Last week, Energy Fuels Inc and Peninsula Energy Limited subsidiary Strata Energy Inc announced that they too had received awards from the NNSA under its competitive procurement process to supply uranium to set up the reserve.

Texas-based enCore Energy today said it had been awarded a contract to sell 100,000 pounds U3O8 to the US government at a price of USD70.50 per pound. "As we have seen in 2022, global supply chains for nuclear fuel have been severely disrupted by geopolitical events and the need for a domestic and secure supply chain for nuclear fuel is a stark reality," CEO Paul Goranson said. "The proceeds from this contract will do exactly as intended and be invested directly into advancing new production from our South Texas Rosita Project in 2023."

Uranium Energy Corp - which has two production-ready in-situ leach (ISL) hub-and-spoke platforms in South Texas and Wyoming - said it has won a USD17.85 million award to supply 300,000 pounds U3O8.

Ur Energy announced it had been contracted to sell 100,000 pounds U3O8 to the reserve at a sales price of USD64.47. The company said it has intentionally held back 224,000 pounds from the bidding process, which it intends to retain to sell into long-term commercial contracts.

The uranium reserve is intended to address challenges to the production of uranium in the USA, ensuring a backup supply for US consumers in the event of a significant market disruption and supporting the operation of US uranium mines. The NNSA earlier this year issued a solicitation to purchase up to an estimated 1 million pounds of domestically produced U3O8 to set up the reserve, for which USD75 million was allocated by Congress in 2020. According to NNSA's solicitation, that material must be "provided by a vendor that has produced uranium at a domestic uranium recovery facility at any time since 1 January 2009," and must be from inventory already in storage in the USA. The vendor is not required to be currently producing uranium at a uranium recovery facility.

Ramp-up for Lost Creek

In addition to the NNSA contract, Ur Energy said that a sales agreement it announced earlier this year - for the annual delivery of 200,000 pounds U3O8 over a six-year period - has been increased by 100,000 pounds U3O8 beginning in 2024. This means the company will have 600,000 pounds U3O8 per year under sales contracts from 2024. "Having secured these sales commitments, Ur Energy has made the decision to immediately ramp up production at its operating Lost Creek uranium mine to levels sufficient to deliver into these current contracts," it said.

It will target an initial annual production rate of 600,000 pounds U3O8, which is 50% of Lost Creek's licensed wellfield production capacity of 1.2 million pounds. The company has already been preparing for ramp-up and said it expects to begin production in the first quarter of 2023 and reach the initial annual production rate in the final quarter of next year.

"The growth in our contract book gives us the confidence to ramp production at Lost Creek to 600,000 pounds per year. Our entire team has been working toward this goal for several years and we are excited to bring our low cost, flagship property back into meaningful production," CEO Johnny Cash said. "In addition to our Lost Creek mine, our Shirley Basin Project has all major permits and licences required to construct and operate a one million pound per year production facility. To further prepare for construction and operations at Shirley Basin, we plan to install the monitor wells for the first Shirley Basin mine unit in Spring 2023."

According to information from the US Energy Information Administration, Lost Creek was one of only two uranium ISL plants operating in the USA in the third quarter of 2022, along with Smith Ranch-Highland, also in Wyoming.

Last month, Peninsula Energy also made a financial investment decision that will see production activities begin at its Lance project during the first quarter of 2023.

HALEU consortium

As well as its contract to supply the strategic reserve, enCore also said it has applied for membership of the newly created HALEU Consortium, the Department of Energy Office of Nuclear Energy's initiative to help create a secure domestic supply of the high-assay low-enriched uranium needed to fuel many advanced nuclear reactors. "enCore's prominent private land holdings offer a competitive advantage as a supplier of natural uranium for the programme which specifically excludes uranium produced from Federal Lands," the company said.