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U.S.
Uranium Sector Glowed in 2005: An Even Brighter Future |
The U.S. Department of Energy record-keeping
arm issued very encouraging data this week, which should give a
boost to many of the companies developing their uranium properties
in the United States. Front-runners, with the more solid outlook,
include Strathmore Minerals (TSX: STM; Other OTC: STHJF), UR-Energy
(TSX: URE), Uranerz Energy (OTC BB: URNZ) and Energy Metals (TSX:
EMC). The U.S. government?s uranium annual report should also help
bolster the aspirations of the more speculative uranium explorers
and developers we have previously written about, including Kilgore
Minerals (TSX: KAU), Max Resources (TSX: MAX; OTC BB: MXROF), and
Northwestern Minerals Ventures (TSX: NWT; OTC BB: NWTF), which also
plan to explore their U.S. uranium-mineralized assets.
The
Energy Information Administration (EIA) released its Annual Domestic
Uranium Production Report on Monday, showing the U.S. uranium
production industry turnaround continued through 2005. Drilling,
mining, concentrate production, employment and expenditures all
increased over 2003 and 2004. U.S. uranium mine production was the
highest since the year 2000, but remains below the period of
1995-1999. Sustained growth in this sector appears likely based upon
the soaring spot uranium price, which has increased more than 500
percent since then.
U.S. uranium mined produced an
estimated 3 million pounds of uranium oxide (U3O8), 24 percent more
than in 2004. Estimated U.S. uranium concentrate (yellowcake)
production in 2005 was 2.7 million pounds U3O8, 18 percent more than
2004. Domestic production mills and in-situ recovery facilities
shipped an estimated 2.7 million pounds of uranium concentrate, this
past year.
In 2005, employment in the uranium industry
increased by 52 percent, over the previous year. Drilling for
uranium, production, land and other expenditures jumped by 54
percent, in 2005 compared to 2004. Companies spent an estimated
$16.4 million in 2005, the most since 1997 ?1998. Surface drilling
as measured in millions of feet was 1.7 million feet, the most since
1999. Employment in person-years was estimated at 638, the largest
employment figure since 1999, but far below the four-digit
employment numbers of 1995 ?1998. The greatest employment percentage
increase came from Arizona, Utah and Washington State, but the
largest employment number in person-years came from Colorado and
Texas. Wyoming, New Mexico, and Nebraska showed modest increases in
employment numbers.
Exploration activity was also up. The
number of drill holes exploring for uranium, in 2005, grew by 47
percent over 2004. Land expenses nearly doubles since 2003. These
were expenditures for land acquisitions, geological research,
geochemical, geophysical surveys, and costs incurred by field
personnel in the course of exploration, reclamation and restoration
work (plus overhead and administrative costs associated with
supervising and supporting field activities).
The largest
percentage and dollar increase came from production expenditures,
which include mining, milling, uranium processing and running the
facilities. The estimated expenditure more than doubled in 2005,
compared to the previous year. This jump in expenses confirms that
uranium exploration, development and production companies are
preparing for a banner year in 2006 and beyond.
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