Thu Mar 1, 2007 12:08pm EST
(Reuters) – SXR Uranium One Inc. SXR.TO said on Thursday that it started processing underground uranium ore on schedule this week at its Dominion Reefs mine in South Africa.
The uranium and gold miner expects to produce 3.8 million pounds of uranium annually from the first phase of the mine, and is now studying if it can boost that to 7 million pounds annually by 2015.
The processing coincides with ongoing gains in the price of uranium as robust demand for the nuclear fuel outpaces supply. Spot prices were $85 a pound this week, and rose nearly 99 percent in 2006.
“The commencement of ore processing at Dominion, in line with targets we set for ourselves in 2003, marks one of the most important milestones in the development of Uranium One,” said chief executive Neal Froneman in a statement. “We look forward to completion of the ramp-up to full production.”
The Toronto-based company said last month an updated estimate showed a 37-percent increase in the indicated uranium resource at the mine. It also said it discovered an indicated uranium resource of 1.2 million pounds, and a 55,000 ounce gold resource in the surface waste dumps on the property.
Shares in Uranium One were about 3 percent lower at C$16.40 on the Toronto Stock Exchange on Thursday amid a broad market decline.
The company recently said it would buy uranium assets from U.S. Energy Corp. (USEG.O) and its majority-owned subsidiary Crested Corp. CBAG.OB for about $140 million in cash and stock.
It also announced in February that it planned to merge with smaller uranium miner UrAsia Energy Ltd. UUU.V to form a global group with a market capitalization of about $5 billion.