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TABLE OF CONTENTS Feb 3 - 9, 2014 Volume 99 Number 51 - 0 comments

U3O8 eyes JV with Chubut gov't at Laguna Salada

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By: Matthew Keevil

VANCOUVER — There are a myriad of issues that can raise trip up mine developers in Argentina, but it looks like Toronto-based U3O8 Corp.’s (TSX: UWE; US-OTC: UWEFF) Laguna Salada uranium–vanadium project in Chubut province could bypass many of the potential social and political hurdles. U3O8 president and CEO Richard Spencer says Laguna Salada is well positioned to become a low-cost uranium operation, but the project could be permitted much faster than some of its peers.

Laguna Salada’s mineralization occurs within three metres of surface in soft, unconsolidated gravel that requires no blasting or crushing. Spencer says U3O8 is looking at bringing in a continuous-mining machine that would dig up a long trench along existing resources that total 47.3 million indicated tonnes grading 0.006% uranium oxide (U3O8) and 0.06% vanadium oxide (V2O5) for 6.3 million contained lb. U3O8 and 57 million contained lb. V2O5. Inferred resources tack on another 21 million tonnes of 0.009% U3O8 and 0.06% V2O5.

Though the grades are very low for a uranium deposit, Spencer says the ease with which a company could mine and process the unconsolidated materials makes Laguna Salada attractive.

“The biggest component of the operation is the beneficiation, which is taking the pebbles or gravel and screening that coarse material out. Only around 5–10% of the gravel mass would go through to a screening facility, and the fine material is in a slurry at that point to be pumped to an alkaline-leach facility,” Spencer says during a phone interview.

U3O8 is close to finishing a preliminary economic assessment on the project, but it’s a pending agreement with the Chubut provincial government that has the company equally excited.

Spencer explains that U3O8 is in advanced negotiations that would see the Chubut government take an ownership stake in the project under a joint venture agreement. The upside for U3O8 would potentially come during permitting, since the government would be more familiar with Laguna Salada.

“They have had uranium mining in Chubut previously, but it was a state-run enterprise. This type of mining is new to the region, and it’s fundamentally important we go about it this way since the government has an open-pit mining ban in effect,” Spencer says.

He points out that the joint venture with the provincial government would include more mineral concessions adjacent to Laguna Salada.

“In our case the trench will get refilled, recontoured, and revegetated as we go. So immediately after an area has been mined, you wouldn’t be able to see it had been mined at all.”

Laguna Salada will need three key permits to start production. Two of these — namely the mining and environmental permits — fall under the purview of the Chubut government. The third, which involves permission to produce yellowcake uranium, is under federal jurisdiction.

The central government’s recent focus on nuclear power is another advantage at Laguna Salada.

Spencer argues that the Argentine authorities have sent a “clear message” about the strategic importance of uranium and nuclear power in the country.

Argentina recently brought its third nuclear reactor online, with a fourth in tender for construction. That leaves U3O8 in a good position, considering the country has no domestic yellowcake production.

“They’ve been supportive of developing that local industry. Argentina also has a strong nuclear link with Brazil, so that creates another market right there,” Spencer says.

Another upside for U3O8 comes in the form of Laguna Salada’s expansion potential. On top of the extra concessions that could come with the Chubut agreement, the company has discovered two areas of uranium mineralization at the project over the past three months.

In mid-November U3O8 announced its La Rosada discovery, which hosts the highest grade of uranium and vanadium at Laguna Salada to date, and features mineralization in adjacent basement rocks harvested during rock-chip sampling.

The highest grades encountered in gravel at La Rosada include 1.1% U3O8 and 0.5% V2O5.

U3O8 followed up in early December with its La Susana discovery. The company reported that “it was only during trenching and pitting in the interior . . . that the extent of the mineralization became clear at Laguna Salada.”

Spencer says La Susana’s footprint could double the size of the project’s current resource.

“Those recent discoveries are an important part of the story. What we’ve been trying to do is demonstrate that we suspect we’re in a uranium district. There are 10 million lb. currently, but we think those are going to grow significantly,” he says.

U3O8 has a couple of non-traditional avenues when it comes to financing Laguna Salada. Firstly, the company’s vanadium by-product could tied into a streaming agreement.

Secondly, U3O8 recently finalized an agreement at its Carina property with an Argentine operator for producing frac sand in the near-term for oil-and-shale gas operations.

Carina is located near the Vaca Muerta basin in Argentina, which is considered one of the largest oil-shale fields in the world. U3O8 will receive annual cash option payments and a 7.5% gross royalty on production.

“The key thing about the Laguna Salada project is the time frame to production. With the provincial joint venture and support from the central government program, we believe we could get into production quite quickly,” Spencer says.

“That’s the big thing, along with the simplicity of the project, which sets us apart from the companies in the Athabasca basin that have these incredible grades and discoveries. You know, it could take 12 to 15 years to get those things permitted.”

U3O8 shares have traded within a 52-week window of 8¢ and 30¢, and gained 11.5% on Jan. 8, en route to a 14.5¢ close at press time.

The company has 162 million shares outstanding for a $23.6-million market capitalization.

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U3O8 Corp.'s Laguna Salada uranium-vanadium project in Argentina. Credit: U3O8 Corp.
U3O8 Corp.'s Laguna Salada uranium-vanadium project in ...
Trenching by U3O8 Corp. at the Laguna Salada uranium project in Argentina's Chubut province. Credit: U3O8 Corp.
Trenching by U3O8 Corp. at the Laguna Salada uranium pr...

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