Two Uranium Exploration Companies Slug It Out in Utah's Lisbon Valley, Part One

By: James Finch
Submitted: 2007-01-17 16:15:37
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After interviewing SXR Uranium One Chief Executive Neal Froneman, we realized it was important to cover developments in Utah, particularly in the Lisbon Valley. Each time Mr. Froneman talked about Wyoming, he nearly always included Utah in the same breath. Most of our focus for the first half of 2006 had been on the In Situ Recovery (ISR) method of uranium mining. Now, as the uranium spot price knocks on the $50/pound level, it appears conventional mining in the United States may return with a vengeance.

Utah is strictly high grade uranium underground mining, possibly offering some the consistently highest grades available in the United States. International Uranium Corporation’s announcement to reopen the White Mesa uranium mill, some 50 miles away from the Lisbon Valley, was the first step geared to renew interest in southeastern Utah’s Paradox Basin. SXR’s interest in the area was a significant second step. There may be several more reasons if the early drilling results of two junior exploration companies show promise deep below this semi-arid ground covered with juniper, sage brush, and sprinklings of Ponderosa and Pinyon pines trees.

Utah is a state where underground uranium mining was successful and continued until the spot price completely collapsed. Specifically, it was the Paradox Basin of the Colorado Plateau, which became world famous, partly because of a Hollywood movie about its most colorful pioneer, Charlie Steen. His home in Moab, Utah became the city of millionaires, a consequence of the uranium rush he launched with his discovery.

Lisbon Valley became the most heavily promoted uranium districts in the world, thanks to a then-penniless Charlie Steen, the unemployed petroleum geologist who discovered the Mi Vida uranium deposit on the southwest side of the Lisbon Valley anticline. On July 6, 1952, Charlie Steen cored through 14 feet of grayish-black pitchblende – specimens of which he had only seen in museums. No one had ever before discovered pitchblende on the Plateau. With uranium grades up to 0.4 percent, this became one of the richest ore bodies mined in the United States.

Our recent investigation and interviews with two geologists revealed there could be an area play again developing in the Lisbon Valley uranium district. It is also known as the Big Indian Uranium District, named after the ore belt, and is located 30 miles south of Moab, Utah – about halfway between Salt Lake City and Santa Fe, New Mexico. Excluding U.S. Energy, which holds prospective uranium properties on the west side of the Lisbon Valley Fault, there are three junior uranium exploration companies exploring or hoping to explore for uranium on the northeast side of the Lisbon Valley Fault. They hope to continue where Rio Algom left off, during the nadir of the twenty-year uranium depression.

Why are the Uranium Companies Exploring the Northeast Flank of the Fault?

While the west side of the fault has been the most productive uranium mining ground, Rio Algom discovered a mineralized zone in 1972 on the “nose” of the northeast side of the fault. For the next sixteen years, the company’s Lisbon Mine produced about 24 million pounds of uranium from more than 5.6 million tons of ore at an average grade of 0.22 percent. True, the grades were higher on the western side of the fault – an average grade of 0.35 percent U3O8.

Rio Algom’s discovery and outstanding uranium production confirmed a little publicized notation in an obscure chapter, of a geological textbook, entitled, “Geology and Exploitation of Uranium Deposits in the Lisbon Valley Area, Utah.” Hiram B. Wood of the American Institute of Mining, and on behalf of the U.S. Atomic Energy Commission, wrote in 1968, “An Extension of the Big Indian Ore Belt, similar in size and grade to the known ore belt, probably occurs in the downthrown block north east of the Lisbon Valley Fault at depths of 2400-2700 feet beneath the Dakota-capped surface…leaving this area as the most favorable unexplored area remaining on the Lisbon Valley Anticline.”

It should be noted that none of the major uranium ore bodies had outcrops. All of the discoveries were made by exploration drilling. Because of the stratigraphy, the mineable deposits were found at depths of more than 2000 feet. “All of the anticlines in the Paradox Basin, of which Lisbon valley is one, are salt structures,” said Richard Dorman, vice president of exploration for Universal Uranium, which is now drilling on the northeast side of the anticline. Dorman explained an anticline for the layman, “It’s where the earth gets bent up into a rounded dome.”

It may be quite possible there is more uranium, according to the two uranium exploration geologists we interviewed for this feature. Both Universal Uranium and Mesa Uranium are drilling to identify and evaluate the Moss Bach sandstones in the Chinle formation. It was Charlie Steen’s uranium discovery overlying the Moss Bach member which started the massive prospecting rush into the district in the 1950s. The majority of the uranium production occurred along the northwest flank of the anticline. For forty years, more than 80 million pounds of uranium were mined from the 16 mile long by one-half mile wide trend of the western flank.

Exploration drilling is underway on the northeastern side of the anticline near the formerly producing Lisbon Mine. There are geological advantages in the exploration programs of both companies, Universal Uranium and Mesa Uranium. Universal’s smaller property position is six miles long and two miles wide, but closer to the fault. Mesa’s larger position is closer to the former Lisbon Mine, but is an arc shaped land position further from the fault. Global Uranium, which has not announced a drill program, is reportedly sandwiched in the area between the two.

James Finch contributes to StockInterview.com and other publications. Visit http://www.stockinterview.com to download your free copy of “Investing in the Great Uranium Bull Market: A Practical Investor’s Guide to Uranium Stocks.” You can always write to James Finch at jfinch@stockinterview.com

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