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Uranium Resources

The IAEA sub-divides uranium resources into conventional and unconventional. Conventional resources are those that have an established history of production where uranium is a primary product, co-product or an important by-product (e.g. from the mining of copper and gold). Very low-grade resources or those from which uranium is only recoverable as a minor by-product are considered unconventional resources.

Based on the confidence level of estimate, conventional resources are classified as reasonably assured (an equivalent of measured and indicated under the CIM and JORC definitions and guidelines) or inferred.

Reasonably assured resources is that part of a mineral resource for which quantity, grade or quality, densities, geometry, and other pertinent physical characteristics are established with sufficient confidence to allow for appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The reasonably assured resource estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both favourable host-rock and grade continuity. Reasonably assured resources are sometimes referred to as demonstrated.

Inferred resources is that part of a mineral resource for which geological continuity has been established but grade, geometry, and other physical characteristics are considered to be inadequate to classify the resource as a reasonably assured resource.

The IAEA tracks identified conventional resources (reasonably assured and inferred) which can be extracted at a cost of less than USD 260/kgU (USD 100/lb U3O8).

Changes in identified resources 2009-2011 (Mlb U3O8) (Modified after IAEA Red Book 2012)

Resource Category20092011Change, Mlb U3O8Change, %
Identified (Total)
<USD 100/lb16,93118,4452,05412.5
<USD 50/lb14,04613,846(200)-1.4
<USD 36/lb9,7268,001(1,724)-17.7
<USD 18/lb2,0701,770(300)-14.5
Reasonably Assured
<USD 100/lb10,94811,3819739.3
<USD 50/lb9,1628,981(180)-2.0
<USD 36/lb6,5405,237(1,303)-19.9
<USD 18/lb1,4811,284(198)-13.3
<USD 100/lb5,9837,0641,08118.1
<USD 50/lb4,8844,865(19)-0.4
<USD 36/lb3,1862,765(421)-13.2
<USD 18/lb589486(103)-17.5

The above table clearly shows that the nuclear power industry has been depleting the low-cost and easily accessible resources leading to a combined 33.6% reduction in the <USD 50/lb U3O8 category. This trend is further demonstrated by a 35.2% drop of reasonably assured resources in the <USD 50/lb U3O8 cost range. It must be noted that, according to the IAEA, some of the reduction in the lower cost ranges occurred because of the reclassification of resources to the higher cost categories.

Uranium Production

According to the World Nuclear Association, in 2012, the world mined an equivalent of 151.7 Mlb U3O8 (about 90% of the 169 Mlb annual demand).

36.5% of that production came from Kazakhstan - all of it produced by in-situ recovery operations at cash costs around USD 20 per pound. Kazakh uranium was produced by 6 ISR operations, each generating between 3 and 6 Mlb U3O8 per year.

In 2012, Canada produced 15.41% of the world supply and all of it came from two underground mines, McArthur River (approximately 20 Mlb U3O8) and Rabbit Lake (approximately 4 Mlb U3O8). Given the mining method and depths (below 500 m), Canadian production has relatively low cash costs due to extraordinarily high ore grades - 16.5% U3O8 at McArthur River (reserve grade, with dilution and mining losses factored in). The phenomenal richness of the ore can be demonstrated as follows: each metric tonne of ore contains almost 364 lb U3O8. Its revenue potential is a staggering USD14,550 per tonne of ore even at the market prices of USD 40 /lb U3O8. And at USD 70 /lb, it balloons to USD 25,460. At the same prices, for example, Olympic Dam, one of the richest mines in the world, is mining ore containing only about USD 370 worth of copper, uranium, gold, and silver per tonne of mill feed. At USD 70 /lb U3O8, one tonne of Roessing's 2009 reserve contains ore only worth about USD 48 in which the 85% processing recovery already factored in.
As Cameco reported 2012 cash costs at approximately USD 20/lb, along with a solid resilience of its mining operations, it signaled exceptionally high running costs and their susceptibility to grade fluctuations. Cameco's figures may also indicate the quality criteria to be met by new uranium projects in the Athabasca Basin as well as the appeal of ISR projects elsewhere.