Six years ago when Uranium Energy (NYSE-MKT: UEC) expanded its in-situ recovery uranium projects beyond those it was developing in southern Texas, one of the parts of the world the company took a close look at was Paraguay.
Uranium Energy knew that Paraguay was conducive to developing sandstone-hosted uranium deposits and that roll-front and tabular mineralization occurred within the margins of the Parana basin, a major cratonic basin covering most of central and eastern Paraguay and extending into Brazil.
“Based upon extensive geologic and socio-economic analysis, the western Parana basin of Paraguay showed the correct geologic attributes similar to what Uranium Energy is currently working with on the South Texas coastal plain,” Clyde Yancey, Uranium Energy’s vice-president of exploration, says in an interview from his winter home in southern Florida.
In May 2011 Uranium Energy bought its first uranium property — called “Oviedo” — from a local company. In January 2012 it acquired the Yuty property from Cue Resources.
Both had been drilled more than 30 years earlier by private uranium-exploration company Anschutz Corp. “Anschutz and partners saw the potential in the late 1970s and early 1980s, but the uranium price collapsed and they had to walk away,” Yancey says.
Aquifer testing by Uranium Energy at both properties showed that the sandstone-hosted occurrences were amenable to intelligence, surveillance and reconnaissance (ISR) technology, and that both properties were characterized by mineralization similar to South Texas and Wyoming basin trends, where the company operates its Palangana ISR mine and its Hobson ISR processing facility, in addition to six satellite uranium development projects.
At Oviedo, drilling by Uranium Energy and others so far has defined prospective roll-front reduction–oxidation (redox) boundaries over 21 km long. (The redox interface is the area where the uranium will precipitate from solution to form a deposit. Uranium is soluble under oxidizing conditions and precipitates out under reducing conditions.) Radiometric anomalies at Oviedo discovered —through land-based radiometric surveys — that the trend extended over another 40 km.
The exploration-stage project has a National Instrument 43-101 exploration target of 23 million to 56 million lb. uranium oxide (U3O8) grading 0.4% to 0.52% U3O8.
At Yuty, the more advanced project, Uranium Energy has completed an National Instrument 43-101 compliant measured and indicated resource estimate of 8.9 million lb. U3O8 grading 0.52% U3O8, and inferred resources of 2.2 million lb. U3O8 at the same grade. Based on drilling by previous operators, there are at least six undeveloped targets across the 2,000 sq. km concession.
The company is discussing an abbreviated drill program this year at Yuty that would total 2,000 to 3,000 metres and cost $150,000 to $200,000. It hopes to increase the resource base and begin a preliminary economic assessment before year-end, depending on the spot price for uranium.
“Both Oviedo and Yuty have tremendous potential, and UEC is committed to seeing the current resources developed and produced,” Yancey says, adding that Oviedo and Yuty are within the same stratigraphic unit as the Figueira, one of two major uranium deposits in Brazil’s Parana basin.
Uranium Energy is convinced that there will be more interest in the unexplored potential of the Parana basin in Paraguay once the uranium price increases, and that is why it is solidifying its position over what it believes is the most prospective uranium concession in the country.
“Paraguay is the land mining forgot in South America,” Yancey says. “The country does not have a mining tradition because mining historically in South America was concentrated in the Andes. This fact preserved Paraguay as an unexplored frontier of the continent.”
Geologically Paraguay is similar to South Africa, with common volcanic environments and petrological assemblages, he says, “which makes the country a unique and attractive exploration target in Latin America.”
The country has a number of other attributes as well, he adds. The cost of doing business in Paraguay, for example, is less than other South American countries such as Brazil, and it has a fairly healthy economy. Economic growth in recent years has averaged 14%, it is the leading producer of electric power per capital (9,000 kilowatt hours) and produces food for 80 million people. “Above all, Paraguay is a friendly and peaceful country, as presented in the very low [United Nations] violence index, which is 20 times smaller than Brazil, and the lowest in all Latin America,” Yancey says.
As for its mining law, he says, low royalties and clear procedures for managing exploration permits are the norm.
“These conditions have resulted in the remarkable development of Paraguay, and many researchers refer to the country as an ‘emerging American miracle.’”
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