The steps through exploration to mine development
Exploration is about looking for that big find – in U3O8 Corp’s case, exploring for a big uranium discovery in the vicinity of the Roraima Basin in Guyana, South America. The exploration path to a potential mine involves many steps, the review of multiple target areas, and typically takes a number of years.
While U3O8 Corp. has achieved a major milestone in reporting an initial resource estimate, the company is still in the exploration stage. Further, ongoing exploration is required to potentially increase our resource base. Once a resource reaches a key size, then commercial and environmental impact assessments can be done to determine whether the deposit can be viably mined prior to an application to the State for a license to build a mine.
The stages through exploration to mine development involve:
1. Target Identification
2. Field Work
3. Phase I – Scout Drilling
4. Phase II – Extension Drilling
5. Phase III – Infill Drilling
6. Resource Estimation & Expansion
7. Preliminary Economic Assessment
8. Reserve Estimation
9. Pre-Feasibility Study
10. Full Feasibility Study
11. Environmental Study
12. Mining License
13. Mine Operation
14. Mine Closure & Land Restoration
Target Identification
Exploration starts with investigation of the geology of a region that is thought to have potential to contain a uranium deposit. This work is largely conceptual and relies on the recognition of key features typically associated with uranium deposits elsewhere. Data gathered through mapping, geophysics, satellite imagery and geochemistry is interpreted to try to identify the most prospective areas that warrant further exploration.
For example in its exploration for unconformity-related uranium, U3O8 Corp. used data from its airborne geophysics surveys to define targets based on where faults intersect graphitic rock immediately beneath the Roraima Basin in Guyana. This approach is based on the analogy with the Athabasca Basin in Canada where most unconformity-related deposits straddle faulted graphite-bearing rocks in the floor of the basin. In addition, we are using radiometric surveys to detect low levels of natural radioactivity in our target areas that potentially stems from buried uranium mineralization.
We are also re-interpreting drill results and archived core deposited with the Guyana Government from prior exploration companies that withdrew from the area. In our exploration for basement-hosted uranium, old drill results together with new geophysical data are providing additional context from which we have identified compelling new drill targets with the potential to add to our initial resource in the Kurupung Batholith.
Field Work
Teams – typically a geologist or technician with local helpers – undertake work in the field on priority target areas looking for exposures of rock and recording whether these outcrops have any natural radioactivity that may be linked to uranium, or if they contain specific clay minerals that could indicate proximity to uranium. This geological mapping is combined with ground scintillometer measurements that detect any radiation from the soil and magnetic surveys that measure the degree of magnetism of the underlying rock – possible indicators of mineralization. Soil sampling may also be done to identify areas of enrichment of uranium and other chemical elements that usually occur with uranium. Members of the local communities constitute a key part of these exploration teams, providing local knowledge and expertise and have an influence on the way in which the exploration is carried out.
A compilation of the field data helps refine the target to determine where the potential uranium is most likely to occur as a guide for further investigation and possible drilling.
Phase I – Scout Drilling
The first few holes drilled into a new target are referred to as scout (or Phase I) holes. Scout drilling aims to test the geological concept and determine if the target contains uranium or other indicators of proximity to uranium.
Exploration drilling uses the same principle as carpentry drilling, except rock drilling uses a hollow cylindrical, diamond-impregnated steel bit. As the hollow bit rotates, it cuts a cylinder of rock about 4.5 centimetres in diameter. This cylinder of rock (called core) is protected by, and subsequently extracted from, the “core barrel” located immediately above the bit. U3O8 Corp’s machines have drilled to a depth of up to 350 metres, but have the capacity to drill holes up to 750 metres in length.
Core: The driller removes the core from the barrel and records the depth from which the core was extracted. The core is broken into one metre lengths and placed sequentially in specially-designed plastic core boxes made from reconstituted plastic bags. Each box contains five metres of core arranged like crayons in a box. The full core boxes are transported from the drill site to U3O8 Corp’s base camp.
At the base camp, the core is laid out in depth sequence on long trestle tables for review. This core, which provides a complete picture of the rock in the target area, is intensely studied for features that may be important indicators of the presence of, or proximity to, uranium. The core is measured to verify the driller’s depths. The radioactivity and magnetism of the core are also measured. Radioactive parts of the core are marked and cut in half lengthwise with a diamond-blade saw similar in design to a tile cutting saw.
One half of the core is bagged and numbered for delivery to the preparation laboratory in Georgetown, Guyana to be crushed and pulverized into a fine power for sampling purposes. Thereafter, the sample is sent to a laboratory in Canada to be analysed for uranium and 32 other chemical elements. The other half of the core, which provides a physical record of what was sampled, remains in the plastic core boxes and stored in sheds designed to house the stacked core trays at U3O8 Corp’s exploration base camp in Guyana.
Phase II – Extension Drilling
If assay results from scout drilling are positive, the target undergoes extension (or Phase II) drilling with additional bore holes placed in the vicinity of the scout holes. Phase II drilling aims to roughly establish the size, grade and extent of the uranium-bearing zone encountered in the scout drilling.
The core extracted from Phase II drilling is prepared, recorded and analyzed in the same manner as is described above (see core).
Phase III – Infill Drilling
If assay results from Phase II drilling confirm good grade and consistency of uranium mineralization, infill (or Phase III) drilling attempts to delineate and detail the areas of most consistent grade to establish the physical size and shape of the uranium-bearing zone as well as its average grade. The assay results from all drilling including Phase I, Phase II and Phase III drilling form the basis on which a resource is estimated.
The core extracted from infill drilling is prepared, recorded and analyzed in the same manner as is described above (see core).
Resource Estimation & Expansion
U3O8 Corp’s resource estimate was done by an independent company in compliance with National Instrument 43-101 (NI 43-101) that dictates Canadian rules for public disclosure of information relating to mineral properties. Based on all exploration information available including geological, geophysical and geochemical data, field work, drilling and assay results, the independent company estimated the size and average uranium grade of the mineralized zone. NI 43-101 dictates that resources are categorized as “measured”, “indicated” and “inferred”. The category to which a resource is assigned depends on the level of confidence that the resource estimator has in the continuity and average grade of the mineralization that he/she believes to exist between adjacent bore hole intercepts.
Measured Resource:
A resource whose size, grade and physical characteristics are so well established and can be estimated with sufficient confidence to apply technical and economic parameters to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed exploration, sampling and testing information gathered from locations such as outcrops, trenches, pits and drill holes that are spaced closely enough to confirm both geological and grade continuity.
Indicated Resource:
Parts of the mineralized body in which the size, grade and physical characteristics of the resource have been estimated from detailed exploration, sampling and testing information including drill spacing close enough that continuity of mineralization and grade can be reasonably assumed.
Inferred Resource:
A resource whose size and grade have been estimated based on geological evidence and limited sampling data including moderately spaced drilling to assume that the mineralized body is continuous.
A resource estimate is usually done when a mineralized area has been extensively delineated with exploration drilling to provide sufficient information so that the size and grade of a deposit can be calculated with confidence. Further drilling may be required to expand a resource to an economic size before commercial and environmental assessments can be undertaken to establish the viability of a mine.
Preliminary Economic Assessment (PEA)
Performed by independent engineers, a PEA is a first-level evaluation of the resource to determine the optimum mining method and estimated production costs. A PEA typically provides the first guidance as to whether the resource has the potential to host a viable mine. The study determines if the resource warrants a pre-feasibility study and subsequently, a full feasibility study.
Reserve Estimation
A reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a pre-feasibility study. A reserve is based on estimated cost parameters including the cost of mining, extraction and administration at different forecast future uranium prices, cost implications of taxation and royalties, and other factors that demonstrate that economic extraction can be justified.
Pre-Feasibility Study
Performed by an independent company, a pre-feasibility study is a comprehensive evaluation of the viability of a resource that has advanced to a stage where the mining method and processing have been determined. It involves the development of a semi-detailed design for the mine, processing facilities and tailings management facility. The estimated construction costs of the mine design and associated infrastructure are integrated with a detailed plan of how the sequence of different parts of the deposit are to be mined in order to optimize cash flow over the life of the mine.
Full Feasibility Study
A full feasibility study requires a Mine Plan including detailed engineering and design of the mine and associated facilities and infrastructure. This study is based on immense detail as to the probable cost, timing and sequence of mine development including the cost of mine closure and land restoration. Several quotes are usually included for construction and infrastructure costs associated with the project.
The study typically requires that buyers are identified and secured for a proportion of the mined product. The study defines the definitive economic analysis of the feasibility of mining a deposit and constitutes the principal parameter on which a decision is made to go ahead with the construction of a mine. A feasibility study is used as the principal means by which funding can be secured for construction.
Environmental Study:
An environmental impact study constitutes a component of a full feasibility study and is based on environmental monitoring that is usually initiated in the exploration phase of a project – around the time that resources are being defined. An assessment is made of the possible environmental effects of a proposed mine including its effect on fauna and flora as well as social and economic considerations.
Mining License
If a uranium deposit has been determined to be economically viable, an application is made for a Mining License under which a mine would be constructed and operated. In Guyana, the license is valid for up to 20 years with possible renewals. The application is subject to a public review period and must include a Positive Feasibility Study with a detailed Mine Plan, Environmental Impact Study and an Environmental Management Plan pursuant to an Environmental Permit to be granted by the Environmental Protection Agency of Guyana.
Any exploration and development on Amerindian lands in Guyana requires prior written agreement by that local community and the Ministry of Amerindian Affairs. Only thereafter, can an application for the necessary permit or license to explore or mine be submitted to the government.
Should U3O8 Corp. achieve its objective of an economic size uranium deposit in Guyana, a prospective mine could cover an estimated 2,000 hectare area or well under 1% of the original land surface covered by its Reconnaissance Permits.
Mine Operation:
Once all required governmental, environmental and community approvals have been granted, construction of the mine and processing facilities can begin. The operation of the mine continues as long as the uranium can be extracted economically.
Mine Closure & Land Restoration:
The mine is decommissioned and mined lands undergo restoration including such aspects as re-vegetation and monitoring of the tailings facility. Re-vegetation is typically ongoing throughout the life of the mine.