UEX Receives Positive Horseshoe and Raven Preliminary Assessment Reporting an EBIT of $394 Million and a Discounted NPV (5%) of $267 Million at Current Market Price for U(3)O(8)

VANCOUVER, Feb. 23 /CNW/ - UEX Corporation ("UEX") (TSX: UEX) is pleased to announce that it has received the results of the Preliminary Assessment Technical Report (the "PA" or the "Report") on the Horseshoe and Raven deposits ("Horseshoe and Raven") prepared by SRK Consulting (Canada) Inc. of Vancouver, BC. The PA will be filed on SEDAR at www.sedar.com and posted on UEX's website at www.uex-corporation.com.

The National Instrument 43-101 ("N.I. 43-101") compliant Report finds the economics of mining the 100%-owned Horseshoe and Raven deposits to be very robust and recommends the project be advanced to a preliminary feasibility level, and that this next phase of study also include the 100%-owned West Bear Deposit.

The PA assumes that uranium processing and tailings management will be conducted through a toll arrangement at one of the two nearby mills, one operated by Cameco Corporation ("Cameco") and the other by AREVA Resources Canada Inc. As Cameco's Rabbit Lake mill is located within 4 km of Horseshoe and Raven and has excess capacity, the Report has focused on this facility.

The PA was conducted utilizing cut-off grades calculated on the basis of $60 (US) per pound ("/lb") of U3O8 in the mine optimization plan under which 16.6 million pounds ("Mlbs") of uranium resources would be extracted over a seven-year mine life (the "Base Case"). References to currencies herein are in Canadian dollars unless otherwise stated.

Sensitivity Analysis

Under the Base Case and at $70 (US) /lb of U3O8 the Horseshoe and Raven deposits would have Earnings Before Interest and Taxes ("EBIT") of $394 million, a pre-tax Net Present Value ("NPV") at a 5% discount rate of $267 million and a pre-tax Internal Rate of Return ("IRR") of 55%. The Report presents three economic scenarios utilizing the Base Case and using uranium prices ranging from $60 (US) to $80 (US) /lb of U3O8 as shown in the following price sensitivity table:

Uranium Price Sensitivity (Base Case)

Price U3O8 Pre-Tax
$60 (US) /lb 246 163 42
$70 (US) /lb 394 267 55
$80 (US) /lb 542 371 66

The current spot price of uranium is $68.75 (US) /lb of U3O8 and the long-term price is $73.00 (US) /lb of U3O8 as quoted by Ux Consulting Company, LLC.

The Report shows that the NPV is most sensitive to uranium price and grade. Under the Base Case an increase in the price of uranium of 20% [for example, from $70(US)/ lb to $84(US) /lb] will result in an increase in NPV5% of over 55% ($267 million to $413 million). A 20% increase in grade will produce an identical increase in NPV. Conversely a drop in either uranium price or grade will reduce the NPV. The PA also concludes that the economics are moderately sensitive to operating costs and are not particularly sensitive to capital costs.

A detailed Base Case sensitivity analysis using EBIT NPV5% is provided in the Report as follows:

Sensitivity Analysis Results (using the Base Case mine plan)

Price U3O8 Variable EBIT NPV5% (M$)
$60 (US) /lb Capital Cost 187 163 138
Operating Cost 232 163 94
Metal Price 38 163 288
Grade 38 163 288
$70 (US) /lb Capital Cost 291 267 242
Operating Cost 336 267 198
Metal Price 121 267 413
Grade 121 267 413
$80 (US) /lb Capital Cost 396 371 346
Operating Cost 440 371 302
Metal Price 205 371 537
Grade 205 371 537

"We are extremely pleased with the preliminary economics associated with the development of the Horseshoe and Raven deposits, using relatively conservative uranium prices" said Graham Thody, President and CEO of UEX, who further noted that "as the price of uranium increases, our mine design will change and provide the opportunity to extract a significantly higher proportion of the total resources at the deposits."

In addition to the Base Case sensitivity tables shown above, which are estimated using $60 (US) /lb U3O8 in the cut-off grade calculation, the PA also contains a simple, preliminary exercise which was conducted to estimate the potential increase in mineable tonnes and NPV0% if lower cut-off grades established by a price of $80 (US) /lb U3O8 were used in the mine optimization plan and the economic model. This exercise showed an increase to 23.6 Mlbs of potentially mineable U3O8 together with a potential increase in the EBIT NPV0% from $542 million (Base Case) to approximately $620 million. This expanded tonnage contains a small proportion of Inferred Mineral Resources which are considered speculative and have no guarantee of being converted into Measured or Indicated Mineral Resources.

Project Opportunities

The Hidden Bay project has many opportunities for improvement of economics including:

  • Expansion of mineable tonnes due to an increase in U3O8 price or a reduction in operating costs which would result in a lower cut-off grade and thus the conversion of a higher proportion of the existing resource base to reserves;
  • Expansion through discovery of additional resources and potential inclusion of Raven underground mineralization in the mine plan;
  • The potential use of the Raven pit as a regional toll tailings management site and potential use of tailings as underground backfill thereby further increasing regional tailings capacity; and
  • The inclusion of UEX's 100%-owned West Bear Deposit in the overall project mine plan and economics.

The PA notes there is a shortage of tailings storage volume in the region and the use of the mined-out Raven pit could provide a minimum of four to five million cubic metres of tailings storage and potentially much more. The Report assumes a tailings deposition cost of $35 per tonne milled by using Cameco's facilities. The use of the Raven pit to store tailings, and elimination of the toll tailings deposition fee, could significantly reduce the tailings deposition costs, potentially up to $50 million over the life of the mine. These savings could be further increased if the improved economics allowed for use of a lower cut-off grade, which in turn would allow economic extraction of a significantly larger open pit resource.

Mine Plan

Horseshoe and Raven are proposed to be developed by conventional ramp access underground methods and open pit mining methods, respectively. Total blended operating costs, including mining, trucking, ground support, ventilation, toll milling, general and administrative expenses, water treatment and tailings management, based on late 2010 figures, are estimated at $201 per tonne.

Under the Base Case (cut-off grade calculated using $60 (US) /lb U3O8) scenario, mining of the deposits is proposed to produce a total of 2.49 million tonnes of mill feed and 15.0 million tonnes of waste over a seven-year mine operating life at a cut-off grade of 0.15% U3O8 and a diluted average mining grade of 0.30% U3O8 containing 16.6 Mlbs of U3O8. The preliminary $80 (US) /lb U3O8 mine optimization case is estimated to a lower cut-off grade of 0.12% U3O8 and a diluted average mining grade of 0.21% U3O8, which would potentially allow profitable mining and processing of mineralization containing 23.6 Mlbs U3O8.

Capital Requirements

Capital and owner's costs for pre-production, inclusive of a 25% contingency, are estimated to be approximately $88 million and $28 million, respectively. Owner's costs include environmental studies and permitting, engineering, design, resource upgrade and data collection. Sustaining capital costs and mine closure costs, inclusive of a contingency, are estimated at $29 million. In all three scenarios the capital payback occurs within a one-year period from the commencement of production.

Working capital is anticipated to be the equivalent of four months operating costs in the first production year, or $20.4 million. The working capital costs will be recovered in the final production year.


Metallurgical testing was completed at SGS Canada Inc.'s Lakefield Research facility in Lakefield, Ontario under the direction of Melis Engineering Ltd. Based on supporting metallurgical test work, process uranium recoveries are estimated to be 95% with a noted absence of deleterious elements.


The PA finds the economics of mining the Horseshoe and Raven deposits to be very robust and recommends the project be advanced to a preliminary feasibility level, which would include the West Bear Deposit.

The PA also recommends that UEX conduct an infill drilling program at the Raven Deposit to upgrade Inferred resources to Indicated resources. This is particularly important as the price of U3O8 increases, thereby allowing for the lower grade mineralization, some of which is in the Inferred category, to be included in the mine plan. The Report also recommends that further expansion drilling be conducted at the Raven Deposit where it appears the resource can be increased. UEX is currently planning a summer drilling program in 2011 to follow up on these recommendations.

In furtherance of the recommended Preliminary Feasibility Study ("PFS"), UEX intends to conduct additional field work and information gathering for geotechnical, environmental, metallurgical and hydrological studies. The PA further recommends that the project description be compiled and submitted to the government for review and advisement of specific guideline requirements. It is anticipated that the PFS and associated information gathering will cost up to $1.5 million.

The technical information in this news release has been compiled by R. Sierd Eriks, P.Geo., UEX's Vice President of Exploration, and reviewed by Gordon Doerksen, P.Eng., of SRK Consulting (Canada) Inc., the PA Project Manager, who are both Qualified Persons as defined by N.I. 43-101.

Cautionary Statement

The PA is preliminary in nature and includes a small proportion of Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Consequently, there is no certainty that the PA will be realized.

About Hidden Bay

The Horseshoe and Raven deposits are located in the central portion of UEX's 100%-owned Hidden Bay Project which also contains the West Bear Deposit. The combined N.I. 43-101 compliant resource estimate at a 0.05% U3O8 cut-off for the Horseshoe, Raven and West Bear deposits is:

  • 10.37 million tonnes containing 36.623 million pounds of U3O8 with an average grade of 0.160% U3O8 in the Indicated Mineral Resource category; and
  • 1.11 million tonnes containing 2.715 million pounds of U3O8 with an average grade of 0.111% U3O8 in the Inferred Mineral Resource category.

Note that Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.

A PFS for the West Bear Deposit upgraded the West Bear resource estimate to a Probable Mineral Reserve estimate of 72,347 tonnes containing 1,492,261 pounds of U3O8 grading 0.94% U3O8 at a cut-off of 0.18% U3O8, which represents 96% of the Mineral Resource. The high conversion rate reflects the near-surface nature of the West Bear mineralization which is amenable to open cast mining in a shallow pit. Metallurgical testing resulted in an estimated overall uranium recovery of 95%.

About UEX

UEX is a Canadian uranium exploration and development company actively involved in 18 uranium projects, including six that are 100% owned and operated by UEX, one joint venture with AREVA that is operated by UEX, as well as ten joint-ventured with AREVA and one under option from JCU (Canada) Exploration Company, Limited, which are operated by AREVA. The 18 projects, totaling 338,972 hectares (837,618 acres), are located in the eastern, western and northern perimeters of the Athabasca Basin, the world's richest uranium belt, which accounts for approximately 22% of the global primary uranium production. UEX is currently developing several uranium deposits in the Athabasca Basin which include the Kianna, Anne, Colette and 58B deposits at its 49%-owned Shea Creek Project, a joint venture with AREVA in the western Athabasca Basin, and the Horseshoe, Raven and West Bear deposits located at its 100%-owned Hidden Bay Project in the eastern Athabasca Basin. With a cash position of approximately $16.8 million at December 31, 2010, UEX is well-financed to carry out its 2011 exploration and development programs, budgeted at approximately $9.6 million.

Forward-Looking Information

This news release may contain statements that constitute "forward-looking information" for the purposes of Canadian securities laws. Such statements are based on UEX's current expectations, estimates, forecasts and projections. Such forward-looking information includes statements regarding UEX's plans for the Hidden Bay Project, resource estimates, outlook for our future operations, plans and timing for exploration activities, and other expectations, intention and plans that are not historical fact. The words "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words and phrases are intended to identify forward-looking information. Such forward-looking information is based on certain factors and assumptions and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking information. Important factors that could cause actual results to differ materially from UEX's expectations include uncertainties relating to interpretation of drill results and geology, additional drilling results, continuity and grade of deposits, public acceptance of uranium as an energy source, fluctuations in uranium prices and currency exchange rates, changes in environmental and other laws affecting uranium exploration and mining, and other risks and uncertainties disclosed in UEX's Annual Information Form and other filings with the applicable Canadian securities commissions on SEDAR. Many of these factors are beyond the control of UEX. Consequently, all forward-looking information contained in this news release is qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by UEX will be realized. For the reasons set forth above, investors should not place undue reliance on such forward-looking information. Except as required by applicable law, UEX disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

SOURCE UEX Corporation

For further information:

Graham C. Thody
President & CEO
(604) 669-2349

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UEX Corporation

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