Only Acquire Properties Which are Likely to Become a Mine. The substantial rise in the price of uranium has generated some speculation on uranium properties that are either too small to justify mine development, have logistical problems, are in areas that are not likely to obtain permitting, or are otherwise unsuited to the construction of an economic mine. We do not speculate on these properties with the hope of finding a naïve buyer or in solving intractable problems. Rather, we look for properties with the requisite size, grade, metallurgy, mining method, logistics, economics, and permittability that will increase the likelihood of developing a mine.
Acquire Uranium Properties via Low Cost Leasing and Staking. There are three basic ways of acquiring a mining property: staking, leasing, and joint venture. Staking is the least expensive, but often involves properties for which there is little information. Leasing is more expensive, but involves properties where some favorable - but not conclusive - information exists. Joint venture is the most expensive and involves properties that are already owned by active exploration companies and that have substantial and positive exploration data available. Our goal is to acquire properties via low cost leasing and staking and then upgrade them through our exploration efforts. These efforts consist of mapping, surface sampling, geophysics, and drilling as well as the generation of suitable geological reports. Following our successful exploration efforts and a discovery, we believe we will be able to either sell or joint venture our properties on favorable terms that will generate profits for our shareholders.
Focus on "Company Makers". Deposits come in all sizes: big, medium, and small. A large uranium deposit is generally considered to be greater than 30-50 million pounds with some in the multi-hundred million pounds. These large deposits are what we term "Company Makers". By contrast, a small deposit of a couple million pounds can at best generate $5-10 million in profit after years of development and are generally not worth the time and investment. We seek deposits that will have a substantial impact on the value of our company. These are projects that have the potential to generate profits in excess of $100 million for our Company. While there can be no assurance that we will find any such deposits, focusing on the small- and medium- sized deposits in an effort for a "sure thing" is misguided since the cost will often exceed the potential for profitability.
Focus on Deposits Amenable to the In-Situ Recovery (ISR) Mining Method. In-situ Recovery (ISR) is the recovery, by hydrological leaching, of the uranium deposit without physical extraction of the mineralized rock from the ground. This process is also referred to as "solution mining." Most uranium deposits in the United States are mined using the ISR mining method. ISR has several advantages over more traditional forms of mining such as underground mining and open pit mining such as: miners are not directly exposed to the ore body, it is less expensive because large amounts of rock do not have to be broken up and removed, there is no solid waste, there is much less ground disturbance, smaller ore bodies can be mined, and it is much more environmentally friendly than conventional mining. By focusing on ISR deposits, we can substantially increase the likelihood that its properties will become operating mines. Furthermore, permitting is the single most important factor for the development of uranium mines in the United States and ISR mines have a history of being successfully permitted and reclaimed in a variety of jurisdictions.
Focus on Areas with Favorable Political, Legal, and Permitting Environments. While there are many promising exploration areas throughout the world, many of these areas pose problems for miners due to political, legal or permitting problems. For instance, various provinces in Australia have standing policies against uranium mining despite the high quality and size of uranium deposits in those jurisdictions. Other international jurisdictions may offer opportunities due to the availability of large and economic deposits coupled with mining friendly local governments. The Company's initial acquisition is in New Mexico and has the all the advantages of operating in the United States, including good infrastructure, a solid legal system, proximity to the final market, and a reasonable permitting environment. In particular, ISR mines are easier to permit due to their smaller environmental footprint, greater mine safety, and past successes in the remediation of these properties. Within the United States, we plan on focusing on the mining-friendly Western states such as Alaska, Wyoming, New Mexico, Arizona, Utah, Texas, and Colorado.
Copyright © 2006 Prospect Uranium, Inc.
