Wednesday, June 13, 2007

Geoscience Australia -overview of exploration

Australia has more low-cost uranium in deposits than any other country, but finding it is not easy. While the price for uranium has been low, little was found but now exploration is starting to increase.

Australia has the largest share of the world's "reasonably assured resources" of uranium, with approximately 27% of the total resource. This is recoverable for less than US$80/kg.

There are about 85 uranium deposits in Australia, including about 20 that have been mined out or partly mined. However, approximately 94% of Australia's uranium resources that are recoverable at less than US$80/kg are within the following seven large deposits.

* Olympic Dam and Beverley in South Australia;

* Ranger in the Alligator Rivers region of the Northern Territory;

* Jabiluka and Koongarra in the Northern Territory (mining of these deposits requires approval from traditional owners); and

* Kintyre and Yeelirrie in Western Australia (mining of these deposits requires a change in state government policy.

Olympic Dam is the world's largest known uranium deposit, containing about 21% of the world's uranium resources recoverable at less than US$80/kg. Additional resources are being delineated as exploration drilling continues in the south-eastern part of the deposit. The uranium grades at Olympic Dam are very low, averaging 300-400 parts per million, but the deposit also contains copper and gold, which makes the recovery of uranium economical.

During 2005, Australia produced uranium from three uranium mines: Ranger (5906 tonnes U^sub 3^O^sub 8^), Olympic Dam (4335 tonnes U^sub 3^0^sub 8^) and Beverley (977 tonnes U^sub 3^O^sub 8^).

The record total production of 11,218 tonnes represented approximately 23% of world uranium production in 2005, the second largest level behind Canada with 28%. Although there are a number of undeveloped deposits in Western Australia, the Northern Territory, South Australia and Queensland, current state government policies only allow uranium mining in the Northern Territory and South Australia.

Australia has no significant demand for uranium, and all mine production is exported under nuclear safeguard agreements with importing countries.

Uranium Exploration

All exploration for uranium and other minerals in Australia is carried out by private companies. However, the federal and state governments carry out continent-wide geological mapping and airborne radiometric and magnetic surveys. A continental network of gravity measurements is also provided by governments as well as specialised studies of specific mineralised regions.

All of these investigations contribute towards various databases of "pre-competitive information" that are compiled to attract mineral exploration to Australia. In August 2006, the federal government announced the allocation of $134 million to Geoscience Australia over a 5-year period through its new energy security initiative for the acquisition of continentwide geoscientific data to assist companies select favourable areas for exploration of energy sources including petroleum, uranium, thorium and geothermal energy.

The main difference between exploration for uranium and other minerals is the application of geophysical radiometric techniques to detect uranium mineralisation at all stages of exploration and mining including:

* airborne and ground radiometric surveys to detect presence of uranium. Such techniques generally can only detect uranium radiation very close to the surface;

* probes to measure gamma radiation in drill holes and prompt fission neutron probes to estimate uranium grades in drill holes; and

* radiometric ore sorting in mining operations to separate uranium ore from waste rock.

However, in general, exploration for uranium does not differ greatly from techniques used in the search for other types of mineral deposits, and is organised in several stages that often merge and overlap. These techniques involve:

* global scale exploration:

- explorers consider areas that are known to be geologically favourable for uranium mineralisation, the amount of geological information available in the country, as well as the political stability of a particular country, mining regulations and taxation regimes, existing infrastructure (roads, ports etc.) and environmental factors that would affect mining if a deposit was found;

* regional scale exploration (usually hundreds to thousands of square kilometres):

- this begins with a literature search, particularly of any previous exploration results and reconnaissance surveys;

- geologically favourable areas are selected on the basis of broad regional geological criteria and are secured by exploration licence tenements;

- exploration methods at this stage include airborne radiometric and magnetic surveys, regional mapping and geochemical surveys, rock sampling and identification of rock samples' formation conditions.

* semi-regional area selection for more detailed work (tens to hundreds of square kilometres):

- results of regional scale exploration are used to reduce the size of an exploration area to smaller locations for more detailed, and usually more expensive, investigation;

- exploration methods include detailed mapping, geochemical mapping and ground geophysical surveys as well as airborne surveys such as airborne electromagnetic surveys followed by exploration drilling.

* prospect-scale delineation and evaluation of uranium mineralisation detected in the semiregional exploration (usually up to only a few square kilometres per prospect and takes place only if uranium mineralisation has been established). Exploration activities at this stage centre on an assessment of uranium mineralisation and include:

- detailed assessment drilling to establish the size of the deposit, often including digging trenches and limited underground workings to ascertain the formation of the mineralised body and consider mining options;

- studies of uranium ore mineralogy, metallurgical studies, bulk sampling and pilot plant metallurgical test to determine the appropriate method to process the ore;

- feasibility studies to establish the profitability of the mining operation;

- appropriate environmental studies and government approvals for mining the deposit.

* a mine development stage:

- make a decision to mine the deposit based on the results of feasibility and environmental studies and mining conditions specified by government authorities;

- proceed to develop the mine and commence mining activities; and * mine closure:

- rehabilitate the mine site once the mining of the deposit is completed.

Chance Discoveries

Explorers may find a uranium deposit while looking for deposits of other minerals. The best example of this is Olympic Dam, where explorers were using magnetic and gravity anomalies along with satellite imagery to identify an area in South Australia for a certain style of copper deposit that required testing by expensive deep drilling.

As a result, a previously unknown type of deposit of copper, gold and uranium was discovered. Geologists are continuing to investigate the Olympic Dam deposit to develop a better understanding of its signatures, which could then be used to discover other similar deposits.

The likelihood of explorers finding uranium deposits while looking for other mineral deposits depends on:

* the type of exploration techniques being used. A variety of mineral deposits could be detected with geochemical and some geophysical surveys. While some exploration programs will target a particular type of mineral deposit, a lookout will be kept for other closely associated deposits types that can be detected by the same methods;

* the type of area being explored. Some areas are not geologically favourable for any uranium deposits; and

* some deposits are polymetallic, such as Olympic Dam, Jabiluka and Nolan's Bore, which contain a combination of minerals

Uranium Exploration in Australia

There was a resurgence in uranium exploration in Australia in 2005 with expenditure of $41.09 million, a threefold increase on the $13.96 million expenditure the previous year.

The number of companies actively exploring for uranium increased from five at the start of 2004 to more than 34 by late 2005. The proportions of total expenditure on exploration in each jurisdiction were:

* South Australia (42%);

* Northern Territory (37%);

* Queensland (15%); and

* Western Australia (6%).

The combined expenditures in South Australia and the Northern Territory accounted for almost 80% of Australia's total. The main areas (in terms of expenditure) are given in Figure 3. They are:

* the Gawler Craton-Stuart Shelf region, tertiary palaeochannel sediments of the Frome Embayment, and palaeochannels overlying the Gawler Craton in South Australia;

* the Alligator Rivers region and western Arnhem Land, and the Ngalia Basin (including the Napperby project in Tertiary sediments overlying the Ngalia Basin) in the Northern Territory; and

* Mount Isa province in Queensland.

Further details on Australia's uranium exploration can be accessed in the Geoscience Australia publication Australia's Identified Mineral Resources at image_cache/GA7036.pdf

Australia's Most Likely Regions

Figure 3 shows areas that are geologically favourable for uranium and were being explored for uranium deposits in 2005. Areas of particular interest include:

* the Gawler Craton area in South Australia, which has the Olympic Dam deposit ("hematite breccia" type) that holds about 70% of Australia's uranium resources. Explorers are looking for more Olympic Damtype deposits in the area. Other areas considered favourable for Olympic Dam-type deposits include the Curnamona Craton (Mt Painter area) of South Australia and the Georgetown and Mount Isa regions in Queensland;

* the Arnhem Land and Rum Jungle areas in the Northern Territory, where companies are exploring for "unconformity-related" uranium deposits similar to those at Ranger and Jabiluka, the second most important type of uranium deposit in Australia with about 18% of the country's uranium resources;

* the Frome Embayment in South Australia is the most important area in Australia for sandstone-type uranium deposits such as the Beverley deposit. This type of deposit accounts for about 4% of Australia's uranium resources and is the most widespread; and

* the north-east Yilgarn area around the Yeelirrie and Lake Way uranium deposits in Western Australia is a promising area for "calcrete" deposits, which account for about 3-4% of Australia's uranium resources.

Recent Discoveries

The last major uranium discovery was Kintyre in Western Australia in 1985.

The discovery of uranium deposits depends on the level of funding allocated to carry out exploration. This depends on the demand and the price, which in turn is determined by the perceived supply. During the late 1960s through until the early 1980s there was a perceived shortage of uranium, which was followed by an oversupply and a sharp downturn in uranium exploration.

If explorers are looking in areas that are geologically favourable for uranium deposits, more funds will be allocated to exploration and more deposits will be found. During recent years there has been increasing concern that there will be a world shortage of uranium for nuclear electricity generators, resulting in a quadrupling of the uranium price to more than US$50/lb. This has been accompanied by a corresponding sharp increase in uranium exploration expenditure.

In constant dollars, expenditure of $41.09 million in 2005 was the highest annual expenditure on uranium exploration in Australia since 1988. However, this is less than half the comparative level of expenditure during the peak years between the late 1960s and the early 1980s, when most of the significant deposits were discovered.

From the early 1980s to 2004, when uranium prices were depressed, there was relatively little exploration either in Australia or globally. Apart from Kintyre, no significant uranium deposits were found during this period.

The recent surge in uranium exploration expenditure has led to the first recent significant uranium discovery, the Beverley 4 Mile, in 2005.

It is of interest to note that Australia's uranium resources have continued to grow for more than 20 years from discoveries made prior to 1985 despite increasing mining since 1976. In particular a lot of additional resources have been discovered in the course of ongoing exploration at Olympic Dam.

Apart from high levels of exploration expenditure, the surge of uranium discoveries also was due to a combination of additional factors including extensive highresolution, low-level airborne radiometric surveys, which picked up uranium deposits emitting radioactivity because they were exposed at the surface.

Among these deposits were Ranger, Nabarlek and Koongarra in the Northern Territory and Yeelirrie in Western Australia. The discoveries led to a better geological understanding of these deposits, and deposit "models" were developed by geologists to assist in the recognition of geological clues that indicate where certain types of deposits are present.

Conversely, the lean period of uranium discoveries from the early 1980s until about 2003 was exacerbated by other factors such as:

* government policies from 1983 to 1996 restricting uranium mining to three mines, which curtailed exploration activity because any discoveries could not be mined. Uranium mining is still prohibited in Western Australia and Queensland, and uranium exploration is not allowed in New South Wales and Victoria;

* decreasing land access to some prime uranium areas, such as the Kakadu National Park in the Northern Territory; and

* as "easily discoverable" uranium deposits are found, it becomes increasingly more difficult and more expensive to find deeply concealed uranium deposits. This is particularly the case for Australia, where about 70-80% of the continent is covered by a veneer of deeply weathered barren rock, making it even more difficult and expensive for explorers to "see through" the barren cover to search for hidden uranium deposits.

Significant factors assisting the discovery of uranium and other mineral deposits are the availability of regional geological, geophysical and geochemical data acquired by government agencies such as Geoscience Australia and state and territory geological agencies.

The data minimises the risk for explorers in areas such as Olympic Dam, where the deposit is concealed by 325 metres of rock but was discovered partly because of the interpretation of regional geophysical data acquired by Geoscience Australia's predecessor, the Bureau of Mineral Resources. Yeelirrie also was found because of the interpretation of regional radiometric data.

It was a similar case for the large uranium deposits at Ranger and Jabiluka in the Northern Territory, which were found when explorers were attracted to the area by their interpretation of the regional geological mapping.

Many of the early discoveries were found in areas of little surface cover, so the rate of uranium discoveries diminished as the value of the old data from the regional geological mapping and geophysical surveys were exhausted. The challenge for future discoveries is to assist explorers with more sophisticated regional data provided by government agencies, which allow explorers to look through the cover and locate uranium deposits below the surface layer covering 70-80% of Australia.

The geophysical and geochemical programs being launched by Geoscience Australia during the next 5 years through the federal government's $134 million new energy security initiative will play an important role in the discovery of new uranium, thorium and geothermal energy as well as other mineral deposits in the future.

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