Pele’s Inferred Resource Tonnage Increases 116% in Latest 43-101 Results
Pele Mountain Resources Inc. (‘Pele’, TSXV: GEM | OTCQX: GOLDF) has issued an update to its NI 43-101 Resource Estimate from for its Eco Ridge Mine Project in Elliot Lake, Ontario, Canada. Pele has already completed a positive Preliminary Economic Assessment (PEA) for the Eco Ridge project that has already confirmed its potential to produce rare earth oxides (REO’s) and uranium oxide (U3O8). The new resource estimated has shown improvements in four main areas:
- The inferred resource has grown 116% in tonnage with an increased average grade of 0.047-percent uranium oxide and 1,554 ppm Total REO. Of this, uranium oxide has increased 136% to 37.6-million pounds and total rare earth oxides by 130% to 125.3-million pounds.
- Indicated resources have increased 11% in tonnage and include 22.6-million pounds of uranium oxide and 80.5-million pounds of total rare earths.
- An expansion of higher-grade zones that can be brought to production early in the mine life. This is a very important development, improving project economics.
- An improved heavy rare earth potential, characterized by substantial increases in neodymium, dysprosium, yttrium, terbium and europium oxides as well as scandium oxide.
The improved resource estimate has come at an ideal time as the Eco Ridge project starts to prepare for a transition to licensing and feasibility, two essential steps on the path to production. Moreover, onre key advantage of Pele’s Eco Ridge Mine project is that it is located in Elliot Lake, which remains the only Canadian mining camp ever to have produced commercially viable rare earth products. This means that Pele has access to proven and well understood mineralization and metallurgy and excellent local infrastructure both in transportation and logistics and in mining support.
Pele’s investors should be pleased by the company’s increased exposure to the higher grade critical rare earths as well as to the higher grade of uranium. The latter aspect is perhaps the one of most immediate value. Demand for uranium is closely linked with that for energy. The spot price of uranium is hovering in the USD$ 40.00-41.00 / lb. U3O8. Worldwide, there are currently about 435 active nuclear reactors. However, global energy demand should rise significantly by 2030, and to meet this demand, the number of reactors will necessarily have to increase. Currently, in spite of the undervalued uranium market, 67 new reactors are being built around the world; this is the highest such number since the 1970s. An additional 164 reactors have been planned and 317 proposed from now until 2030 according to the World Nuclear Association.
The majority of the new units will be built in China, India, Russia and South Korea. Other short-term catalysts of the uranium market include the resumption of nuclear power generation in Japan, the increasing number of suppliers in China and the Russian HEU (Megaton to Megawatts Agreement) involving the sale of depleted former Soviet weapons grade uranium to the United States, which is reaching its end. All these elements point to the uranium market preparing for an upward mood swing after the downturn of the past few years and the ‘artificially’ low prices in the wake of the Fukushima meltdown. A growing number of M&A transactions has also suggested that the uranium market is ready for an upturn. After the past few years of ‘neglect’, several M & A transactions have been processed, including Rio Tinto’s acquisition of Hathor Exploration Ltd in 2011, and the takeover bid, last March, by the Russian ARMZ for Uranium One in the amount of USD$ 1.3 billion.
Some industrial powers, including Germany, have drawn their conclusions and decided to get out of the nuclear power production business in the long term. However, this attitude will face increasing scrutiny because, everything points to the general trend being in the other direction. The fastest rising economies include some of the most populous countries, where energy demand is growing tremendously and where, realistically, only nuclear power generation can address. Nuclear power is not possible without uranium (or thorium, once the related technology is ready) and the bulk of its demand comes from utilities. Uranium mining takes place worldwide in many countries, including some European countries, however, Canada is, and remains, one of the best and lowest risk areas for production.
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