Friday, March 27, 2009

Is Uranium DOA? Official: HRI’s Churchrock Uranium Project on Hold

Copyright © 2009
Gallup Independent

By Kathy Helms
Diné Bureau

CHURCHROCK — A proposed in-situ leach uranium mining project near Churchrock is on hold, according to Rick Van Horn, chief operating officer of Uranium Resources Inc.

With spot uranium prices down, Uranium Resources Inc., parent company of HRI-Churchrock Inc., is still awaiting a decision from the 10th Circuit Court in Denver regarding an underground injection control permit.

On Dec. 5, 2006, Hydro Resources Inc, or HRI, entered into a joint venture with a wholly owned subsidiary of Itochu, one of Japan’s largest trading companies, to develop its Churchrock property in New Mexico. Under terms of the joint venture, both parties had until April 2, 2007, to make a preliminary investment decision and over the past two years, mutually agreed to extend the date for the decision.

However, earlier this month URI received notification that Itochu had terminated the joint venture.

“We decided mutually that it was in both of our best interests for them to, at this time, pull out. Uranium prices are depressed, we’re still awaiting the court decision, and right now the project is on hold until we get that decision,” Van Horn said Wednesday.

“It basically gives us the whole project back. Instead of having a partner in there, we’ve got the whole thing back and we look at it as a positive,” he said. The company could seek other investors.

Asked whether uranium prices and the lawsuit were factors in Itochu’s decision, Van Horn said, “It might have, but I can’t speak for them. I think the big thing is that it was not going anywhere, mostly because of the uranium prices and the general malaise in the market, and the inability of anybody to get financing for anything.

“The only two industries that are going well are Walmart and McDonalds,” he said jokingly.

Approximately 70 million pounds of uranium reserves are known to exist on the Navajo Reservation, Van Horn said.

“Right now, it’s a very valuable asset for the Nation. The thing that we have to get around is the ban that the Nation has on uranium mining.”

Through legislation sponsored by Resources Committee Chairman George Arthur, the Navajo Nation imposed a ban on uranium mining and milling within Navajo Indian Country in April 2005. The same year, New Mexico Environment Department received a request from HRI for an underground injection control permit to operate a uranium in-situ leach mine in Section 8.

As a result, NMED formally requested U.S. Environmental Protection Agency make a decision on the Indian Country status of Section 8 land, with the underlying issue being which was the appropriate agency to consider the permit application.

On Feb. 6, 2007, EPA found that Churchrock Chapter, which includes Section 8, is a “dependent Indian community” and that EPA was the proper authority to issue the permit. The case was appealed to the 10th Circuit in Denver, which has yet to rule on oral arguments heard last May from attorneys for HRI and attorneys for Eastern Navajo Diné Against Uranium Mining.

According to URI’s year-end report for 2008 released March 10, revenue for the fourth quarter was $2.2 million, a $6 million decrease compared with $8.2 million during the fourth quarter of 2007, as significantly fewer pounds of uranium were sold at a lower price per pound. The net loss for the fourth quarter was $7.5 million.

During the quarter, URI sold 38,700 pounds of uranium, a 65.8 percent decrease from the 113,000 pounds sold in last year’s fourth quarter. URI received an average selling price per pound of $56.76 in the fourth quarter, down from an average per pound price of $72.72 in the 2007 quarter.

Uranium spot prices, or short-term, were at $42.50 Wednesday. “There’s also a long-term price and that’s at $70 right now. It depends on what your contracts are like.

We have no contracts for New Mexico. We are currently producing in Texas and we produce into an average of the long-term and short-term price,” Van Horn said.

“We are only producing at the Kingsville site. Rosita has been shut in and is under restoration, and Vasquez has been shut in and is under restoration. All three are in Texas.

Kingsville, we are currently producing out of some well fields and restoring in others.”

URI has closed an exploration office in Corpus Christi, Texas, and has consolidated it into the Kingsville operation.

The company’s Albuquerque office also has been closed.

“The good news is we’re still here. We have cash enough to last for two years without any additional infusions of cash and to continue the restoration activities we are conducting here in Texas. We are also working with Navajo EPA to do some work on Section 17 in Churchrock as far as some characterization of possible legacy contamination,” Van Horn said.

Though HRI/URI did not put the contamination there, “We are funding a study to see what is there. I think that’s an important thing with all of these legacy issues. There are a lot of numbers that are flying around and a lot of supposed facts. We need to get out and get the facts: What is the contamination? What is critical? What needs to be done to protect the health and safety of the people in community, and the people in New Mexico in general.”

Van Horn said HRI applied for and was issued the permit by the state, but the project can’t proceed until they get a court decision on who has the authority to issue the permit, the state or EPA, based on whether the proposed site is in Indian Country or not Indian Country.

“We have our NRC license. The only permit we’re lacking right now is the underground injection control permit. We have been issued one but we couldn’t act on it,” he said.

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